Washington Post links Herbert Kalmbach to the spy fund

The Washington Post’s report linking Herbert Kalmbach to the spy fund widened the Watergate investigation from one operative’s payments to the campaign’s concealed financial machinery. Drawing on Hugh Sloan’s account, Bob Woodward established that cash kept in California and money held in Maurice Stans’s safe were parts of a single fund for espionage and political sabotage—and that Kalmbach had distributed far more from it than he had paid Donald Segretti. The report’s force lay in that connection: Segretti’s secret work was not an isolated expense but one use of a larger pool of campaign money.

From scattered leads to a financial trail

The report followed months of attempts to reconstruct the committee’s secret finances. Earlier, Bernstein and Woodward had reported that funds for the Watergate espionage operation were controlled by principal assistants to John Mitchell and held in a special account at the Committee for the Re-election of the President. That account contained more than $300,000 earmarked for sensitive political projects; Gordon Liddy had received money from it, records had been destroyed, and Sloan’s resignation as campaign treasurer had followed his suspicions about Watergate. The earlier report had shown that the indictments did not end the conspiracy or resolve who had financed it.

The paper trail included the Kenneth H. Dahlberg’s $25,000 cashier’s check, drawn on a Boca Raton, Florida, bank and made payable to Dahlberg. It had been deposited on April 20 with four Mexican checks, bringing the deposit to $114,000; four days later, Bernard Barker withdrew $25,000, and the remaining $89,000 was withdrawn separately. At the time the reporters examined the check, they did not know who Dahlberg was. The check was one concrete trace among the financial records, not by itself a complete explanation of the fund or its later uses.

The reporting also depended on people inside the committee who were frightened or reluctant to speak. During evening visits to campaign workers’ homes, Bernstein encountered employees who trembled, pleaded with him to leave before others saw him, or broke down in tears. The visits had no guaranteed result, but they exposed the pressure under which staff were working and produced fragments about the campaign’s response to the break-in, including secondhand accounts of records being destroyed.

The Bookkeeper, who had worked for Sloan and later for Stans, told Bernstein that people had lied before the grand jury and that Sally Harmony and others had not been candid. She could not specify what had been concealed. Sloan, by contrast, eventually explained why he had left: he suspected the worst. He said that no one had explicitly ordered him not to talk, but the instruction to preserve unity was unmistakable. His lawyers also warned him that public statements could be used against him in a civil suit related to his role as campaign treasurer. Those constraints help explain why the fund’s structure emerged through guarded conversations rather than a single, complete account.

Sloan’s account of Kalmbach and the fund

On the Sunday Woodward pursued the story, Time magazine’s account of the Segretti–Chapin connection had already added details the Post had not established independently. It said Dwight Chapin had hired Segretti, identified Gordon Strachan as another participant in the hiring, and reported that Kalmbach had paid Segretti more than $35,000. A Justice Department attorney hurriedly confirmed to Woodward that Kalmbach had been the paymaster for Segretti’s secret activities. Woodward did not manage to ask the attorney about Strachan, so that part of Time’s account remained unconfirmed by him.

Woodward then called Sloan and questioned him about Kalmbach’s place in the campaign’s finances. Kalmbach had resigned as deputy finance chairman on April 7, when the new campaign-finance disclosure law took effect. Before that resignation, he had been in charge of fundraising for Richard Nixon’s reelection; even afterward, Sloan said, there was little about the financial side of the campaign that Kalmbach did not know. Stans, while still serving as Secretary of Commerce, was also doing political work.

When Woodward proposed that Kalmbach must have been among the five people authorized to approve payments from the cash kept in Stans’s safe, Sloan agreed, then supplied a crucial qualification: Kalmbach had some of the money in California. The location did not mark a separate operation. Sloan said the California money and the Washington cash were all one fund, and that the records showed them together in the same burned books. He identified it as the Special Projects fund. Asked whether it had financed espionage and political sabotage, he said that it had, though he had not understood that at the time.

Sloan’s account clarified the mechanism without answering every question. Earlier, he had described Mitchell authorizing payments by telephone, in calls that began in 1971. At first Mitchell alone had authority to approve expenditures; later the authority passed to others, including Jeb Magruder. Sloan’s description of five people with approval power placed Kalmbach within that system, while leaving the full list of authorizers and the purpose of every disbursement unresolved. He also said Kalmbach had distributed sums far beyond the amount Segretti received, but would not say how much or to whom.

Publication and immediate significance

Woodward called Bernstein, who was away in the Virginia countryside, and laid out Sloan’s account. They agreed that Kalmbach’s control over and distribution of the fund mattered more than the Segretti payments alone, and that it should lead the story. Woodward also incorporated the Time report about Strachan, although he had been unable to confirm that detail. The White House did not provide a comment for the article. The next day, the Post’s front page carried a two-column headline above Kalmbach’s photograph identifying Nixon’s lawyer as someone said to have used the Republican spy fund.

The story appeared amid a broader effort by the White House to cast allegations of campaign espionage as unproved or ordinary political activity. On television, John Ehrlichman denied personal knowledge of a Republican campaign of espionage and sabotage and distinguished criminal bugging from finding out an opponent’s schedule. The contrast sharpened the significance of Sloan’s account: the reported fund was not merely a collection of rumors about political pranks, but a financial structure that a former treasurer connected to espionage and sabotage. The article established an important link; it did not, on its own, prove that every senior official knew the purpose of every payment.

The fund’s continuing shadow

The Kalmbach story also mattered because the secret fund did not disappear with the Watergate arrests. Months later, Woodward and Bernstein recalled that Sloan had told them money was transferred from Stans’s safe to Fred LaRue after the arrests. They had not published that information earlier because they could not confirm it or establish how the money had been spent. Subsequent testimony by James McCord that cash payoffs to the conspirators had come directly from the campaign committee made the earlier questions about the continuing fund newly urgent. That later disclosure connected the committee’s money to hush payments, but it should be distinguished from what Sloan had established for the Kalmbach report: a unified cash fund, its use for political espionage and sabotage, and Kalmbach’s substantial, incompletely disclosed distributions.

The report’s investigative achievement was therefore both substantial and bounded. It joined a named campaign lawyer to the secret fund and traced money across its Washington and California locations, while preserving the gaps in what Sloan would reveal. Rather than treating Segretti as the whole story, it placed his payments within a broader operation whose scale, authorization, and eventual uses would continue to emerge through later testimony and reporting.