Coe, Virginius Frank (1907-1980)

coe_virginius_frank

Virginius Frank Coe

An American economist and government official who was the first Secretary of the International Monetary Fund (IMF) from July 1946 to December 1952.Born in 1907 in Richmond, Virginia, Coe studied at the University of Chicago, where he earned his bachelor of philosophy in 1926 and continued graduate work into 1928. He was on the staff of the Johns Hopkins University Institute of Law from 1928 to 1930, when he returned to the University of Chicago as a research assistant. He completed his doctoral thesis in 1933. As of 1932, he was also an instructor at the People’s Junior College in Chicago. During 1933 and 1934, he was on the staff of the Brookings Institution. Then, from the summer of 1934 until 1939, Coe frequently served as a consultant to the Office of the Secretary of the Treasury. He taught economics at the University of Toronto from the fall of 1934 until the spring of 1939, and remained a member of its staff, on leave, for several more years.

In 1939, Coe moved to Washington, D.C. to become an adviser to the head of the Federal Security Agency. In 1940 he took a similar position in the Office of Price Administration (then known as the National Defense Council). By the end of that year, he returned to the Treasury Department as an Assistant Director of Monetary Research. Then, in 1942, he became Executive Secretary of the Joint War Production Committee of the United States and Canada and an assistant to the Executive Director of the Board of Economic Warfare (BEW, later called the Foreign Economic Administration, or FEA). From late 1944 to early 1945, Coe served as Director of the Division of Monetary Research in the Treasury Department; he was also Technical Secretary at the United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire in 1944. In the fall of 1945, he became Secretary of the newly established, inter-agency National Advisory Council on International Monetary and Financial Problems.

On July 1, 1946, Coe resigned from the Treasury Department to become the Secretary of the International Monetary Fund. In that position, his duties included presiding over board meetings, preparing the minutes and distributing documents appropriately. He did not have a say on policy issues.

By 1946 Coe became the subject of an FBI investigation of Soviet espionage in the United States, after being named as a Communist sympathizer and/or secret Communist by two defectors from the Soviet cause, Whittaker Chambers and Elizabeth Bentley. Bentley did not mention the name V.F. Coe in her first two signed statements (November 8 and November 30, 1945). However, when interviewed on January 30, 1946, she “recalled… one individual who was associated with the Silvermaster crowd” – that is, with a Communist Party “informational group” in Washington, D.C. during World War II headed by a government economist, Nathan Gregory Silvermaster. Bentley’s recollection was vague – “she could not recall definitely having seen any material that she could identify as having originated with COE” and assumed that “he was relatively unimportant to the group.” 1 Nonetheless, Coe became a subject of investigation “as early as December 6, 1945” 2 and was placed under physical and technical surveillance. When interviewed by the FBI on May 29, 1947, Coe “emphatically denied furnishing information of any nature to anyone which would be of detrimental nature to this country. Coe particularly stated that no information concerning any official activity was passed on to any individual for transmittal to a Russian contact.” 3

In the summer of 1948, Bentley and Chambers both named Coe publicly, but in his testimony before the House Committee on Un-American Affairs (HUAC) on August 13, 1948, Coe vehemently denied any charges of Communist Party membership and espionage. In late 1952, Coe was called to testify before a grand jury in New York and then before the Senate Internal Security Subcommittee (SISS) – often referred to as the McCarran Committee – both of which were investigating alleged Communist affiliations of U.S. citizens working for international organizations. Testifying before the Senate subcommittee, Coe refused to say whether he was a member of the Communist Party, taking the Fifth Amendment. In the aftermath of this investigation, he was forced to resign from the IMF. In early June 1953, he appeared before Senator Joseph McCarthy’s Permanent Subcommittee on Investigations, which used a nominal pretext to investigate Coe’s alleged Communist activities. Once again, Coe refused to answer questions on Fifth Amendment grounds.

Blacklisted and already deprived of his passport (as of late 1949), Coe began looking for a job abroad. In 1958 he moved to the People’s Republic of China at the invitation of an old Chinese friend, “to be the eyes and ears of the West” for the Mao regime. 4 In 1961, Coe was joined by another American economist, Solomon (Sol) Adler, who had been invited to work as an advisor on international economic matters. Both men were assigned to a Chinese economic think tank, the Institute of World Economics, where they provided advice on international trade and global macroeconomic conditions.

Coe died in Beijing, China on June 2, 1980 at the age of 73.

* * *

At the time of the release of Soviet intelligence cables dating from the World War II period which had been partially decrypted in the course of the Venona operation, Venona translators identified the cover name “Pik” [Peak] as “possibly” belonging to Coe. “Pik” appeared in a few partially decrypted reports. For example, an August 31, 1944 cable from New York to Moscow reported that “Robert” [Nathan Gregory Silvermaster] “hopes to influence PAGE [PAZH] through PEAK [PIK].” On February 25, 1945, Moscow Center warned its New York station that the fact that “some PROBATIONERS of ROBERT’s group are working for us is widely known among other FELLOW-COUNTRYMEN…” [the Venona translation for the Russian Zemlyaki, that is, compatriots] The list included PIK, identified as “possibly Virginius Frank Coe.” 5

The tentative Venona identification of “Pik” as Coe was confirmed in the notes on KGB foreign intelligence documents taken by former KGB officer and journalist Alexander Vassiliev during 1994 and 1995. (Vassiliev was conducting research for a prospective Russian-American collaborative book; his notes later became the basis for The Haunter Wood: Soviet Espionage in America – The Stalin Era (1999), which he co-authored with the American historian Allen Weinstein.)

In The Haunted Wood, Allen Weinstein concluded that “a recent investigation into the KGB archives claimed that files show Coe to have been a Soviet agent.” This conclusion found its way into Coe’s Wikipedia bio. 6 Moreover, a second re-write based on Vassiliev’s notes, SPIES: The Rise and Fall of the KGB in America, by John Earl Haynes, Harvey Klehr and Alexander Vassiliev, labeled Coe “an active KGB source.” 7

However, the story as it appears in Vassiliev’s notes — which were posted last spring on the Woodrow Wilson Center’s Cold War International History Project website 8 — is much less unequivocal.

In the fall of 1944, in Moscow, Vassili Zarubin, the NKGB resident in the United States from January 1942 to August 1944, wrote a summary report , for the head of the NKGB, Vsevolod Merkulov. Zarubin described “Pik” as a “zemlyak” – a member of the CPUSA who “has access to valuable polit. and econ. information and has provided many valuable materials.” However, as Zarubin learned indirectly from Silvermaster (through Jacob Golos, who was Zarubin’s only link to Silvermaster), “Pik”was “not privy to the substance of the work and believes he is working for the “Helmsman,” that is, the current head of the CPUSA. 9

Zarubin’s conclusion checks out in several other notes made by Vassiliev on reports dated from 1941 to 1945, which acknowledge as fact that “Pik” belonged to Silvermaster’s Communist informational group and that information was passed from Coe via Silvermaster. However, these notes and reports make it very clear that Soviet intelligence used “Pik” as an information source “blind” – in other words, without his knowledge.

Furthermore, as late as October 1, 1945, Zarubin’s successor “Vadim” (Anatoly Gorsky) reported to Moscow that “”Peak” gives us very little…” 10

Vassiliev’s notes about Virginius Frank Coe’s relationship with Soviet intelligence leave many questions open. His name would appear for the last time in a list of agents and sources compromised by the defection of five former Soviet agents, which would be compiled in Moscow by Anatoly Gorsky in the late 1940s. 11

  1. The FBI FOIA Silvermaster File, No 65-56402, vol. 031, serials 717-762, PDF p. 146.
  2. Ibid., vol. 082, serials 1862-1.
  3. Ibid., vol. 144, serials 3620X3-3646, PDF p. 59.
  4. Prof. Roger Sandilands to Svetlana Chervonnaya, September 18, 2009.
  5. Venona 1943 KGB New York to Moscow, 31 August, 1945; Venona 179-180 KGB Moscow to New York, 25 February 1945.
  6. http://en.wikipedia.org/wiki/Frank_Coe
  7. SPIES: The Rise and Fall of the KGB in America by John Earl Haynes, Harvey Klehr and Alexander Vassiliev, Yale University Press, 2009, p. 261.
  8. http://www.wilsoncenter.org/index.cfm?topic_id=1409&fuseaction=topics.documents&group_id=511603
  9. Vassili Zarubine to V.N. Merkulov, September [no day given] 1944, Alexander Vassiliev’s White Notebook No. 1, p. 5, arch. ref to No. 35112, Vol. 1, pp. 400-401.
  10. Vadim to the Moscow Center, October 1, 1945, Alexander Vassiliev’s White Notebook No. 3, p. 82.
  11. Report from A. Gorsky – to S.R. Savchenko, December 23, 1949, “Failures in the USA (1938-48).” Alexander Vassiliev’s Black Notebook, p. 78. Coe appears under No. 14 in “Sound” and “Myrna’s” group: 14. “Peak” – Frank Coe, former chief of the Monetary Section of the Dept. of the Treasury.