Notes on Hoover Spy Letter

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Federal Bureau of Investigation
United States Department of Justice
Washington 25, D.C.
May 29, 1946
PERSONAL AND CONFIDENTIAL
BY SPECIAL MESSENGER

Honorable George E. Allen
Director
Reconstruction Finance Corporation
Washington, D.C.

Dear George:

I thought the President and you would be interested in the following information with respect to certain high Government officials operating an alleged espionage network in Washington, D.C., on behalf of the Soviet Government.

Information has been furnished to this Bureau through a source believed to be reliable that there is an enormous Soviet espionage ring in Washington operating with the view of obtaining all information possible with reference to atomic energy, its specific use as an instrument of war, and the commercial aspects of the energy in peacetime, and that a number of high Government officials whose identities will be set out hereinafter are involved. It has been alleged that the following departments and agencies of the United States Government handle the problem and current development of atomic energy and among these departments and agencies, the United States secret of atomic energy is held in trust. The names of the individuals in each department or agency who control such matters have been furnished as follows:

State Department--Under Secretary of State Dean Acheson
Assistant to the Under Secretary of State--Herbert Marks
Former Assistant Secretary of War John J. McCloy
War Department--Assistant Secretary of War--Howard C. Peterson
Commerce Department--Secretary of Commerce--Henry A. Wallace
Bureau of the Budget--Paul H. Appleby
George Schwartzwalder
Bureau of Standards--Dr. Edward U. Condon
United Nations Organization--Alger Hiss
Abe Feller
Paul Appleby (who is being considered for transfer from the Bureau of the Budget to the United Nations Organization)
Office of War Mobilization and Reconversion--James R. Newman
Advisors to the Congressional Committee on Atomic Energy--James R. Newman
Dr. Edward U. Condon

The individual who furnished this information has reported that all of the above individuals mentioned are noted for their pro-Soviet leanings, mentioning specifically Alger Hiss of the United Nations Organization, Paul Appleby and George Schwartzwalder of the Bureau of the Budget, Dr. Condon of the Bureau of Standards, and John J. McCloy of the State Department.

The informant has stated that the McMahon Committee headed by Senator Brien McMahon of Connecticut is charged with formulating the policy concerning atomic energy[,] and serving as advisors to the Committee are Dr. Condon of the Bureau of Standards, who, the informant states, is nothing more or less than an espionage agent in disguise, and James R. Newman, an employee of the Office of War Mobilization and Reconversion who is known to the informant to be a personal friend of Nathan Gregory Silvermaster, who, you may recall, is one of the principal individuals known to have operated as an agent of the Soviet Government in U.S. Government offices for a considerable time until December, 1944. It is known that Silvermaster obtained information through his associates in a Russian espionage network and such information was turned over to the Soviet Government. The informant has indicated that Newman is also a friend of the news commentator Raymond Gram Swing and columnist Marquis Childs. Newman is also reported to be the so-called ringleader of this particular Soviet espionage network and through his employment with the Office of War Mobilization and Reconversion, he had access to material flowing from the White House. The informant stated that through Dr. Edward Condon at the Bureau of Standards, Newman has access to technical data concerning atomic energy. The informant further stated that Secretary of Commerce Henry A. Wallace knows of the background of Dr. Condon but condones his further employment in this highly strategic and important position.

James Newman allegedly obtains from the War Department through the cooperation of Assistant Secretary of War Peterson highly technical information on the atomic bomb itself and all matters relating generally to atomic energy. According to the informant, Newman has a direct line to Assistant Secretary Peterson's office.

With reference to the State Department, it was reported that Newman is in personal and daily contact with Dean Acheson, Herbert Marks, and on some occasions with John J. McCloy, and therefore, any knowledge of atomic energy and international relations with reference to it are immediately known to him. In so far as the international picture is concerned with respect to atomic energy, it was reported that Newman is in a position to obtain this information from Alger Hiss of the State Department who holds the position of advisor to Mr. Stettinius, the American Representative to the United Nations Organization.

Concerning the Bureau of the Budget, the informant reported that Paul Appleby and sometimes George Schwartzwalder pass upon the recommendations of the Office of War Mobilization and Reconversion which are made to the President concerning the necessary appropriations to carry on experimental operations concerning atomic energy and particularly its relative position to that of a large Army and Navy. It was pointed out that in almost all cases the final decision at the Bureau of the Budget on such matters is passed upon by Paul Appleby.

The informant has drawn the conclusion that the entire setup of the McMahon Committee to investigate and recommend legislation on atomic energy and its use is a scheme to make available information concerning the atomic bomb and atomic energy, and that it all amounts to Soviet espionage in this country directed toward the obtaining for the Soviet Union the knowledge possessed by the United States concerning atomic energy and specifically the atomic bomb.

The informant stated that technical and exacting information which Newman desires to pass on to Russian principals is made available to Mr. Silvermaster, or, in those matters of a highly technical nature, Dr. Edward Condon of the Bureau of Standards contacts Silvermaster directly. The news commentator Raymond Gram Swing, according to the informant, is utilized for subtle propaganda with reference to agitation for release of atomic energy to the Allied Powers and that the same use is made of Marquis Childs, a feature Washington newspaper writer.

The informant is of the opinion that the entire setup has a use other than that of espionage for the Soviet Government, namely, the promotion of pro-Soviet propaganda, which, when reduced to its simplest form, advances the argument "why keep a large Army and Navy when the use of atomic energy eliminates the necessity for such a large force." In Government circles and among those handling the question of atomic energy, the unanimous argument of all and especially of those mentioned above is in agreement that a large Army and Navy are not necessary to the United States as the United States has exclusive knowledge and the "know how" of the atomic bomb.

It is known to this Bureau that Dr. Condon is a personal friend of Nathan Gregory Silvermaster, and although Silvermaster is presently under investigation by this Bureau, no information has been developed to substantiate the fact that Condon has turned over any information of a confidential nature to Silvermaster. It has also been made known to this Bureau through various sources in the past that the political views of Under Secretary of State Dean Acheson, Assistant Secretary of War Howard C. Peterson, and Secretary of Commerce Henry Wallace have been pro-Russian in nature, and therefore, it is not beyond the realm of conjecture that they would fit into a scheme as set out above. Alger Hiss of the United Nations Organization has been reported to this Bureau as a former member of the Communist underground organization operating within the Government in Washington, D.C.

Since James R. Newman has been described as the ringleader of this alleged espionage network and, further, since Herbert S. Marks is in close touch with information dealing with relations between the United States and Russia at the State Department in the office of Dean Acheson, investigations are being conducted by this Bureau concerning the activities of these two individuals. You may be assured that you will be kept advised of all developments in connection with the above allegations.

Sincerely yours,

Edgar

Secrecy - Chapter One

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Thanks and best wishes,

J. Barry O'Connell Jr.

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