firm as a joint stock company capitalized at 100,000 yen of
which he contributed 85,000 yen. He even established a
branch at Mukden with a working capital of 20,000 yen.
In fact, Klausen was doing so well, and making so much
money that his earlier convictions of the perfection of
communism were shaken. His business not only was a
personal cover but also a perfect cover for the financial
transactions of the ring. He bought and sold currency, and
there was nothing conspicuously irregular in his receipt
of drafts from New York or San Francisco or Shanghai for
his commercial bank account.
VFuenther Stein, a member of the ring, was a German
Jew who managed to become a British citizen in 1941 in
Hong Kong. In 1936 he came to Japan as correspondent
for the British Financial News. His specialty was economic
and financial affairs, and his small book Made in Japan
often is used as an authoritative source on prewar Japanese commerce and industry.
Stein's book, Challenge of Red China, published in
America in 1945, has the outward appearance of the
thoughtful reporting of a serious, objective analyst who
is neither pro- nor anti-Communist, but who only wants
to discover the underlying truth. This book has been very
effective in perpetuating the myth of the Forties that
Chinese Beds are not really Communists, or in any way
connected with the Soviet Union. Like Miss Smedley,
Guenther Stein was a Soviet agent, and one can be certain
that neither of them was revealing the true nature of the
Because he was no longer in Japan when the members
of the Sorge ring were arrested, the Japanese police did
not go very deeply into Stein's antecedents and complicity.
That he was a top-level member of the ring is clear. Stein
made at least one courier run to Hong Kong in 1937, and
sometimes served as Sorge's deputy in dealing with Ozaki.
Alter Stein left Japan [prior to 1939]. Sorge was ordered
to have no further contact with him.
Stein appeared in the States, as correspondent of the
Manchester Guardian. When the War Department
released part of the Sorge story, in 1919. Stein disappeared.
He was picked up by the Surete in Paris, in 1950, and
charged with espionage. His cover then was correspondent
of the Hindustani Sens -a suggestive combination of an
I.P.R. associate. Indian correspondent and Surge operator.
Sorge had rings within a ring. Tlie outer ring consisted of
the principals: Sorge, Ozaki, de Voukelitch, Miyagi, Stein,
and Klausen. Within this outer ring were two lesser rings,
one maintained by Ozaki and one by Miyagi. The members
were not entirely unknown to each other, but where possible were kept separate, to reduce risks. The lesser individuals did help a great deal. What they learned was
screened through either Miyagi or Ozaki, and subsequently assessed by Sorge in his conversations with the
experts at the German Embassy.
These minor [Japanese] informants, traitors to their
country, presented a wide variety of backgrounds and
motives, vet all were working for the Bed Army intelligence. [Kitabayash Tomo, a woman associated with
Miyagi in collecting scraps and trivia of information,
eventually proved to be the undoing of the whole cuter
Max Klausen — In
1935 tie became secret
radio operator for
the Sorge Spy Ring in
Tokyo. His "cover"
operation was the establishment of a
company which made
and sold printing
presses and blueprints.
Among its customers
were munition factories, and the Japanese Army and
Navy. "His business
not only was a personal
cover but also a perfect cover for the
of the ring."
W1D1 wul'j [i PHOTO
prise, confirming Sorge's conviction that women were apt
to be liabilities. Keep your eye on Kita.]
At first Sorge coded and decoded all messages. In 19')'
or 19.38, following a motor accident which put him in th*
hospital, he taught the cipher to Klausen.
The location of the Soviet receiving station, presumabl)
King within a radius of 2,000 kilometers from Tokv"
was never revealed though it was probably Vladivostok-
Klausen used a portable sending set, and operated his sets
at safe distances from each other, making frequent chan-1'
Although Japanese stations at home and in Manclii"'-1
had been intercepting long series of ciphers for years, the)
had been unable to determine their origin or meaning'
Greatly perplexed, thev continued to gather a mount'""
file of messages, so that when Sorge and his gang vvetf
arrested. Japanese intelligence set themselves to break tl"
code. It is not clear whether Klausen helped them in tl"
beginning, but eventually he told them the whole stOf)
and gave them every assistance.
The code was a relatively simple transposition eip'"'1
but hard to break because of continous daily changes,
system known to professionals as the "one time pad." Son-
used a commonplace reference work "Statistical '''•"
Hook of Germany" to develop his cipher; possession of tl"*
book was not apt to arouse suspicion.
Oorge sent a great volume ol material by courier, us'i"'
ill the form of micro-filmed documents, chiefly of his «^'
analysis but often actual German or Japanese tests. I-
Soviet EmbasS) official, listed as "Serge." and an aekiH1^
edged member of the ring, helped to handle and transp"^
the film cartridges, after war conditions had made the tr'T
ol regular couriers precarious.]
This extraordinarily successful spv organization cost W
Soviet Union practically nothing in hard money. Even
thev tried to cut expenses and in 1910 directed that 1"
ol the profits from M. Klausen & Co. should go into
ring. Perhaps thev were only living to forestall the p"s>'
hie apostasy ot Max klausen. Making money was apt
transmute this Commie into a Capitalist!
Fvi is Forum News, March, '■'