The Spy Who Changed History: The Untold Story of How the Soviet Union Won the Race for America’s Top Secrets

A highly perceptive observer, Klivans could have been an excellent US intelligence asset. She certainly was an important Soviet one, through her work passing on to her charges her observations on American life. She had learned during her stay exactly what was going on in the USSR. Her close friendships with her students had given her invaluable information. Her sources were impeccable, as her engineering students were at the heart of every aspect of the first Five-Year Plan. And her analysis of the state of Soviet economic development was correct. She told America the unvarnished truth that in the mind of the Russians Henry Ford was the greatest American and that they were trying to model Soviet industry on his methods. It was her view, however, that using the Ford method without Ford himself to direct them might not lead to success. She explained the importance of the mission in America her charges were about to be sent on:

The development in Russia has been so rapid that usually even after new industries have been established the training of the Russian labour has been so inadequate that they cannot run them. A tractor factory that was supposed to have turned out 100,000 tractors per year has turned out not over 2,000 in six months, and none of these would run more than 4 or 5 days without falling apart, solely because of the lack of training on the part of the workers.10

Earnestly Klivans explained that the Soviet Union was still very much a work in progress, not the finished article. Her students were now on the way to America in order to learn the skills to train Russian workers to drive the industrialisation programme. In Russia, she exclaimed, engineers were rated highest among the professional men, the value placed on them three times greater than that of a doctor. She adroitly turned the reporters’ dumbest questions to her advantage to explain the sacrifices required from the Russian people today for a brighter tomorrow: ‘There are no sleepless nights for Russian families, for no coffee is served. Food of the type familiar to us is impossible to obtain. Most of it is shipped to foreign countries, and the proceeds go towards purchasing machinery for the Soviet factories. Wheat, fish and the like are extensively imported, however, as are fine wines.’11 And the Russians, Miss Klivans declared, actually liked work. But few in the US cared to listen.

The readers of the newspapers were evidently hungry for news about the mysterious Soviet Union, a society with an answer to the world’s problems. No doubt they were confused by the conflicting accounts trickling out of Moscow. Jack Hayward, another correspondent, reported, perhaps untruthfully, in the same edition of the newspaper that when a Russian went shopping in Moscow, he was likely to find that his cheese purchase was made of wood; delicious. Klivans confirmed to readers that despite the ongoing effects of the Great Depression, standards of living were still higher for the majority in the United States than in Russia. But the gap was closing. The Ulanovskys, two ‘illegal’ Military Intelligence agents already embedded in New York at the time, agreed. They had witnessed first hand the conditions of the unemployed, homeless families in the shanty towns known as ‘Hoovervilles’ set up on the Great Lawn at Central Park and Riverside Park at 72nd Street in New York City. These Russian patriots arrived knowing that America was the classic country of capitalism,

the most disgusting in the world, and we sought to see all the evils of capitalism first hand quickly, and we found a lot of it unattractive … We saw the unemployed in line for soup, which was distributed by the Salvation Army. But the unemployed in the queue in 1931, during the Depression, were dressed better than my Moscow friends. We went looking in vain for a slum.12

• • •

But why was there such an intense American interest in news from the first Communist state? The answer lay in the grim, fatalistic mood of the US at the time. Trapped in the midst of the Great Depression, perhaps they were witnessing the death of the American dream itself. Like many of her generation, Gertrude Klivans had, through her travels, come to question the very future and purpose of liberal democracy and capitalism. She had discovered a ‘Soviet atmosphere, an atmosphere strangely free from the tradition of that brand of democracy to be found in the West’.13

The Communist state’s giant socialist experiment polarised US public opinion. Most US visitors to the Soviet Union returned home with their views reinforced. Those who had come seeking alternatives to the raging social crisis in depression-hit America found hope in the socialist experiment; others who sought it found deprivation, oppression and a rising red menace. Enthusiasm in liberal and left-leaning circles for Communism tracked the ups and downs of the US economic cycle. Initially, the Russian Revolution had been greeted with wild enthusiasm, although US banks lost billions on the default of Tsarist debt. ‘I have seen the future, and it works,’14 proclaimed American journalist Lincoln Steffens, who was targeted by Soviet Military Intelligence in 1931 for possible recruitment as an ‘agent of influence’. The Soviets approached many leading left-leaning cultural figures in this period to play an active role as advocates for socialism. Most rebuffed the approaches. Some did not. Steffens refused to join up, but as an ideologically sympathetic fellow traveller, he promised to help the Soviet Union when the interests of the US and the USSR coincided.

In the 1920s, as the US economy prospered in the post-war recovery, the Soviet Union had been roundly criticised by visiting international socialists for its failings. Despite thousands of invitations to sympathetic left-leaning artists, writers and politicians to visit, the Russians could garner few friends. Some criticised the Soviets for insufficient radicalism, as they wanted a world revolution. Many found issue with the Communists’ belief that ‘the end justifies the means’. The Communists in power were too brutal for their taste. Lincoln Steffens on the other hand found convenient excuses for the bloody excesses of the ‘Red Terror’. He concluded that the Soviets were not evil per se but that dire circumstances had forced evil on them. ‘Soviet Russia was a revolutionary government with an evolutionary plan enduring a temporary condition of evil, which is made tolerable by hope and a plan.’15

In bohemian circles, there was still much praise for Moscow’s artistic freedom, avant-garde theatre, movies and poetry. As the US economy boomed in the 1920s, intellectual socialists were out of touch with the day-to-day issues of the working class. It was only during the crisis of the 1930s that the Soviet Union and Communism started to enjoy broader US support and clandestine help. The crisis of capitalism and the rise of fascism (seen by the left as capitalism with murder) proved to be the catalyst for the growth of the US radical left. Marx’s theory of historical determinism was in vogue.

• • •

The closing of all American banks on 4 March 1933 marked the nadir for capitalism as the entire nation went into a state of traumatic shock. The illusion of permanent prosperity that had captivated and motivated everyone during the boom evaporated. The deepening economic crisis caught intellectuals such as novelist Theodore Dreiser and socialist writer Upton Sinclair unawares, but they soon recovered to take the lead in asserting that American capitalism was undeserving of support or survival. From 1930 onwards there had begun a quest that took many on a journey leading far from their social, political and philosophical starting points. Along the way some fell into the waiting arms of Soviet intelligence. This was the era when Communists joined the US government, not just to gather useful information for their Soviet controllers but also to influence government policy for Communist ends. Dozens of agents such as Nathan Silvermaster, Lachlan Currie and Harry Dexter White found careers in government service, in particular in the Treasury and the Labor Department.

The battering of the Great Depression dispelled political apathy. No one could remain indifferent to the capitalist system that was creating havoc and misery. Liberalism was the first political casualty of this political awakening. Its spokesmen had failed to foresee the catastrophe and, the radicals believed, were unable to explain its causes, cope effectively with its consequences or offer answers. In their search for a solution many turned their eyes abroad. If the Russians were achieving full employment and economic growth with their backward technology, surely the Americans could do far better with their advanced facilities? In the US, the factories were built but now lay idle, so the priority was a plan for the economy to put America back to work. The leftward move, coupled with the feebleness of right-wing opinion at the time, made the Communist movement the unchallenged attraction. The starry-eyed saw a promised paradise in the land of the Five-Year Plans, while the more grounded were impressed by the achievements of a planned economy operated on the foundation of nationalised property. A Soviet-style economic policy might provide the means of propelling the US economy forward, eliminating the scourge of mass unemployment.

• • •

Blamed for causing the Depression, Hoover won only 39.7 per cent of the popular vote in the 1932 presidential election, a dismal result, and in 1933 Franklin Delano Roosevelt replaced him as President. Roosevelt’s reforms derailed the leftward political momentum in the US. A stream of radicals were hired into the federal government to enact depression relief measures adopted from their leftist agenda. Faith in the vitality of American capitalism revived with the economic upturn. Roosevelt’s New Deal aimed to provide support for the millions of unemployed, to grow the economy and to enact reform to prevent a repeat of the financial crisis. It was attractive for some Communists who, as members of the Democratic administration, could be anti-fascist fighters, defend the cause of labour and promote the aims of the Communist Party and the Soviet Union while pursuing a government career with a good salary. It was no wonder at the time that Soviet spy rings flourished unhindered at the heart of the American government. But New Deal reform did not extend much beyond the end of the recession in 1937, when urgent plans for war displaced domestic concerns. And as the vision of an imminent proletarian revolution was eclipsed by the war shadows, the slow journey back to a belief in democracy quickened into a stampede. Patriotic fervour swamped the radicalism of the thirties. Conservatives still depict the Red Decade as an ugly spectacle of rampant subversion in America.

One clear demonstration of the broad appeal of the radical message at the time, but not of the socialist name, was given by the writer and politician Upton Sinclair. Having founded EPIC (End Poverty In California) to pursue a solution more radical than Roosevelt’s New Deal, Sinclair came close to becoming Governor of California in 1934. He wrote after his defeat that ‘the American People will take Socialism, but they won’t take the label. I certainly proved it in the case of EPIC. Running on the Socialist ticket, I got 60,000 votes and running on the slogan to “End Poverty in California” I got 879,000. I think we simply have to recognize the fact that our enemies have succeeded in spreading the Big Lie. There is no use attacking it by a frontal attack; it is much better to out-flank them.’16

Sinclair was a lifelong Socialist who had become frustrated with the New Deal’s inability to end the Depression at a stroke. Rather than putting the unemployed on relief, Sinclair proposed, via EPIC, to put them to work within a state-organised ‘production-for-use’ economy distinct from the capitalist marketplace. Under his scheme, the state would take over idle farms and factories, allowing the jobless to grow their own food or produce clothing and other goods. Any surplus could be traded, through a system of barter, only for other goods produced within the system. Considered the front-runner in the election, Sinclair was subjected to intense attacks from both Republicans and Democrats as ‘a communistic wolf in the dried skin of the Democratic donkey’.17

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The Soviet students tripping down the gangplank in the summer of 1931 arrived with fixed expectations and preconceived ideas about America. The views of Shumovsky and his fellow Soviet students were based on their own political ideology, reinforced by selective imported left-wing reading and popular culture including movies. Long before the Revolution, the idea of America had exercised a profound fascination for Russians, and not just for its technological successes. There was a hungry market in Russia for American movies and cheap novels about cowboys and gangsters.18 An unusual import was the staging of selected American dramas. Several American plays were produced in Moscow, notably The Front Page – famously adapted in 1940 for the screen as His Girl Friday starring Cary Grant and Rosalind Russell – which was rechristened Sensations for a Communist audience. Giving theatre-going Muscovites a further taste of the life and times of the windy city was a staging of Chicago, a ‘tale of America’s foremost big gun and bullet city’ depicting the life of Roxie Hart and today more renowned as a musical. Hollywood movie styles inspired domestically produced Soviet films, which often emulated the style and stunts of Harold Lloyd, Buster Keaton and the Keystone Kops in delivering their ideological message. In one popular movie, The Extraordinary Adventures of Mr. West in the Land of the Bolsheviks,19 an American philanthropist, fearful for his own safety having heard lurid tales of bloodthirsty Communists, brings a cowboy to Moscow as a personal bodyguard. The cowboy, played by a Moscow circus clown, is a carbon copy of Keaton, while Moscow’s finest do a passable impression of the Keystone Kops. The philanthropist falls victim to conniving White Guards spinning impossible tales such as that the iconic Bolshoi Theatre was dynamited by the Communists. Mr West returns to the US, and the arms of his relieved wife, knowing that tales of bloodthirsty philistines destroying Moscow are untrue. As the students arrived in America, like Klivans they felt the need to tackle prejudices about the new Russia similar to those held by Mr West and many Americans.

Two Russian satirists, Ilf and Petrov, summed up Russian expectations of arriving in depression-hit New York:

the word ‘America’ has well-developed grandiose associations for a Soviet person, for whom it refers to a country of skyscrapers, where day and night one hears the unceasing thunder of surface and underground trains, the hellish roar of automobile horns, and the continuous despairing screams of stockbrokers rushing through the skyscrapers waving their ever-falling shares.20

They believed they would find a culture of exploitation in America and that ‘the rich people not only had all the money’ but ‘the poor man was down, and he had to stay down’.21 They had devoured in Moscow the available books on America, mostly those of socialist writers Sinclair and Dreiser about the current state of the US. Without another source of knowledge, they believed them to be the gospel truth. The students expected to find ‘a population, low-class and mostly foreign, hanging always on the verge of starvation and dependent for its opportunities of life upon the whim of men every bit as brutal and unscrupulous as the old-time slave drivers; under such circumstances, immorality is exactly as inevitable, and as prevalent, as it is under the system of chattel slavery’.22

As devout Communists, they did not expect a warm welcome on American soil but to be confronted with cold shoulders and suspicion. And they soon learned that outside the narrow circles of intellectuals and émigrés they needed to be careful when discussing Communism. On their travels, they discovered that the deeply conservative soul of America was rooted in traditional churchgoing communities that were suspicious of new-fangled foreign ideas.

Officially, a man will never be forced out of his job for his beliefs. He is free to hold any views, any convictions. He’s a free citizen. But let him try to praise communism – and something like this happens, he will just not find work in a small or big town. He will not even notice it happening. People who do it, do not believe in God but go to church because it is indecent not go to church. As for Communism, that is for Mexicans, Slavs, and black people. It is not an American thing.23

Russians were not yet an urbanised people, and they knew that the real America was to be discovered in its myriad small towns and villages, not its cities. Soviet visitors loved taking road trips, driving across America’s incredible highway system in the freedom of a car. On their journey they discovered in equal measure much to admire and amuse:

Americans don’t like to waste time on stupid things, for example, on the torturous process of coming up with names for their towns. And indeed, why strain yourself when so many beautiful names already exist in the world? That’s right, an authentic Moscow, just in the state of Ohio, not in the USSR in Moscow province. There’s another Moscow in some other state, and yet another Moscow in a third state. On the whole, every state has the absolute right to have its very own Moscow.24

Soviet visitors discovered in America a confusing, happy melting pot of nationalities. One remarked that ‘a Spaniard and a Pole worked in the barbershop where we got our hair cut. An Italian shined our shoes. A Croat washed our car.’ However, they encountered racism and discrimination of a type that their revolution had eliminated:

To a Soviet person, used to the nationality policy of the USSR, all the mistakes of the American government’s Indian policy are evident from the first glance. The errors are, of course, intentional. The fact of the matter is that in Indian schools, the class is conducted exclusively in English. There is no written form of any Indian language at all. It’s true that every Indian tribe has its own language, but this doesn’t change anything. If there were any desire to do so, the many American specialists who have fallen in love with Indian culture could create Indian written languages in a short time. But imperialism remains imperialism.25

Russian visitors to the US often found American society shallow: ‘If you should attempt to maintain that film is an art in conversation with a cultured, intelligent American, he’ll just plain stop talking to you.’26 American workers were too materialistic, seemingly happy with the system of exploitation, easily bought off rather than striking and heading to the barricades. Americans appeared obsessed with their material conditions to the exclusion of culture and the spiritual. The observation of Gertrude Klivans was that to meet demand the Soviets published more books in a year, she estimated, than any other country. However, many of the avid readers had probably had only one square meal in three years. In addition, ‘Art rates [are] very high in Moscow and throughout the Soviet states Opera is highly popular, as are the theater and literature. Among the classic authors, Tolstoy reigns supreme. Gorky is the idol of the modernists. But art, in Russian fashion, must interpret the struggle for expression of the masses, the keynote of present day civilization in that country.’27

MIT welcomed the arrival of the Russians. The Institute had embarked on an ambitious investment plan at the very moment the Great Depression hit, leading to a dramatic fall in US student numbers. In 1932 and 1933, across the nation some eighty thousand youths who in more prosperous times would have attended college were unable to enrol. Universities were thus desperate for the income that the arrival of the Russian students provided and were correspondingly uninterested in asking any awkward questions. America’s finest universities were about to start teaching the cream of Russia’s leadership how to build an even stronger socialist society. And one university was to show inadvertently how to spy on America and create a chain leading to the greatest espionage achievement of all time: the theft of the secret of the Manhattan Project – how to build an atomic bomb.

4

‘AGENT 001’

Throughout the hot summer of 1931, after more than a year of careful planning, seventy-five determined Russians arrived in the US to enrol as students at its elite universities.1 Disembarking at the Port of New York, shaky after a week at sea, the first of the generation of Soviet ‘super spies’ set foot in America when Stanislav Shumovsky, one of the final fifty-four, landed in late September. He travelled on the SS Europa, arriving just in time for the start of the new academic term. The group included architects, town planners, mining experts, transport gurus, metallurgists, ship designers, aeronautics experts, chemists, electrical and mechanical engineers. A few were professional intelligence officers, the rest willing helpers. They had all been sent by Stalin to find out first hand how America had met and surmounted the engineering challenges of industrialisation.

It would be wrong to say Soviet intelligence invented industrial espionage. As early as June 1810, Francis Cabot Lowell, a Boston businessman and Harvard alumnus, had embarked on an industrial espionage mission for the US. He set off on a two-year visit with his family to Scotland and England as war clouds darkened in North America, using as his cover story ‘poor health’. The mill towns of the north of England were not known for their curative delights and Lowell’s interests lay in stealing the secrets of Britain’s Industrial Revolution. The textile industry based in the growing towns of Lancashire and Scotland was at the heart of that revolution, one fuelled by new water-or steam-powered spinning and weaving machines. The flint-hearted capitalists of Britain were never going to allow anyone – and certainly not an American – to buy drawings or a model of a powered loom. So Lowell secretly studied the machines on his visits to the mills, although their desperate working conditions must surely have played havoc with his failing health. In a quite prodigious feat, Lowell memorised the workings of the British power looms without committing anything to paper.

By the time he departed Britain’s shores in 1812, the country was at war with the United States, and Lowell was carefully searched on his departure. Back in Boston, he built his textile factories, funding his enterprises with a pioneering public stock offering, and was awarded the patent for the powered loom, a stolen copy of the British version, in 1815. There was no end to Lowell’s claims; he even suggested that the technology was all his original work adapted to local conditions rather than the fruits of industrial espionage. In recognition of his imaginative schemes, he was inducted into the US Business Hall of Fame in 2013.2

In 1931 the intelligence mastermind Artur Artuzov, Shumovsky’s recruiter, had unleashed a new type of Soviet intelligence operation, one which would do to the Americans what they had done to the British. It was the start of a process of stealing industrial secrets that was to last for almost eighty years. From late 1931 until 2010fn1 a trail of agents would penetrate the US by enrolling as students in elite universities following the textbook rules written by Shumovsky.

• • •

Some of Shumovsky’s travelling companions were enrolled in undergraduate programmes; others, already qualified engineers, were on shorter specialist courses perhaps lasting a year or more to gain valuable experience. Soviet intelligence targeted American universities for two main reasons. First, America’s position as the most competitive modern industrialised society was based on its ability to produce from its universities a steady stream of fresh graduate engineers and scientists who could transfer ideas from university-based research centres to America’s factory floors and production lines. Such constant innovation maintained the position of the US as the world’s leading economy.