ESPIONAGE: Red Hand in the Fund

When Elizabeth Bentley began naming names from her Communist past, no one was more indignant than William Henry Taylor, onetime U.S. Treasury Department official who had found a comfortable postwar roost with the International Monetary Fund (as an adviser on Middle Eastern affairs). Upon learning that Witness Bentley had cited him as a member of the Nathan Gregory Silvermaster-Harry Dexter White spy ring in the Treasury Department, Taylor angrily fired off letters and an affidavit denying that he was or ever had been a Communist. Last week, after hearings on Taylor’s fitness to continue with the International Monetary Fund, a U.S. Civil Service Commission loyalty review board agreed with Elizabeth Bentley.

Member of the Ring. Wrote the board: “The reports of investigation disclosed information considered derogatory … to the following effect: the employee [Taylor] was a member of a Soviet espionage ring headed by Nathan Gregory Silvermaster, which operated in Washington and New York in the early 1940s. The employee surreptitiously furnished to Nathan Gregory Silvermaster oral and written information affecting the national interests of the U.S. and other material and data of a confidential nature available to him as an employee of the U.S. Treasury Department. Silvermaster, in turn, transmitted the material furnished by the employee to agents of the Union of Soviet Socialist Republics. Nathan Gregory Silvermaster also forwarded to officials of the Communist Party . . . dues paid to him by the employee.

“The employee in January 1941 obtained an appointment to a position in the U.S. Treasury Department through the aid and influence of Nathan Gregory Silvermaster. The latter, who had known the employee since they were graduate students together at the University of California in 1928-30, was named by the employee as a reference on his application for employment . . .

“During his employment with the U.S. Treasury Department … the employee, while under the supervision of [the late] Dr. Harry D. White [TIME, Nov. 23, 1953], rose to a high-level position [assistant director] in the Division of Monetary Research. Among his closest associates were Harold Glasser and Ludwig Ullman,* both of whom, in addition to Dr. White, have been identified as Communists and members of a Soviet espionage group . . .”

“And Possibly Still Is. ” “[At the hearings] some of the reported factual information was admitted by Dr. Taylor to be true, but he denied that his motivation was based on a sympathy for or support of the Communist philosophy . . . Dr. Taylor also categorically denied that he had ever been a member of an espionage ring or of the Communist Party . . . The board found it difficult to believe that an individual who was reported to have been strongly pro-Communist throughout the 1930s, a Communist Party member in Hawaii in 1939, and an admitted friend of an espionage agent could have in November 1940 casually wandered into and received a position in the very division of the Treasury Department which was headed and staffed by persons subsequently identified as engaged with that agent in espionage against the U.S.”

Concluded the board: “This board is convinced that the employee has engaged in espionage and subversive activity against the U.S., that he was placed in a position in the Treasury Department of the U.S. by Communists and espionage agents for the purpose of obtaining his assistance and cooperation in their treacherous plans and objectives, and that he was and possibly still is an adherent to the Communist ideology.”

At week’s end William Henry Taylor was still a $12,000-a-year adviser to the I.M.F., with offices in Washington. He plans to fight the board’s finding. Implementing the decision may be difficult: because the monetary fund is an international agency, the U.S. board’s opinion can be only advisory.

*White died of a heart attack on Aug. 16, 1948. Glasser now lives in Great Neck, N.Y., has no occupation of record. Ullman and Silvermaster, who lived together in Washington, are partners in a New Jersey construction firm. Ullman has been brought into the courts and ordered to testify under a law that would grant him immunity from prosecution, thereby preventing him from using the Fifth Amendment. He is still fighting the constitutionality of the law. If Ullman is finally required to tell what he knows about the Silvermaster ring, the Government still hopes to prosecute its other members.