Chapter I
THE ACTORS ON THE REVOLUTIONARY STAGE
Dear Mr. President:
I am in sympathy with the Soviet form of government as that best suited
for the Russian people...
Letter to President Woodrow Wilson (October 17, 1918) from William
Lawrence Saunders, chairman, Ingersoll-Rand Corp.; director, American
International Corp.; and deputy chairman, Federal Reserve Bank of New
York
The frontispiece in this book was drawn by cartoonist Robert Minor in
1911 for the St. Louis Post-Dispatch. Minor was a talented artist and
writer who doubled as a Bolshevik revolutionary, got himself arrested in
Russia in 1915 for alleged subversion, and was later bank-rolled by
prominent Wall Street financiers. Minor's cartoon portrays a bearded,
beaming Karl Marx standing in Wall Street with Socialism tucked under
his arm and accepting the congratulations of financial luminaries J.P.
Morgan, Morgan partner George W. Perkins, a smug John D. Rockefeller,
John D. Ryan of National City Bank, and Teddy Roosevelt prominently
identified by his famous teeth in the background. Wall Street is
decorated by Red flags. The cheering crowd and the airborne hats suggest
that Karl Marx must have been a fairly popular sort of fellow in the New
York financial district.
Was Robert Minor dreaming? On the contrary, we shall see that Minor was
on firm ground in depicting an enthusiastic alliance of Wall Street and
Marxist socialism. The characters in Minor's cartoon Karl Marx
(symbolizing the future revolutionaries Lenin and Trotsky), J. P.
Morgan, John D. Rockefeller and indeed Robert Minor himself, are also
prominent characters in this book.
The contradictions suggested by Minor's cartoon have been brushed under
the rug of history because they do not fit the accepted conceptual
spectrum of political left and political right. Bolsheviks are at the
left end of the political spectrum and Wall Street financiers are at the
right end; therefore, we implicitly reason, the two groups have nothing
in common and any alliance between the two is absurd. Factors contrary
to this neat conceptual arrangement are usually rejected as bizarre
observations or unfortunate errors. Modern history possesses such a
built-in duality and certainly if too many uncomfortable facts have been
rejected and brushed under the rug, it is an inaccurate history.
On the other hand, it may be observed that both the extreme right and
the extreme left of the conventional political spectrum are absolutely
collectivist. The national socialist (for example, the fascist) and the
international socialist (for example, the Communist) both recommend
totalitarian politico-economic systems based on naked, unfettered
political power and individual coercion. Both systems require monopoly
control of society. While monopoly control of industries was once the
objective of J. P. Morgan and J. D. Rockefeller, by the late nineteenth
century the inner sanctums of Wall Street understood that the most
efficient way to gain an unchallenged monopoly was to "gopolitical" and
make society go to work for the monopolists under the name of the
public good and the public interest. This strategy was detailed in 1906
by Frederick C. Howe in his Confessions of a Monopolist.1 Howe,
by the way, is also a figure in the story of the Bolshevik Revolution.
Therefore, an alternative conceptual packaging of political ideas and
politico-economic systems would be that of ranking the degree of
individual freedom versus the degree of centralized political control.
Under such an ordering the corporate welfare state and socialism are at
the same end of the spectrum. Hence we see that attempts at monopoly
control of society can have different labels while owning common
features.
Consequently, one barrier to mature understanding of recent history is
the notion that all capitalists are the bitter and unswerving enemies of
all Marxists and socialists. This erroneous idea originated with Karl
Marx and was undoubtedly useful to his purposes. In fact, the idea is
nonsense. There has been a continuing, albeit concealed, alliance
between international political capitalists and international
revolutionary socialists to their mutual benefit. This alliance has
gone unobserved largely because historians with a few notable
exceptions have an unconscious Marxian bias and are thus locked into
the impossibility of any such alliance existing. The open-minded reader
should bear two clues in mind: monopoly capitalists are the bitter
enemies of laissez-faire entrepreneurs; and, given the weaknesses of
socialist central planning, the totalitarian socialist state is a
perfect captive market for monopoly capitalists, if an alliance can be
made with the socialist powerbrokers. Suppose and it is only
hypothesis at this point that American monopoly capitalists were able
to reduce a planned socialist Russia to the status of a captive
technical colony? Would not this be the logical twentieth-century
internationalist extension of the Morgan railroad monopolies and the
Rockefeller petroleum trust of the late nineteenth century?
Apart from Gabriel Kolko, Murray Rothbard, and the revisionists,
historians have not been alert for such a combination of events.
Historical reporting, with rare exceptions, has been forced into a
dichotomy of capitalists versus socialists. George Kennan's monumental
and readable study of the Russian Revolution consistently maintains this
fiction of a Wall Street-Bolshevik dichotomy.2 Russia
Leaves the War has a single incidental reference to the J.P. Morgan firm
and no reference at all to Guaranty Trust Company. Yet both
organizations are prominently mentioned in the State Department files,
to which frequent reference is made in this book, and both are part of
the core of the evidence presented here. Neither self-admitted
"Bolshevik banker" Olof Aschberg nor Nya Banken in Stockholm is
mentioned in Kennan yet both were central to Bolshevik funding.
Moreover, in minor yet crucial circumstances, at least crucial
for our argument, Kennan is factually in error. For example, Kennan
cites Federal Reserve Bank director William Boyce Thompson as leaving
Russia on November 27, 1917. This departure date would make it
physically impossible for Thompson to be in Petrograd on December 2,
1917, to transmit a cable request for $1 million to Morgan in New York.
Thompson in fact left Petrograd on December 4, 1918, two days after
sending the cable to New York. Then again, Kennan states that on
November 30, 1917, Trotsky delivered a speech before the Petrograd
Soviet in which he observed, "Today I had here in the Smolny Institute
two Americans closely connected with American Capitalist elements
"According to Kennan, it "is difficult to imagine" who these two
Americans "could have been, if not Robins and Gumberg." But in [act
Alexander Gumberg was Russian, not American. Further, as Thompson was
still in Russia on November 30, 1917, then the two Americans who visited
Trotsky were more than likely Raymond Robins, a mining promoter turned
do-gooder, and Thompson, of the Federal Reserve Bank of New York.
The Bolshevization of Wall Street was known among well informed circles
as early as 1919. The financial journalist Barron recorded a
conversation with oil magnate E. H. Doheny in 1919 and specifically
named three prominent financiers, William Boyce Thompson, Thomas Lamont
and Charles R. Crane:
Aboard S.S. Aquitania, Friday Evening, February 1, 1919.
Spent the evening with the Dohenys in their suite. Mr. Doheny said: If
you believe in democracy you cannot believe in Socialism. Socialism is
the poison that destroys democracy. Democracy means opportunity for all.
Socialism holds out the hope that a man can quit work and be better off.
Bolshevism is the true fruit of socialism and if you will read the
interesting testimony before the Senate Committee about the middle of
January that showed up all these pacifists and peace-makers as German
sympathizers, Socialists, and Bolsheviks, you will see that a majority
of the college professors in the United States are teaching socialism
and Bolshevism and that fifty-two college professors were on so-called
peace committees in 1914. President Eliot of Harvard is teaching
Bolshevism. The worst Bolshevists in the United States are not only
college professors, of whom President Wilson is one, but capitalists and
the wives of capitalists and neither seem to know what they are talking
about. William Boyce Thompson is teaching Bolshevism and he may yet
convert Lamont of J.P. Morgan & Company. Vanderlip is a Bolshevist, so
is Charles R. Crane. Many women are joining the movement and neither
they, nor their husbands, know what it is, or what it leads to. Henry
Ford is another and so are most of those one hundred historians Wilson
took abroad with him in the foolish idea that history can teach youth
proper demarcations of races, peoples, and nations geographically.3
In brief, this is a story of the Bolshevik Revolution and its aftermath,
but a story that departs from the usual conceptual straitjacket approach
of capitalists versus Communists. Our story postulates a partnership
between international monopoly capitalism and international
revolutionary socialism for their mutual benefit. The final human cost
of this alliance has fallen upon the shoulders of the individual Russian
and the individual American. Entrepreneurship has been brought into
disrepute and the world has been propelled toward inefficient socialist
planning as a result of these monopoly maneuverings in the world of
politics and revolution.
This is also a story reflecting the betrayal of the Russian Revolution.
The tsars and their corrupt political system were ejected only to be
replaced by the new powerbrokers of another corrupt political system.
Where the United States could have exerted its dominant influence to
bring about a free Russia it truckled to the ambitions of a few Wall
Street financiers who, for their own purposes, could accept a
centralized tsarist Russia or a centralized Marxist Russia but not a
decentralized free Russia. And the reasons for these assertions will
unfold as we develop the underlying and, so far, untold history of the
Russian Revolution and its aftermath.4
Footnotes:
1"These are the rules of big business. They have superseded the
teachings of our parents and are reducible to a simple maxim: Get a
monopoly; let Society work for you: and remember that the best of all
business is politics, for a legislative grant, franchise, subsidy or tax
exemption is worth more than a Kimberly or Comstock lode, since it does
not require any labor, either mental or physical, lot its exploitation"
(Chicago: Public Publishing, 1906), p. 157.
2George F. Kennan, Russia Leaves the War (New York: Atheneum, 1967);
and Decision to Intervene.. Soviet-American Relations,
1917-1920(Princeton, N.J.: Princeton University Press, 1958).
3Arthur Pound and Samuel Taylor Moore, They Told Barron (New York:
Harper & Brothers, 1930), pp. 13-14.
4There is a parallel, and also unknown, history with respect to the
Makhanovite movement that fought both the "Whites" and the "Reds" in the
Civil War of 1919-20 (see Voline, The Unknown Revolution [New York:
Libertarian Book Club, 1953]). There was also the "Green" movement,
which fought both Whites and Reds. The author has never seen even one
isolated mention of the Greens in any history of the Bolshevik
Revolution. Yet the Green Army was at least 700,000 strong
Chapter II
TROTSKY LEAVES NEW YORK TO COMPLETE THE REVOLUTION
You will have a revolution, a terrible revolution. What course it takes
will depend much on what Mr. Rockefeller tells Mr. Hague to do. Mr.
Rockefeller is a symbol of the American ruling class and Mr. Hague is a
symbol of its political tools.
Leon Trotsky, in New York Times, December 13, 1938. (Hague was a New
Jersey politician)
In 1916, the year preceding the Russian Revolution, internationalist
Leon Trotsky was expelled from France, officially because of his
participation in the Zimmerwald conference but also no doubt because of
inflammatory articles written for Nashe Slovo, a Russian-language
newspaper printed in Paris. In September 1916 Trotsky was politely
escorted across the Spanish border by French police. A few days later
Madrid police arrested the internationalist and lodged him in a
"first-class cell" at a charge of one-and-one-haft pesetas per day.
Subsequently Trotsky was taken to Cadiz, then to Barcelona finally to be
placed on board the Spanish Transatlantic Company steamerMonserrat. Trotsky
and family crossed the Atlantic Ocean and landed in New York on January
13, 1917.
Other Trotskyites also made their way westward across the Atlantic.
Indeed, one Trotskyite group acquired sufficient immediate influence in
Mexico to write the Constitution of Querιtaro for the revolutionary 1917
Carranza government, giving Mexico the dubious distinction of being the
first government in the world to adopt a Soviet-type constitution.
How did Trotsky, who knew only German and Russian, survive in capitalist
America? According to his autobiography, My Life, "My only profession in
New York was that of a revolutionary socialist." In other words, Trotsky
wrote occasional articles for Novy Mir, the New York Russian socialist
journal. Yet we know that the Trotsky family apartment in New York had a
refrigerator and a telephone, and, according to Trotsky, that the family
occasionally traveled in a chauffeured limousine. This mode of living
puzzled the two young Trotsky boys. When they went into a tearoom, the
boys would anxiously demand of their mother, "Why doesn't the chauffeur
come in?"1 The
stylish living standard is also at odds with Trotsky's reported income.
The only funds that Trotsky admits receiving in 1916 and 1917 are $310,
and, said Trotsky, "I distributed the $310 among five emigrants who were
returning to Russia." Yet Trotsky had paid for a first-class cell in
Spain, the Trotsky family had traveled across Europe to the United
States, they had acquired an excellent apartment in New York paying
rent three months in advance and they had use of a chauffeured
limousine. All this on the earnings of an impoverished revolutionary for
a few articles for the low-circulation Russian-language newspaper Nashe Slovo
in Paris and Novy Mir in New York!
Joseph Nedava estimates Trotsky's 1917 income at $12.00 per week,
"supplemented by some lecture fees."2 Trotsky
was in New York in 1917 for three months, from January to March, so that
makes $144.00 in income from Novy Mir and, say, another $100.00 in
lecture fees, for a total of $244.00. Of this $244.00 Trotsky was able
to give away $310.00 to his friends, pay for the New York apartment,
provide for his family and find the $10,000 that was taken from him in
April 1917 by Canadian authorities in Halifax. Trotsky claims that those
who said he had other sources of income are "slanderers" spreading
"stupid calumnies" and "lies," but unless Trotsky was playing the horses
at the Jamaica racetrack, it can't be done. Obviously Trotsky had an
unreported source of income.
What was that source? In The Road to Safety, author Arthur Willert says
Trotsky earned a living by working as an electrician for Fox Film
Studios. Other writers have cited other occupations, but there is no
evidence that Trotsky occupied himself for remuneration otherwise than
by writing and speaking.
Most investigation has centered on the verifiable fact that when Trotsky
left New York in 1917 for Petrograd, to organize the Bolshevik phase of
the revolution, he left with $10,000. In 1919 the U.S. Senate Overman
Committee investigated Bolshevik propaganda and German money in the
United States and incidentally touched on the source of Trotsky's
$10,000. Examination of Colonel Hurban, Washington attachι to the Czech
legation, by the Overman Committee yielded the following:
COL. HURBAN: Trotsky, perhaps, took money from Germany, but Trotsky will
deny it. Lenin would not deny it. Miliukov proved that he got $10,000
from some Germans while he was in America. Miliukov had the proof, but
he denied it. Trotsky did, although Miliukov had the proof.
SENATOR OVERMAN: It was charged that Trotsky got $10,000 here.
COL. HURBAN: I do not remember how much it was, but I know it was a
question between him and Miliukov.
SENATOR OVERMAN: Miliukov proved it, did he?
COL. HURBAN: Yes, sir.
SENATOR OVERMAN: Do you know where he got it from?
COL. HURBAN: I remember it was $10,000; but it is no matter. I will
speak about their propaganda. The German Government knew Russia better
than anybody, and they knew that with the help of those people they
could destroy the Russian army.
(At 5:45 o'clock p.m. the subcommittee adjourned until tomorrow,
Wednesday, February 19, at 10:30 o'clock a.m.)3
It is quite remarkable that the committee adjourned abruptly before
the source of Trotsky's funds could be placed into the Senate record.
When questioning resumed the next day, Trotsky and his $10,000 were no
longer of interest to the Overman Committee. We shall later develop
evidence concerning the financing of German and revolutionary activities
in the United States by New York financial houses; the origins of
Trotsky's $10,000 will then come into focus.
An amount of $10,000 of German origin is also mentioned in the official
British telegram to Canadian naval authorities in Halifax, who requested
that Trotsky and party en route to the revolution be taken off the S.S. Kristianiafjord (see
page 28). We also learn from a British Directorate of Intelligence
report4 that
Gregory Weinstein, who in 1919 was to become a prominent member of the
Soviet Bureau in New York, collected funds for Trotsky in New York.
These funds originated in Germany and were channeled through the
Volks-zeitung, a German daily newspaper in New York and subsidized by
the German government.
While Trotsky's funds are officially reported as German, Trotsky was
actively engaged in American politics immediately prior to leaving New
York for Russia and the revolution. On March 5, 1917, American
newspapers headlined the increasing possibility of war with Germany; the
same evening Trotsky proposed a resolution at the meeting of the New
York County Socialist Party "pledging Socialists to encourage strikes
and resist recruiting in the event of war with Germany."5 Leon
Trotsky was called by the New York Times "an exiled Russian
revolutionist." Louis C. Fraina, who cosponsored the Trotsky resolution,
later under an alias wrote an uncritical book on the Morgan
financial empire entitled House of Morgan.6 The
Trotsky-Fraina proposal was opposed by the Morris Hillquit faction, and
the Socialist Party subsequently voted opposition to the resolution.7
More than a week later, on March 16, at the time of the deposition of
the tsar, Leon Trotsky was interviewed in the offices of Novy Mir.. The
interview contained a prophetic statement on the Russian revolution:
"... the committee which has taken the place of the deposed Ministry in
Russia did not represent the interests or the aims of the
revolutionists, that it would probably be shortlived and step down in
favor of men who would be more sure to carry forward the democratization
of Russia."8
The "men who would be more sure to carry forward the democratization of
Russia," that is, the Mensheviks and the Bolsheviks, were then in exile
abroad and needed first to return to Russia. The temporary "committee"
was therefore dubbed the Provisional Government, a title, it should be
noted, that was used from the start of the revolution in March and not
applied ex post facto by historians.
WOODROW WILSON AND A PASSPORT FOR TROTSKY
President Woodrow Wilson was the fairy godmother who provided Trotsky
with a passport to return to Russia to "carry forward" the revolution.
This American passport was accompanied by a Russian entry permit and a
British transit visa. Jennings C. Wise, in Woodrow Wilson: Disciple of
Revolution, makes the pertinent comment, "Historians must never forget
that Woodrow Wilson, despite the efforts of the British police, made it
possible for Leon Trotsky to enter Russia with an American passport."
President Wilson facilitated Trotsky's passage to Russia at the same
time careful State Department bureaucrats, concerned about such
revolutionaries entering Russia, were unilaterally attempting to tighten
up passport procedures. The Stockholm legation cabled the State
Department on June 13, 1917, just after Trotsky crossed the
Finnish-Russian border, "Legation confidentially informed Russian,
English and French passport offices at Russian frontier, Tornea,
considerably worried by passage of suspicious persons bearing American
passports."9
To this cable the State Department replied, on the same day, "Department
is exercising special care in issuance of passports for Russia"; the
department also authorized expenditures by the legation to establish a
passport-control office in Stockholm and to hire an "absolutely
dependable American citizen" for employment on control work.10But
the bird had flown the coop. Menshevik Trotsky with Lenin's Bolsheviks
were already in Russia preparing to "carry forward" the revolution. The
passport net erected caught only more legitimate birds. For example, on
June 26, 1917, Herman Bernstein, a reputable New York newspaperman on
his way to Petrograd to represent the New York Herald, was held at the
border and refused entry to Russia. Somewhat tardily, in mid-August 1917
the Russian embassy in Washington requested the State Department (and
State agreed) to "prevent the entry into Russia of criminals and
anarchists... numbers of whom have already gone to Russia."11
Consequently, by virtue of preferential treatment for Trotsky, when the
S.S. Kristianiafjord left New York on March 26, 1917, Trotsky was aboard
and holding a U.S. passport and in company with other Trotskyire
revolutionaries, Wall Street financiers, American Communists, and other
interesting persons, few of whom had embarked for legitimate business.
This mixed bag of passengers has been described by Lincoln Steffens, the
American Communist:
The passenger list was long and mysterious. Trotsky was in the steerage
with a group of revolutionaries; there was a Japanese revolutionist in
my cabin. There were a lot of Dutch hurrying home from Java, the only
innocent people aboard. The rest were war messengers, two from Wall
Street to Germany....12
Notably, Lincoln Steffens was on board en route to Russia at the
specific invitation of Charles Richard Crane, a backer and a former
chairman of the Democratic Party's finance committee. Charles Crane,
vice president of the Crane Company, had organized the Westinghouse
Company in Russia, was a member of the Root mission to Russia, and had
made no fewer than twenty-three visits to Russia between 1890 and 1930.
Richard Crane, his son, was confidential assistant to then Secretary of
State Robert Lansing. According to the former ambassador to Germany
William Dodd, Crane "did much to bring on the Kerensky revolution which
gave way to Communism."13 And
so Steffens' comments in his diary about conversations aboard the S.S. Kristianiafjord are
highly pertinent:" . . . all agree that the revolution is in its first
phase only, that it must grow. Crane and Russian radicals on the ship
think we shall be in Petrograd for the re-revolution.14
Crane returned to the United States when the Bolshevik Revolution (that
is, "the re-revolution") had been completed and, although a private
citizen, was given firsthand reports of the progress of the Bolshevik
Revolution as cables were received at the State Department. For example,
one memorandum, dated December 11, 1917, is entitled "Copy of report on
Maximalist uprising for Mr Crane." It originated with Maddin Summers,
U.S. consul general in Moscow, and the covering letter from Summers
reads in part:
I have the honor to enclose herewith a copy of same [above report] with
the request that it be sent for the confidential information of Mr.
Charles R. Crane. It is assumed that the Department will have no
objection to Mr. Crane seeing the report ....15
In brief, the unlikely and puzzling picture that emerges is that Charles
Crane, a friend and backer of Woodrow Wilson and a prominent financier
and politician, had a known role in the "first" revolution and traveled
to Russia in mid-1917 in company with the American Communist Lincoln
Steffens, who was in touch with both Woodrow Wilson and Trotsky. The
latter in turn was carrying a passport issued at the orders of Wilson
and $10,000 from supposed German sources. On his return to the U.S.
after the "re-revolution," Crane was granted access to official
documents concerning consolidation of the Bolshevik regime: This is a
pattern of interlocking if puzzling events that warrants further
investigation and suggests, though without at this point providing
evidence, some link between the financier Crane and the revolutionary
Trotsky.
CANADIAN GOVERNMENT DOCUMENTS ON TROTSKY'S RELEASE16
Documents on Trotsky's brief stay in Canadian custody are now
de-classified and available from the Canadian government archives.
According to these archives, Trotsky was removed by Canadian and British
naval personnel from the S.S. Kristianiafjord at Halifax, Nova Scotia,
on April 3, 1917, listed as a German prisoner of war, and interned at
the Amherst, Nova Scotia, internment station for German prisoners. Mrs.
Trotsky, the two Trotsky boys, and five other men described as "Russian
Socialists" were also taken off and interned. Their names are recorded
by the Canadian files as: Nickita Muchin, Leiba Fisheleff, Konstantin
Romanchanco, Gregor Teheodnovski, Gerchon Melintchansky and Leon
Bronstein Trotsky (all spellings from original Canadian documents).
Canadian Army form LB-l, under serial number 1098 (including thumb
prints), was completed for Trotsky, with a description as follows:
"37 years old, a political exile, occupation journalist, born in
Gromskty, Chuson, Russia, Russian citizen." The form was signed by Leon
Trotsky and his full name given as Leon Bromstein (sic) Trotsky.
The Trotsky party was removed from the S.S. Kristianiafjord under
official instructions received by cablegram of March 29, 1917, London,
presumably originating in the Admiralty with the naval control officer,
Halifax. The cablegram reported that the Trotsky party was on the "Christianiafjord"
(sic) and should be "taken off and retained pending instructions." The
reason given to the naval control officer at Halifax was that "these are
Russian Socialists leaving for purposes of starting revolution against
present Russian government for which Trotsky is reported to have 10,000
dollars subscribed by Socialists and Germans."
On April 1, 1917, the naval control officer, Captain O. M. Makins, sent
a confidential memorandum to the general officer commanding at Halifax,
to the effect that he had "examined all Russian passengers" aboard the
S.S. Kristianiafjord and found six men in the second-class section:
"They are all avowed Socialists, and though professing a desire to help
the new Russian Govt., might well be in league with German Socialists in
America, and quite likely to be a great hindrance to the Govt. in Russia
just at present." Captain Makins added that he was going to remove the
group, as well as Trotsky's wife and two sons, in order to intern them
at Halifax. A copy of this report was forwarded from Halifax to the
chief of the General Staff in Ottawa on April 2, 1917.
The next document in the Canadian files is dated April 7, from the chief
of the General Staff, Ottawa, to the director of internment operations,
and acknowledges a previous letter (not in the files) about the
internment of Russian socialists at Amherst, Nova Scotia: ". . . in this
connection, have to inform you of the receipt of a long telegram
yesterday from the Russian Consul General, MONTREAL, protesting against
the arrest of these men as they were in possession of passports issued
by the Russian Consul General, NEW YORK, U.S.A."
The reply to this Montreal telegram was to the effect that the men were
interned "on suspicion of being German," and would be released only upon
definite proof of their nationality and loyalty to the Allies. No
telegrams from the Russian consul general in New York are in the
Canadian files, and it is known that this office was reluctant to issue
Russian passports to Russian political exiles. However, there is a
telegram in the files from a New York attorney, N. Aleinikoff, to R. M.
Coulter, then deputy postmaster general of Canada. The postmaster
general's office in Canada had no connection with either internment of
prisoners of war or military activities. Accordingly, this telegram was
in the nature of a personal, nonofficial intervention. It reads:
DR. R. M. COULTER, Postmaster Genl. OTTAWA Russian political exiles
returning to Russia detained Halifax interned Amherst camp. Kindly
investigate and advise cause of the detention and names of all detained.
Trust as champion of freedom you will intercede on their behalf. Please
wire collect. NICHOLAS ALEINIKOFF
On April 11, Coulter wired Aleinikoff, "Telegram received. Writing you
this afternoon. You should receive it tomorrow evening. R. M. Coulter."
This telegram was sent by the Canadian Pacific Railway Telegraph but
charged to the Canadian Post Office Department. Normally a private
business telegram would be charged to the recipient and this was not
official business. The follow-up Coulter letter to Aleinikoff is
interesting because, after confirming that the Trotsky party was held at
Amherst, it states that they were suspected of propaganda against the
present Russian government and "are supposed to be agents of Germany."
Coulter then adds," . . . they are not what they represent themselves to
be"; the Trotsky group is "...not detained by Canada, but by the
Imperial authorities." After assuring Aleinikoff that the detainees
would be made comfortable, Coulter adds that any information "in their
favour" would be transmitted to the military authorities. The general
impression of the letter is that while Coulter is sympathetic and fully
aware of Trotsky's pro-German links, he is unwilling to get involved. On
April 11 Arthur Wolf of 134 East Broadway, New York, sent a telegram to
Coulter. Though sent from New York, this telegram, after being
acknowledged, was also charged to the Canadian Post Office Department.
Coulter's reactions, however, reflect more than the detached sympathy
evident in his letter to Aleinikoff. They must be considered in the
light of the fact that these letters in behalf of Trotsky came from two
American residents of New York City and involved a Canadian or Imperial
military matter of international importance. Further, Coulter, as deputy
postmaster general, was a Canadian government official of some standing.
Ponder, for a moment, what would happen to someone who similarly
intervened in United States affairs! In the Trotsky affair we have two
American residents corresponding with a Canadian deputy postmaster
general in order to intervene in behalf of an interned Russian
revolutionary.
Coulter's subsequent action also suggests something more than casual
intervention. After Coulter acknowledged the Aleinikoff and Wolf
telegrams, he wrote to Major General Willoughby Gwatkin of the
Department of Militia and Defense in Ottawa a man of significant
influence in the Canadian military and attached copies of the
Aleinikoff and Wolf telegrams:
These men have been hostile to Russia because of the way the Jews have
been treated, and are now strongly in favor of the present
Administration, so far as I know. Both are responsible men. Both are
reputable men, and I am sending their telegrams to you for what they may
be worth, and so that you may represent them to the English authorities
if you deem it wise.
Obviously Coulter knows or intimates that he knows a great deal
about Aleinikoff and Wolf. His letter was in effect a character
reference, and aimed at the root of the internment problem London.
Gwatkin was well known in London, and in fact was on loan to Canada from
the War Office in London.17
Aleinikoff then sent a letter to Coulter to thank him
most heartily for the interest you have taken in the fate of the Russian
Political Exiles .... You know me, esteemed Dr. Coulter, and you also
know my devotion to the cause of Russian freedom .... Happily I know Mr.
Trotsky, Mr. Melnichahnsky, and Mr. Chudnowsky . . . intimately.
It might be noted as an aside that if Aleinikoff knew Trotsky
"intimately," then he would also probably be aware that Trotsky had
declared his intention to return to Russia to overthrow the Provisional
Government and institute the "re-revolution." On receipt of Aleinikoff's
letter, Coulter immediately (April 16) forwarded it to Major General
Gwatkin, adding that he became acquainted with Aleinikoff "in connection
with Departmental action on United States papers in the Russian
language" and that Aleinikoff was working "on the same lines as Mr. Wolf
. . . who was an escaped prisoner from Siberia."
Previously, on April 14, Gwatkin sent a memorandum to his naval
counterpart on the Canadian Military Interdepartmental Committee
repeating that the internees were Russian socialists
with "10,000 dollars subscribed by socialists and Germans." The
concluding paragraph stated: "On the other hand there are those who
declare that an act of high-handed injustice has been done." Then on
April 16, Vice Admiral C. E. Kingsmill, director of the Naval Service,
took Gwatkin's intervention at face value. In a letter to Captain Makins,
the naval control officer at Halifax, he stated, "The Militia
authorities request that a decision as to their (that is, the six
Russians) disposal may be hastened." A copy of this instruction was
relayed to Gwatkin who in turn informed Deputy Postmaster General
Coulter. Three days later Gwatkin applied pressure. In a memorandum of
April 20 to the naval secretary, he wrote, "Can you say, please, whether
or not the Naval Control Office has given a decision?"
On the same day (April 20) Captain Makins wrote Admiral Kingsmill
explaining his reasons for removing Trotsky; he refused to be pressured
into making a decision, stating, "I will cable to the Admiralty
informing them that the Militia authorities are requesting an early
decision as to their disposal." However, the next day, April 21, Gwatkin
wrote Coulter: "Our friends the Russian socialists are to be released;
and arrangements are being made for their passage to Europe." The order
to Makins for Trotsky's release originated in the Admiralty, London.
Coulter acknowledged the information, "which will please our New York
correspondents immensely."
While we can, on the one hand, conclude that Coulter and Gwatkin were
intensely interested in the release of Trotsky, we do not, on the other
hand, know why. There was little in the career of either Deputy
Postmaster General Coulter or Major General Gwatkin that would explain
an urge to release the Menshevik Leon Trotsky.
Dr. Robert Miller Coulter was a medical doctor of Scottish and Irish
parents, a liberal, a Freemason, and an Odd Fellow. He was appointed
deputy postmaster general of Canada in 1897. His sole claim to fame
derived from being a delegate to the Universal Postal Union Convention
in 1906 and a delegate to New Zealand and Australia in 1908 for the "All
Red" project. All Red had nothing to do with Red revolutionaries; it was
only a plan for all-red or all-British fast steamships between Great
Britain, Canada, and Australia.
Major General Willoughby Gwatkin stemmed from a long British military
tradition (Cambridge and then Staff College). A specialist in
mobilization, he served in Canada from 1905 to 1918. Given only the
documents in the Canadian files, we can but conclude that their
intervention in behalf of Trotsky is a mystery.
CANADIAN MILITARY INTELLIGENCE VIEWS TROTSKY
We can approach the Trotsky release case from another angle: Canadian
intelligence. Lieutenant Colonel John Bayne MacLean, a prominent
Canadian publisher and businessman, founder and president of MacLean
Publishing Company, Toronto, operated numerous Canadian trade journals,
including the Financial Post. MacLean also had a long-time association
with Canadian Army Intelligence.18
In 1918 Colonel MacLean wrote for his own MacLean's magazine an article
entitled "Why Did We Let Trotsky Go? How Canada Lost an Opportunity to
Shorten the War."19 The
article contained detailed and unusual information about Leon Trotsky,
although the last half of the piece wanders off into space remarking
about barely related matters. We have two clues to the authenticity of
the information. First, Colonel MacLean was a man of integrity with
excellent connections in Canadian government intelligence. Second,
government records since released by Canada, Great Britain, and the
United States confirm MacLean's statement to a significant degree. Some
MacLean statements remain to be confirmed, but information available in
the early 1970s is not necessarily inconsistent with Colonel MacLean's
article.
MacLean's opening argument is that "some Canadian politicians or
officials were chiefly responsible for the prolongation of the war
[World War I], for the great loss of life, the wounds and sufferings of
the winter of 1917 and the great drives of 1918."
Further, states MacLean, these persons were (in 1919)doing everything
possible to prevent Parliament and the Canadian people from getting the
related facts. Official reports, including those of Sir Douglas Haig,
demonstrate that but for the Russian break in 1917 the war would have
been over a year earlier, and that "the man chiefly responsible for the
defection of Russia was Trotsky... acting under German instructions."
Who was Trotsky? According to MacLean, Trotsky was not Russian, but
German. Odd as this assertion may appear it does coincide with other
scraps of intelligence information: to wit, that Trotsky spoke better
German than Russian, and that he was the Russian executive of the German
"Black Bond." According to MacLean, Trotsky in August 1914 had been
"ostentatiously" expelled from Berlin;20 he
finally arrived in the United States where he organized Russian
revolutionaries, as well as revolutionaries in Western Canada, who "were
largely Germans and Austrians traveling as Russians." MacLean continues:
Originally the British found through Russian associates that Kerensky,21 Lenin
and some lesser leaders were practically in German pay as early as 1915
and they uncovered in 1916 the connections with Trotsky then living in
New York. From that time he was closely watched by... the Bomb Squad. In
the early part of 1916 a German official sailed for New York. British
Intelligence officials accompanied him. He was held up at Halifax; but
on their instruction he was passed on with profuse apologies for the
necessary delay. After much manoeuvering he arrived in a dirty little
newspaper office in the slums and there found Trotsky, to whom he bore
important instructions. From June 1916, until they passed him on [to]
the British, the N.Y. Bomb Squad never lost touch with Trotsky. They
discovered that his real name was Braunstein and that he was a German,
not a Russian.22
Such German activity in neutral countries is confirmed in a State
Department report (316-9-764-9) describing organization of Russian
refugees for revolutionary purposes.
Continuing, MacLean states that Trotsky and four associates sailed on
the "S.S. Christiania" (sic), and on April 3 reported to "Captain
Making" (sic) and were taken off the ship at Halifax under the direction
of Lieutenant Jones. (Actually a party of nine, including six men, were
taken off the S.S. Kristianiafjord. The name of the naval control
officer at Halifax was Captain O. M. Makins, R.N. The name of the
officer who removed the Trotsky party from the ship is not in the
Canadian government documents; Trotsky said it was "Machen.") Again,
according to MacLean, Trotsky's money came "from German sources in New
York." Also:
generally the explanation given is that the release was done at the
request of Kerensky but months before this British officers and one
Canadian serving in Russia, who could speak the Russian language,
reported to London and Washington that Kerensky was in German service.23
Trotsky was released "at the request of the British Embassy at
Washington . . . [which] acted on the request of the U.S. State
Department, who were acting for someone else." Canadian officials "were
instructed to inform the press that Trotsky was an American citizen
travelling on an American passport; that his release was specially
demanded by the Washington State Department." Moreover, writes MacLean,
in Ottawa "Trotsky had, and continues to have, strong underground
influence. There his power was so great that orders were issued that he
must be given every consideration."
The theme of MacLean's reporting is, quite evidently, that Trotsky had
intimate relations with, and probably worked for, the German General
Staff. While such relations have been established regarding Lenin to
the extent that Lenin was subsidized and his return to Russia
facilitated by the Germans it appears certain that Trotsky was
similarly aided. The $10,000 Trotsky fund in New York was from German
sources, and a recently declassified document in the U.S. State
Department files reads as follows:
March 9, 1918 to: American Consul, Vladivostok from Polk, Acting
Secretary of State, Washington D.C.
For your confidential information and prompt attention: Following is
substance of message of January twelfth from Von Schanz of German
Imperial Bank to Trotsky, quote Consent imperial bank to appropriation
from credit general staff of five million roubles for sending assistant
chief naval commissioner Kudrisheff to Far East.
This message suggests some liaison between Trotsky and the Germans in
January 1918, a time when Trotsky was proposing an alliance with the
West. The State Department does not give the provenance of the telegram,
only that it originated with the War College Staff. The State Department
did treat the message as authentic and acted on the basis of assumed
authenticity. It is consistent with the general theme of Colonel
MacLean's article.
TROTSKY'S INTENTIONS AND OBJECTIVES
Consequently, we can derive the following sequence of events: Trotsky
traveled from New York to Petrograd on a passport supplied by the
intervention of Woodrow Wilson, and with the declared intention to
"carry forward" the revolution. The British government was the immediate
source of Trotsky's release from Canadian custody in April 1917, but
there may well have been "pressures." Lincoln Steffens, an American
Communist, acted as a link between Wilson and Charles R. Crane and
between Crane and Trotsky. Further, while Crane had no official
position, his son Richard was confidential assistant to Secretary of
State Robert Lansing, and Crane senior was provided with prompt and
detailed reports on the progress of the Bolshevik Revolution. Moreover,
Ambassador William Dodd (U.S. ambassador to Germany in the Hitler era)
said that Crane had an active role in the Kerensky phase of the
revolution; the Steffens letters confirm that Crane saw the Kerensky
phase as only one step in a continuing revolution.
The interesting point, however, is not so much the communication among
dissimilar persons like Crane, Steffens, Trotsky, and Woodrow Wilson as
the existence of at least a measure of agreement on the procedure to be
followed that is, the Provisional Government was seen as
"provisional," and the "re-revolution" was to follow.
On the other side of the coin, interpretation of Trotsky's intentions
should be cautious: he was adept at double games. Official documentation
clearly demonstrates contradictory actions. For example, the Division of
Far Eastern Affairs in the U.S. State Department received on March 23,
1918, two reports stemming from Trotsky; one is inconsistent with the
other. One report, dated March 20 and from Moscow, originated in the
Russian newspaper Russkoe Slovo. The report cited an interview with
Trotsky in which he stated that any alliance with the United States was
impossible:
The Russia of the Soviet cannot align itself... with capitalistic
America for this would be a betrayal It is possible that Americans seek
such an rapprochement with us, driven by its antagonism towards Japan,
but in any case there can be no question of an alliance by us of any
nature with a bourgeoisie nation.24
The other report, also originating in Moscow, is a message dated March
17, 1918, three days earlier, and from Ambassador Francis: "Trotsky
requests five American officers as inspectors of army being organized
for defense also requests railroad operating men and equipment."25
This request to the U.S. is of course inconsistent with rejection of an
"alliance."
Before we leave Trotsky some mention should be made of the Stalinist
show trials of the 1930s and, in particular, the 1938 accusations and
trial of the "Anti-Soviet bloc of rightists and Trotskyites." These
forced parodies of the judicial process, almost unanimously rejected in
the West, may throw light on Trotsky's intentions.
The crux of the Stalinist accusation was that Trotskyites were paid
agents of international capitalism. K. G. Rakovsky, one of the 1938
defendants, said, or was induced to say, "We were the vanguard of
foreign aggression, of international fascism, and not only in the USSR
but also in Spain, China, throughout the world." The summation of the
"court" contains the statement, "There is not a single man in the world
who brought so much sorrow and misfortune to people as Trotsky. He is
the vilest agent of fascism .... "26
Now while this may be no more than verbal insults routinely traded among
the international Communists of the 1930s and 40s, it is also notable
that the threads behind the self-accusation are consistent with the
evidence in this chapter. And further, as we shall see later, Trotsky
was able to generate support among international capitalists, who,
incidentally, were also supporters of Mussolini and Hitler.27
So long as we see all international revolutionaries and all
international capitalists as implacable enemies of one another, then we
miss a crucial point that there has indeed been some operational
cooperation between international capitalists, including fascists. And
there is no a priori reason why we should reject Trotsky as a part of
this alliance.
This tentative, limited reassessment will be brought into sharp focus
when we review the story o£ Michael Gruzenberg, the chief Bolshevik
agent in Scandinavia who under the alias of Alexander Gumberg was also a
confidential adviser to the Chase National Bank in New York and later to
Floyd Odium of Atlas Corporation. This dual role was known to and
accepted by both the Soviets and his American employers. The Gruzenberg
story is a case history of international revolution allied with
international capitalism.
Colonel MacLean's observations that Trotsky had "strong underground
influence" and that his "power was so great that orders were issued that
he must be given every consideration" are not at all inconsistent with
the Coulter-Gwatkin intervention in Trotsky's behalf; or, for that
matter, with those later occurrences, the Stalinist accusations in the
Trotskyite show trials of the 1930s. Nor are they inconsistent with the
Gruzenberg case. On the other hand, the only known direct link between
Trotsky and international banking is through his cousin Abram Givatovzo,
who was a private banker in Kiev before the Russian Revolution and in
Stockholm after the revolution. While Givatovzo professed antibolshevism,
he was in fact acting in behalf of the Soviets in 1918 in currency
transactions.28
Is it possible an international web (:an be spun from these events?
First there's Trotsky, a Russian internationalist revolutionary with
German connections who sparks assistance from two supposed supporters of
Prince Lvov's government in Russia (Aleinikoff and Wolf, Russians
resident in New York). These two ignite the action of a liberal Canadian
deputy postmaster general, who in turn intercedes with a prominent
British Army major general on the Canadian military staff. These are all
verifiable links.
In brief, allegiances may not always be what they are called, or appear.
We can, however, surmise that Trotsky, Aleinikoff, Wolf, Coulter, and
Gwatkin in acting for a common limited objective also had some common
higher goal than national allegiance or political label. To emphasize,
there is no absolute proof that this is so. It is, at the moment, only a
logical supposition from the facts. A loyalty higher than that forged by
a common immediate goal need have been no more than that of friendship,
although that strains the imagination when we ponder such a polyglot
combination. It may also have been promoted by other motives. The
picture is yet incomplete.
Footnotes:
1Leon Trotsky, My Life (New York: Scribner's, 1930), chap. 22.
2Joseph Nedava, Trotsky and the Jews (Philadelphia: Jewish Publication
Society of America, 1972), p. 163.
3United States, Senate, Brewing and Liquor Interests and German and
Bolshevik Propaganda (Subcommittee on the Judiciary), 65th Cong., 1919.
4Special Report No. 5, The Russian Soviet Bureau in the United
States, July 14, 1919, Scotland House, London S.W.I. Copy in U.S. State
Dept. Decimal File, 316-23-1145.
5New York Times, March 5, 1917.
6Lewis Corey, House of Morgan: A Social Biography of the Masters of
Money (New York: G. W. Watt, 1930).
7Morris Hillquit. (formerly Hillkowitz) had been defense attorney for
Johann Most, alter the assassination of President McKinley, and in 1917
was a leader of the New York Socialist Party. In the 1920s Hillquit
established himself in the New York banking world by becoming a director
of, and attorney for, the International Union Bank. Under President
Franklin D. Roosevelt, Hillquit helped draw up the NRA codes for the
garment industry.
8New York Times, March 16, 1917.
9U.S. State Dept. Decimal File, 316-85-1002.
10Ibid.
11Ibid., 861.111/315.
12Lincoln Steffens, Autobiography (New York: Harcourt, Brace, 1931), p.
764. Steffens was the "go-between" for Crane and Woodrow Wilson.
13William Edward Dodd, Ambassador Dodd's Diary, 1933-1938 (New York:
Harcourt, Brace, 1941), pp. 42-43.
14Lincoln Steffens, The Letters of Lincoln Steffens (New York: Harcourt,
Brace, 1941), p. 396.
15U.S. State Dept. Decimal File, 861.00/1026.
16This section is based on Canadian government records.
17Gwatkin's memoramada in the Canadian government files are not signed,
but initialed with a cryptic mark or symbol. The mark has been
identified as Gwatkin's because one Gwatkin letter (that o[ April 21)
with that cryptic mark was acknowledged.
18H.J. Morgan, Canadian Men and Women of the Times, 1912, 2 vols.
(Toronto: W. Briggs, 1898-1912).
19June 1919, pp. 66a-666. Toronto Public Library has a copy; the issue
of MacLean's in which Colonel MacLean's article appeared is not easy to
find and a frill summary is provided below.
20See also Trotsky, My Life, p. 236.
21See
Appendix 3.
22According to his own account, Trotsky did not arrive in the U.S. until
January 1917. Trotsky's real name was Bronstein; he invented the name
"Trotsky." "Bronstein" is German and "Trotsky" is Polish rather than
Russian. His first name is usually given as "Leon"; however, Trotsky's
first book, which was published in Geneva, has the initial "N," not "L."
23See
Appendix 3; this document was obtained in 1971 from the British
Foreign Office but apparently was known to MacLean.
24U.S. State Dept. Decimal File, 861.00/1351.
25U.S. State Dept. Decimal File, 861.00/1341.
26Report of Court Proceedings in the Case of the Anti-Soviet "Bloc of
Rightists and Trotskyites" Heard Before the Military Collegium of the
Supreme Court of the USSR (Moscow: People's Commissariat of Justice of
the USSR, 1938), p. 293.
27See p. 174. Thomas Lamont of the Morgans was an early supporter of
Mussolini.
28See p. 122
Chapter III
LENIN AND GERMAN ASSISTANCE FOR THE BOLSHEVIK REVOLUTION
It was not until the Bolsheviks had received from us a steady flow of
funds through various channels and under varying labels that they were
in a position to be able to build up their main organ Pravda, to conduct
energetic propaganda and appreciably to extend the originally
narrow base of their party.
Von Kόhlmann, minister of foreign affairs, to the kaiser, December 3,
1917
In April 1917 Lenin and a party of 32 Russian revolutionaries, mostly
Bolsheviks, journeyed by train from Switzerland across Germany through
Sweden to Petrograd, Russia. They were on their way to join Leon Trotsky
to "complete the revolution." Their trans-Germany transit was approved,
facilitated, and financed by the German General Staff. Lenin's transit
to Russia was part of a plan approved by the German Supreme Command,
apparently not immediately known to the kaiser, to aid in the
disintegration of the Russian army and so eliminate Russia from World
War I. The possibility that the Bolsheviks might be turned against
Germany and Europe did not occur to the German General Staff. Major
General Hoffman has written, "We neither knew nor foresaw the danger to
humanity from the consequences of this journey of the Bolsheviks to
Russia."1
At the highest level the German political officer who approved Lenin's
journey to Russia was Chancellor Theobald von Bethmann-Hollweg, a
descendant of the Frankfurt banking family Bethmann, which achieved
great prosperity in the nineteenth century. Bethmann-Hollweg was
appointed chancellor in 1909 and in November 1913 became the subject of
the first vote of censure ever passed by the German Reichstag on a
chancellor. It was Bethmann-Hollweg who in 1914 told the world that the
German guarantee to Belgium was a mere "scrap of paper." Yet on other
war matters such as the use of unrestricted submarine warfare
Bethmann-Hollweg was ambivalent; in January 1917 he told the kaiser, "I
can give Your Majesty neither my assent to the unrestricted submarine
warfare nor my refusal." By 1917 Bethmann-Hollweg had lost the
Reichstag's support and resigned but not before approving transit of
Bolshevik revolutionaries to Russia. The transit instructions from
Bethmann-Hollweg went through the state secretary Arthur Zimmermann
who was immediately under Bethmann-Hollweg and who handled day-to-day
operational details with the German ministers in both Bern and
Copenhagen to the German minister to Bern in early April 1917. The
kaiser himself was not aware of the revolutionary movement until after
Lenin had passed into Russia.
While Lenin himself did not know the precise source of the assistance,
he certainly knew that the German government was providing some funding.
There were, however, intermediate links between the German foreign
ministry and Lenin, as the following shows:
LENIN'S TRANSFER TO RUSSIA IN APRIL 1917
Final decision BETHMANN-HOLLWEG
(Chancellor)
Intermediary I ARTHUR ZIMMERMANN
(State Secretary)
Intermediary II BROCKDORFF-RANTZAU
(German Minister in Copenhagen)
Intermediary III ALEXANDER ISRAEL HELPHAND
(alias PARVUS)
Intermediary IV JACOB FURSTENBERG (alias GANETSKY)
LENIN, in Switzerland
From Berlin Zimmermann and Bethmann-Hollweg communicated with the German
minister in Copenhagen, Brockdorff-Rantzau. In turn, Brockdorff-Rantzau
was in touch with Alexander Israel Helphand (more commonly known by his
alias, Parvus), who was located in Copenhagen.2 Parvus
was the connection to Jacob Furstenberg, a Pole descended from a wealthy
family but better known by his alias, Ganetsky. And Jacob Furstenberg
was the immediate link to Lenin.
Although Chancellor Bethmann-Hollweg was the final authority for Lenin's
transfer, and although Lenin was probably aware of the German origins of
the assistance, Lenin cannot be termed a German agent. The German
Foreign Ministry assessed Lenin's probable actions in Russia as being
consistent with their own objectives in the dissolution of the existing
power structure in Russia. Yet both parties also had hidden objectives:
Germany wanted priority access to the postwar markets in Russia, and
Lenin intended to establish a Marxist dictatorship.
The idea of using Russian revolutionaries in this way can be traced back
to 1915. On August 14 of that year, Brockdorff-Rantzau wrote the German
state undersecretary about a conversation with Helphand (Parvus), and
made a strong recommendation to employ Helphand, "an extraordinarily
important man whose unusual powers I feel wemust employ for duration of
the war .... "3 Included
in the report was a warning: "It might perhaps be risky to want to use
the powers ranged behind Helphand, but it would certainly be an
admission of our own weakness if we were to refuse their services out of
fear of not being able to direct them."4
Brockdorff-Rantzau's ideas of directing or controlling the
revolutionaries parallel, as we shall see, those of the Wall Street
financiers. It was J.P. Morgan and the American International
Corporation that attempted to control both domestic and foreign
revolutionaries in the United States for their own purposes.
A subsequent document5 outlined
the terms demanded by Lenin, of which the most interesting was point
number seven, which allowed "Russian troops to move into India"; this
suggested that Lenin intended to continue the tsarist expansionist
program. Zeman also records the role of Max Warburg in establishing a
Russian publishing house and adverts to an agreement dated August 12,
1916, in which the German industrialist Stinnes agreed to contribute two
million rubles for financing a publishing house in Russia.6
Consequently, on April 16, 1917, a trainload of thirty-two, including
Lenin, his wife Nadezhda Krupskaya, Grigori Zinoviev, Sokolnikov, and
Karl Radek, left the Central Station in Bern en route to Stockholm. When
the party reached the Russian frontier only Fritz Plattan and Radek were
denied entrance into Russia. The remainder of the party was allowed to
enter. Several months later they were followed by almost 200 Mensheviks,
including Martov and Axelrod.
It is worth noting that Trotsky, at that time in New York, also had
funds traceable to German sources. Further, Von Kuhlmann alludes to
Lenin's inability to broaden the base of his Bolshevik party until the
Germans supplied funds. Trotsky was a Menshevik who turned Bolshevik
only in 1917. This suggests that German funds were perhaps related to
Trotsky's change of party label.
THE SISSON DOCUMENTS
In early 1918 Edgar Sisson, the Petrograd representative of the U.S.
Committee on Public Information, bought a batch of Russian documents
purporting to prove that Trotsky, Lenin, and the other Bolshevik
revolutionaries were not only in the pay of, but also agents of, the
German government.
These documents, later dubbed the "Sisson Documents," were shipped to
the United States in great haste and secrecy. In Washington, D.C. they
were submitted to the National Board for Historical Service for
authentication. Two prominent historians, J. Franklin Jameson and Samuel
N. Harper, testified to their genuineness. These historians divided the
Sisson papers into three groups. Regarding Group I, they concluded:
We have subjected them with great care to all the applicable tests to
which historical students are accustomed and . . . upon the basis of
these investigations, we have no hesitation in declaring that we see no
reason to doubt the genuineness or authenticity of these fifty-three
documents.7
The historians were less confident about material in Group II. This
group was not rejected as. outright forgeries, but it was suggested that
they were copies of original documents. Although the historians made
"no confident declaration" on Group III, they were not prepared to
reject the documents as outright forgeries.
The Sisson Documents were published by the Committee on Public
Information, whose chairman was George Creel, a former contributor to
the pro-Bolshevik Masses. The American press in general accepted the
documents as authentic. The notable exception was the New York Evening
Post, at that time owned by Thomas W. Lamont, a partner in the Morgan
firm. When only a few installments had been published,
the Post challenged the authenticity of all the documents.8
We now know that the Sisson Documents were almost all forgeries: only
one or two of the minor German circulars were genuine. Even casual
examination of the German letterhead suggests that the forgers were
unusually careless forgers perhaps working for the gullible American
market. The German text was strewn with terms verging on the ridiculous:
for example, Bureau instead of the German word Bόro; Central for the
German Zentral; etc.
That the documents are forgeries is the conclusion of an exhaustive
study by George Kennan9 and
of studies made in the 1920s by the British government. Some documents
were based on authentic information and, as Kennan observes, those who
forged them certainly had access to some unusually good information. For
example, Documents 1, 54, 61, and 67 mention that the Nya Banken in
Stockholm served as the conduit for Bolshevik funds from Germany. This
conduit has been confirmed in more reliable sources. Documents 54, 63,
and 64 mention Furstenberg as the banker-intermediary between the
Germans and the Bolshevists; Furstenberg's name appears elsewhere in
authentic documents. Sisson's Document 54 mentions Olof Aschberg, and
Olof Aschberg by his own statements was the "Bolshevik Banker." Aschberg
in 1917 was the director of Nya Banken. Other documents in the Sisson
series list names and institutions, such as the German Naptha-Industrial
Bank, the Disconto Gesellschaft, and Max Warburg, the Hamburg banker,
but hard supportive evidence is more elusive. In general, the Sisson
Documents, while themselves outright forgeries, are nonetheless based
partly on generally authentic information.
One puzzling aspect in the light of the story in this book is that the
documents came to Edgar Sisson from Alexander Gumberg (alias Berg, real
name Michael Gruzenberg), the Bolshevik agent in Scandinavia and later a
confidential assistant to Chase National Bank and Floyd Odium of Atlas
Corporation. The Bolshevists, on the other hand, stridently repudiated
the Sisson material. So did John Reed, the American representative on
the executive of the Third International and whose paycheck came
fromMetropolitan magazine, which was owned by J.P. Morgan interests.10 So
did Thomas Lamont, the Morgan partner who owned the New York Evening
Post. There are several possible explanations. Probably the connections
between the Morgan interests in New York and such agents as John Reed
and Alexander Gumberg were highly flexible. This could have been a
Gumberg maneuver to discredit Sisson and Creel by planting forged
documents; or perhaps Gumberg was working in his own interest.
The Sisson Documents "prove" exclusive German involvement with the
Bolsheviks. They also have been used to "prove" a Jewish-Bolshevik
conspiracy theory along the lines of that of the Protocols of Zion. In
1918 the U.S. government wanted to unite American opinion behind an
unpopular war with Germany, and the Sisson Documents dramatically
"proved" the exclusive complicity of Germany with the Bolshevists. The
documents also provided a smoke screen against public knowledge of the
events to be described in this book.
THE TUG-OF-WAR IN WASHINGTON11
A review of documents in the State Department Decimal File suggests that
the State Department and Ambassador Francis in Petrograd were quite well
informed about the intentions and progress of the Bolshevik movement. In
the summer of 1917, for example, the State Department wanted to stop the
departure from the U.S. of "injurious persons" (that is, returning
Russian revolutionaries) but was unable to do so because they were using
new Russian and American passports. The preparations for the Bolshevik
Revolution itself were well known at least six weeks before it came
about. One report in the State Department files states, in regard to the
Kerensky forces, that it was "doubtful whether government . . . [can]
suppress outbreak." Disintegration of the Kerensky government was
reported throughout September and October as were Bolshevik preparations
for a coup. The British government warned British residents in Russia to
leave at least six weeks before the Bolshevik phase of the revolution.
The first full report of the events of early November reached Washington
on December 9, 1917. This report described the low-key nature of the
revolution itself, mentioned that General William V. Judson had made an
unauthorized visit to Trotsky, and pointed out the presence of Germans
in Smolny the Soviet headquarters.
On November 28, 1917, President Woodrow Wilson ordered no interference
with the Bolshevik Revolution. This instruction was apparently in
response to a request by Ambassador Francis for an Allied conference, to
which Britain had already agreed. The State Department argued that such
a conference was impractical. There were discussions in Paris between
the Allies and Colonel Edward M. House, who reported these to Woodrow
Wilson as "long and frequent discussions on Russia." Regarding such a
conference, House stated that England was "passively willing,"
France "indifferently against," and Italy "actively so." Woodrow Wilson,
shortly thereafter, approved a cable authored by Secretary of State
Robert Lansing, which provided financial assistance for the Kaledin
movement (December 12, 1917). There were also rumors filtering into
Washington that "monarchists working with the Bolsheviks and same
supported by various occurrences and circumstances"; that the Smolny
government was absolutely under control of the German General Staff; and
rumors elsewhere that "many or most of them [that is, Bolshevists] are
from America."
In December, General Judson again visited Trotsky; this was looked upon
as a step towards recognition by the U.S., although a report dated
February 5, 1918, from Ambassador Francis to Washington, recommended
against recognition. A memorandum originating with Basil Miles in
Washington argued that "we should deal with all authorities in Russia
including Bolsheviks." And on February 15, 1918, the State Department
cabled Ambassador Francis in Petrograd, stating that the "department
desires you gradually to keep in somewhat closer and informal touch with
the Bolshevik authorities using such channels as will avoid any official
recognition."
The next day Secretary of State Lansing conveyed the following to the
French ambassador J. J. Jusserand in Washington: "It is considered
inadvisable to take any action which will antagonize at this time any of
the various elements of the people which now control the power in Russia
.... "12
On February 20, Ambassador Francis cabled Washington to report the
approaching end of the Bolshevik government. Two weeks later, on March
7, 1918, Arthur Bullard reported to Colonel House that German money was
subsidizing the Bolsheviks and that this subsidy was more substantial
than previously thought. Arthur Bullard (of the U.S. Committee on Public
Information) argued: "we ought to be ready to help any honest national
government. But men or money or equipment sent to the present rulers of
Russia will be used against Russians at least as much as against
Germans."13
This was followed by another message from Bullard to Colonel House:
"I strongly advise against giving material help to the present Russian
government. Sinister elements in Soviets seem to be gaining control."
But there were influential counterforces at work. As early as November
28, 1917, Colonel House cabled President Woodrow Wilson from Paris that
it was "exceedingly important" that U.S. newspaper comments advocating
that "Russia should be treated as an enemy" be "suppressed." Then next
month William Franklin Sands, executive secretary of the
Morgan-controlled American International Corporation and a friend of the
previously mentioned Basil Miles, submitted a memorandum that described
Lenin and Trotsky as appealing to the masses and that urged the U.S. to
recognize Russia. Even American socialist Walling complained to the
Department of State about the pro-Soviet attitude of George Creel (of
the U.S. Committee on Public Information), Herbert Swope, and William
Boyce Thompson (of the Federal Reserve Bank of New York).
On December 17, 1917, there appeared in a Moscow newspaper an attack on
Red Cross colonel Raymond Robins and Thompson, alleging a link between
the Russian Revolution and American bankers:
Why are they so interested in enlightenment? Why was the money given the
socialist revolutionaries and not to the constitutional democrats? One
would suppose the latter nearer and dearer to hearts of bankers.
The article goes on to argue that this was because American capital
viewed Russia as a future market and thus wanted to get a firm foothold.
The money was given to the revolutionaries because
the backward working men and peasants trust the social revolutionaries.
At the time when the money was passed the social revolutionaries were in
power and it was supposed they would remain in control in Russia for
some time.
Another report, dated December 12, 1917, and relating to Raymond Robins,
details "negotiation with a group of American bankers of the American
Red Cross Mission"; the "negotiation" related to a payment of two
million dollars. On January 22, 1918, Robert L Owen, chairman of the
U.S. Senate Committee on Banking and Currency and linked to Wall Street
interests, sent a letter to Woodrow Wilson recommending de facto
recognition of Russia, permission for a shipload of goods urgently
needed in Russia, the appointment of representatives to Russia to offset
German influence, and the establishment of a career-service group in
Russia.
This approach was consistently aided by Raymond Robins in Russia. For
example, on February 15, 1918, a cable from Robins in Petrograd to
Davison in the Red Cross in Washington (and to be forwarded to William
Boyce Thompson) argued that support be given to the Bolshevik authority
for as long as possible, and that the new revolutionary Russia will turn
to the United States as it has "broken with the German imperialism."
According to Robins, the Bolsheviks wanted United States assistance and
cooperation together with railroad reorganization, because "by generous
assistance and technical advice in reorganizing commerce and industry
America may entirely exclude German commerce during balance of war."
In brief, the tug-of-war in Washington reflected a struggle between, on
one side, old-line diplomats (such as Ambassador Francis) and
lower-level departmental officials, and, on the other, financiers like
Robins, Thompson, and Sands with allies such as Lansing and Miles in the
State Department and Senator Owen in the Congress.
Footnotes:
1Max Hoffman, War Diaries and Other Papers (London: M. Secker, 1929),
2:177.
2Z. A. B. Zeman and W. B. Scharlau, The Merchant of Revolution.. The
Life of A1exander Israel Helphand (Parvus), 1867-1924 (New York: Oxford
University Press, 1965).
3Z. A. B. Zeman, Germany and the Revolution in Russia, 1915-1918.
Documents from the Archives of the German Foreign Ministry (London:
Oxford University Press, 1958), p. ????5.
4Ibid.
5Ibid., p. 6, doc. 6, reporting a conversation with the Fstonian
intermediary Keskula.
6Ibid., p. 92, n. 3.
7U.S., Committee on Public Information, The German-Bolshevik
Conspiracy, War Information Series, no. 20, October 1918.
8New York Evening Post, September 16-18, 21; October 4, 1918. It is also
interesting, but not conclusive of anything, that the Bolsheviks also
stoutly questioned the authenticity of the documents.
9George F. Kennan, "The Sisson Documents," Journal of Modern
History 27-28 (1955-56): 130-154.
10John Reed, The Sisson Documents (New York: Liberator Publishing, n.d.).
11This part is based on section 861.00 o[ the U.S. State Dept. Decimal
File, also available as National Archives rolls 10 and 11 of microcopy
316.
12U.S. State Dept. Decimal File, 861.00/1117a. The same message was
conveyed to the Italian ambassador.
13See Arthur Bullard papers at Princeton University
Chapter IV
WALL STREET AND WORLD REVOLUTION
What you Radicals and we who hold opposing views differ about, is not so
much the end as the means, not so much what should be brought about as
how it should, and can, be brought about ....
Otto H. Kahn, director, American International Corp., and partner, Kuhn,
Loeb & Co., speaking to the League/or Industrial Democracy, New York,
December 30, 1924
Before World War I, the financial and business structure of the United
States was dominated by two conglomerates: Standard Oil, or the
Rockefeller enterprise, and the Morgan complex of industries finance
and transportation companies. Rockefeller and Morgan trust alliances
dominated not only Wall Street but, through interlocking directorships,
almost the entire economic fabric of the United States.l Rockefeller
interests monopolized the petroleum and allied industries, and
controlled the copper trust, the smelters trust, and the gigantic
tobacco trust, in addition to having influence in some Morgan properties
such as the U.S. Steel Corporation as well as in hundreds of smaller
industrial trusts, public service operations, railroads, and banking
institutions. National City Bank was the largest of the banks influenced
by Standard Oil-Rockefeller, but financial control extended to the
United States Trust Company and Hanover National Bank as well as to
major life insurance companies Equitable Life and Mutual of New York.
The great Morgan enterprises were in steel, shipping, and the electrical
industry; they included General Electric, the rubber trust, and
railroads. Like Rockefeller, Morgan controlled financial corporations
the National Bank of Commerce and the Chase National Bank, New York Life
Insurance, and the Guaranty Trust Company. The names J.P. Morgan and
Guaranty Trust Company occur repeatedly throughout this book. In the
early part of the twentieth century the Guaranty Trust Company was
dominated by the Harriman interests. When the elder Harriman (Edward
Henry) died in 1909, Morgan and associates bought into Guaranty Trust as
well as into Mutual Life and New York Life. In 1919 Morgan also bought
control of Equitable Life, and the Guaranty Trust Company absorbed an
additional six lesser trust companies. Therefore, at the end of World
War I the Guaranty Trust and Bankers Trust were, respectively, the first
and second largest trust companies in the United States, both dominated
by Morgan interests.2
American financiers associated with these groups were involved in
financing revolution even before 1917. Intervention by the Wall Street
law firm of Sullivan & Cromwell into the Panama Canal controversy is
recorded in 1913 congressional hearings. The episode is summarized by
Congressman Rainey:
It is my contention that the representatives of this Government [United
States] made possible the revolution on the isthmus of Panama. That had
it not been for the interference of this Government a successful
revolution could not possibly have occurred, and I contend that this
Government violated the treaty of 1846. I will be able to produce
evidence to show that the declaration of independence which was
promulgated in Panama on the 3rd day of November, 1903, was prepared
right here in New York City and carried down there prepared in the
office of Wilson (sic) Nelson Cromwell ....3
Congressman Rainey went on to state that only ten or twelve of the top
Panamanian revolutionists plus "the officers of the Panama Railroad &
Steamship Co., who were under the control of William Nelson Cromwell, of
New York and the State Department officials in Washington," knew about
the impending revolution.4 The
purpose of the revolution was to deprive Colombia, of which Panama was
then a part, of $40 million and to acquire control of the Panama Canal.
The best-documented example of Wall Street intervention in revolution is
the operation of a New York syndicate in the Chinese revolution of 1912,
which was led by Sun Yat-sen. Although the final gains of the syndicate
remain unclear, the intention and role of the New York financing group
are fully documented down to amounts of money, information on affiliated
Chinese secret societies, and shipping lists of armaments to be
purchased. The New York bankers syndicate for the Sun Yat-sen revolution
included Charles B. Hill, an attorney with the law firm of Hunt, Hill &
Betts. In 1912 the firm was located at 165 Broadway, New York, but in
1917 it moved to 120 Broadway (see chapter eight for the significance of
this address). Charles B. Hill was director of several Westinghouse
subsidiaries, including Bryant Electric, Perkins Electric Switch, and
Westinghouse Lamp all affiliated with Westinghouse Electric whose New
York office was also located at 120 Broadway. Charles R. Crane,
organizer of Westinghouse subsidiaries in Russia, had a known role in
the first and second phases of the Bolshevik Revolution (see page 26).
The work of the 1910 Hill syndicate in China is recorded in the Laurence
Boothe Papers at the Hoover Institution.5 These
papers contain over 110 related items, including letters of Sun Yat-sen
to and from his American backers. In return for financial support, Sun
Yat-sen promised the Hill syndicate railroad, banking, and commercial
concessions in the new revolutionary China.
Another case of revolution supported by New York financial institutions
concerned that of Mexico in 1915-16. Von Rintelen, a German espionage
agent in the United States,6 was
accused during his May 1917 trial in New York City of attempting to
"embroil" the U.S. with Mexico and Japan in order to divert ammunition
then flowing to the Allies in Europe.7 Payment
for the ammunition that was shipped from the United States to the
Mexican revolutionary Pancho Villa, was made through Guaranty Trust
Company. Von Rintelen's adviser, Sommerfeld, paid $380,000 via Guaranty
Trust and Mississippi Valley Trust Company to the Western Cartridge
Company of Alton, Illinois, for ammunition shipped to El Paso, for
forwarding to Villa. This was in mid-1915. On January 10, 1916, Villa
murdered seventeen American miners at Santa Isabel and on March 9, 1916,
Villa raided Columbus, New Mexico, and killed eighteen more Americans.
Wall Street involvement in these Mexican border raids was the subject of
a letter (October 6, 1916) from Lincoln Steffens, an American Communist,
to Colonel House, an aide' to Woodrow Wilson:
My dear Colonel House:
Just before I left New York last Monday, I was told convincingly that
"Wall Street" had completed arrangements for one more raid of Mexican
bandits into the United States: to be so timed and so atrocious that it
would settle the election ....8
Once in power in Mexico, the Carranza government purchased additional
arms in the United States. The American Gun Company contracted to ship
5,000 Mausers and a shipment license was issued by the War Trade Board
for 15,000 guns and 15,000,000 rounds of ammunition. The American
ambassador to Mexico, Fletcher, "flatly refused to recommend or sanction
the shipment of any munitions, rifles, etc., to Carranza."9 However,
intervention by Secretary of State Robert Lansing reduced the barrier to
one of a temporary delay, and "in a short while . . . [the American Gun
Company] would be permitted to make the shipment and deliver."10
The raids upon the U.S. by the Villa and the Carranza forces were
reported in the New York Times as the "Texas Revolution" (a kind of dry
run for the Bolshevik Revolution) and were undertaken jointly by Germans
and Bolsheviks. The testimony of John A. Walls, district attorney of
Brownsville, Texas, before the 1919 Fall Committee yielded documentary
evidence of the link between Bolshevik interests in the United States,
German activity, and the Carranza forces in Mexico.11 Consequently,
the Carranza government, the first in the world with a Soviet-type
constitution (which was written by Trotskyites), was a government with
support on Wall Street. The Carranza revolution probably could not have
succeeded without American munitions and Carranza would not have
remained in power as long as he did without American help.12
Similar intervention in the 1917 Bolshevik Revolution in Russia revolves
around Swedish banker and intermediary Olof Aschberg. Logically the
story begins with prerevolutionary tsarist loans by Wall Street bank
syndicates.
AMERICAN BANKERS AND TSARIST LOANS
In August 1914 Europe went to war. Under international law neutral
countries (and the United States was neutral until April 1917) could not
raise loans for belligerent countries. This was a question of law as
well as morality.
When the Morgan house floated war loans for Britain and France in 1915,
J.P. Morgan argued that these were not war loans at all but merely a
means of facilitating international trade. Such a distinction had indeed
been elaborately made by President Wilson in October 1914; he explained
that the sale of bonds in the U.S. for foreign governments was in effect
a loan of savings to belligerent governments and did not finance a war.
On the other hand, acceptance of Treasury notes or other evidence of
debt in payment for articles was only a means of facilitating trade and
not of financing a war effort.13
Documents in the State Department files demonstrate that the National
City Bank, controlled by Stillman and Rockefeller interests, and the
Guaranty Trust, controlled by Morgan interests, jointly raised
substantial loans for the belligerent Russia before U.S. entry into the
war, and that these loans were raised alter the State Department pointed
out to these firms that they were contrary to international law.
Further, negotiations for the loans were undertaken through official
U.S. government communications facilities under cover of the top-level
"Green Cipher" of the State Department. Below are extracts from State
Department cables that will make the case.
On May 94, 1916, Ambassador Francis in Petrograd sent the following
cable to the State Department in Washington for forwardin to Frank
Arthur Vanderlip, then chairman of the National City Bank in New York.
The cable was sent in Green Cipher and was enciphered and deciphered by
U.S. State Department officers in Petrograd and Washington at the
taxpayers' expense (file 861.51/110).
563, May 94, 1 p.m.
For Vanderlip National City Bank New York. Five. Our previous opinions
credit strengthened. We endorse plan cabled as safe investment plus very
attractive speculation in roubles. In view of guarantee of exchange rate
have placed rate somewhat above present market. Owing unfavorable
opinion created by long delay have on own responsibility offered take
twenty-five million dollars. We think large portion of all should be
retained by bank and allied institutions. With clause respect customs
bonds become practical lien on more than one hundred and fifty million
dollars per annum customs making absolute security and secures market
even if defect. We consider three [years?] option on bonds very valuable
and for that reason amount of rouble credit should be enlarged by group
or by distribution to close friends. American International should take
block and we would inform Government. Think group should be formed at
once to take and issue of bonds . . . should secure full cooperation
guaranty. Suggest you see Jack personally, use every endeavor to get
them really work otherwise cooperate guarantee form new group.
Opportunities here during the next ten years very great along state and
industrial financiering and if this transaction consummated doubtless
should be established. In answering bear in mind situation regarding
cable.
MacRoberts Rich.
FRANCIS, AMERICAN AMBASSADOR14
There are several points to note about the above cable to understand the
story that follows. First, note the reference to American International
Corporation, a Morgan firm, and a name that turns up again and again in
this story. Second, "guarantee" refers to Guaranty Trust Company.
Third, "MacRoberts" was Samuel MacRoberts, a vice president and the
executive manager of National City Bank.
On May 24, 1916, Ambassador Francis cabled a message from Rolph Marsh of
Guaranty Trust in Petrograd to Guaranty Trust in New York, again in the
special Green Cipher and again using the facilities of the State
Department. This cable reads as follows:
565, May 24, 6 p.m.
for Guaranty Trust Company New York:
Three.
Olof and self consider the new proposition takes care Olof and will help
rather than harm your prestige. Situation such co-operation necessary if
big things are to be accomplished here. Strongly urge your arranging
with City to consider and act jointly in all big propositions here.
Decided advantages for both and prevents playing one against other. City
representatives here desire (hand written) such co-operation.
Proposition being considered eliminates our credit in name also option
but we both consider the rouble credit with the bond option in
propositions. Second paragraph offers wonderful profitable opportunity,
strongly urge your acceptance. Please cable me full authority to act in
connection with City. Consider our entertaining proposition satisfactory
situation for us and permits doing big things. Again strongly urge your
taking twenty-five million of rouble credit. No possibility loss and
decided speculative advantages. Again urge having Vice President upon
the ground. Effect here will be decidedly good. Resident Attorney does
not carry same prestige and weight. This goes through Embassy by code
answer same way. See cable on possibilities.
ROLPH MARSH.
FRANCIS,
AMERICAN AMBASSADOR
Note:
Entire Message in Green Cipher.
TELEGRAPH ROOM15
"Olof" in the cable was Olof Aschberg, Swedish banker and head of the
Nya Banken in Stockholm. Aschberg had been in New York in 1915
conferring with the Morgan firm on these Russian loans. Now, in 1916, he
was in Petrograd with Rolph Marsh of Guaranty Trust and Samuel
MacRoberts and Rich of National City Bank ("City" in cable) arranging
loans for a Morgan-Rockefeller consortium. The following year, Aschberg,
as we shall see later, would be known as the "Bolshevik Banker," and his
own memoirs reproduce evidence of his right to the title.
The State Department files also contain a series of cables between
Ambassador Francis, Acting Secretary Frank Polk, and Secretary of State
Robert Lansing concerning the legality and propriety of transmitting
National City Bank and Guaranty Trust cables at public expense. On May
25, 1916, Ambassador Francis cabled Washington as follows and referred
to the two previous cables:
569, May 25, one p.m.
My telegram 563 and 565 May twenty-fourth are sent for local
representatives of institutions addressed in the hope of consummating
loan which would largely increase international trade and greatly
benefit [diplomatic relations?]. Prospect for success promising.
Petrograd representatives consider terms submitted very satisfactory but
fear such representations to their institutions would prevent
consummation loan if Government here acquainted these proposals.
FRANCIS, AMERICAN AMBASSADOR.16
The basic reason cited by Francis for facilitating the cables is "the
hope of consummating loan which would largely increase international
trade." Transmission of commercial messages using State Department
facilities had been prohibited, and on June 1, 1916, Polk cabled
Francis:
842
In view of Department's regulation contained in its circular telegraphic
instruction of March fifteenth, (discontinuance of forwarding Commercial
messages)171915,
please explain why messages in your 563, 565 and 575, should be
communicated.
Hereafter please follow closely Department's instructions.
Acting.
Polk
861.51/112
/110
Then on June 8, 1916, Secretary of State Lansing expanded the
prohibition and clearly stated that the proposed loans were illegal:
860 Your 563, 565, May 24, g: 569 May 25.1 pm Before delivering messages
to Vanderlip and Guaranty Trust Company, I must inquire whether they
refer to Russian Government loans of any description. If they do, I
regret that the Department can not be a party to their transmission, as
such action would submit it to justifiable criticism because of
participation by this Government in loan transaction by a belligerent
for the purpose of carrying on its hostile operations. Such
participation is contrary to the accepted rule of international law that
neutral Governments should not lend their assistance to the raising of
war loans by belligerents.
The last line of the Lansing cable as written, was not transmitted to
Petrograd. The line read: "Cannot arrangements be made to send these
messages through Russian channels?"
How can we assess these cables and the parties involved?
Clearly the Morgan-Rockefeller interests were not interested in abiding
by international law. There is obvious intent in these cables to supply
loans to belligerents. There was no hesitation on the part of these
firms to use State Department facilities for the negotiations. Further,
in spite of protests, the State Department allowed the messages to go
through. Finally, and most interesting for subsequent events, Olof
Aschberg, the Swedish banker, was a prominent participant and
intermediary in the negotiations on behalf of Guaranty Trust. Let us
therefore take a closer look at Olof Aschberg.
OLOF ASCHBERG IN NEW YORK, 1916
Olof Aschberg, the "Bolshevik Banker" (or "Bankier der Weltrevolution,"
as he has been called in the German press), was owner of the Nya Banken,
founded 1912 in Stockholm. His codirectors included prominent members of
Swedish cooperatives and Swedish socialists, including G. W. Dahl, K. G.
Rosling, and C. Gerhard Magnusson.18 In
1918 Nya Banken was placed on the Allied black-list for its financial
operations in behalf of Germany. In response to the blacklisting, Nya
Banken changed its name to Svensk Ekonomiebolaget. The bank remained
under the control of Aschberg, and was mainly owned by him. The bank's
London agent was the British Bank of North Commerce, whose chairman was
Earl Grey, former associate of Cecil Rhodes. Others in Aschberg's
interesting circle of business associates included Krassin, who was
until the Bolshevik Revolution (when he changed color to emerge as a
leading Bolshevik) Russian manager of Siemens-Schukert in Petrograd;
Carl Furstenberg, minister of finance in the first Bolshevik government;
and Max May, vice president in charge of foreign operations for Guaranty
Trust of New York. Olof Aschberg thought so highly of Max May that a
photograph of May is included in Aschberg's book.19
In the summer of 1916 Olof Aschberg was in New York representing both
Nya Banken and Pierre Bark, the tsarist minister of finance. Aschberg's
prime business in New York, according to the New York Times (August 4,
1916), was to negotiate a $50 million loan for Russia with an American
banking syndicate headed by Stillman's National City Bank. This business
was concluded on June 5, 1916; the results were a Russian credit of $50
million in New York at a bank charge of 7 1/2 percent per annum, and a
corresponding 150-million-ruble credit for the NCB syndicate in Russia.
The New York syndicate then turned around and issued 6 1/2 percent
certificates in its own name in the U.S. market to the amount of $50
million. Thus, the NCB syndicate made a profit on the $50 million loan
to Russia, floated it on the American market for another profit, and
obtained a 150-million-ruble credit in Russia.
During his New York visit on behalf of the tsarist Russian government,
Aschberg made some prophetic comments concerning the future for America
in Russia:
The opening for American capital and American initiative, with the
awakening brought by the war, will be country-wide when the struggle is
over. There are now many Americans in Petrograd, representatives of
business firms, keeping in touch with the situation, and as soon as the
change comes a huge American trade with Russia should spring up.20
OLOF ASCHBERG IN THE BOLSHEVIK REVOLUTION
While this tsarist loan operation was being floated in New York, Nya
Banken and Olof Aschberg were funneling funds from the German government
to Russian revolutionaries, who would eventually bring down the
"Kerensky committee" and establish the Bolshevik regime.
The evidence for Olof Aschberg's intimate connection with financing the
Bolshevik Revolution comes from several sources, some of greater value
than others. The Nya Banken and Olof Aschberg are prominently cited in
the Sisson papers (see chapter three); however, George Kennan has
systematically analyzed these papers and shown them to be forged,
although they are probably based in part on authentic material. Other
evidence originates with Colonel B. V. Nikitine, in charge of
counterintelligence in the Kerensky government, and consists of
twenty-nine telegrams transmitted from Stockholm to Petrograd, and vice
versa, regarding financing of the Bolsheviks. Three of these telegrams
refer to banks telegrams 10 and 11 refer to Nya Banken, and telegram
14 refers to the Russo-Asiatic Bank in Petrograd. Telegram 10 reads as
follows:
Gisa Furstenberg Saltsjobaden. Funds very low cannot assist if really
urgent give 500 as last payment pencils huge loss original hopeless
instruct Nya Banken cable further 100 thousand Sumenson.
Telegram 11 reads:
Kozlovsky Sergievskaya 81. First letters received Nya Banken telegraphed
cable who Soloman offering local telegraphic agency refers to Bronck
Savelievich Avilov.
Fόrstenberg was the intermediary between Parvus (Alexander I. Helphand)
and the German government. About these transfers, Michael Futrell
concludes:
It was discovered that during the last few months she [Evegeniya
Sumenson] had received nearly a million rubles from Furstenberg through
the Nya Banken in Stockholm, and that this money came from German
sources.21
Telegram 14 of the Nikitine series reads: "Furstenberg Saltsjφbaden.
Number 90 period hundred thousand into Russo-Asiatic Sumenson." The U.S.
representative for Russo-Asiatic was MacGregor Grant Company at 120
Broadway, New York City, and the bank was financed by Guaranty Trust in
the U.S. and Nya Banken in Sweden.
Another mention of the Nya Banken is in the material "The Charges
Against the Bolsheviks," which was published in the Kerensky period.
Particularly noteworthy in that material is a document signed by Gregory
Alexinsky, a former member of the Second State Duma, in reference to
monetary transfers to the Bolsheviks. The document, in part, reads as
follows:
In accordance with the information just received these trusted persons
in Stockholm were: the Bolshevik Jacob Furstenberg, better known under
the name of "Hanecki" (Ganetskii), and Parvus (Dr. Helfand); in
Petrograd: the Bolshevik attorney, M. U. Kozlovsky, a woman relative of
Hanecki Sumenson, engaged in speculation together with Hanecki, and
others. Kozlovsky is the chief receiver of German money, which is
transferred from Berlin through the "Disconto-Gesellschaft" to the
Stockholm "Via Bank," and thence to the Siberian Bank in Petrograd,
where his account at present has a balance of over 2,000,000 rubles. The
military censorship has unearthed an uninterrupted exchange of telegrams
of a political and financial nature between the German agents and
Bolshevik leaders [Stockholm-Petrograd].22
Further, there is in the State Dept. files a Green Cipher message from
the U.S. embassy in Christiania (named Oslo, 1925), Norway, dated
February 21, 1918, that reads: "Am informed that Bolshevik funds are
deposited in Nya Banken, Stockholm, Legation Stockholm advised.
Schmedeman."23
Finally, Michael Furtell, who interviewed Olof Aschberg just before his
death, concludes that Bolshevik funds were indeed transferred from
Germany through Nya Banken and Jacob Furstenberg in the guise of payment
for goods shipped. According to Futrell, Aschberg confirmed to him that
Furstenberg had a commercial business with Nya Banken and that
Furstenberg had also sent funds to Petrograd. These statements are
authenticated in Aschberg's memoirs (see page 70). In sum, Aschberg,
through his Nya Banken, was undoubtedly a channel for funds used in the
Bolshevik Revolution, and Guaranty Trust was indirectly linked through
its association with Aschberg and its interest in MacGregor Grant Co.,
New York, agent of the Russo-Asiatic Bank, another transfer vehicle.
NYA BANKEN AND GUARANTY TRUST JOIN RUSKOMBANK
Several years later, in the fall of 1922, the Soviets formed their first
international bank. It was based on a syndicate that involved the former
Russian private bankers and some new investment from German, Swedish,
American, and British bankers. Known as the Ruskombank (Foreign
Commercial Bank or the Bank of Foreign Commerce), it was headed by Olof
Aschberg; its board consisted of tsarist private bankers,
representatives of German, Swedish, and American banks, and, of course,
representatives of the Soviet Union. The U.S. Stockholm legation
reported to Washington on this question and noted, in a reference to
Aschberg, that "his reputation is poor. He was referred to in Document
54 of the Sisson documents and Dispatch No. 138 of January 4, 1921 from
a legation in Copenhagen."24
The foreign banking consortium involved in the Ruskombank represented
mainly British capital. It included Russo-Asiatic Consolidated Limited,
which was one of the largest private creditors of Russia, and which was
granted £3 million by the Soviets to compensate for damage to its
properties in the Soviet Union by nationalization. The British
government itself had already purchased substantial interests in the
Russian private banks; according to a State Department report, "The
British Government is heavily invested in the consortium in question."25
The consortium was granted extensive concessions in Russia and the bank
had a share capital of ten million gold rubles. A report in the Danish
newspaper National Titendestated that "possibilities have been created
for cooperation with the Soviet government where this, by political
negotiations, would have been impossible."26 In
other words, as the newspaper goes on to say, the politicians had failed
to achieve cooperation with the Soviets, but "it may be taken for
granted that the capitalistic exploitation of Russia is beginning to
assume more definite forms."27
In early October 1922 Olof Aschberg met in Berlin with Emil Wittenberg,
director of the Nationalbank fur Deutschland, and Scheinmann, head of
the Russian State Bank. After discussions concerning German involvement
in the Ruskombank, the three bankers went to Stockholm and there met
with Max May, vice president of the Guaranty Trust Company. Max May was
then designated director of the Foreign Division of the Ruskombank, in
addition to Schlesinger, former head of the Moscow Merchant Bank;
Kalaschkin, former head of the Junker Bank; and Ternoffsky, former head
of the Siberian Bank. The last bank had been partly purchased by the
British government in 1918. Professor Gustav Cassell of Sweden agreed to
act as adviser to Ruskombank. Cassell was quoted in a Swedish
newspaper (Svenskadagbladet of October 17, 1922) as follows:
That a bank has now been started in Russia to take care of purely
banking matters is a great step forward, and it seems to me that this
bank was established in order to do something to create a new economic
life in Russia. What Russia needs is a bank to create internal and
external commerce. If there is to be any business between Russia and
other countries there must be a bank to handle it. This step forward
should be supported in every way by other countries, and when I was
asked my advice I stated that I was prepared to give it. I am not in
favor of a negative policy and believe that every opportunity should be
seized to help in a positive reconstruction. The great question is how
to bring the Russian exchange back to normal. It is a complicated
question and will necessitate thorough investigation. To solve this
problem I am naturally more than willing to take part in the work. To
leave Russia to her own resources and her own fate is folly.28
The former Siberian Bank building in Petrograd was used as the head
office of the Ruskombank, whose objectives were to raise short-term
loans in foreign countries, to introduce foreign capital into the Soviet
Union, and generally to facilitate Russian overseas trade. It opened on
December 1, 1922, in Moscow and employed about 300 persons.
In Sweden Ruskombank was represented by the Svenska Ekonomibolaget of
Stockholm, Olof Aschberg's Nya Banken under a new name, and in Germany
by the Garantie und Creditbank fur Den Osten of Berlin. In the United
States the bank was represented by the Guaranty Trust Company of New
York. On opening the bank, Olof Aschberg commented:
The new bank will look after the purchasing of machinery and raw
material from England and the United States and it will give guarantees
for the completion of contracts. The question of purchases in Sweden has
not yet arisen, but it is hoped that such will be the case later on.29
On joining Ruskombank, Max May of Guaranty Trust made a similar
statement:
The United States, being a rich country with well developed industries,
does not need to import anything from foreign countries, but... it is
greatly interested in exporting its products to other countries and
considers Russia the most suitable market for that purpose, taking into
consideration the vast requirements of Russia in all lines of its
economic life.30
May stated that the Russian Commercial Bank was "very important" and
that it would "largely finance all lines of Russian industries."
From the very beginning the operations of the Ruskombank were restricted
by the Soviet foreign-trade monopoly. The bank had difficulties in
obtaining advances on Russian goods deposited abroad. Because they were
transmitted in the name of Soviet trade delegations, a great deal of
Ruskombank funds were locked up in deposits with the Russian State Bank.
Finally, in early 1924 the Russian Commercial Bank was fused with the
Soviet foreign-trade commissariat, and Olof Aschberg was dismissed from
his position at the bank because, it was claimed in Moscow, he had
misused bank funds. His original connection with the bank was because of
his friendship with Maxim Litvinov. Through this association, so runs a
State Department report, Olof Aschberg had access to large sums of money
for the purpose of meeting payments on goods ordered by Soviets in
Europe:
These sums apparently were placed in the Ekonomibolaget, a private
banking company, owned by Mr. Aschberg. It is now alledged [sic] that a
large portion of these funds were employed by Mr. Aschberg for making
investments for his personal account and that he is now endeavoring to
maintain his position in the bank through his possession of this money.
According to my informant Mr. Aschberg has not been the sole one to
profit by his operations with the Soviet funds, but has divided the
gains with those who are responsible for his appointment in the Russian
Commerce Bank, among them being Litvinoff.31
Ruskombank then became Vneshtorg, by which it is known today.
We now have to retrace our steps and look at the activities of
Aschberg's New York associate, Guaranty Trust Company, during World War
I, to lay the foundation for examination of its role in the
revolutionary era in Russia.
GUARANTY TRUST AND GERMAN ESPIONAGE IN THE UNITED STATES, 1914-191732
During World War I Germany raised considerable funds in New York for
espionage and covert operations in North America and South America. It
is important to record the flow of these funds because it runs from the
same firms Guaranty Trust and American International Corporation
that were involved in the Bolshevik Revolution and its aftermath. Not to
mention the fact (outlined in chapter three) that the German government
also financed Lenin's revolutionary activities.
A summary of the loans granted by American banks to German interests in
World War I was given to the 1919 Overman Committee of the United States
Senate by U.S. Military Intelligence. The summary was based on the
deposition of Karl Heynen, who came to the United States in April 1915
to assist Dr. Albert with the commercial and financial affairs of the
German government. Heynen's official work was the transportation of
goods from the United States to Germany by way of Sweden, Switzerland,
and Holland. In fact, he was up to his ears in covert operations.
The major German loans raised in the United States between 1915 and
1918, according to Heynen, were as follows: The first loan, of $400,000,
was made about September 1914 by the investment bankers Kuhn, Loeb & Co.
Collateral of 25 million marks was deposited with Max M. Warburg in
Hamburg, the German affiliate of Kuhn, Loeb & Co. Captain George B.
Lester of U.S. Military Intelligence told the Senate that Heynen's reply
to the question "Why did you go to Kuhn, Loeb & Co?" was, "Kuhn, Loeb &
Co. we considered the natural bankers of the German government and the
Reichsbank."
The second loan, of $1.3 million, did not come directly from the United
States but was negotiated by John Simon, an agent of the Suedeutsche
Disconto-Gesellschaft, to secure funds for making shipments to Germany.
The third loan was from the Chase National Bank (in the Morgan group) in
the amount of three million dollars. The fourth loan was from the
Mechanics and Metals National Bank in the amount of one million dollars.
These loans financed German espionage activities in the United States
and Mexico. Some funds were traced to Sommerfeld, who was an adviser to
Von Rintelen (another German espionage agent) and who was later
associated with Hjalmar Schacht and Emil Wittenberg. Sommerfeld was to
purchase ammunition for use in Mexico. He had an account with the
Guaranty Trust Company and from this payments were made to Western
Cartridge Co. of Alton, Illinois, for ammunition that was shipped to El
Paso for use in Mexico by Pancho Villa's bandits. About $400,000 was
expended on ammunition, Mexican propaganda, and similar activities.
The then German ambassador Count Von Bernstorff has recounted his
friendship with Adolph von Pavenstedt, a senior partner of Amsinck &
Co., which was controlled and in November 1917 owned by American
International Corporation. American International figures prominently in
later chapters; its board of directors contained the key names on Wall
Street: Rockefeller, Kahn, Stillman, du Pont, Winthrop, etc. According
to Von Bernstorff, Von Pavenstedt was "intimately acquainted with all
the members of the Embassy."33 Von
Bernstorff himself regarded Von Pavenstedt as one of the most respected,
"if not the most respected imperial German in New York."34 Indeed,
Von Pavenstedt was "for many years a Chief pay master of the German spy
system in this country."35 In
other words, there is no question that Armsinck & Co., controlled by
American International Corporation, was intimately associated with the
funding of German wartime espionage in the United States. To clinch Von
Bernstorff's last statement, there exists a photograph of a check in
favor of Amsinck & Co., dated December 8, 1917 just four weeks after
the start of the Bolshevik Revolution in Russia signed Von Papen
(another German espionage operator), and having a counterfoil bearing
the notation "travelling expenses on Von W [i.e., Von Wedell]." French
Strothers,36 who
published the photograph, has stated that this check is evidence that
Von Papen "became an accessory after the fact to a crime against
American laws"; it also makes Amsinck & Co. subject to a similar charge.
Paul Bolo-Pasha, yet another German espionage agent, and a prominent
French financier formerly in the service of the Egyptian government,
arrived in New York in March 1916 with a letter of introduction to Von
Pavenstedt. Through the latter, Bolo-Pasha met Hugo Schmidt, director of
the Deutsche Bank in Berlin and its representative in the United States.
One of Bolo-Pasha's projects was to purchase foreign newspapers so as to
slant their editorials in favor of Germany. Funds for this program were
arranged in Berlin in the form of credit with Guaranty Trust Company,
with the credit subsequently made available to Amsinck & Co. Adolph von
Pavenstedt, of Amsinck, in turn made the funds available to Bolo-Pasha.
In other words, both Guaranty Trust Company and Amsinck & Co., a
subsidiary of American International Corporation, were directly involved
in the implementation of German espionage and other activities in the
United States. Some links can be established from these firms to each of
the major German operators in the U.S. Dr. Albert, Karl Heynen, Von
Rintelen, Von Papan, Count Jacques Minotto (see below), and Paul
Bolo-Pasha.
In 1919 the Senate Overman Committee also established that Guaranty
Trust had an active role in financing German World War I efforts in an "unneutral"
manner. The testimony of the U.S. intelligence officer Becker makes this
clear:
In this mission Hugo Schmidt [of Deutsche Bank] was very largely
assisted by certain American banking institutions. It was while we were
neutral, but they acted to the detriment of the British interests, and I
have considerable data on the activity of the Guaranty Trust Co. in that
respect, and would like to know whether the committee wishes me to go
into it.
SENATOR NELSON: That is a branch of the City Bank, is it not?
MR. BECKER: No.
SENATOR OVERMAN: If it was inimical to British interests it was
unneutral, and I think you had better let it come out.
SENATOR KING: Was it an ordinary banking transaction?
MR. BECKER: That would be a matter of opinion. It has to do with
camouflaging exchange so as to make it appear to be neutral exchange,
when it was really German exchange on London. As a result of those
operations in which the Guaranty Trust Co. mainly participated between
August 1, 1914, and the time America entered the war, the Deutsche Banke
in its branches in South America succeeded in negotiating £4,670,000 of
London exchange in war time.
SENATOR OVERMAN: I think that is competent.37
What is really important is not so much that financial assistance was
given to Germany, which was only illegal, as that directors of Guaranty
Trust were financially assisting the Allies at the same time. In other
words, Guaranty Trust was financing both sides of The conflict. This
raises the question of morality.
THE GUARANTY TRUST-MINOTTO-CAILLAUX THREADS. 38
Count Jacques Minotto is a most unlikely but verifiable and persistent
thread that links the Bolshevik Revolution in Russia with German banks,
German World War I espionage in the United States, the Guaranty Trust
Company in New York, the abortive French Bolshevik revolution, and the
related Caillaux-Malvy espionage trials in France.
Jacques Minotto was born February 17, 1891, in Berlin, the son of an
Austrian father descended from Italian nobility, and a German mother.
Young Minotto was educated in Berlin and then entered employment with
the Deutsche Bank in Berlin in 1912. Almost immediately Minotto was sent
to the United States as assistant to Hugo Schmidt, deputy director of
the Deutsche Bank and its New York representative. After a year in New
York, Minotto was sent by the Deutsche Bank to London, where he
circulated in prominent political and diplomatic circles. At the
outbreak of World War I, Minotto returned to the United States and
immediately met with the German ambassador Count Von Bernstorff, after
which he entered the employ of Guaranty Trust Company in New York. At
Guaranty Trust, Minotto was under the direct orders of Max May, director
of its foreign department and an associate of Swedish banker Olof
Aschberg. Minotto was no minor bank official. The interrogatories of the
Caillaux trials in Paris in 1919 established that Minotto worked
directly under Max May.39 On
October 25, 1914, Guaranty Trust sent Jacques Minotto to South America
to make a report on the political, financial, and commercial situation.
As he did in London, Washington, and New York, so Minotto moved in the
highest diplomatic and political circles here. One purpose of Minotto's
mission in Latin America was to establish the mechanism by which
Guaranty Trust could be used as an intermediary for the previously
mentioned German fund raising on the London money market, which was then
denied to Germany because of World War I. Minotto returned to the United
States, renewed his association with Count Von Bernstorff and Count
Luxberg, and subsequently, in 1916, attempted to obtain a position with
U.S. Naval Intelligence. After this he was arrested on charges of
pro-German activities. When arrested Minotto was working at the Chicago
plant of his father-in-law Louis Swift, of Swift & Co., meatpackers.
Swift put up the security for the $50,000 bond required to free Minotto,
who was represented by Henry Veeder, the Swift & Co. attorney. Louis
Swift was himself arrested for pro-German activities at a later date. As
an interesting and not unimportant coincidence, "Major" Harold H. Swift,
brother of Louis Swift, was a member of the William Boyce Thompson 1917
Red Cross Mission to Petrograd that is, one of the group of Wall
Street lawyers and businessmen whose intimate connections with the
Russian Revolution are to be described later. Helen Swift Neilson,
sister of Louis and Harold Swift, was later connected with the
pro-Communist Abraham Lincoln Center "Unity." This established a minor
link between German banks, American. banks, German espionage, and, as we
shall see later, the Bolshevik Revolution.40
Joseph Caillaux was a famous (sometimes called notorious) French
politician. He was also associated with Count Minotto in the latter's
Latin America operations for Guaranty Trust, and was later implicated in
the famous French espionage cases of 1919, which had Bolshevik
connections. In 1911, Caillaux became minister of finance and later in
the same year became premier of France. John Louis Malvy became
undersecretary of state in the Caillaux government. Several years later
Madame Caillaux murdered Gaston Calmette, editor of the prominent Paris
newspaper Figaro. The prosecution charged that Madame Caillaux murdered
Calmette to prevent publication of certain compromising documents. This
affair resulted in the departure of Caillaux and his wife from France.
The couple went to Latin America and there met with Count Minotto, the
agent of the Guaranty Trust Company who was in Latin America to
establish intermediaries for German finance. Count Minotto was socially
connected with the Caillaux couple in Rio de Janeiro and Sao Paulo,
Brazil, in Montevideo, Uruguay, and in Buenos Aires, Argentina. In other
words, Count Minotto was a constant companion of the Caillaux couple
while they were in Latin America.41 On
returning to France, Caillaux and his wife stayed at Biarritz as guests
of Paul Bolo-Pasha, who was, as we have seen, also a German espionage
operator in the United States and France.42 Later,
in July 1915, Count Minotto arrived in France from Italy, met with the
Caillaux couple; the same year the Caillaux couple also visited
Bolo-Pasha again in Biarritz. In other words, in 1915 and 1916 Caillaux
established a continuing social relationship with Count Minotto and
Bolo-Pasha, both of whom were German espionage agents in the United
States.
Bolo-Pasha's work in France was to gain influence for Germany in the
Paris newspapers Le Temps and Figaro. Bolo-Pasha then went to New York,
arriving February 24, 1916. Here he was to negotiate a loan of $2
million and here he was associated with Von Pavenstedt, the prominent
German agent with Amsinck & Co.43 Severance
Johnson, in The Enemy Within, has connected Caillaux and Malvy to the
1918 abortive French Bolshevik revolution, and states that if the
revolution had succeeded, "Malvy would have been the Trotsky of France
had Caillaux been its Lenin."44 Caillaux
and Malvy formed a radical socialist party in France using German funds
and were brought to trial for these subversive efforts. The court
interrogatories in the 1919 French espionage trials introduce testimony
concerning New York bankers and their relationship with these German
espionage operators. They also set forth the links between Count Minotto
and Caillaux, as well as the relationship of the Guaranty Trust Company
to the Deutsche Bank and the cooperation between Hugo Schmidt of
Deutsche Bank and Max May of Guaranty Trust Company. The French
interrogatory (page 940) has the following extract from the New York
deposition of Count Minotto (page 10, and retranslated from the French):
QUESTION: Under whose orders were you at Guaranty Trust?
REPLY: Under the orders of Mr. Max May.
QUESTION: He was a Vice President?
ANSWER: He was Vice President and Director of the Foreign Department.
Later, in 1922, Max May became a director of the Soviet Ruskom-bank and
represented the interests of Guaranty Trust in that bank. The French
interrogatory establishes that Count Minotto, a German espionage agent,
was in the employ of Guaranty Trust Company; that Max May was his
superior officer; and that Max May was also closely associated with
Bolshevik banker Olof Aschberg. In brief: Max May of Guaranty Trust was
linked to illegal fund raising and German espionage in the United States
during World War I; he was linked indirectly to the Bolshevik Revolution
and directly to the establishment of Ruskombank, the first international
bank in the Soviet Union.
It is too early to attempt an explanation for this seemingly
inconsistent, illegal, and sometimes immoral international activity. In
general, there are two plausible explanations: the first, a relentless
search for profits; the second which agrees with the words of Otto
Kahn of Kuhn, Loeb & Co. and of American International Corporation in
the epigraph to this chapter the realization of socialist aims, aims
which "should, and can, be brought about" by nonsocialist means.
Footnotes:
1John Moody, The Truth about the Trusts (New York: Moody Publishing,
1904).
2The J. P. Morgan Company was originally founded in London as George
Peabody and Co. in 1838. It was not incorporated until March 21, 1940.
The company ceased to exist in April 1954 when it merged with the
Guaranty Trust Company, then its most important commercial bank
subsidiary, and is today known as the Morgan Guarantee Trust Company of
New York.
3United States, House, Committee on Foreign Affairs, The Story of
Panama, Hearings on the Rainey Resolution, 1913. p. 53.
4Ibid., p. 60.
5Stanford, Calif. See also the Los Angeles Times, October 13, 1966.
6Later codirector with Hjalmar Schacht (Hitler's banker) and Emil
Wittenberg, of the Nationalbank fόr Deutschland.
7United States, Senate, Committee on Foreign Relations, Investigation of
Mexican Affairs, 1920.
8Lincoln Steffens, The Letters of Lincoln Steffens (New York: Harcourt,
Brace, 1941, I:386
9U.S., Senate, Committee on Foreign Relations, Investigation of Mexican
Affairs, 1920, pts. 2, 18, p. 681.
10Ibid.
11New York Times, January 23, 1919.
12U.S., Senate, Committee on Foreign Relations, op. cit., pp. 795-96.
13U.S., Senate, Hearings Before the Special Committee Investigating the
Munitions Industry, 73-74th Cong., 1934-37, pt. 25, p. 7666.
14U.S. State Dept. Decimal File, 861.51/110 (316-116-682).
15U.S. State Dept. Decimal File, 861.51/112.
16U.S. State Dept. Decimal File, 861.51/111.
17Handwritten in parentheses.
18Olof Aschberg, En Vandrande Jude Frδn Glasbruksgatan (Stockholm:
Albert Bonniers Fφrlag, n.d.), pp. 98-99, which is included in Memoarer(Stockholm:
Albert Bonniers Fφrlag, 1946). See also Gδstboken (Stockholm: Tidens
Fφrlag, 1955) for further material on Aschberg.
19Aschberg, p. 123.
20New York Times, August 4, 1916.
21Michael Futrell, Northern Underground (London: Faber and Faber, 1963),
p. 162.
22See Robert Paul Browder and Alexander F. Kerensky, The Russian
Provisional government, 1917 (Stanford, Calif.: Stanford University
Perss, 1961), 3: 1365. "Via Bank" is obviously Nya Banken.
23U.S. State Dept. Decimal File, 861.00/1130.
24U.S. State Dept. Decimal File, 861.516/129, August 28, 1922. A State
Dept. report from Stockholm, dated October 9, 1922 (861.516/137), states
in regard to Aschberg, "I met Mr. Aschberg some weeks ago and in the
conversation with him he substantially stated all that appeared in this
report. He also asked me to inquire whether he could visit the United
States and gave as references some of the prominent banks. In connection
with this, however, I desire to call the department's attention to
Document 54 of the Sisson Documents, and also to many other dispatches
which this legation wrote concerning this man during the war, whose
reputation and standing is not good. He is undoubtedly working closely
in connection with the Soviets, and during the entire war he was in
close cooperation with the Germans" (U.S. State Dept. Decimal File,
861.516/137, Stockholm, October 9, 1922. The report was signed by Ira N.
Morris).
25Ibid., 861.516/130, September 13, 1922.
26Ibid.
27Ibid.
28Ibid., 861.516/140, Stockholm, October 23, 1922.
29Ibid., 861.516/147, December 8, 1922.
30Ibid., 861.516/144, November 18, 1922.
31Ibid., 861.316/197, Stockholm, March 7, 1924.
32This section is based on the Overman Committee hearings, U.S.,
Senate, Brewing and Liquor Interests and German and Bolshevik
Propaganda, Hearings before the Subcommittee on the Judiciary, 65th
Cong., 1919, 2:2154-74.
33Count Von Bernstorff, My Three Years in America (New York: Scribner's,
1920), p. 261.
34Ibid.
35Ibid.
36French Strothers, Fighting Germany's Spies (Garden City, N.Y.:
Doubleday, Page, 1918), p. 152.
37 U.S., Senate, Overman Committee, 2:2009.
38This section is based on the following sources (as well as those cited
elsewhere): Jean Bardanne, Le Colonel Nicolai: espion de genie (Paris:
Editions Siboney, n.d.); Cours de Justice, Affaire Caillaux, Loustalot
et Comby: Procedure Generale Interrogatoires (Paris, 1919), pp. 349-50,
937-46; Paul Vergnet, L'Affaire Caillaux (Paris 1918), especially the
chapter titled "Marx de Mannheim"; Henri Guernut, Emile Kahn, and
Camille M. Lemercier, Etudes documentaires sur L'Affaire Caillaux (Paris,
n.d.), pp. 1012-15; and George Adam, Treason and Tragedy: An Account of
French War Trials (London: Jonathan Cape, 1929).
39See p. 70.
40This Interrelationship is dealt with extensively in the three-volume
Overman Committee report of 1919. See bibliography.
41See Rudolph Binion, Defeated Leaders (New York: Columbia University
Press, 1960).
42George Adam, Treason and Tragedy: An Account of French War
Trials (London: Jonathan Cape, 1929).
43Ibid.
44The Enemy Within (London: George Allen & Unwin, 1920)
Chapter V
THE AMERICAN RED CROSS MISSION IN RUSSIA 1917
Poor Mr. Billings believed he was in charge of a scientific mission for
the relief of Russia .... He was in reality nothing but a mask the Red
Cross complexion of the mission was nothing but a mask.
Cornelius Kelleher, assistant to William Boyce Thompson (in George F.
Kennan, Russia Leaves the War)
The Wall Street project in Russia in 1917 used the Red Cross Mission as
its operational vehicle. Both Guaranty Trust and National City Bank had
representatives in Russia at the time of the revolution. Frederick M.
Corse of the National City Bank branch in Petrograd was attached to the
American Red Cross Mission, of which a great deal will be said later.
Guaranty Trust was represented by Henry Crosby Emery. Emery was
temporarily held by the Germans in 1918 and then moved on to represent
Guaranty Trust 'in China.
Up to about 1915 the most influential person in the American Red Cross
National Headquarters in Washington, D.C. was Miss Mabel Boardman. An
active and energetic promoter, Miss Boardman had been the moving force
behind the Red Cross enterprise, although its endowment came from
wealthy and prominent persons including J. P. Morgan, Mrs. E. H.
Harriman, Cleveland H. Dodge, and Mrs. Russell Sage. The 1910
fund-raising campaign for $2 million, for example, was successful only
because it was supported by these wealthy residents of New York City. In
fact, most of the money came from New York City. J.P. Morgan himself
contributed $100,000 and seven other contributors in New York City
amassed $300,000. Only one person outside New York City contributed over
$10,000 and that was William J. Boardman, Miss Boardman's father. Henry
P. Davison was chairman of the 1910 New York Fund-Raising Committee and
later became chairman of the War Council of the American Red Cross. In
other words, in World War I the Red Cross depended heavily on Wall
Street, and specifically on the Morgan firm.
The Red Cross was unable to cope with the demands of World War I and in
effect was taken over by these New York bankers. According to John
Foster Dulles, these businessmen "viewed the American Red Cross as a
virtual arm of government, they envisaged making an incalculable
contribution to the winning of the war."1 In
so doing they made a mockery of the Red Cross motto: "Neutrality and
Humanity."
In exchange for raising funds, Wall Street asked for the Red Cross War
Council; and on the recommendation of Cleveland H. Dodge, one of Woodrow
Wilson's financial backers, Henry P. Davison, a partner in J.P. Morgan
Company, became chairman. The list of administrators of the Red Cross
then began to take on the appearance of the New York Directory of
Directors: John D. Ryan, president of Anaconda Copper Company (see
frontispiece); George W. Hill, president of the American Tobacco
Company; Grayson M.P. Murphy, vice president of the Guaranty Trust
Company; and Ivy Lee, public relations expert for the Rockefellers.
Harry Hopkins, later to achieve fame under President Roosevelt, became
assistant to the general manager of the Red Cross in Washington, D.C.
The question of a Red Cross Mission to Russia came before the third
meeting of this reconstructed War Council, which was held in the Red
Cross Building, Washington, D.C., on Friday, May 29, 1917, at 11:00 A.M.
Chairman Davison was deputed to explore the idea with Alexander Legge of
the International Harvester Company. Subsequently International
Harvester, which had considerable interests in Russia, provided $200,000
to assist financing the Russian mission. At a later meeting it was made
known that William Boyce Thompson, director of the Federal Reserve Bank
of New York, had "offered to pay the entire expense of the commission";
this offer was accepted in a telegram: "Your desire to pay expenses of
commission to Russia is very much appreciated and from our point of view
very important."2
The members of the mission received no pay. All expenses were paid by
William Boyce Thompson and the $200,000 from International Harvester was
apparently used in Russia for political subsidies. We know from the
files of the U.S. embassy in Petrograd that the U.S. Red Cross gave
4,000 rubles to Prince Lvoff, president of the Council of Ministers, for
"relief of revolutionists" and 10,000 rubles in two payments to Kerensky
for "relief of political refugees."
AMERICAN RED CROSS MISSION TO RUSSIA, 1917
In August 1917 the American Red Cross Mission to Russia had only a
nominal relationship with the American Red Cross, and must truly have
been the most unusual Red Cross Mission in history. All expenses,
including those of the uniforms the members were all colonels, majors,
captains, or lieutenants were paid out of the pocket of William Boyce
Thompson. One contemporary observer dubbed the all-officer group an "Haytian
Army":
The American Red Cross delegation, about forty Colonels, Majors,
Captains and Lieutenants, arrived yesterday. It is headed by Colonel
(Doctor) Billings of Chicago, and includes Colonel William B. Thompson
and many doctors and civilians, all with military titles; we dubbed the
outfit the "Haytian Army" because there were no privates. They have come
to fill no clearly defined mission, as far as I can find out, in fact
Gov. Francis told me some time ago that he had urged they not be allowed
to come, as there were already too many missions from the various allies
in Russia. Apparently, this Commission imagined there was urgent call
for doctors and nurses in Russia; as a matter of fact there is at
present a surplus of medical talent and nurses, native and foreign in
the country and many haft-empty hospitals in the large cities.3
The mission actually comprised only twenty-four (not forty), having
military rank from lieutenant colonel down to lieutenant, and was
supplemented by three orderlies, two motion-picture photographers, and
two interpreters, without rank. Only five (out of twenty-four) were
doctors; in addition, there were two medical researchers. The mission
arrived by train in Petrograd via Siberia in August 1917. The five
doctors and orderlies stayed one month, returning to the United States
on September 11. Dr. Frank Billings, nominal head of the mission and
professor of medicine at the University of Chicago, was reported to be
disgusted with the overtly political activities of the majority of the
mission. The other medical men were William S. Thayer, professor of
medicine at Johns Hopkins University; D. J. McCarthy, Fellow of Phipps
Institute for Study and Prevention of Tuberculosis, at Philadelphia;
Henry C. Sherman, professor of food chemistry at Columbia University; C.
E. A. Winslow, professor of bacteriology and hygiene at Yale Medical
School; Wilbur E. Post, professor of medicine at Rush Medical College;
Dr. Malcolm Grow, of the Medical Officers Reserve Corps of the U.S.
Army; and Orrin Wightman, professor of clinical medicine, New York
Polyclinic Hospital. George C. Whipple was listed as professor of
sanitary engineering at Harvard University but in fact was partner of
the New York firm of Hazen, Whipple & Fuller, engineering consultants.
This is significant because Malcolm Pirnie of whom more later was
listed as an assistant sanitary engineer and employed as an engineer by
Hazen, Whipple & Fuller.
The majority of the mission, as seen from the table, was made up of
lawyers, financiers, and their assistants, from the New York financial
district. The mission was financed by William B. Thompson, described in
the official Red Cross circular as "Commissioner and Business Manager;
Director United States Federal Bank of New York." Thompson brought along
Cornelius Kelleher, described as an attache to the mission but actually
secretary to Thompson and with the same address 14 Wall Street, New
York City. Publicity for the mission was handled by Henry S. Brown, of
the same address. Thomas Day Thacher was an attorney with Simpson,
Thacher & Bartlett, a firm founded by his father, Thomas Thacher, in
1884 and prominently involved in railroad reorganization and mergers.
Thomas as junior first worked for the family firm, became assistant U.S.
attorney under Henry L. Stimson, and returned to the family firm in
1909. The young Thacher was a close friend of Felix Frankfurter and
later became assistant to Raymond Robins, also on the Red Cross Mission.
In 1925 he was appointed district judge under President Coolidge, became
solicitor general under Herbert Hoover, and was a director of the
William Boyce Thompson Institute.
THE 1917 AMERICAN RED CROSS MISSION TO RUSSIA
Members from Wall Street financial community and their
affiliations
Medical
doctors Orderlies,
interpreters,
etc.
Andrews (Liggett & Myers Tobacco) Billings (doctor) Brooks (orderly)
Barr (Chase National Bank) Grow (doctor) Clark (orderly)
Brown (c/o William B. Thompson) McCarthy (medical research;
doctor) Rocchia (orderly)
Cochran (McCann Co.) Post (doctor)
Kelleher (c/o William B. Thompson) Sherman (food chemistry) Travis
(movies)
Nicholson (Swirl & Co.) Thayer (doctor) Wyckoff (movies)
Pirnie (Hazen, Whipple & Fuller)
Redfield (Stetson, Jennings & Russell) Wightman (medicine) Hardy
(justice)
Robins (mining promoter) Winslow (hygiene) Horn (transportation)
Swift (Swift & Co.)
Thacher (Simpson, Thacher & Bartlett)
Thompson (Federal Reserve Bank of N.Y.)
Wardwell (Stetson, Jennings & Russell)
Whipple (Hazen, Whipple & Fuller)
Corse (National City Bank)
Magnuson (recommended by confidential agent of Colonel Thompson)
Alan Wardwell, also a deputy commissioner and secretary to the chairman,
was a lawyer with the law firm of Stetson, Jennings & Russell of 15
Broad Street, New York City, and H. B. Redfield was law secretary to
Wardwell. Major Wardwell was the son of William Thomas Wardwell,
long-time treasurer of Standard Oil of New Jersey and Standard Oil of
New York. The elder Wardwell was one of the signers of the famous
Standard Oil trust agreement, a member of the committee to organize Red
Cross activities in the Spanish American War, and a director of the
Greenwich Savings Bank. His son Alan was a director not only of
Greenwich Savings, but also of Bank of New York and Trust Co. and the
Georgian Manganese Company (along with W. Averell Harriman, a director
of Guaranty Trust). In 1917 Alan Wardwell was affiliated with Stetson,
Jennings 8c Russell and later joined Davis, Polk, Wardwell, Gardner &
Read (Frank L. Polk was acting secretary of state during the Bolshevik
Revolution period). The Senate Overman Committee noted that Wardwell was
favorable to the Soviet regime although Poole, the State Department
official on the spot, noted that "Major Wardwell has of all Americans
the widest personal knowledge of the terror" (316-23-1449). In the 1920s
Wardwell became active with the Russian-American Chamber of Commerce in
promoting Soviet trade objectives.
The treasurer of the mission was James W. Andrews, auditor of Liggett &
Myers Tobacco Company of St. Louis. Robert I. Barr, another member, was
listed as a deputy commissioner; he was a vice president of Chase
Securities Company (120 Broadway) and of the Chase National Bank. Listed
as being in charge of advertising was William Cochran of 61 Broadway,
New York City. Raymond Robins, a mining promoter, was included as a
deputy commissioner and described as "a social economist." Finally, the
mission included two members of Swift & Company of Union Stockyards,
Chicago. The Swifts have been previously mentioned as being connected
with German espionage in the United States during World War I. Harold H.
Swift, deputy commissioner, was assistant to the vice president of Swift
& Company; William G. Nicholson was also with Swift & Company, Union
Stockyards.
Two persons were unofficially added to the mission after it arrived in
Petrograd: Frederick M. Corse, representative of the National City Bank
in Petrograd; and Herbert A. Magnuson, who was "very highly recommended
by John W. Finch, the confidential agent in China of Colonel William B.
Thompson."4
The Pirnie papers, deposited at the Hoover Institution, contain primary
material on the mission. Malcolm Pirnie was an engineer employed by the
firm of Hazen, Whipple & Fuller, consulting engineers, of 42 Street, New
York City. Pirnie was a member of the mission, listed on a manifest as
an assistant sanitary engineer. George C. Whipple, a partner in the
firm, was also included in the group. The Pirnie papers include an
original telegram from William B. Thompson, inviting assistant sanitary
engineer Pirnie to meet with him and Henry P. Davison, chairman of the
Red Cross War Council and partner in the J.P. Morgan firm, before
leaving for Russia. The telegram reads as follows:
WESTERN UNION TELEGRAM New York, June 21, 1917
To Malcolm Pirnie
I should very much like to have you dine with me at the Metropolitan
Club, Sixteenth Street and Fifth Avenue New York City at eight o'clock
tomorrow Friday evening to meet Mr. H. P. Davison.
W. B. Thompson, 14 Wall Street
The files do not elucidate why Morgan partner Davison and Thompson,
director of the Federal Reserve Bank two of the most prominent
financial men in New York wished to have dinner with an assistant
sanitary engineer about to leave for Russia. Neither do the files
explain why Davison was subsequently unable to meet Dr. Billings and the
commission itself, nor why it was necessary to advise Pirnie of his
inability to do so. But we may surmise that the official cover of the
mission Red Cross activities was of significantly less interest than
the Thompson-Pirnie activities, whatever they may have been. We do know
that Davison wrote to Dr. Billings on June 25, 1917:
Dear Doctor Billings:
It is a disappointment to me and to my associates on the War Council not
have been able to meet in a body the members of your Commission ....
A copy of this letter was also mailed to assistant sanitary engineer
Pirnie with a personal letter from Morgan banker Henry P. Davison, which
read:
My dear Mr. Pirnie:
You will, I am sure, entirely understand the reason for the letter to
Dr. Billings, copy of which is enclosed, and accept it in the spirit in
which it is sent ....
The purpose of Davison's letter to Dr. Billings was to apologize to the
commission and Billings for being unable to meet with them. We may then
be justified in supposing that some deeper arrangements were made by
Davison and Pirnie concerning the activities of the mission in Russia
and that these arrangements were known to Thompson. The probable nature
of these activities will be described later.5
The American Red Cross Mission (or perhaps we should call it the Wall
Street Mission to Russia) also employed three Russian-English
interpreters: Captain Ilovaisky, a Russian Bolshevik; Boris Reinstein, a
Russian-American, later secretary to Lenin, and the head of Karl Radek's
Bureau of International Revolutionary Propaganda, which also employed
John Reed and Albert Rhys Williams; and Alexander Gumberg (alias Berg,
real name Michael Gruzenberg), who was a brother of Zorin, a Bolshevik
minister. Gumberg was also the chief Bolshevik agent in Scandinavia. He
later became a confidential assistant to Floyd Odlum of Atlas
Corporation in the United States as well as an adviser to Reeve Schley,
a vice president of the Chase Bank.
It should be asked in passing: How useful were the translations supplied
by these interpreters? On September 13, 1918, H. A. Doolittle, American
vice consul at Stockholm, reported to the secretary of state on a
conversation with Captain Ilovaisky (who was a "close personal friend"
of Colonel Robins of the Red Cross Mission) concerning a meeting of the
Murman Soviet and the Allies. The question of inviting the Allies to
land at Murman was under discussion at the Soviet, with Major Thacher of
the Red Cross Mission acting for the Allies. Ilovaisky interpreted
Thacher's views for the Soviet. "Ilovaisky spoke at some length in
Russian, supposedly translating for Thacher, but in reality for Trotsky
.... "to the effect that "the United States would never permit such a
landing to occur and urging the speedy recognition of the Soviets and
their politics."6Apparently
Thacher suspected he was being mistranslated and expressed his
indignation. However, "Ilovaisky immediately telegraphed the substance
to Bolshevik headquarters and through their press bureau had it appear
in all the papers as emanating from the remarks of Major Thacher and as
the general opinion of all truly accredited American representatives."7
Ilovaisky recounted to Maddin Summers, U.S. consul general in Moscow,
several instances where he (Ilovaisky) and Raymond Robins of the Red
Cross Mission had manipulated the Bolshevik press, especially "in regard
to the recall of the Ambassador, Mr. Francis." He admitted that they had
not been scrupulous, "but had acted according to their ideas of right,
regardless of how they might have conflicted with the politics of the
accredited American representatives."8
This then was the American Red Cross Mission to Russia in 1917.
AMERICAN RED CROSS MISSION TO RUMANIA
In 1917 the American Red Cross also sent a medical assistance mission to
Rumania, then fighting the Central Powers as an ally of Russia. A
comparison of the American Red Cross Mission to Russia with that sent to
Rumania suggests that the Red Cross Mission based in Petrograd had very
little official connection with the Red Cross and even less connection
with medical assistance. Whereas the Red Cross Mission to Rumania
valiantly upheld the Red Cross twin principles of "humanity" and
"neutrality," the Red Cross Mission in Petrograd flagrantly abused both.
The American Red Cross Mission to Rumania left the United States in July
1917 and located itself at Jassy. The mission consisted of thirty
persons under Chairman Henry W. Anderson, a lawyer from Virginia. Of the
thirty, sixteen were either doctors or surgeons. By comparison, out of
twenty-nine individuals with the Red Cross Mission to Russia, only three
were doctors, although another four members were from universities and
specialized in medically related fields. At the most, seven could be
classified as doctors with the mission to Russia compared with sixteen
with the mission to Rumania. There was about the same number of
orderlies and nurses with both missions. The significant comparison,
however, is that the Rumanian mission had only two lawyers, one
treasurer, and one engineer. The Russian mission had fifteen lawyers and
businessmen. None of the Rumanian mission lawyers or doctors came from
anywhere near the New York area but all, except one (an "observer" from
the Department of Justice in Washington, D.C.), of the lawyers and
businessmen with the Russian mission came from that area. Which is to
say that more than half the total of the Russian mission came from the
New York financial district. In other words, the relative composition of
these missions confirms that the mission to Rumania had a legitimate
purpose to practice medicine while the Russian mission had a
non-medical and strictly political objective. From its personnel, it
could be classified as a commercial or financial mission, but from its
actions it was a subversive political action group.
PERSONNEL WITH THE AMERICAN RED CROSS MISSIONS TO RUSSIA AND RUMANIA,
1917
AMERICAN RED CROSS
MISSION TO
Personnel Russia Rumania
Medical (doctors and surgeons) 7 16
Orderlies, nurses 7 10
Lawyers and businessmen 15 4
TOTAL 29 30
SOURCES:
American Red Cross, Washington, D.C.
U.S. Department of State, Petrograd embassy, Red Cross file, 1917.
The Red Cross Mission to Rumania remained at its post in Jassy for the
remainder of 1917 and into 1918. The medical staff of the American Red
Cross Mission in Russia the seven doctors quit in disgust in August
1917, protested the political activities of Colonel Thompson, and
returned to the United States. Consequently, in September 1917, when the
Rumanian mission appealed to Petrograd for American doctors and nurses
to help out in the near crisis conditions in Jassy, there were no
American doctors or nurses in Russia available to go to Rumania.
Whereas the bulk of the mission in Russia occupied its time in internal
political maneuvering, the mission in Rumania threw itself into relief
work as soon as it arrived. On September 17, 1917, a confidential cable
from Henry W. Anderson, chairman of the Rumania mission, to the American
ambassador Francis in Petrograd requested immediate and urgent help in
the form of $5 million to meet an impending catastrophe in Rumania. Then
followed a series of letters, cables, and communications from Anderson
to Francis appealing, unsuccessfully, for help.
On September 28, 1917, Vopicka, American minister in Rumania, cabled
Francis at length, for relay to Washington, and repeated Anderson's
analysis of the Rumanian crisis and the danger of epidemics and
worse as winter closed in:
Considerable money and heroic measures required prevent far reaching
disaster .... Useless try handle situation without someone with
authority and access to government . . . With proper organization to
look after transport receive and distribute supplies.
The hands of Vopicka and Anderson were tied as all Rumanian supplies and
financial transactions were handled by the Red Cross Mission in
Petrograd and Thompson and his staff of fifteen Wall Street lawyers
and businessmen apparently had matters of greater concern that Rumanian
Red Cross affairs. There is no indication in the Petrograd embassy files
at the U.S. State Department that Thompson, Robins, or Thacher concerned
himself at any time in 1917 or 1918 with the urgent situation in
Rumania. Communications from Rumania went to Ambassador Francis or to
one of his embassy staff, and occasionally through the consulate in
Moscow.
By October 1917 the Rumanian situation reached the crisis point. Vopicka
cabled Davison in New York (via Petrograd) on October 5:
Most urgent problem here .... Disastrous effect feared .... Could you
possibly arrange special shipment .... Must rush or too late.
Then on November 5 Anderson cabled the Petrograd embassy saying that
delays in sending help had already "cost several thousand lives." On
November 13 Anderson cabled Ambassador Francis concerning Thompson's
lack of interest in Rumanian conditions:
Requested Thompson furnish details all shipments as received but have
not obtained same .... Also requested him keep me posted as to transport
conditions but received very little information.
Anderson then requested that Ambassador Francis intercede on his behalf
in order to have funds for the Rumanian Red Cross handled in a separate
account in London, directly under Anderson and removed from the control
of Thompson's mission.
THOMPSON IN KERENSKY'S RUSSIA
What then was the Red Cross Mission doing? Thompson certainly acquired a
reputation for opulent living in Petrograd, but apparently he undertook
only two major projects in Kerensky's Russia: support for an American
propaganda program and support for the Russian Liberty Loan. Soon after
arriving in Russia Thompson met with Madame Breshko-Breshkovskaya and
David Soskice, Kerensky's secretary, and agreed to contribute $2 million
to a committee of popular education so that it could "have its own press
and... engage a staff of lecturers, with cinematograph illustrations"
(861.00/ 1032); this was for the propaganda purpose of urging Russia to
continue in the war against Germany. According to Soskice, "a packet of
50,000 rubles" was given to Breshko-Breshkovskaya with the statement,
"This is for you to expend according to your best judgment." A further
2,100,000 rubles was deposited into a current bank account. A letter
from J. P. Morgan to the State Department (861.51/190) confirms that
Morgan cabled 425,000 rubles to Thompson at his request for the Russian
Liberty Loan; J. P. also conveyed the interest of the Morgan firm
regarding "the wisdom of making an individual subscription through Mr.
Thompson" to the Russian Liberty Loan. These sums were transmitted
through the National City Bank branch in Petrograd.
THOMPSON GIVES THE BOLSHEVIKS $1 MILLION
Of greater historical significance, however, was the assistance given to
the Bolsheviks first by Thompson, then, after December 4, 1917, by
Raymond Robins.
Thompson's contribution to the Bolshevik cause was recorded in the
contemporary American press. The Washington Post of February 2, 1918,
carried the following paragraphs:
GIVES BOLSHEVIKI A MILLION
W. B. Thompson, Red Cross Donor, Believes Party Misrepresented. New
York, Feb. 2 (1918). William B. Thompson, who was in Petrograd from July
until November last, has made a personal contribution of $1,000,000 to
the Bolsheviki for the purpose of spreading their doctrine in Germany
and Austria.
Mr. Thompson had an opportunity to study Russian conditions as head of
the American Red Cross Mission, expenses of which also were largely
defrayed by his personal contributions. He believes that the Bolsheviki
constitute the greatest power against Pro-Germanism in Russia and that
their propaganda has been undermining the militarist regimes of the
General Empires.
Mr. Thompson deprecates American criticism of the Bolsheviki. He
believes they have been misrepresented and has made the financial
contribution to the cause in the belief that it will be money well spent
for the future of Russia as well as for the Allied cause.
Hermann Hagedorn's biography The Magnate: William Boyce Thompson and His
Time (1869-1930) reproduces a photograph of a cablegram from J.P. Morgan
in New York to W. B. Thompson, "Care American Red Cross, Hotel Europe,
Petrograd." The cable is date-stamped, showing it was received at
Petrograd "8-Dek 1917" (8 December 1917), and reads:
New York Y757/5 24W5 Nil Your cable second received. We have paid
National City Bank one million dollars as instructed Morgan.
The National City Bank branch in Petrograd had been exempted from the
Bolshevik nationalization decree the only foreign or domestic Russian
bank to have been so exempted. Hagedorn says that this million dollars
paid into Thompson's NCB account was used for "political purposes."
SOCIALIST MINING PROMOTER RAYMOND ROBINS9
William B. Thompson left Russia in early December 1917 to return home.
He traveled via London, where, in company with Thomas Lamont of the J.P.
Morgan firm, he visited Prime Minister Lloyd George, an episode we pick
up in the next chapter. His deputy, Raymond Robins, was left in charge
of the Red Cross Mission to Russia. The general impression that Colonel
Robins presented in the subsequent months was not overlooked by the
press. In the words of the Russian newspaper Russkoe Slovo,Robins "on
the one hand represents American labor and on the other hand American
capital, which is endeavoring through the Soviets to gain their Russian
markets."10
Raymond Robins started life as the manager of a Florida phosphate
company commissary. From this base he developed a kaolin deposit, then
prospected Texas and the Indian territories in the late nineteenth
century. Moving north to Alaska, Robins made a fortune in the Klondike
gold rush. Then, for no observable reason, he switched to socialism and
the reform movement. By 1912 he was an active member of Roosevelt's
Progressive Party. He joined the 1917 American Red Cross Mission to
Russia as a "social economist."
There is considerable evidence, including Robins' own statements, that
his reformist social-good appeals were little more than covers for the
acquisition of further power and wealth, reminiscent of Frederick Howe's
suggestions in Confessions of a Monopolist. For example, in February
1918 Arthur Bullard was in Petrograd with the U.S. Committee on Public
Information and engaged in writing a long memorandum for Colonel Edward
House. This memorandum was given to Robins by Bullard for comments and
criticism before transmission to House in Washington, D.C. Robins' very
unsocialistic and imperialistic comments were to the effect that the
manuscript was "uncommonly discriminating, far-seeing and well done,"
but that he had one or two reservations in particular, that
recognition of the Bolsheviks was long overdue, that it should have been
effected immediately, and that had the U.S. so recognized the
Bolsheviks, "I believe that we would now be in control of the surplus
resources of Russia and have control officers at all points on the
frontier."11
This desire to gain "control of the surplus resources of Russia" was
also obvious to Russians. Does this sound like a social reformer in the
American Red Cross or a Wall Street mining promoter engaged in the
practical exercise of imperialism?
In any event, Robins made no bones about his support for the
Bolshevists.12 Barely
three weeks after the Bolshevik phase of the Revolution started, Robins
cabled Henry Davison at Red Cross headquarters: "Please urge upon the
President the necessity of our continued intercourse with the Bolshevik
Government." Interestingly, this cable was in reply to a cable
instructing Robins that the "President desires the withholding of direct
communications by representatives of the United States with the
Bolshevik Government."13 Several
State Department reports complained about the partisan nature of Robins'
activities. For example, on March 27, 1919, Harris, the American consul
at Vladivostok, commented on a long conversation he had had with Robins
and protested gross inaccuracies in the latter's reporting. Harris
wrote, "Robins stated to me that no German and Austrian prisoners of war
had joined the Bolshevik army up to May 1918. Robbins knew this
statement was absolutely false." Harris then proceeded to provide the
details of evidence available to Robins.14
Limit of Area Controlled by Bolsheviks, January 1918
Harris concluded, "Robbins deliberately misstated facts concerning
Russia at that time and he has been doing it ever since."
On returning to the United States in 1918, Robins continued his efforts
in behalf of the Bolsheviks. When the files of the Soviet Bureau were
seized by the Lusk Committee, it was found that Robins had had
"considerable correspondence" with Ludwig Martens and other members of
the bureau. One of the more interesting documents seized was a letter
from Santeri Nuorteva (alias Alexander Nyberg), the first Soviet
representative in the U.S., to "Comrade Cahan," editor of the New York
Daily Forward. The letter called on the party faithful to prepare the
way for Raymond Robins:
(To Daily) FORWARD July 6, 1918
Dear Comrade Cahan:
It is of the utmost importance that the Socialist press set up a clamor
immediately that Col. Raymond Robins, who has just returned from Russia
at the head of the Red Cross Mission, should be heard from in a public
report to the American people. The armed intervention danger has greatly
increased. The reactionists are using the Czecho-Slovak adventure to
bring about invasion. Robins has all the facts about this and about the
situation in Russia generally. He takes our point of view.
I am enclosing copy of Call editorial which shows a general line of
argument, also some facts about Czecho-Slovaks.
Fraternally,
PS&AU Santeri
Nuorteva
THE INTERNATIONAL RED CROSS AND REVOLUTION
Unknown to its administrators, the Red Cross has been used from time to
time as a vehicle or cover for revolutionary activities. The use of Red
Cross markings for unauthorized purposes is not uncommon. When Tsar
Nicholas was moved from Petrograd to Tobolsk allegedly for his safety
(although this direction was towards danger rather than safety), the
train carried Japanese Red Cross placards. The State Department files
contain examples of revolutionary activity under cover of Red Cross
activities. For example, a Russian Red Cross official (Chelgajnov) was
arrested in Holland in 1919 for revolutionary acts (316-21-107). During
the Hungarian Bolshevik revolution in 1918, led by Bela Kun, Russian
members of the Red Cross (or revolutionaries operating as members of the
Russian Red Cross) were found in Vienna and Budapest. In 1919 the U.S.
ambassador in London cabled Washington startling news; through the
British government he had learned that "several Americans who had
arrived in this country in the uniform of the Red Cross and who stated
that they were Bolsheviks . . . were proceeding through France to
Switzerland to spread Bolshevik propaganda." The ambassador noted that
about 400 American Red Cross people had arrived in London in November
and December 1918; of that number one quarter returned to the United
States and "the remainder insisted on proceeding to France." There was a
later report on January 15, 1918, to the effect that an editor of a
labor newspaper in London had been approached on three different
occasions by three different American Red Cross officials who offered to
take commissions to Bolsheviks in Germany. The editor had suggested to
the U.S. embassy that it watch American Red Cross personnel. The U.S.
State Department took these reports seriously and Polk cabled for names,
stating, "If true, I consider it of the greatest importance"
(861.00/3602 and /3627).
To summarize: the picture we form of the 1917 American Red Cross Mission
to Russia is remote from one of neutral humanitarianism. The mission was
in fact a mission of Wall Street financiers to influence and pave the
way for control, through either Kerensky or the Bolshevik
revolutionaries, of the Russian market and resources. No other
explanation will explain the actions of the mission. However, neither
Thompson nor Robins was a Bolshevik. Nor was either even a consistent
socialist. The writer is inclined to the interpretation that the
socialist appeals of each man were covers for more prosaic objectives.
Each man was intent upon the commercial; that is, each sought to use the
political process in Russia for personal financial ends. Whether the
Russian people wanted the Bolsheviks was of no concern. Whether the
Bolshevik regime would act against the United States as it
consistently did later was of no concern. The single overwhelming
objective was to gain political and economic influence with the new
regime, whatever its ideology. If William Boyce Thompson had acted
alone, then his directorship of the Federal Reserve Bank would be
inconsequential. However, the fact that his mission was dominated by
representatives of Wall Street institutions raises a serious question
in effect, whether the mission was a planned, premeditated operation by
a Wall Street syndicate. This the reader will have to judge for himself,
as the rest of the story unfolds.
Footnotes:
1John Foster Dulles, American Red Cross (New York: Harper, 1950).
2Minutes of the War Council of the American National Red Cross
(Washington, D.C., May 1917)
3Gibbs Diary, August 9, 1917. State Historical Society of Wisconsin.
4 Billings report to Henry P. Davison, October 22, 1917, American Red
Cross Archives.
5The Pirnie papers also enable us to fix exactly the dates that members
of the mission left Russia. In the case of William B. Thompson, this
date is critical to the argument of this book: Thompson left Petrograd
for London on December 4, 1917. George F. Kennan states Thompson left
Petrograd on November 27, 1917(Russia Leaves the War, p. 1140).
6U.S. State Dept. Decimal File, 861.00/3644.
7Ibid.
8Ibid.
9Robins is the correct spelling. The name is consistently spelled
"Robbins" in the Stale Department files.
10U.S. State Dept. Decimal File, 316-11-1265, March 19, 1918.
11Bullard ms., U.S. State Dept. Decimal File, 316-11-1265.
12The New World Review (fall 1967, p. 40) comments on Robins, noting
that he was "in sympathy with the aims of the Revolution, although a
capitalist "
13Petrograd embassy, Red Cross file.
14U.S. State Dept. Decimal File, 861.00/4168
Chapter VI
CONSOLIDATION AND EXPORT OF THE REVOLUTION
Marx's great book Das Kapital is at once a monument of reasoning and a
storehouse of facts.
Lord Milner, member of the British War Cabinet, 1917, and director of
the London Joint Stock Bank
William Boyce Thompson is an unknown name in twentieth-century history,
yet Thompson played a crucial role in the Bolshevik Revolution.1 Indeed,
if Thompson had not been in Russia in 1917, subsequent history might
have followed a quite different course. Without the financial and, more
important, the diplomatic and propaganda assistance given to Trotsky and
Lenin by Thompson, Robins, and their New York associates, the Bolsheviks
may well have withered away and Russia evolved into a socialist but
constitutional society.
Who was William Boyce Thompson? Thompson was a promoter of mining
stocks, one of the best in a high-risk business. Before World War I he
handled stock-market operations for the Guggenheim copper interests.
When the Guggenheims needed quick capital for a stock-market struggle
with John D. Rockefeller, it was Thompson who promoted Yukon
Consolidated Goldfields before an unsuspecting public to raise a $3.5
million war chest. Thompson was manager of the Kennecott syndicate,
another Guggenheim operation, valued at $200 million. It was Guggenheim
Exploration, on the other hand, that took up Thompson's options on the
rich Nevada Consolidated Copper Company. About three quarters of the
original Guggenheim Exploration Company was controlled by the Guggenheim
family, the Whitney family (who ownedMetropolitan magazine, which
employed the Bolshevik John Reed), and John Ryan. In 1916 the Guggenheim
interests reorganized into Guggenheim Brothers and brought in William C.
Potter, who was formerly with Guggenheim's American Smelting and
Refining Company but who was in 1916 first' vice president of Guaranty
Trust.
Extraordinary skill in raising capital for risky mining promotions
earned Thompson a personal fortune and directorships in Inspiration
Consolidated Copper Company, Nevada Consolidated Copper Company, and
Utah Copper Company all major domestic copper producers. Copper is, of
course, a major material in the manufacture of munitions. Thompson was
also director of the Chicago Rock Island & Pacific Railroad, the Magma
Arizona Railroad and the Metropolitan Life Insurance Company. And of
particular interest for this book, Thompson was "one of the heaviest
stockholders in the Chase National Bank." It was Albert H. Wiggin,
president of the Chase Bank, who pushed Thompson for a post in the
Federal Reserve System; and in 1914 Thompson became the first full-term
director of the Federal Reserve Bank of New York the most important
bank in the Federal Reserve System.
By 1917, then, William Boyce Thompson was a financial operator of
substantial means, demonstrated ability, with a flair for promotion and
implementation of capitalist projects, and with ready access to the
centers of political and financial power. This was the same man who
first supported Aleksandr Kerensky, and who then became an ardent
supporter of the Bolsheviks, bequeathing a surviving symbol of this
support a laudatory pamphlet in Russian, "Pravda o Rossii i
Bol'shevikakh."2
Before leaving Russia in early December 1917 Thompson handed over the
American Red Cross Mission to his deputy Raymond Robins. Robins then
organized Russian revolutionaries to implement the Thompson plan for
spreading Bolshevik propaganda in Europe (see Appendix 3). A French
government document confirms this: "Itappeared that Colonel Robins . . .
was able to send a subversive mission of Russian bolsheviks to Germany
to start a revolution there."3 This
mission led to the abortive German Spartacist revolt of 1918. The
overall plan also included schemes for dropping Bolshevik literature by
airplane or for smuggling it across German lines.
Thompson made preparations in late 1917 to leave Petrograd and sell the
Bolshevik Revolution to governments in Europe and to the U.S. With this
in mind, Thompson cabled Thomas W. Lamont, a partner in the Morgan firm
who was then in Paris with Colonel E. M. House. Lamont recorded the
receipt of this cablegram in his biography:
Just as the House Mission was completing its discussions in Paris in
December 1917, I received an arresting cable from my old school and
business friend, William Boyce Thompson, who was then in Petrograd in
charge of the American Red Cross Mission there.4
Lamont journeyed to London and met with Thompson, who had left Petrograd
on December 5, traveled via Bergen, Norway, and arrived in London on
December 10. The most important achievement of Thompson and Lamont in
London was to convince the British War Cabinet then decidedly
anti-Bolshevik that the Bolshevik regime had come to stay, and that
British policy should cease to be anti-Bolshevik, should accept the new
realities, and should support Lenin and Trotsky. Thompson and Lamont
left London on December 18 and arrived in New York on December 25, 1917.
They attempted the same process of conversion in the United States.
A CONSULTATION WITH LLOYD GEORGE
The secret British War Cabinet papers are now available and record the
argument used by Thompson to sell the British government on a
pro-Bolshevik policy. The prime minister of Great Britain was David
Lloyd George. Lloyd George's private and political machinations rivaled
those of a Tammany Hall politician yet in his lifetime and for decades
after, biographers were unable, or unwilling, to come to grips with
them. In 1970 Donald McCormick's The Mask of Merlin lifted the veil of
secrecy. McCormick shows that by 1917 David Lloyd George had
bogged "too deeply in the mesh of international armaments intrigues to
be a free agent" and was beholden to Sir Basil Zaharoff, an
international armaments dealer, whose considerable fortune was made by
selling arms to both sides in several wars.5 Zaharoff
wielded enormous behind-the-scenes power and, according to McCormick,
was consulted on war policies by the Allied leaders. On more than one
occasion, reports McCormick, Woodrow Wilson, Lloyd George, and Georges
Clemenceau met in Zaharoff's Paris home. McCormick notes that "Allied
statesmen and leaders were obliged to consult him before planning any
great attack." British intelligence, according to McCormick, "discovered
documents which incriminated servants of the Crown as secret agents of
Sir Basil Zaharoff with the knowledge of Lloyd George."6 In
1917 Zaharoff was linked to the Bolsheviks; he sought to divert
munitions away from anti-Bolsheviks and had already intervened in behalf
of the Bolshevik regime in both London and Paris.
In late 1917, then at the time Lamont and Thompson arrived in London
Prime Minister Lloyd George was indebted to powerful international
armaments interests that were allied to the Bolsheviks and providing
assistance to extend Bolshevik power in Russia. The British prime
minister who met with William Thompson in 1917 was not then a free
agent; Lord Milner was the power behind the scenes and, as the epigraph
to this chapter suggests, favorably inclined towards socialism and Karl
Marx.
The "secret" War Cabinet papers give the "Prime Minister's account of a
conversation with Mr. Thompson, an American returned from Russia,"7 and
the report made by the prime minister to the War Cabinet after meeting
with Thompson.8 The
cabinet paper reads as follows:
The Prime Minister reported a conversation he had had with a Mr.
Thompson an American traveller and a man of considerable means who
had just returned from Russia, and who had given a somewhat different
impression of affairs in that country from what was generally believed.
The gist of his remarks was to the effect that the Revolution had come
to stay; that the Allies had not shown themselves sufficiently
sympathetic with the Revolution; and that MM. Trotzki and Lenin were not
in German pay, the latter being a fairly distinguished Professor. Mr.
Thompson had added that he considered the Allies should conduct in
Russia an active propaganda, carried out by some form of Allied Council
composed o[ men especially selected [or the purpose; further, that on
the whole, he considered, having regard to the character of the de facto
Russian Government, the several Allied Governments were not suitably
represented in Petrograd. In Mr. Thompson's opinion, it was necessary
for the Allies to realise that the Russian army and people were out of
the war, and that the Allies would have to choose between Russia as the
friendly or a hostile neutral.
The question was discussed as to whether the Allies ought not to change
their policy in regard to the de facto Russian Government, the
Bolsheviks being stated by Mr. Thompson to be and-German. In this
connection Lord Robert Cecil drew attention to the conditions of the
armistice between the German and Russian armies, which provided, inter
alia, for trading between the two countries, and for the establishment
of a Purchasing Commission in Odessa, the whole arrangement being
obviously dictated by the Germans. Lord Robert Cecil expressed the view
that the Germans would endeavour to continue the armistice until the
Russian army had melted away.
Sir Edward Carson read a communication, signed by M. Trotzki, which had
been sent to him by a British subject, the manager of the Russian branch
of the Vauxhall Motor Company, who had just returned from Russia [Paper
G.T. 3040]. This report indicated that M. Trotzki's policy was,
ostensibly at any rate, one of hostility to the organisation of
civilised society rather than pro-German. On the other hand, it was
suggested that an assumed attitude of this kind was by no means
inconsistent with Trotzki's being a German agent, whose object was to
ruin Russia in order that Germany might do what she desired in that
country.
After hearing Lloyd George's report and supporting arguments, the War
Cabinet decided to go along with Thompson and the Bolsheviks. Milner had
a former British consul in Russia Bruce Lockhart ready and waiting
in the wings. Lockhart was briefed and sent to Russia with instructions
to work informally with the Soviets.
The thoroughness of Thompson's work in London and the pressure he was
able to bring to bear on the situation are suggested by subsequent
reports coming into the hands of the War Cabinet, from authentic
sources. The reports provide a quite different view of Trotsky and the
Bolsheviks from that presented by Thompson, and yet they were ignored by
the cabinet. In April 1918 General Jan Smuts reported to the War Cabinet
his talk with General Nieffel, the head of the French Military Mission
who had just returned from Russia:
Trotski (sic) . . . was a consummate scoundrel who may not be
pro-German, but is thoroughly pro-Trotski and pro-revolutionary and
cannot in any way be trusted. His influence is shown by the way he has
come to dominate Lockhart, Robins and the French representative. He [Nieffel]
counsels great prudence in dealing with Trotski, who he admits is the
only really able man in Russia.9
Several months later Thomas D. Thacher, Wall Street lawyer and another
member of the American Red CrAss Mission to Russia, was in London. On
April 13, 1918, Thacher wrote to the American ambassador in London to
the effect that he had received a request from H. P. Davison, a Morgan
partner, "to confer with Lord Northcliffe" concerning the situation in
Russia and then to go on to Paris "for other conferences." Lord
Northcliffe was ill and Thacher left with yet another Morgan partner,
Dwight W. Morrow, a memorandum to be submitted to Northcliffe on his
return to London.10 This
memorandum not only made explicit suggestions about Russian policy that
supported Thompson's position but even stated that "the fullest
assistance should be given to the Soviet government in its efforts to
organize a volunteer revolutionary army." The four main proposals in
this Thacher report are:
First of all . . . the Allies should discourage Japanese intervention in
Siberia.
In the second place, the fullest assistance should be given to the
Soviet Government in its efforts to organize a volunteer revolutionary
army.
Thirdly, the Allied Governments should give their moral support to the
Russian people in their efforts to work out their own political systems
free from the domination of any foreign power ....
Fourthly, until the time when open conflict shall result between the
German Government and the Soviet Government of Russia there will be
opportunity for peaceful commercial penetration by German agencies in
Russia. So long as there is no open break, it will probably be
impossible to entirely prevent such commerce. Steps should, therefore,
be taken to impede, so far as possible, the transport of grain and raw
materials to Germany from Russia.11
THOMPSON'S INTENTIONS AND OBJECTIVES
Why would a prominent Wall Street financier, and director of the Federal
Reserve Bank, want to organize and assist Bolshevik revolutionaries? Why
would not one but several Morgan partners working in concert want to
encourage the formation of a Soviet "volunteer revolutionary army" an
army supposedly dedicated to the overthrow of Wall Street, including
Thompson, Thomas Lamont, Dwight Morrow, the Morgan firm, and all their
associates?
Thompson at least was straightforward about his objectives in Russia: he
wanted to keep Russia at war with Germany (yet he argued before the
British War Cabinet that Russia was out of the war anyway) and to retain
Russia as a market for postwar American enterprise. The December 1917
Thompson memorandum to Lloyd George describes these aims.12 The
memorandum begins, "The Russian situation is lost and Russia lies
entirely open to unopposed German exploitation .... "and concludes,
"I believe that intelligent and courageous work will still prevent
Germany from occupying the field to itself and thus exploiting Russia at
the expense of the Allies." Consequently, it was German commercial and
industrial exploitation of Russia that Thompson feared (this is also
reflected in the Thacher memorandum) and that brought Thompson and his
New York friends into an alliance with the Bolsheviks. Moreover, this
interpretation is reflected in a quasi-jocular statement made by Raymond
Robins, Thompson's deputy, to Bruce Lockhart, the British agent:
You will hear it said that I am the representative of Wall Street; that
I am the servant of William B. Thompson to get Altai copper for him;
that I have already got 500,000 acres of the best timber land in Russia
for myself; that I have already copped off the Trans-Siberian Railway;
that they have given me a monopoly of the platinum of Russia; that this
explains my working for the soviet .... You will hear that talk. Now, I
do not think it is true, Commissioner, but let us assume it is true. Let
us assume that I am here to capture Russia for Wall Street and American
business men. Let us assume that you are a British wolf and I am an
American wolf, and that when this war is over we are going to eat each
other up for the Russian market; let us do so in perfectly frank, man
fashion, but let us assume at the same time that we are fairly
intelligent wolves, and that we know that if we do not hunt together in
this hour the German wolf will eat us both up, and then let us go to
work.13
With this in mind let us take a look at Thompson's personal motivations.
Thompson was a financier, a promoter, and, although without previous
interest in Russia, had personally financed the Red Cross Mission to
Russia and used the mission as a vehicle for political maneuvering. From
the total picture we can deduce that Thompson's motives were primarily
financial and commercial. Specifically, Thompson was interested in the
Russian market, and how this market could be influenced, diverted; and
captured for postwar exploitation by a Wall Street syndicate, or
syndicates. Certainly Thompson viewed Germany as an enemy, but less a
political enemy than an economic or a commercial enemy. German industry
and German banking were the real enemy. To outwit Germany, Thompson was
willing to place seed money on any political power vehicle that would
achieve his objective. In other words, Thompson was an American
imperialist fighting against German imperialism, and this struggle was
shrewdly recognized and exploited by Lenin and Trotsky.
The evidence supports this apolitical approach. In early August 1917,
William Boyce Thompson lunched at the U.S. Petrograd embassy with
Kerensky, Terestchenko, and the American ambassador Francis. Over lunch
Thompson showed his Russian guests a cable he had just sent to the New
York office of J.P. Morgan requesting transfer of 425,000 rubles to
cover a personal subscription to the new Russian Liberty Loan. Thompson
also asked Morgan to "inform my friends I recommend these bonds as the
best war investment I know. Will be glad to look after their purchasing
here without compensation"; he then offered personally to take up twenty
percent of a New York syndicate buying five million rubles of the
Russian loan. Not unexpectedly, Kerensky and Terestchenko indicated
"great gratification" at support from Wall Street. And Ambassador
Francis by cable promptly informed the State Department that the Red
Cross commission was "working harmoniously with me," and that it would
have an "excellent effect."14 Other
writers have recounted how Thompson attempted to convince the Russian
peasants to support Kerensky by investing $1 million of his own money
and U.S. government funds on the same order of magnitude in propaganda
activities. Subsequently, the Committee on Civic Education in Free
Russia, headed by the revolutionary "Grandmother" Breshkovskaya, with
David Soskice (Kerensky's private secretary) as executive, established
newspapers, news bureaus, printing plants, and speakers bureaus to
promote the appeal "Fight the kaiser and save the revolution." It is
noteworthy that the Thompson-funded Kerensky campaign had the same
appeal "Keep Russia in the war" as had his financial support of the
Bolsheviks. The common link between Thompson's support of Kerensky and
his support of Trotsky and Lenin was "continue the war against
Germany" and keep Germany out of Russia.
In brief, behind and below the military, diplomatic, and political
aspects of World War I, there was another battle raging, namely, a
maneuvering for postwar world economic power by international operators
with significant muscle and influence. Thompson was not a Bolshevik; he
was not even pro-Bolshevik. Neither was he pro-Kerensky. Nor was he even
pro-American. The overriding motivation was the capturing of the postwar
Russian market. This was a commercial, not an ideological, objective.
Ideology could sway revolutionary operators like Kerensky, Trotsky,
Lenin et al., but not financiers.
The Lloyd George memorandum demonstrates Thompson's partiality for
neither Kerensky nor the Bolsheviks: "After the overthrow of the last
Kerensky government we materially aided the dissemination of the
Bolshevik literature, distributing it through agents and by aeroplanes
to the Germany army."15 This
was written in mid-December 1917, only five weeks after the start of the
Bolshevik Revolution, and less than four months after Thompson expressed
his support of Kerensky over lunch in the American embassy.
THOMPSON RETURNS TO THE UNITED STATES
Thompson then returned and toured the United States with a public plea
for recognition of the Soviets. In a speech to the Rocky Mountain Club
of New York in January 1918, Thompson called for assistance for the
emerging Bolshevik government and, appealing to an audience composed
largely of Westerners, evoked the spirit of the American pioneers:
These men would not have hesitated very long about extending recognition
and giving the fullest help and sympathy to the workingman's government
of Russia, because in 1819 and the years following we had out there
bolsheviki governments . . . and mighty good governments too....16
It strains the imagination to compare the pioneer experience of our
Western frontier to the ruthless extermination of political opposition
then under way in Russia. To Thompson, promoting this was no doubt
looked upon as akin to his promotion of mining stocks in days gone by.
As for those in Thompson's audience, we know not what they thought;
however, no one raised a challenge. The speaker was a respected director
of the Federal Reserve Bank of New York, a self-made millionaire (and
that counts for much). And after all, had he not just returned from
Russia? But all was not rosy. Thompson's biographer Hermann Hagedorn has
written that Wall Street was "stunned" that his friends were "shocked"
and "said he had lost his head, had turned Bolshevist himself."17
While Wall Street wondered whether he had indeed "turned Bolshevik,"
Thompson found sympathy among fellow directors on the board of the
Federal Reserve Bank of New York. Codirector W. L. Saunders, chairman of
Ingersoll-Rand Corporation and a director of the FRB, wrote President
Wilson on October 17, 1918, stating that he was "in sympathy with the
Soviet form of Government"; at the same time he disclaimed any ulterior
motive such as "preparing now to get the trade of the world after the
war.18
Most interesting of Thompson's fellow directors was George Foster
Peabody, deputy chairman of the Federal Reserve Bank of New York and a
close friend of socialist Henry George. Peabody had made a fortune in
railroad manipulation, as Thompson had made his fortune in the
manipulation of copper stocks. Peabody then became active in behalf of
government ownership of railroads, and openly adopted socialization.19 How
did Peabody reconcile his private-enterprise success with promotion of
government ownership? According to his biographer Louis Ware, "His
reasoning told him that it was important for this form of transport to
be operated as a public service rather than for the advantage of private
interests." This high-sounding do-good reasoning hardly rings true. It
would be more accurate to argue that given the dominant political
influence of Peabody and his fellow financiers in Washington, they could
by government control of railroads more easily avoid the rigors of
competition. Through political influence they could manipulate the
police power of the state to achieve what they had been unable, or what
was too costly, to achieve under private enterprise. In other words, the
police power of the state was a means of maintaining a private monopoly.
This was exactly as Frederick C. Howe had proposed.20 The
idea of a centrally planned socialist Russia must have appealed to
Peabody. Think of it one gigantic state monopoly! And Thompson, his
friend and fellow director, had the inside track with the boys running
the operation!21
THE UNOFFICIAL AMBASSADORS: ROBINS, LOCKHART, AND SADOUL
The Bolsheviks for their part correctly assessed a lack of sympathy
among the Petrograd representatives of the three major Western powers:
the United States, Britain and France. The United States was represented
by Ambassador Francis, undisguisedly out of sympathy with the
revolution. Great Britain was represented by Sir James Buchanan, who had
strong ties to the tsarist monarchy and was suspected of having helped
along the Kerensky phase of the revolution. France was represented by
Ambassador Paleologue, overtly anti-Bolshevik. In early 1918 three
additional personages made their appearance; they became de
facto representatives of these Western countries and edged out the
officially recognized representatives.
Raymond Robins took over the Red Cross Mission from W. B. Thompson in
early December 1917 but concerned himself more with economic and
political matters than obtaining relief and assistance for
poverty-stricken Russia. On December 26, 1917, Robins cabled Morgan
partner Henry Davison, temporarily the director general of the American
Red Cross: "Please urge upon the President the necessity of our
continued intercourse with the Bolshevik Government."22 On
January 23, 1918, Robins cabled Thompson, then in New York:
Soviet Government stronger today than ever before. Its authority and
power greatly consolidated by dissolution of Constituent Assembly ....
Cannot urge too strongly importance of prompt recognition of Bolshevik
authority .... Sisson approves this text and requests you to show this
cable to Creel. Thacher and Wardwell concur.23
Later in 1918, on his return to the United States, Robins submitted a
report to Secretary of State Robert Lansing containing this opening
paragraph: "American economic cooperation with Russia; Russia will
welcome American assistance in economic reconstruction."24
Robins' persistent efforts in behalf of the Bolshevik cause gave him a
certain prestige in the Bolshevik camp, and perhaps even some political
influence. The U.S. embassy in London claimed in November 1918 that "Salkind
owe[s] his appointment, as Bolshevik Ambassador to Switzerland, to an
American . . . no other than Mr. Raymond Robins."25 About
this time reports began filtering into Washington that Robins was
himself a Bolshevik; for example, the following from Copenhagen, dated
December 3, 1918:
Confidential. According to a statement made by Radek to George de
Patpourrie, late Austria Hungarian Consul General at Moscow, Colonel
Robbins [sic],formerly thief of the American Red Cross Mission to
Russia, is at present in Moscow negotiating with the Soviet Government
and arts as the intermediary between the Bolsheviki and their friends in
the United States. The impression seems to be in some quarters that
Colonel Robbins is himself a Bolsheviki while others maintain that he is
not but that his activities in Russia have been contrary to the interest
of Associated Governments.26
Materials in the files of the Soviet Bureau in New York, and seized by
the Lusk Committee in 1919, confirm that both Robins and his wife were
closely associated with Bolshevik activities in the United States and
with the formation of the Soviet Bureau in New York.27
The British government established unofficial relations with the
Bolshevik regime by sending to Russia a young Russian-speaking agent,
Bruce Lockhart. Lockhart was, in effect, Robins' opposite number; but
unlike Robins, Lockhart had direct channels to his Foreign Office.
Lockhart was not selected by the foreign secretary or the Foreign
Office; both were dismayed at the appointment. According to Richard
Ullman, Lockhart was "selected for his mission by Milner and Lloyd
George themselves .... "Maxim Litvinov, acting as unofficial Soviet
representative in Great Britain, wrote for Lockhart a letter of
introduction to Trotsky; in it he called the British agent "a thoroughly
honest man who understands our position and sympathizes with us.28
We have already noted the pressures on Lloyd George to take a
pro-Bolshevik position, especially those from William B. Thompson, and
those indirectly from Sir Basil Zaharoff and Lord Milner. Milner was, as
the epigraph to this chapter suggests, exceedingly prosocialist. Edward
Crankshaw has succinctly outlined Milner's duality.
Some of the passages [in Milner] on industry and society . . . are
passages which any Socialist would be proud to have written. But they
were not written by a Socialist. They were written by "the man who made
the Boer War." Some of the passages on Imperialism and the white man's
burden might have been written by a Tory diehard. They were written by
the student of Karl Marx.29
According to Lockhart, the socialist bank director Milner was a man who
inspired in him "the greatest affection and hero-worship."30 Lockhart
recounts how Milner personally sponsored his Russian appointment, pushed
it to cabinet level, and after his appointment talked "almost daily"
with Lockhart. While opening the way for recognition of the Bolsheviks,
Milner also promoted financial support for their opponents in South
Russia and elsewhere, as did Morgan in New York. This dual policy is
consistent with the thesis that the modus operandi of the politicized
internationalists such as Milner and Thompson was to place state
money on any revolutionary or counterrevolutionary horse that looked a
possible winner. The internationalists, of course, claimed any
subsequent benefits. The clue is perhaps in Bruce Lockhart's observation
that Milner was a man who "believed in the highly organized state."31
The French government appointed an even more openly Bolshevik
sympathizer, Jacques Sadoul, an old friend of Trotsky.32
In sum, the Allied governments neutralized their own diplomatic
representatives in Petrograd and replaced them with unofficial agents
more or less sympathetic to the Bolshevists.
The reports of these unofficial ambassadors were in direct contrast to
pleas for help addressed to the West from inside Russia. Maxim Gorky
protested the betrayal of revolutionary ideals by the Lenin-Trotsky
group, which had imposed the iron grip of a police state in Russia:
We Russians make up a people that has never yet worked in freedom, that
has never yet had a chance to develop all its powers and its talents.
And when I think that the revolution gives us the possibility of free
work, of a many-sided joy in creating, my heart is tilled with great
hope and joy, even in these cursed days that are besmirched with blood
and alcohol.
There is where begins the line of my decided and irreconcilable
separation [tom the insane actions of the People's Commissaries. I
consider Maximalism in ideas very useful for the boundless Russian soul;
its task is to develop in this soul great and bold needs, to call forth
the so necessary fighting spirit and activity, to promote initiative in
this indolent soul and to give it shape and life in general.
But the practical Maximalism of the Anarcho-Communists and visionaries
from the Smolny is ruinous for Russia and, above all, for the Russian
working class. The People's Commissaries handle Russia like material for
an experiment. The Russian people is for them what the Horse is for
learned bacteriologists who inoculate the horse with typhus so that the
anti-typhus lymph may develop in its blood. Now the Commissaries are
trying such a predestined-to-failure experiment upon the Russian people
without thinking that the tormented, half-starved horse may die.
The reformers from the Smolny do not worry about Russia. They are
cold-bloodedly sacrificing Russia in the name of their dream of the
worldwide and European revolution. And just as long as I can, I shall
impress this upon the Russian proletarian: "Thou art being led to
destruction} Thou art being used as material for an inhuman experiment!"33
Also in contrast to the reports of the sympathetic unofficial
ambassadors were the reports from the old-line diplomatic
representatives. Typical o[ many messages [lowing into Washington in
early 1918 particularly after Woodrow Wilson's expression of support
for the Bolshevik governments was the following cable [tom the U.S.
legation in Bern, Switzerland:
For Polk. President's message to Consul Moscow not understood here and
people are asking why the President expresses support of Bolsheviki, in
view of rapine, murder and anarchy of these bands.34
Continued support by the Wilson administration for the Bolsheviks led to
the resignation of De Witt C. Poole, the capable American charge
d'affaires in Archangel (Russia):
It is my duty to explain frankly to the department the perplexity into
which I have been thrown by the statement of Russian policy adopted by
the Peace Conference, January 22, on the motion of the President. The
announcement very happily recognizes the revolution and confirms again
that entire absence of sympathy for any form of counter revolution which
has always been a key note of American policy in Russia, but it contains
not one [word] of condemnation for the other enemy of the revolution
the Bolshevik Government.35
Thus even in the early days of 1918 the betrayal of the libertarian
revolution had been noted by such acute observers as Maxim Gorky and De
Witt C. Poole. Poole's resignation shook the State Department, which
requested the "utmost reticence regarding your desire to resign" and
stated that "it will be necessary to replace you in a natural and normal
manner in order to prevent grave and perhaps disastrous effect upon the
morale of American troops in the Archangel district which might lead to
loss of American lives."36
So not only did Allied governments neutralize their own government
representatives but the U.S. ignored pleas from within and without
Russia to cease support of the Bolsheviks. Influential support of the
Soviets came heavily from the New York financial area (little effective
support emanated from domestic U.S. revolutionaries). In particular, it
came from American International Corporation, a Morgan-controlled firm.
EXPORTING THE REVOLUTION: JACOB H. RUBIN
We are now in a position to compare two cases not by any means the
only such cases in which American citizens Jacob Rubin and Robert
Minor assisted in exporting the revolution to Europe and other parts of
Russia.
Jacob H. Rubin was a banker who, in his own words, "helped to form the
Soviet Government of Odessa."37 Rubin
was president, treasurer, and secretary of Rubin Brothers of 19 West 34
Street, New York City. In 1917 he was associated with the Union Bank of
Milwaukee and the Provident Loan Society of New York. The trustees of
the Provident Loan Society included persons mentioned elsewhere as
having connection with the Bolshevik Revolution: P. A. Rockefeller,
Mortimer L. Schiff, and James Speyer.
By some process only vaguely recounted in his book I Live to Tell38
Rubin was in Odessa in February 1920 and became the subject of a message
from Admiral McCully to the State Department (dated February 13, 1920,
861.00/6349). The message was to the effect that Jacob H. Rubin of Union
Bank, Milwaukee, was in Odessa and desired to remain with the
Bolshevists "Rubin does not wish to leave, has offered his services to
Bolsheviks and apparently sympathizes with them." Rubin later found his
way back to the U.S. and gave testimony before the House Committee on
Foreign Affairs in 1921:
I had been with the American Red Cross people at Odessa. I was there
when the Red Army took possession of Odessa. At that time I was
favorably inclined toward the Soviet Government, because I was a
socialist and had been a member of that party for 20 years. I must admit
that to a certain extent I helped to form the Soviet Government of
Odessa ....39
While adding that he had been arrested as a spy by the Denikin
government of South Russia, we learn little more about Rubin. We do,
however, know a great deal more about Robert Minor, who was caught in
the act and released by a mechanism reminiscent of Trotsky's release
from a Halifax prisoner-of-war camp.
EXPORTING THE REVOLUTION: ROBERT MINOR
Bolshevik propaganda work in Germany,40 financed
and organized by William Boyce Thompson and Raymond Robins, was
implemented in the field by American citizens, under the supervision of
Trotsky's People's Commissariat for Foreign Affairs:
One of Trotsky's earliest innovations in the Foreign Office had been to
institute a Press Bureau under Karl Radek and a Bureau of
International Revolutionary Propaganda under Boris Reinstein, among
whose assistants were John Reed and Albert Rhys Williams, and the full
blast of these power-houses was turned against the Germany army.
A German newspaper, Die Fackel (The Torch), was printed in editions of
half a million a day and sent by special train to Central Army
Committees in Minsk, Kiev, and other cities, which in turn distributed
them to other points along the front.41
Robert Minor was an operative in Reinstein's propaganda bureau. Minor's
ancestors were prominent in early American history. General Sam Houston,
first president of the Republic of Texas, was related to Minor's mother,
Routez Houston. Other relatives were Mildred Washington, aunt of George
Washington, and General John Minor, campaign manager for Thomas
Jefferson. Minor's father was a Virginia lawyer who migrated to Texas.
After hard years with few clients, he became a San Antonio judge.
Robert Minor was a talented cartoonist and a socialist. He left Texas to
come East. Some of his contributions appeared in Masses, a pro-Bolshevik
journal. In 1918 Minor was a cartoonist on the staff of the Philadelphia
Public Ledger. Minor left New York in March 1918 to report the Bolshevik
Revolution. While in Russia Minor joined Reinstein's Bureau of
International Revolutionary Propaganda (see diagram), along with Philip
Price, correspondent of the Daily Herald and Manchester Guardian, and
Jacques Sadoul, the unofficial French ambassador and friend of Trotsky.
Excellent data on the activities of Price, Minor, and Sadoul have
survived in the form of a Scotland Yard (London) Secret Special Report,
No. 4, entitled, "The Case of Philip Price and Robert Minor," as well as
in reports in the files of the State Department, Washington, D.C.42 According
to this Scotland Yard report, Philip Price was in Moscow in mid-1917,
before the Bolshevik Revolution, and admitted, "I am up to my neck in
the Revolutionary movement." Between the revolution and about the fall
of 1918, Price worked with Robert Minor in the Commissariat for Foreign
Affairs.
ORGANIZATION OF FOREIGN PROPAGANDA WORK IN 1918
PEOPLE'S COMMISSARIAT FOR FOREIGN AFFAIRS
(Trotsky)
PRESS BUREAU
(Radek)
BUREAU OF INTERNATIONAL REVOLUTIONARY PROPAGANDA
(Reinstein)
Field Operatives
John Reed
Louis Bryant
Albert Rhys Williams
Robert Minor
Philip Price
Jacques Sadoul
In November 1918 Minor and Price left Russia and went to Germany.43 Their
propaganda products were first used on the Russian Murman front;
leaflets were dropped by Bolshevik airplanes amongst British, French,
and American troops according to William Thompson's program.44 The
decision to send Sadoul, Price, and Minor to Germany was made by the
Central Executive Committee of the Communist Party. In Germany their
activities came to the notice of British, French, and American
intelligence. On February 15, 1919, Lieutenant J. Habas of the U.S. Army
was sent to Dόsseldorf, then under control of a Spartacist revolutionary
group; he posed as a deserter from the American army and offered his
services to the Spartacists. Habas got to know Philip Price and Robert
Minor and suggested that some pamphlets be printed for distribution
amongst American troops. The Scotland Yard report relates that Price and
Minor had already written several pamphlets for British and American
troops, that Price had translated some of Wilhelm Liebknecht's works
into English, and that both were working on additional propaganda
tracts. Habas reported that Minor and Price said they had worked
together in Siberia printing an English-language Bolshevik newspaper for
distribution by air among American and British troops.45
On June 8, 1919, Robert Minor was arrested in Paris by the French police
and handed over to the American military authorities in Coblenz.
Simultaneously, German Spartacists were arrested by the British military
authorities in the Cologne area. Subsequently, the Spartacists were
convicted on charges of conspiracy to cause mutiny and sedition among
Allied forces. Price was arrested but, like Minor, speedily liberated.
This hasty release was noted in the State Department:
Robert Minor has now been released, for reasons that are not quite
clear, since the evidence against him appears to have been ample to
secure conviction. The release will have an unfortunate effect, for
Minor is believed to have been intimately connected with the IWW in
America.46
The mechanism by which Robert Minor secured his release is recorded in
the State Department files. The first relevant document, dated June 12,
1919, is from the U.S. Paris embassy to the secretary of state in
Washington, D.C., and marked URGENT AND CONFIDENTIAL.47 The
French Foreign Office informed the embassy that on June 8, Robert Minor,
"an American correspondent," had been arrested in Paris and turned over
to the general headquarters of the Third American Army in Coblenz.
Papers found on Minor appear "to confirm the reports furnished on his
activities. It would therefore seem to be established that Minor has
entered into relations in Paris with the avowed partisans of
Bolshevism." The embassy regarded Minor as a "particularly dangerous
man." Inquiries were being made of the American military authorities;
the embassy believed this to be a matter within the jurisdiction of the
military alone, so that it contemplated no action although instructions
would be welcome.
On June 14, Judge R. B. Minor in San Antonio, Texas, telegraphed Frank
L. Polk in the State Department:
Press reports detention my son Robert Minor in Paris for unknown
reasons. Please do all possible to protect him I refer to Senators from
Texas.
[sgd.] R. P. Minor, District Judge, San Antonio, Texas48
Polk telegraphed Judge Minor that neither the State Department nor the
War Department had information on the detention of Robert Minor, and
that the case was now before the military authorities at Coblenz. Late
on June 13 the State Department received a "strictly confidential
urgent" message from Paris reporting a statement made by the Office of
Military Intelligence (Coblenz) in regard to the detention of Robert
Minor: "Minor was arrested in Paris by French authorities upon request
of British Military Intelligence and immediately turned over to American
headquarters at Coblenz."49 He
was charged with writing and disseminating Bolshevik revolutionary
literature, which had been printed in Dusseldorf, amongst British and
American troops in the areas they occupied. The military authorities
intended to examine the charges against Minor, and if substantiated, to
try him by court-martial. If the charges were not substantiated, it was
their intention to turn Minor over to the British authorities, "who
originally requested that the French hand him over to them."50 Judge
Minor in Texas independently contacted Morris Sheppard, U.S. senator
from Texas, and Sheppard contacted Colonel House in Paris. On June 17,
1919, Colonel House sent the following to Senator Sheppard:
Both the American Ambassador and I are following Robert Minor's case. Am
informed that he is detained by American Military authorities at Cologne
on serious charges, the exact nature of which it is difficult to
discover. Nevertheless, we will take every possible step to insure just
consideration for him.51
Both Senator Sheppard and Congressman Carlos Bee (14th District, Texas)
made their interest known to the State Department. On June 27, 1919,
Congressman Bee requested facilities so that Judge Minor could send his
son $350 and a message. On July 3 Senator Sheppard wrote Frank Polk,
stating that he was "very much interested" in the Robert Minor case, and
wondering whether State could ascertain its status, and whether Minor
was properly under the jurisdiction of the military authorities. Then on
July 8 the Paris embassy cabled Washington: "Confidential. Minor
released by American authorities . . . returning to the United States on
the first available boat." This sudden release intrigued the State
Department, and on August 3 Secretary of State Lansing cabled Paris:
"Secret. Referring to previous, am very anxious to obtain reasons for
Minor's release by Military authorities."
Originally, U.S. Army authorities had wanted the British to try Robert
Minor as "they feared politics might intervene in the United States to
prevent a conviction if the prisoner was tried by American
court-martial." However, the British government argued that Minor was a
United States citizen, that the evidence showed he prepared propaganda
against American troops in the first instance, and that, consequently
so the British Chief of Staff suggested Minor should be tried before
an American court. The British Chief of Staff did "consider it of the
greatest importance to obtain a conviction if possible."52
Documents in the office of the Chief of Staff of the Third Army relate
to the internal details of Minor's release.53 A
telegram of June 23, 1919, from Major General Harbord, Chief of Staff of
the Third Army (later chairman of the Board of International General
Electric, whose executive center, coincidentally, was also at 120
Broadway), to the commanding general, Third Army, stated that Commander
in Chief John J. Pershing "directs that you suspend action in the case
against Minor pending further orders." There is also a memorandum signed
by Brigadier General W. A. Bethel in the office of the judge advocate,
dated June 28, 1919, marked "Secret and Confidential," and entitled
"Robert Minor, Awaiting Trial by a Military Commission at Headquarters,
3rd Army." The memo reviews the legal case against Minor. Among the
points made by Bethel is that the British were obviously reluctant to
handle the Minor case because "they fear American opinion in the event
of trial by them of an American for a war offense in Europe," even
though tire offense with which Minor is charged is as serious "as a man
can commit." This is a significant statement; Minor, Price, and Sadoul
were implementing a program designed by Federal Reserve Bank director
Thompson, a fact confirmed by Thompson's own memorandum (see Appendix
3). Was not therefore Thompson (and Robins), to some degree, subject to
the same charges?
After interviewing Siegfried, the witness against Minor, and reviewing
the evidence, Bethel commented:
I thoroughly believe Minor to be guilty, but if I was sitting in court,
I would not put guilty on the evidence now available the testimony of
one man only and that man acting in the character of a detective and
informer.
Bethel goes on to state that it would be known within a week or ten days
whether substantial corroboration of Siegfried's testimony was
available. If available, "I think Minor should be tried," but "if
corroboration cannot be had, I think it would be better to dismiss the
case."
This statement by Bethel was relayed in a different form by General
Harbord in a telegram of July 5 to General Malin Craig (Chief of Staff,
Third Army, Coblenz):
With reference to the case against Minor, unless other witnesses than
Siegfried have been located by this time C in C directs the case be
dropped and Minor liberated. Please acknowledge and state action.
The reply from Craig to General Harbord (July 5) records that Minor was
liberated in Paris and adds, "This is in accordance with his own wishes
and suits our purposes." Craig also adds that other witnesses had been
obtained.
This exchange of telegrams suggests a degree of haste in dropping the
charges against Robert Minor, and haste suggests pressure. There was no
significant attempt made to develop evidence. Intervention by Colonel
House and General Pershing at the highest levels in Paris and the
cablegram from Colonel House to Senator Morris Sheppard give weight to
American newspaper reports that both House and President Wilson were
responsible for Minor's hasty release without trial.54
Minor returned to the United States and, like Thompson and Robins before
him, toured the U.S. promoting the wonders of Bolshevik Russia.
By way of summary, we find that Federal Reserve Bank director William
Thompson was active in promoting Bolshevik interests in several ways
production of a pamphlet in Russian, financing Bolshevik operations,
speeches, organizing (with Robins) a Bolshevik revolutionary mission to
Germany (and perhaps France), and with Morgan partner Lamont influencing
Lloyd George and the British War Cabinet to effect a change in British
policy. Further, Raymond Robins was cited by the French government for
organizing Russian Bolsheviks for the German revolution. We know that
Robins was undisguisedly working for Soviet interests in Russia and the
United States. Finally, we find that Robert Minor, one of the
revolutionary propagandists used in Thompson's program, was released
under circumstances suggesting intervention from the highest levels of
the U.S. government.
Obviously, this is but a fraction of a much wider picture. These are
hardly accidental or random events. They constitute a coherent,
continuing pattern over several years. They suggest powerful influence
at the summit levels of several governments.
Footnotes:
1For a biography see Hermann Hagedorn, The Magnate: William Boyce
Thompson and His Time (1869-1930) (New York: Reynal & Hitchcock, 1935).
2Polkovnik' Villiam' Boic' Thompson', "Pravda o Rossii i Bol'shevikakh"
(New York: Russian-American Publication Society, 1918).
3John Bradley, Allied Intervention in Russia (London: Weidenfeld and
Nicolson, 1968.)
4Thomas W. Lamont, Across World Frontiers (New York: Harcourt, Brace,
1959), p. 85. See also pp. 94-97 for massive breastbeating over the
failure of President Wilson to act promptly to befriend the Soviet
regime. Corliss Lamont, his son, became a [font-line domestic leftist in
the U.S.
5Donald McCormick, The Mask of Merlin (London: MacDonald, 1963; New
York: Holt, Rinehart and Winston, 1964), p. 208. Lloyd George's personal
life would certainly leave him open to blackmail.
6Ibid. McCormick's italics.
7British War Cabinet papers, no. 302, sec. 2 (Public Records Office,
London).
8The written memorandum that Thompson submitted to Lloyd George and that
became the basis for the War Cabinet statement is available from U.S.
archival sources and is printed in full in Appendix 3.
9War Cabinet papers, 24/49/7197 (G.T. 4322) Secret, April 24, 1918.
10Letter reproduced in full in Appendix 3. It should be noted that we
have identified Thomas Lamont, Dwight Morrow, and H. P. Davison as being
closely involved in developing policy towards the Bolsheviks. All were
partners in the J.P. Morgan firm. Thacher was with the law firm Simpson,
Thacher & Bartlett and was a close friend of Felix Frankfurter.
11Complete memorandum is in U.S. State Dept. Decimal File, 316-13-698.
12See Appendix 3.
13U.S., Senate, Bolshevik Propaganda, Hearings before a Subcommittee of
the Committee on the Judiciary, 65th Cong., t919, p. 802.
14U.S. State Dept. Decimal File, 861.51/184.
15See Appendix 3.
16Inserted by Senator Calder into the Congressional Record, January 31,
1918, p. 1409.
17Hagedorn, op. tit., p. 263.
18U.S. State Dept. Decimal File, 861.00/3005.
19Louis Ware, George Foster Peabody (Athens: University of Georgia
Press, 1951).
20Seep. 16.
21If this argument seems too farfetched, the reader should see Gabriel
Kolko, Railroads and Regulation 1877-1916 (New York: W. W. Norton,
1965), which describes how pressures for government control and
formation of the Interstate Commerce Commission came from the
railroad owners, not from farmers and users of railroad services.
22C. K. Cumming and Waller W. Pettit, Russian-American Relations,
Documents and Papers (New York: Harcourt, Brace & Howe, 1920), doe. 44.
23Ibid., doc. 54.
24Ibid., doc. 92.
25U.S. State Dept. Decimal File, 861.00/3449. But see Kennan, Russia
Leaves the War, pp. 401-5.
26Ibid., 861.00 3333.
27See chapter seven.
28Richard H. Ullman, Intervention and the War (Princeton, N.J.:
Princeton University Press, 1961), t). 61.
29Edward Crankshaw, The Forsaken Idea: A Study o! Viscount
Milner (London: Longmans Green, 1952), p. 269.
30Robert Hamilton Bruce Lockhart, British Agent (New York: Putnam's,
1933), p. 119.
31Ibid., p. 204.
32See Jacques Sadoul, Notes sur la revolution bolchevique (Paris:
Editions de la sirene, 1919).
34U.S. State Dept. Decimal File, 861.00/1305, March 15, 1918.
35Ibid., 861.00/3804.
36Ibid.
37U.S., House, Committee on Foreign Affairs, Conditions in Russia, 66th
Cong., 3d sess., 1921.
38Jacob H. Rubin, 1 Live to Tell: The Russian Adventures o! an American
Socialist (Indianapolis: Bobbs-Merrill, 1934).
39U.S., House, Committee on Foreign Affairs, op. cit.
40See George G. Bruntz, Allied Propaganda and the Collapse o! the German
Empire in 1918 (Stanford, Calif.: Stanford University Press, 1938), pp.
144-55; see also herein p. 82.
41John W. Wheeler-Bennett, The Forgotten Peace (New York: William
Morrow, 1939).
42There is a copy of this Scotland Yard report in U.S. Start' Dept.
Decimal File, 316-23-1184 9.
43Joseph North, Robert Minor: Artist and Crusader (New York:
International Publishers, 1956).
44Samples of Minor's propaganda tracts are still in the U.S. State Dept.
files. See p. 197-200 on Thompson.
45See Appendix 3.
46U.S. State Dept. Decimal File, 316-23-1184.
47Ibid., 861.00/4680 (316-22-0774).
48Ibid., 861.00/4685 (/783).
49U.S. State Dept. Decimal File, 861.00/4688 (/788).
50Ibid.
51Ibid., 316-33-0824.
52U.S. State Dept. Decimal File, 861.00/4874.
53Office of Chief of Staff, U.S. Army, National Archives, Washington,
D.C.
54U.S., Senate, Congressional Record, October 1919, pp. 6430, 6664-66,
7353-54; and New York Times, October It, 1919. See also Sacramento
Bee,July 17, 1919
Chapter VI
THE BOLSHEVIKS RETURN TO NEW YORK
Martens is very much in the limelight. There appears to be no doubt
about his connection with the Guarantee [sic] Trust Company, Though it
is surprising that so large and influential an enterprise should have
dealings with a Bolshevik concern.
Scotland Yard Intelligence Report, London, 19191
Following on the initial successes of the revolution, the Soviets wasted
little time in attempting through former U.S. residents to establish
diplomatic relations with and propaganda outlets in the United States.
In June 1918 the American consul in Harbin cabled Washington:
Albert R. Williams, bearer Department passport 52,913 May 15, 1917
proceeding United States to establish information bureau for Soviet
Government for which he has written authority. Shall I visa?2
Washington denied the visa and so Williams was unsuccessful in his
attempt to establish an information bureau here. Williams was followed
by Alexander Nyberg (alias Santeri Nuorteva), a former Finnish immigrant
to the United States in January 1912, who became the first operative
Soviet representative in the United States. Nyberg was an activtive
propagandist. In fact, in 1919 be was, according to J. Edgar Hoover (in
a letter to the U.S. Committee on Foreign Affairs), "the forerunner of
LCAK Martens anti with Gregory Weinstein the most active individual of
official Bolshevik propaganda in the United States."3
Nyberg was none too successful as a diplomatic representative or,
ultimately, as a propagandist. The State Departmment files record an
interview with Nyberg by the counselors' office, dated January 29, 1919.
Nyberg was accompanied by H. Kellogg, described as "an American citizen,
graduate of Harvard," and, more surprisingly, by a Mr. McFarland, an
attorney for the Hearst organization. The State Department records show
that Nyberg made "many misstatements in regard to the attitude to the
Bolshevik Government" and claimed that Peters, the Lett terrorist police
chief in Petrograd, was merely a "kind-hearted poet." Nyberg requested
the department to cable Lenin, "on the theory that it might be helpful
in bringing about the conference proposed by the Allies at Paris."4 The
proposed message, a rambling appeal to Lenin to gain international
acceptance appearing at the Paris Conference, was not sent.5
A RAID ON THE SOVIET BUREAU IN NEW YORK
Alexander Nyberg (Nuorteva) was then let go and replaced by the Soviet
Bureau, which was established in early 1919 in the World Tower Building,
110 West 40 Street, New York City. The bureau was headed by a German
citizen, Ludwig C. A. K. Martens, who is usually billed as the first
ambassador of the Soviet Union in the United States, and who, up to that
time, had been vice president of Weinberg & Posner, an engineering firm
located at 120 Broadway, New York City. Why the "ambassador" and his
offices were located in New York rather than in Washington, D.C. was not
explained; it does suggest that trade rather than diplomacy was its
primary objective. In any event, the bureau promptly issued a call lot
Russian trade with the United States. Industry had collapsed and Russia
direly needed machinery, railway goods, clothing, chemicals, drugs
indeed, everything utilized by a modern civilization. In exchange the
Soviets offered gold and raw materials. The Soviet Bureau then proceeded
to arrange contracts with American firms, ignoring the facts of the
embargo and nonrecognition. At the same time it was providing financial
support for the emerging Communist Party U.S.A.6
On May 7, 1919, the State Department slapped down business intervention
in behalf of the bureau (noted elsewhere),7 and
repudiated Ludwig Martens, the Soviet Bureau, and the Bolshevik
government o1 Russia. This official rebuttal did not deter the eager
order-hunters in American industry. When the Soviet Bureau offices were
raided on June 12, 1919, by representatives of the Lusk Committee of the
state of New York, files of letters to and from American businessmen,
representing almost a thousand firms, were unearthed. The British Home
Office Directorate of Intelligence "Special Report No. 5 (Secret),"
issued from Scotland Yard, London, July 14, 1919, and written by Basil
H. Thompson, was based on this seized material; the report noted:
. . . Every effort was made from the first by Martens and his associates
to arouse the interest of American capitalists and there are grounds tot
believing that the Bureau has received financial support from some
Russian export firms, as well as from the Guarantee [sic] Trust Company,
although this firm has denied the allegation that it is financing
Martens' organisation.8
It was noted by Thompson that the monthly rent of the Soviet Bureau
offices was $300 and the office salaries came to about $4,000. Martens'
funds to pay these bills came partly from Soviet couriers such as John
Reed and Michael Gruzenberg who brought diamonds from Russia for sale
in the U.S., and partly from American business firms, including the
Guaranty Trust Company of New York. The British reports summarized the
files seized by the Lusk investigators from the bureau offices, and this
summary is worth quoting in full:
(1) There was an intrigue afoot about the time the President first went
to France to get the Administration to use Nuorteva as an intermediary
with the Russian Soviet Government, with a view to bring about its
recognition by America. Endeavour was made to bring Colonel House into
it, and there is a long and interesting letter to Frederick C. Howe, on
whose support and sympathy Nuorteva appeared to rely. There are other
records connecting Howe with Martens and Nuorteva.
(2) There is a file of correspondence with Eugene Debs.
(3) A letter from Amos Pinchot to William Kent of the U.S. Tariff
Commission in an envelope addressed to Senator Lenroot, introduces Evans
Clark "now in the Bureau of the Russian Soviet Republic." "He wants to
talk to you about the recognition of Kolchak and the raising of the
blockade, etc."
(4) A report to Felix Frankfurter, dated 27th May, 1919 speaks of the
virulent campaign vilifying the Russian Government.
(5) There is considerable correspondence between a Colonel and Mrs.
Raymond Robbins [sic] and Nuorteva, both in 1918 and 1919. In July 1918
Mrs. Robbins asked Nuorteva for articles for "Life and Labour," the
organ of the National Women's Trade League. In February and March, 1919,
Nuorteva tried, through Robbins, to get invited to give evidence before
the Overman Committee. He also wanted Robbins to denounce the Sisson
documents.
(6) In a letter from the Jansen Cloth Products Company, New York, to
Nuorteva, dated March 30th, 1918, E. Werner Knudsen says that he
understands that Nuorteva intends to make arrangements for the export of
food-stuffs through Finland and he offers his services. We have a file
on Knudsen, who passed information to and from Germany by way of Mexico
with regard to British shipping.9
Ludwig Martens, the intelligence report continued, was in touch with all
the leaders of "the left" in the United States, including John Reed,
Ludwig Lore, and Harry J. Boland, the Irish rebel. A vigorous campaign
against Aleksandr Kolchak in Siberia had been organized by Martens. The
report concludes:
[Martens'] organization is a powerful weapon for supporting the
Bolshevik cause in the United States and... he is in close touch with
the promoters of political unrest throughout the whole American
continent.
The Scotland Yard list of personnel employed by the Soviet Bureau in New
York coincides quite closely with a similar list in the Lusk Committee
files in Albany, New York, which are today open for public inspection.10 There
is one essential difference between the two lists: the British analysis
included the name "Julius Hammer" whereas Hammer was omitted from the
Lusk Committee report.11 The
British report characterizes Julius Hammer as follows:
In Julius Hammer, Martens has a real Bolshevik and ardent Left Wing
adherent, who came not long ago from Russia. He was one of the
organizers of the Left Wing movement in New York, and speaks at meetings
on the same platform with such Left Wing leaders as Reed, Hourwich, Lore
and Larkin.
There also exists other evidence of Hammer's work in behalf of the
Soviets. A letter from National City Bank, New York, to the U.S.
Treasury Department stated that documents received by the bank from
Martens were "witnessed by a Dr. Julius Hammer for the Acting Director
of the Financial Department" of the Soviet Bureau.12
The Hammer family has had close ties with Russia and the Soviet regime
from 1917 to the present. Armand Hammer is today able to acquire the
most lucrative of Soviet contracts. Jacob, grandfather of Armand Hammer,
and Julius were born in Russia. Armand, Harry, and Victor, sons of
Julius, were born in the United States and are U.S. citizens. Victor was
a well-known artist; his son also named Armand and granddaughter are
Soviet citizens and reside in the Soviet Union. Armand Hammer is
chairman of Occidental Petroleum Corporation and has a son, Julian, who
is director of advertising and publications for Occidental Petroleum.
Julius Hammer was a prominent member and financier of the left wing of
the Socialist Party. At its 1919 convention Hammer served with Bertram
D. Wolfe and Benjamin Gitlow on the steering committee that gave birth
to the Communist Party of the U.S.
In 1920 Julius Hammer was given a sentence of three-and-one-half to
fifteen years in Sing Sing for criminal abortion. Lenin suggested with
justification that Julius was "imprisoned on the charge of practicing
illegal abortions but in fact because of communism."13 Other
U.S. Communist Party members were sentenced to jail for sedition or
deported to the Soviet Union. Soviet representatives in the United
States made strenuous but unsuccessful efforts to have Julius and his
fellow party members released.
Another prominent member of the Soviet Bureau was the assistant
secretary, Kenneth Durant, a former aide to Colonel House. In 1920
Durant was identified as a Soviet courier. Appendix 3 reproduces a
letter to Kenneth Durant that was seized by the U.S. Department of
Justice in 1920 and that describes Durant's close relationship with the
Soviet hierarchy. It was inserted into the record of a House committee's
hearings in 1920, with the following commentary:
MR. NEWTON: It is a mailer of interest to this committee to know what
was the nature of that letter, and I have a copy of the letter that I
Want inserted in the record in connection with the witness' testimony.
MR. Mason: That letter has never been shown to the witness. He said that
he never saw the letter, and had asked to see it, and that the
department had refused to show it to him. We would not put any witness
on the stand and ask him to testify to a letter without seeing it.
MR. NEWTON: The witness testified that he has such a letter, and he
testified that they found it in his coat in the trunk, I believe. That
letter was addressed to a Mr. Kenneth Durant, and that letter had within
it another envelope which was likewise sealed. They were opened by the
Government officials and a photostatic copy made. The letter, I may say,
is signed by a man by the name of "Bill." It refers specifically to
soviet moneys on deposit in Christiania, Norway, a portion of which they
waist turned over here to officials of the soviet government in this
country.14
Kenneth Durant, who acted as Soviet courier in the transfer of funds,
was treasurer lot the Soviet Bureau and press secretary and publisher
of Soviet Russia, the official organ of the Soviet Bureau. Durant came
from a well-to-do Philadelphia family. He spent most of his life in the
service of the Soviets, first in charge of publicity work at the Soviet
Bureau then from 1923 to 1944 as manager of the Soviet Tass bureau in
the United States. J. Edgar Hoover described Durant as "at all times . .
. particularly active in the interests of Martens and of the Soviet
government."15
Felix Frankfurter later justice of the Supreme Courts was also
prominent in the Soviet Bureau files. A letter from Frankfurter to
Soviet agent Nuorteva is reproduced in Appendix 3 and suggests that
Frankfurter had some influence with the bureau.
In brief, the Soviet Bureau could not have been established without
influential assistance from within the United States. Part of this
assistance came from specific influential appointments to the Soviet
Bureau staff and part came from business firms outside the bureau, firms
that were reluctant to make their support publicly known.
CORPORATE ALLIES FOR THE SOVIET BUREAU
On February 1, 1920, the front page of the New York Times carried a
boxed notation stating that Martens was to be arrested and deported to
Russia. At the same time Martens was being sought as a witness to appear
before a subcommittee of the Senate Foreign Relations Committee
investigating Soviet activity in the United States. After lying low for
a few days Martens appeared before the committee, claimed diplomatic
privilege, and refused to give up "official" papers in his possession.
Then after a flurry of publicity, Martens "relented," handed over his
papers, and admitted to revolutionary activities in the United States
with the ultimate aim of overthrowing the capitalist system.
Martens boasted to the news media and Congress that big corporations,
the Chicago packers among them, were aiding the Soviets:
Affording to Martens, instead of farthing on propaganda among the
radicals and the proletariat he has addressed most of his efforts to
winning to the side of Russia the big business and manufacturing
interests of this country, the packers, the United States Steel
Corporation, the Standard Oil Company and other big concerns engaged in
international trade. Martens asserted that most of the big business
houses of the country were aiding him in his effort to get the
government to recognize the Soviet government.16
This claim was expanded by A. A. Heller, commercial attache at the
Soviet Bureau:
"Among the people helping us to get recognition from the State
Department are the big Chit ago packers, Armour, Swift, Nelson Morris
and Cudahy ..... Among the other firms are . . . the American Steel
Export Company, the Lehigh Machine Company, the Adrian Knitting Company,
the International Harvester Company, the Aluminum Goods Manufacturing
Company, the Aluminum Company of America, the American Car and Foundry
Export Company, M.C.D. Borden & Sons."17
The New York Times followed up these claims and reported comments of the
firms named. "I have never heard of this man [Martens] before in my
life," declared G. F. Swift, Jr., in charge of the export department of
Swift & Co. "Most certainly I am sure that we have never had any
dealings with him of any kind."18 The Times added
that O. H. Swift, the only other member of the firm that could be
contacted, "also denied any knowledge whatever of Martens or his bureau
in New York." The Swift statement was evasive at best. When the Lusk
Committee investigators seized the Soviet Bureau files, they found
correspondence between the bureau and almost all the firms named by
Martens and Heller. The "list of firms that offered to do business with
Russian Soviet Bureau," compiled from these files, included an entry
(page 16), "Swift and Company, Union Stock Yards, Chicago, Ill." In
other words, Swift had been in communication with Martens despite its
denial to the New York Times.
The New York Times contacted United States Steel and reported, "Judge
Elbert H. Gary said last night that there was no foundation for the
statement with the Soviet representative here had had any dealings with
the United States Steel Corporation." This is technically correct. The
United States Steel Corporation is not listed in the Soviet files, but
the list does contain (page 16) an affiliate, "United States Steel
Products Co., 30 Church Street, New York City."
The Lusk Committee list records the following about other firms
mentioned by Martens and Heller: Standard Oil not listed. Armour 8c
Co., meatpackers listed as "Armour Leather" and "Armour & Co. Union
Stock Yards, Chicago." Morris Go., meatpackers, is listed on page 13.
Cudahy listed on page 6. American Steel Export Co. listed on page 2
as located at the Woolworth Building; it had offered to trade with the
USSR. Lehigh Machine Co. not listed. Adrian Knitting Co. listed on
page 1. International Harvester Co. listed on page 11. Aluminum Goods
Manufacturing Co. listed on page 1. Aluminum Company of America not
listed. American Car and Foundry Export the closest listing is
"American Car Co. Philadelphia." M.C.D. Borden 8c Sons listed as
located at 90 Worth Street, on page 4.
Then on Saturday, June 21, 1919, Santeri Nuorteva (Alexander Nyberg)
confirmed in a press interview the role of International Harvester:
Q: [by New York Times reporter]: What is your business?
A: Purchasing director tot Soviet Russia.
Q: What did you do to accomplish this?
A: Addressed myself to American manufacturers.
Q: Name them.
A: International Harvester Corporation is among them.
Q: Whom did you see?
A: Mr. Koenig.
Q: Did you go to see him?
A: Yes.
Q: Give more names.
A: I went to see so many, about 500 people and I can't remember all the
names. We have files in the office disclosing them.19
In brief, the claims by Heller and Martens relating to their widespread
contacts among certain U.S. firms20 were
substantiated by the office files of the Soviet Bureau. On the other
hand, for their own good reasons, these firms appeared unwilling to
confirm their activities.
EUROPEAN BANKERS AID THE BOLSHEVIKS
In addition to Guaranty Trust and the private banker Boissevain in New
York, some European bankers gave direct help to maintain and expand the
Bolshevik hold on Russia. A 1918 State Department report from our
Stockholm embassy details these financial transfers. The department
commended its author, stating that his "reports on conditions in Russia,
the spread of Bolshevism in Europe, and financial questions . . . have
proved most helpful to the Department. Department is much gratified by
your capable handling of the legation's business."21 According
to this report, one of these "Bolshevik bankers" acting in behalf of the
emerging Soviet regime was Dmitri Rubenstein, of the former Russo-French
bank in Petrograd. Rubenstein, an associate of the notorious Grigori
Rasputin, had been jailed in prerevolutionary Petrograd in connection
with the sale of the Second Russian Life Insurance Company. The American
manager and director of the Second Russian Life Insurance Company was
John MacGregor Grant, who was located at 120 Broadway, New York City.
Grant was also the New York representative of Putiloff's Banque Russo-Asiatique.
In August 1918 Grant was (for unknown reasons) listed on the Military
Intelligence Bureau "suspect list."22 This
may have occurred because Olof Aschberg in early 1918 reported opening a
foreign credit in Petrograd "with the John MacGregor Grant Co., export
concern, which it [Aschberg] finances in Sweden and which is financed in
America by the Guarantee[sic] Trust Co."23 After
the revolution Dmitri Rubenstein moved to Stockholm and became financial
agent for the Bolsheviks. The State Department noted that while
Rubenstein was "not a Bolshevik, he has been unscrupulous in moneT'
making, and it is suspected that he may be making the contemplated visit
to America in Bolshevik interest and for Bolshevik pay.24
Another Stockholm "Bolshevik banker" was Abram Givatovzo, brother-in-law
of Trotsky and Lev Kamenev. The State Department report asserted that
while Givatovzo pretended to be "very anti-Bolshevik," he had in fact
received "large sums" of moneT' from the Bolsheviks by courier for
financing revolutionary operations. Givatovzo was part of a syndicate
that included Denisoff of the former Siberian bank, Kamenka of the Asoff
Don Bank, and Davidoff of the Bank of Foreign Commerce. This syndicate
sold the assets of the former Siberian Bank to the British government.
Yet another tsarist private banker, Gregory Lessine, handled Bolshevik
business through the firm of Dardel and Hagborg. Other "Bolshevik
bankers" named in the report are stirrer and Jakob Berline, who
previously controlled, through his wife, the Petrograd Nelkens Bank.
Isidor Kon was used by these bankers as an agent.
The most interesting of these Europe-based bankers operating in behalf
of the Bolsheviks was Gregory Benenson, formerly chairman in Petrograd
of the Russian and English Bank a bank which included on its board of
directors Lord Balfour (secretary of state for foreign affairs in
England) and Sir I. M. H. Amory, as well as S. H. Cripps and H. Guedalla.
Benenson traveled to Petrograd after the revolution, then on to
Stockholm. He came. said one State Department official, "bringing to my
knowledge ten million rubles with him as he offered them to me at a high
price for the use of our Embassy Archangel." Benenson had an arrangement
with the Bolsheviks to exchange sixty million rubles for £1.5 million
sterling.
In January 1919 the private bankers in Copenhagen that were associated
with Bolshevik institutions became alarmed by rumors that the Danish
political police had marked the Soviet legation and those persons in
contact with the Bolsheviks for expulsion from Denmark. These bankers
and the legation hastily attempted to remove their funds from Danish
banks in particular, seven million rubles from the Revisionsbanken.25 Also,
confidential documents were hidden in the offices of the Martin Larsen
Insurance Company.
Consequently, we can identify a pattern of assistance by capitalist
bankers for the Soviet Union. Some of these were American bankers, some
were tsarist bankers who were exiled and living in Europe, and some were
European bankers. Their common objective was profit, not ideology.
The questionable aspects of the work of these "Bolshevik bankers," as
they were called, arises from the framework of contemporary events in
Russia. In 1919 French, British, and American troops were fighting
Soviet troops in the Archangel region. In one clash in April 1919, for
example, American casualties were one officer, .five men killed, and
nine missing.26 Indeed,
at one point in 1919 General Tasker H. Bliss, the U.S. commander in
Archangel, affirmed the British statement that "Allied troops in the
Murmansk and Archangel districts were in danger of extermination unless
they were speedily reinforced."27 Reinforcements
were then on the way under the command of Brigadier General W. P.
Richardson.
In brief, while Guaranty Trust and first-rank American firms were
assisting the formation of the Soviet Bureau in New York, American
troops were in conflict with Soviet troops in North Russia. Moreover,
these conflicts were daily reported in the New York Times, presumably
read by these bankers and businessmen. Further, as we shall see in
chapter ten, the financial circles that were supporting the Soviet
Bureau in New York also formed in New York the "United Americans" a
virulently anti-Communist organization predicting bloody revolution,
mass starvation, and panic in the streets of New York.
Footnotes:
1Copy in U.S. State Dept. Decimal File, 316-22-656.
2Ibid., 861.00/1970.
3U.S., House, Committee on Foreign Affairs, Conditions in Russia, 66th
Cong., 3d sess., 1921, p. 78.
4U.S. State Dept. Decimal File, 316-19-1120.
5Ibid.
6See Benjamin Gitlow, [U.S., House, Un-American Propaganda
Activities (Washington, 1939), vols. 7-8, p. 4539.
7See p. 119.
8Copy in [U.S. State Dept. Decimal File, 316-22-656. Confirmation of
Guaranty Trust involvement tomes in later intelligence reports.
9On Frederick C. Howe see pp. 16, 177, for an early statement of the
manner in which financiers use society and its problems for their own
ends; on Felix Frankfurter, later Supreme Court justice, see Appendix 3
for an early Frankfurter letter to Nuorteva; on Raymond Robins see p.
100.
10The Lusk Committee list of personnel in the Soviet Bureau is printed
in Appendix 3. The list includes Kenneth Durant, aide to Colonel House;
Dudley Field Malone, appointed by President Wilson as collector of
customs for the Port of New York; and Morris Hillquit, the financial
intermediary between New York banker Eugene Boissevain on the one hand,
and John Reed and Soviet agent Michael Gruzenberg on the other.
11Julius Hammer was the father of Armand Hammer, who today is chairman
of the Occidental Petroleum Corp. of Los Angeles.
12See Appendix 3.
13V. I. Lenin, Polnoe Sobranie Sochinenii, 5th ed. (Moscow, 1958),
53:267.
14U.S., House, Committee. on Foreign Affairs, Conditions in Russia, 66th
Cong., 3d sess., 1921, p. 75. "Bill" was William Bobroff, Soviet agent.
15Ibid., p. 78.
16New York Times, November 17, 1919.
17Ibid.
18Ibid.
19New York Times, June 21, 1919.
20See p. 119.
21U.S. State Dept. Decimal File, 861.51/411, November 23, 1918.
22Ibid., 316-125-1212.
23U.S., Department of State, Foreign Relations o! the United States:
1918, Russia, 1:373.
24U.S. State Dept. Decimal File, 861.00/4878, July,' 21, 1919.
25Ibid., 316-21-115/21.
26New York Times, April 5, 1919.
27Ibid
Chapter VIII
120 BROADWAY, NEW YORK CITY
William B. Thompson, who was in Petrograd from July until November last,
has made a personal contribution of $1,000,000 to the Bolsheviki for the
purpose of spreading their doctrine in Germany and Austria ....
Washington Post, February 2, 1918
While collecting material for this book a single location and address in
the Wall Street area came to the fore 120 Broadway, New York City.
Conceivably, this book could have been written incorporating only
persons, firms, and organizations located at 120 Broadway in the year
1917. Although this research method would have been forced and
unnatural, it would have excluded only a relatively small segment of the
story.
The original building at 120 Broadway was destroyed by fire before World
War I. Subsequently the site was sold to the Equitable Office Building
Corporation, organized by General T. Coleman du Pont, president of du
Pont de Nemours Powder Company.1 A
new building was completed in 1915 and the Equitable Life Assurance
Company moved back to its old site.2 In
passing we should note an interesting interlock in Equitable history. In
1916 the cashier of the Berlin Equitable Life office was William
Schacht, the father of Hjalmar Horace Greeley Schacht later to become
Hitler's banker, and financial genie. William Schacht was an American
citizen, worked thirty years for Equitable in Germany, and owned a
Berlin house known as "Equitable Villa." Before joining Hitler, young
Hjalmar Schacht served as a member of the Workers and Soldiers Council
(a soviet) of Zehlendoff; this he left in 1918 to join the board of the
Nationalbank fur Deutschland. His codirector at DONAT was Emil
Wittenberg, who, with Max May of Guaranty Trust Company of New York, was
a director of the first Soviet international bank, Ruskombank.
In any event, the building at 120 Broadway was in 1917 known as the
Equitable Life Building. A large building, although by no means the
largest office building in New York City, it occupies a one-block area
at Broadway and Pine, and has thirty-four floors. The Bankers Club was
located on the thirty-fourth floor. The tenant list in 1917 in effect
reflected American involvement in the Bolshevik Revolution and its
aftermath. For example, the headquarters of the No. 2 District of the
Federal Reserve System the New York area by far the most important
of the Federal Reserve districts, was located at 120 Broadway. The
offices of several individual directors of the Federal Reserve Bank of
New York and, most important, the American International Corporation
were also at 120 Broadway. By way of contrast, Ludwig Martens, appointed
by the Soviets as the first Bolshevik "ambassador" to the United States
and head of the Soviet Bureau, was in 1917 the vice president of
Weinberg & Posner and also had offices at 120 Broadway.*
Is this concentration an accident? Does the geographical contiguity have
any significance? Before attempting to suggest an answer, we have to
switch our frame of reference and abandon the left-right spectrum of
political analysis.
With an almost unanimous lack of perception the academic world has
described and analyzed international political relations in the context
of an unrelenting conflict between capitalism and communism, and rigid
adherence to this Marxian formula has distorted modern history. Tossed
out from time to time are odd remarks to the effect that the polarity is
indeed spurious, but these are quickly dispatched to limbo. For example,
Carroll Quigley, professor of international relations at Georgetown
University, made the following comment on the House of Morgan:
More than fifty years ago the Morgan firm decided to infiltrate the
Left-wing political movements in the United States. This was relatively
easy to do, since these groups were starved for funds and eager for a
voice to reach the people. Wall Street supplied both. The purpose was
not to destroy, dominate or take over...3
Professor Quigley's comment, apparently based on confidential
documentation, has all the ingredients of an historical bombshell if it
can be supported. We suggest that the Morgan firm infiltrated not only
the domestic left, as noted by Quigley, but also the foreign left that
is, the Bolshevik movement and the Third International. Even further,
through friends in the U.S. State Department, Morgan and allied
financial interests, particularly the Rockefeller family, have exerted a
powerful influence on U.S.-Russian relations from World War I to the
present. The evidence presented in this chapter will suggest that two of
the operational vehicles for infiltrating or influencing foreign
revolutionary movements were located at 120 Broadway: the first, the
Federal Reserve Bank of New York, heavily laced with Morgan appointees;
the second, the Morgan-controlled American International Corporation.
Further, there was an important interlock between the Federal Reserve
Bank of New York and the American International Corporation C. A.
Stone, the president of American International, was also a director of
the Federal Reserve Bank.
The tentative hypothesis then is that this unusual concentration at a
single address was a reflection of purposeful actions by specific firms
and persons and that these actions and events cannot be analyzed within
the usual spectrum of left-right political antagonism.
AMERICAN INTERNATIONAL CORPORATION
The American International Corporation (AIC) was organized in New York
on November 22, 1915, by the J.P. Morgan interests, with major
participation by Stillman's National City Bank and the Rockefeller
interests. The general office of AIC was at 120 Broadway. The company's
charter authorized it to engage in any kind of business, except banking
and public utilities, in any country in the world. The stated purpose of
the corporation was to develop domestic and foreign enterprises, to
extend American activities abroad, and to promote the interests of
American and foreign bankers, business and engineering.
Frank A. Vanderlip has described in his memoirs how American
International was formed and the excitement created on Wall Street over
its business potential.4 The
original idea was generated by a discussion between Stone & Webster
the international railroad contractors who "were convinced there was not
much more railroad building to be done in the United States" and Jim
Perkins and Frank A. Vanderlip of National City Bank (NCB).5 The
original capital authorization was $50 million and the board of
directors represented the leading lights of the New York financial
world. Vanderlip records that he wrote as follows to NCB president
Stillman, enthusing over the enormous potential for American
International Corporation:
James A. Farrell and Albert Wiggin have been invited [to be on the
board] but had to consult their committees before accepting. I also have
in mind asking Henry Walters and Myron T. Herrick. Mr. Herrick is
objected to by Mr. Rockefeller quite strongly but Mr. Stone wants him
and I feel strongly that he would be particularly desirable in France.
The whole thing has gone along with a smoothness that has been
gratifying and the reception of it has been marked by an enthusiasm
which has been surprising to me even though I was so strongly convinced
we were on the right track.
I saw James J. Hill today, for example. He said at first that he could
not possibly think of extending his responsibilities, but after I had
finished telling him what we expected to do, he said he would be glad to
go on the board, would take a large amount of stock and particularly
wanted a substantial interest in the City Bank and commissioned me to
buy him the stock at the market.
I talked with Ogden Armour about the matter today for the first time. He
sat in perfect silence while I went through the story, and, without
asking a single question, he said he would go on the board and wanted
$500,000 stock.
Mr. Coffin [of General Electric] is another man who is retiring from
everything, but has 'become so enthusiastic over this that he was
willing to go on the board, and offers the most active cooperation.
I felt very good over getting Sabin. The Guaranty Trust is altogether
the most active competitor we have in the field and it is of great value
to get them into the fold in this way. They have been particularly
enthusiastic at Kuhn, Loeb's. They want to take up to $2,500,000. There
was really quite a little competition to see who should get on the
board, but as I had happened to talk with Kahn and had invited him
first, it was decided he should go on. He is perhaps the most
enthusiastic of any one. They want half a million stock for Sir Ernest
Castle** to
whom they have cabled the plan and they have back from him approval of
it.
I explained the whole matter to the Board [of the City Bank] Tuesday and
got nothing but favorable comments.6
Everybody coveted the AIC stock. Joe Grace (of W. R. Grace & Co.) wanted
$600,000 in addition to his interest in National City Bank. Ambrose
Monell wanted $500,000. George Baker wanted $250,000. And "William
Rockefeller tried, vainly, to get me to put him down for $5,000,000 of
the common."7
By 1916 AIC investments overseas amounted to more than $23 million and
in 1917 to more than $27 million. The company established representation
in London, Paris, Buenos Aires, and Peking as well as in Petrograd,
Russia. Less than two years after its formation AIC was operating on a
substantial scale in Australia, Argentina, Uruguay, Paraguay, Colombia,
Brazil, Chile, China, Japan, India, Ceylon, Italy, Switzerland, France,
Spain, Cuba, Mexico, and other countries in Central America.
American International owned several subsidiary companies outright, had
substantial interests in yet other companies, and operated still other
firms in the United States and abroad. The Allied Machinery Company of
America was founded in February 1916 and the entire share capital taken
up by American International Corporation. The vice president of American
International Corporation was Frederick Holbrook, an engineer and
formerly head of the Holbrook Cabot & Rollins Corporation. In January
1917 the Grace Russian Company was formed, the joint owners being W. R.
Grace & Co. and the San Galli Trading Company of Petrograd. American
International Corporation had a substantial investment in the Grace
Russian Company and through Holbrook an interlocking directorship.
AIC also invested in United Fruit Company, which was involved in Central
American revolutions in the 1920s. The American International
Shipbuilding Corporation was wholly owned by AIC and signed substantial
contracts for war vessels with the Emergency Fleet Corporation: one
contract called for fifty vessels, followed by another contract for
forty vessels, followed by yet another contract for sixty cargo vessels.
American International Shipbuilding was the largest single recipient of
contracts awarded by the U.S. government Emergency Fleet Corporation.
Another company operated by AIC was G. Amsinck & Co., Inc. of New York;
control of the company was acquired in November 1917. Amsinck was the
source of financing for German espionage in the United States (see page
66). In November 1917 the American International Corporation formed and
wholly owned the Symington Forge Corporation, a major government
contractor for shell forgings. Consequently, American International
Corporation had significant interest in war contracts within the United
States and overseas. It had, in a word, a vested interest in the
continuance of World War I.
The directors of American International and some of their associations
were (in 1917):
J. OGDEN ARMOUR Meatpacker, of Armour & Company, Chicago; director of
the National City Bank of New York; and mentioned by A. A. Heller in
connection with the Soviet Bureau (see p. 119).
GEORGE JOHNSON BALDWIN Of Stone & Webster, 120 Broadway. During World
War I Baldwin was chairman of the board of American International
Shipbuilding, senior vice president of American International
Corporation, director of G. Amsinck (Von Pavenstedt of Amsinck was a
German espionage paymaster in the U.S., see page 65), and a trustee of
the Carnegie Foundation, which financed the Marburg Plan for
international socialism to be controlled behind the scenes by world
finance (see page 174-6).
C. A. COFFIN Chairman of General Electric (executive office: 120
Broadway), chairman of cooperation committee of the American Red Cross.
W. E. COREY (14 Wall Street) Director of American Bank Note Company,
Mechanics and Metals Bank, Midvale Steel and Ordnance, and International
Nickel Company; later director of National City Bank.
ROBERT DOLLAR San Francisco shipping magnate, who attempted in behalf of
the Soviets to import tsarist gold rubles into U.S. in 1920, in
contravention of U.S. regulations.
PIERRE S. DU PONT Of the du Pont family.
PHILIP A. S. FRANKLIN Director of National City Bank.
J.P. GRACE Director of National City Bank.
R. F. HERRICK Director, New York Life Insurance; former president of the
American Bankers Association; trustee of Carnegie Foundation.
OTTO H. KAHN Partner in Kuhn, Loeb. Kahn's father came to America in
1948, "having taken part in the unsuccessful German revolution of that
year." According to J. H. Thomas (British socialist, financed by the
Soviets), "Otto Kahn's face is towards the light."
H. W. PRITCHETT Trustee of Carnegie Foundation.
PERCY A. ROCKEFELLER Son of John D. Rockefeller; married to Isabel,
daughter of J. A. Stillman of National City Bank.
JOHN D. RYAN Director of copper-mining companies, National City Bank,
and Mechanics and Metals Bank. (See frontispiece to this book.)
W. L. SAUNDERS Director the Federal Reserve Bank of New York, 120
Broadway, and chairman of Ingersoll-Rand. According to the National
Cyclopaedia (26:81): "Throughout the war he was one of the President's
most trusted advisers." See page 15 for his views on the Soviets.
J. A. STILLMAN President of National City Bank, after his father (J.
Stillman, chairman of NCB) died in March 1918.
C. A. STONE Director (1920-22) of Federal Reserve Bank of New York, 120
Broadway; chairman of Stone & Webster, 120 Broadway; president (1916-23)
of American International Corporation, 120 Broadway.
T. N. VAIL President of National City Bank of Troy, New York
F. A. VANDERLIP President of National City Bank.
E. S. WEBSTER Of Stone & Webster, 120 Broadway.
A. H. WIGGIN Director of Federal Reserve Bank of New York in the early
1930s.
BECKMAN WINTHROPE Director of National City Bank.
WILLIAM WOODWARD Director of Federal Reserve Bank of New York, 120
Broadway, and Hanover National Bank.
The interlock of the twenty-two directors of American International
Corporation with other institutions is significant. The National City
Bank had no fewer than ten directors on the board of AIC; Stillman of
NCB was at that time an intermediary between the Rockefeller and Morgan
interests, and both the Morgan and the Rockefeller interests were
represented directly on AIC. Kuhn, Loeb and the du Ponts each had one
director. Stone & Webster had three directors. No fewer than four
directors of AIC (Saunders, Stone, Wiggin, Woodward) either were
directors of or were later to join the Federal Reserve Bank of New York.
We have noted in an earlier chapter that William Boyce Thompson, who
contributed funds and his considerable prestige to the Bolshevik
Revolution, was also a director of the Federal Reserve Bank of New
York the directorate of the FRB of New York comprised only nine
members.
THE INFLUENCE OF AMERICAN INTERNATIONAL ON THE REVOLUTION
Having identified the directors of AIC we now have to identify their
revolutionary influence.
As the Bolshevik Revolution took hold in central Russia, Secretary of
State Robert Lansing requested the views of American International
Corporation on the policy to be pursued towards the Soviet regime. On
January 16, 1918 barely two months after the takeover in Petrograd and
Moscow, and before a fraction of Russia had come under Bolshevik
control William Franklin Sands, executive secretary of American
International Corporation, submitted the requested memorandum on the
Russian political situation to Secretary Lansing. Sands covering letter,
headed 120 Broadway, began:
To the Honourable
January 16, 1918
Secretary of State
Washington D.C.
Sir
I have the honor to enclose herewith the memorandum which you requested
me to make for you on my view of the political situation in Russia.
I have separated it into three parts; an explanation of the historical
causes of the Revolution, told as briefly as possible; a suggestion as
to policy and a recital of the various branches of American activity at
work now in Russia ....8
Although the Bolsheviks had only precarious control in Russia and
indeed were to come near to losing even this in the spring of 1918
Sands wrote that already (January 1918) the United States had delayed
too long in recognizing "Trotzky." He added, "Whatever ground may have
been lost, should be regained now, even at the cost of a slight personal
triumph for Trotzky."9
Firms located at, or near, 120 Broadway:
American International Corp 120 Broadway
National City Bank 55 Wall Street
Bankers Trust Co Bldg 14 Wall Street
New York Stock Exchange 13 Wall Street/12 Broad
Morgan Building corner Wall & Broad
Federal Reserve Bank of NY 120 Broadway
Equitable Building 120 Broadway
Bankers Club 120 Broadway
Simpson, Thather & Bartlett 62 Cedar St
William Boyce Thompson 14 Wall Street
Hazen, Whipple & Fuller 42nd Street Building
Chase National Bank 57 Broadway
McCann Co 61 Broadway
Stetson, Jennings & Russell 15 Broad Street
Guggenheim Exploration 120 Broadway
Weinberg & Posner 120 Broadway
Soviet Bureau 110 West 40th Street
John MacGregor Grant Co 120 Broadway
Stone & Webster 120 Broadway
General Electric Co 120 Broadway
Morris Plan of NY 120 Broadway
Sinclair Gulf Corp 120 Broadway
Guaranty Securities 120 Broadway
Guaranty Trust 140 Broadway
Map of Wall Street Area Showing Office Locations
Sands then elaborates the manner in which the U.S. could make up for
lost time, parallels the Bolshevik Revolution to "our own revolution,"
and concludes: "I have every reason to believe that the Administration
plans for Russia will receive all possible support from Congress, and
the hearty endorsement of public opinion in the United States."
In brief, Sands, as executive secretary of a corporation whose directors
were the most prestigious on Wall Street, provided an emphatic
endorsement of the Bolsheviks and the Bolshevik Revolution, and within a
matter of weeks after the revolution started. And as a director of the
Federal Reserve Bank of New York, Sands had just contributed $1 million
to the Bolsheviks such endorsement of the Bolsheviks by banking
interests is at least consistent.
Moreover, William Sands of American International was a man with truly
uncommon connections and influence in the State Department.
Sands' career had alternated between the State Department and Wall
Street, In the late nineteenth and early twentieth century he held
various U.S. diplomatic posts. In 1910 he left the department to join
the banking firm of James Speyer to negotiate an Ecuadorian loan, and
for the next two years represented the Central Aguirre Sugar Company in
Puerto Rico. In 1916 he was in Russia on "Red Cross work" actually a
two-man "Special Mission" with Basil Miles and returned to join the
American International Corporation in New York.10
In early 1918 Sands became the known and intended recipient of certain
Russian "secret treaties." If the State Department files are to be
believed, it appears that Sands was also a courier, and that he had some
prior access to official documents prior, that is, to U.S. government
officials. On January 14, 1918, just two days before Sands wrote his
memo on policy towards the Bolsheviks, Secretary Lansing caused the
following cable to be sent in Green Cipher to the American legation in
Stockholm: "Important official papers for Sands to bring here were left
at Legation. Have you forwarded them? Lansing." The reply of January 16
from Morris in Stockholm reads: "Your 460 January 14, 5 pm. Said
documents forwarded Department in pouch number 34 on December 28th." To
these documents is attached another memo, signed "BM"(Basil Miles, an
associate of Sands): "Mr. Phillips. They failed to give Sands 1st
installment of secret treaties wh. [which] he brought from Petrograd to
Stockholm."11
Putting aside the question why a private citizen would be carrying
Russian secret treaties and the question of the content of such secret
treaties (probably an early version of the so-called Sisson Documents),
we can at least deduce that the AIC executive secretary traveled from
Petrograd to Stockholm in late 1917 and must indeed have been a
privileged and influential citizen to have access to secret treaties.12
A few months later, on July 1, 1918, Sands wrote to Treasury Secretary
McAdoo suggesting a commission for "economic assistance to Russia." He
urged that since it would be difficult for a government commission to
"provide the machinery" for any such assistance, "it seems, therefore,
necessary to call in the financial, commercial and manufacturing
interest of the United States to provide such machinery under the
control of the Chief Commissioner or whatever official is selected by
the President for this purpose."13 In
other words, Sands obviously intended that any commercial exploitation
of Bolshevik Russia was going to include 120 Broadway.
THE FEDERAL RESERVE BANK OF NEW YORK
The certification of incorporation of the Federal Reserve Bank of New
York was filed May 18, 1914. It provided for three Class A directors
representing member banks in the district, three Class B directors
representing commerce, agriculture, and industry, and three Class C
directors representing the Federal Reserve Board. The original directors
were elected in 1914; they proceeded to generate an energetic program.
In the first year of organization the Federal Reserve Bank of New York
held no fewer than 50 meetings.
From our viewpoint what is interesting is the association between, on
the one hand, the directors of the Federal Reserve Bank (in the New York
district) and of American International Corporation, and, on the other,
the emerging Soviet Russia.
In 1917 the three Class A directors were Franklin D. Locke, William
Woodward, and Robert H. Treman. William Woodward was a director of
American International Corporation (120 Broadway) and of the
Rockefeller-controlled Hanover National Bank. Neither Locke nor Treman
enters our story. The three Class B directors in 1917 were William Boyce
Thompson, Henry R. Towne, and Leslie R. Palmer. We have already noted
William B. Thompson's substantial cash contribution to the Bolshevik
cause. Henry R. Towne was chairman of the board of directors of the
Morris Plan of New York, located at 120 Broadway; his seat was later
taken by Charles A. Stone of American International Corporation (120
Broadway) and of Stone & Webster (120 Broadway). Leslie R. Palmer does
not come into our story. The three Class C directors were Pierre Jay, W.
L. Saunders, and George Foster Peabody. Nothing is known about Pierre
Jay, except that his office was at 120 Broadway and he appeared to be
significant only as the owner of Brearley School, Ltd. William Lawrence
Saunders was also a director of American International Corporation; he
openly avowed, as we have seen, pro-Bolshevik sympathies, disclosing
them in a letter to President Woodrow Wilson (see page 15). George
Foster Peabody was an active socialist (see page 99-100).
In brief, of the nine directors of the Federal Reserve Bank of New York,
four were physically located at 120 Broadway and two were then connected
with American International Corporation. And at least four members of
AIC's board were at one time or another directors of the FRB of New
York. We could term all of this significant, but regard it not
necessarily as a dominant interest.
AMERICAN-RUSSIAN INDUSTRIAL SYNDICATE INC.
William Franklin Sands' proposal for an economic commission to Russia
was not adopted. Instead, a private vehicle was put together to exploit
Russian markets and the earlier support given the Bolsheviks. A group of
industrialists from 120 Broadway formed the American-Russian Industrial
Syndicate Inc. to develop and foster these opportunities. The financial
backing for the new firm came from the Guggenheim Brothers, 120
Broadway, previously associated with William Boyce Thompson (Guggenheim
controlled American Smelting and Refining, and the Kennecott and Utah
copper companies); from Harry F. Sinclair, president of Sinclair Gulf
Corp., also 120 Broadway; and from James G. White of J. G. White
Engineering Corp. of 43 Exchange Place the address of the
American-Russian Industrial Syndicate.
In the fall of 1919 the U.S. embassy in London cabled Washington about
Messrs. Lubovitch and Rossi "representing American-Russian Industrial
Syndicate Incorporated What is the reputation and the attitude of the
Department toward the syndicate and the individuals?"14
To this cable State Department officer Basil Miles, a former associate
of Sands, replied:
. . . Gentlemen mentioned together with their corporation are of good
standing being backed financially by the White, Sinclair and Guggenheim
interests for the purpose of opening up business relations with Russia.15
So we may conclude that Wall Street interests had quite definite ideas
of the manner in which the new Russian market was to be exploited. The
assistance and advice proffered in behalf of the Bolsheviks by
interested parties in Washington and elsewhere were not to remain
unrewarded.
JOHN REED: ESTABLISHMENT REVOLUTIONARY
Quite apart from American International's influence in the State
Department is its intimate relationship which AIC itself called
"control" with a known Bolshevik: John Reed. Reed was a prolific,
widely read author of the World War I era who contributed to the
Bolshevik-oriented Masses.16 and
to the Morgan-controlled journalMetropolitan. Reed's book on the
Bolshevik Revolution, Ten Days That Shook the World, sports an
introduction by Nikolai Lenin, and became Reed's best-known and most
widely read literary effort. Today the book reads like a superficial
commentary on current events, is interspersed with Bolshevik
proclamations and decrees, and is permeated with that mystic fervor the
Bolsheviks know will arouse foreign sympathizers. After the revolution
Reed became an American member of the executive committee of the Third
International. He died of typhus in Russia in 1920.
The crucial issue that presents itself here is not Reed's known
pro-Bolshevik tenor and activities, but how Reed who had the entire
confidence of Lenin ("Here is a book I should like to see published in
millions of copies and translated into all languages," commented Lenin
in Ten Days), who was a member of the Third International, and who
possessed a Military Revolutionary Committee pass (No. 955, issued
November 16, 1917) giving him entry into the Smolny Institute (the
revolutionary headquarters) at any time as the representative of the
"American Socialist press," was also despite these things a puppet
under the "control" of the Morgan financial interests through the
American International Corporation. Documentary evidence exists for this
seeming conflict (see below and Appendix 3).
Let's fill in the background. Articles for the Metropolitan and
the Masses gave John Reed a wide audience for reporting the Mexican and
the Russian Bolshevik revolutions. Reed's biographer Granville Hicks has
suggested, in John Reed, that "he was . . . the spokesman of the
Bolsheviks in the United States." On the other hand, Reed's financial
support from 1913 to 1918 came heavily from the Metropolitan owned by
Harry Payne Whitney, a director of the Guaranty Trust, an institution
cited in every chapter of this book and also' from the New York
private banker and merchant Eugene Boissevain, who channeled funds to
Reed both directly and through the pro-BolshevikMasses. In other words,
John Reed's financial support came from two supposedly competing
elements in the political spectrum. These funds were for writing and may
be classified as: payments from Metropolitan from 1913 onwards for
articles; payments from Masses from 1913 onwards, which income at least
in part originated with Eugene Boissevain. A third category should be
mentioned: Reed received some minor and apparently unconnected payments
from Red Cross commissioner Raymond Robins in Petrograd. Presumably he
also received smaller sums for articles written for other journals, and
book royalties; but no evidence has been found giving the amounts of
such payments.
JOHN REED AND THE METROPOLITAN MAGAZINE
The Metropolitan supported contemporary establishment causes including,
for example, war preparedness. The magazine was owned by Harry Payne
Whitney (1872-1930), who founded the Navy League and was partner in the
J.P. Morgan firm. In the late 1890s Whitney became a director of
American Smelting and Refining and of Guggenheim Exploration. Upon his
father's death in 1908, he became a director of numerous other
companies, including Guaranty Trust Company. Reed began writing for
Whitney's Metropolitan in July 1913 and contributed a half-dozen
articles on the Mexican revolutions: "With Villa in Mexico," "The Causes
Behind/Mexico's Revolution," "If We Enter Mexico," "With Villa on the
March," etc. Reed's sympathies were with revolutionist Pancho Villa. You
will recall the link (see page 65) between Guaranty Trust and Villa's
ammunition supplies.
In any event, Metropolitan was Reed's main source of income. In the
words of biographer Granville Hicks, "Money meant primarily work for
the Metropolitan and incidentally articles and stories for other paying
magazines." But employment by Metropolitan did not inhibit Reed from
writing articles critical of the Morgan and Rockefeller interests. One
such piece, "At the Throat of the Republic" (Masses, July 1916), traced
the relationship between munitions industries, the national
security-preparedness lobby, the interlocking directorates of the
Morgan-Rockefeller interest, "and showed that they dominated both the
preparedness societies and the newly formed American International
Corporation, organized for the exploitation of backward countries."17
In 1915 John Reed was arrested in Russia by tsarist authorities, and
the Metropolitan intervened with the State Department in Reed's behalf.
On June 21, 1915, H. J. Whigham wrote Secretary of State Robert Lansing
informing him that John Reed and Boardman Robinson (also arrested and
also a contributor to the Masses) were in Russia "with commission from
the Metropolitan magazine to write articles and to make illustrations in
the Eastern field of the War." Whigham pointed out that neither had "any
desire or authority from us to interfere with the operations of any
belligerent powers that be." Whigham's letter continues:
If Mr. Reed carried letters of introduction from Bucharest to people in
Galicia of an anti-Russian frame of mind I am sure that it was done
innocently with the simple intention of meeting as many people as
possible ....
Whigham points out to Secretary Lansing that John Reed was known at the
White House and had given "some assistance" to the administration on
Mexican affairs; he concludes: "We have the highest regard for Reed's
great qualities as a writer and thinker and we are very anxious as
regards his safety."18 The
Whigham letter is not, let it be noted, from an establishment journal in
support of a Bolshevik writer; it is from an establishment journal in
support of a Bolshevik writer for the Masses and similar revolutionary
sheets, a writer who was also the author of trenchant attacks ("The
Involuntary Ethics of Big Business: A Fable for Pessimists," for
example) on the same Morgan interests that owned Metropolitan.
The evidence of finance by the private banker Boissevain is
incontrovertible. On February 23, 1918, the American legation at
Christiania, Norway, sent a cable to Washington in behalf of John Reed
for delivery to Socialist Party leader Morris Hillquit. The cable stated
in part: "Tell Boissevain must draw on him but carefully." A cryptic
note by Basil Miles in the State Department files, dated April 3, 1918,
states, "If Reed is coming home he might as well have money. I
understand alternatives are ejection by Norway or polite return. If this
so latter seems preferable." This protective note is followed by a cable
dated April 1, 1918, and again from the American legation at
Christiania: "John Reed urgently request Eugene Boissevain, 29 Williams
Street, New York, telegraph care legation $300.00."19 This
cable was relayed to Eugene Boissevain by the State Department on April
3, 1918.
Reed apparently received his funds and arrived safely back in the United
States. The next document in the State Department files is a letter to
William Franklin Sands from John Reed, dated June 4, 1918, and written
from Crotonon-Hudson, New York. In the letter Reed asserts that he has
drawn up a memorandum for the State Department, and appeals to Sands to
use his influence to get release of the boxes of papers brought back
from Russia. Reed concludes, "Forgive me for bothering you, but I don't
know where else to turn, and I can't afford another trip to Washington."
Subsequently, Frank Polk, acting secretary of state, received a letter
from Sands regarding the release of John Reed's papers. Sands' letter,
dated June 5, 1918, from 120 Broadway, is here reproduced in full; it
makes quite explicit statements about control of Reed:
120 BROADWAY NEW YORK
June fifth, 1918
My dear Mr. Polk:
I take the liberty of enclosing to you an appeal from John ("Jack") Reed
to help him, if possible, to secure the release of the papers which he
brought into the country with him from Russia.
I had a conversation with Mr. Reed when he first arrived, in which he
sketched certain attempts by the Soviet Government to initiate
constructive development, and expressed the desire to place whatever
observations he had made or information he had obtained through his
connection with Leon Trotzky, at the disposal of our Government. I
suggested that he write a memorandum on this subject for you, and
promised to telephone to Washington to ask you to give him an interview
for this purpose. He brought home with him a mass of papers which were
taken from him for examination, and on this subject also he wished to
speak to someone in authority, in order to voluntarily offer an>,
information they might contain to the Government, and to ask for the
release of those which he needed for his newspaper and magazine work.
I do not believe that Mr. Reed is either a "Bolshevik" or a "dangerous
anarchist," as I have heard him described. He is a sensational
journalist, without doubt, but that is all. He is not trying to
embarrass our Government, and for this reason refused the "protection"
which I understand was offered to him by Trotzky, when he returned to
New York to face the indictment against him in the "Masses" trial. He is
liked by the Petrograd Bolsheviki, however, and, therefore, anything
which our police may do which looks like "persecution" will be resented
in Petrograd, which I believe to be undesirable because unnecessary. He
can be handled and controlled much better by other means than through
the police.
I have not seen the memorandum he gave to Mr. Bullitt I wanted him to
let me see it first and perhaps to edit it, but he had not the
opportunity to do so.
I hope that you will not consider me to be intrusive in this matter or
meddling with matters which do not concern me. I believe it to be wise
not to offend the Bolshevik leaders unless and until it may become
necessary to do so if it should become necessary and it is unwise to
look on every one as a suspicious or even dangerous character, who has
had friendly relations with the Bolsheviki in Russia. I think it better
policy to attempt to use such people for our own purposes in developing
our policy toward Russia, if it is possible to do so. The lecture which
Reed was prevented by the police from delivering in Philadelphia (he
lost his head, came into conflict with the police and was arrested) is
the only lecture on Russia which I would have paid to hear, if I had not
already seen his notes on the subject. It covered a subject which we
might quite possibly find to be a point of contact with the Soviet
Government, from which to begin constructive work!
Can we not use him, instead of embittering him and making him an enemy?
He is not well balanced, but he is, unless I am very much
mistaken, susceptible to discreet guidance and might be quite useful.
Sincerely yours,
William Franklin Sands
The Honourable
Frank Lyon Polk
Counselor for the Department of State
Washington, D.C.
WFS:AO
Enclosure20
The significance of this document is the hard revelation of direct
intervention by an officer (executive secretary) of American
International Corporation in behalf of a known Bolshevik. Ponder a few
of Sands' statements about Reed: "He can be handled and controlled much
better by other means than through the police"; and, "Can we not use
him, instead of embittering him and making him an enemy? . . . he is,
unless I am very much mistaken, susceptible to discreet guidance and
might be quite useful." Quite obviously, the American International
Corporation viewed John Reed as an agent or a potential agent who could
be, and probably had already been, brought under its control. The fact
that Sands was in a position to request editing a memorandum by Reed
(for Bullitt) suggests some degree of control had already been
established.
Then note Sands' potentially hostile attitude towards and barely
veiled intent to provoke the Bolsheviks: "I believe it to be wise not
to offend the Bolshevik leaders unless and until it may become necessary
to do so if it should become necessary . . ." (italics added).
This is an extraordinary letter in behalf of a Soviet agent from a
private U.S. citizen whose counsel the State Department had sought, and
continued to seek.
A later memorandum, March 19, 1920, in the State files reported the
arrest of John Reed by the Finnish authorities at Abo, and Reed's
possession of English, American and German passports. Reed, traveling
under the alias of Casgormlich, carried diamonds, a large sum of money,
Soviet propaganda literature, and film. On April 21, 1920, the American
legation at Helsingfors cabled the State Department:
Am forwarding by the next pouch certified copies of letters from Emma
Goldman, Trotsky, Lenin and Sirola found in Reed's possession. Foreign
Office has promised to furnish complete record of the Court proceedings.
Once again Sands intervened: "I knew Mr. Reed personally."21 And,
as in 1915, Metropolitan magazine also came to Reed's aid. H. J. Whigham
wrote on April 15, 1920, to Bainbridge Colby in the State Department:
"Have heard John Reed in danger of being executed in Finland. Hope the
State Dept. can take immediate steps to see that he gets proper trial.
Urgently request prompt action."22 This
was in addition to an April 13, 1920 telegram from Harry Hopkins, who
was destined for fame under President Roosevelt:
Understand State Dept. has information Jack Reed arrested Finland, will
be executed. As one of his friends and yours and on his wife's behalf
urge you take prompt action prevent execution and secure release. Feel
sure can rely your immediate and effective intervention.23
John Reed was subsequently released by the Finnish authorities.
This paradoxical account on intervention in behalf of a Soviet agent can
have several explanations. One hypothesis that fits other evidence
concerning Wall Street and the Bolshevik Revolution is that John Reed
was in effect an agent of the Morgan interests perhaps only half aware
of his double role that his anticapitalist writing maintained the
valuable myth that all capitalists are in perpetual warfare with all
socialist revolutionaries. Carroll Quigley, as we have already noted,
reported that the Morgan interests financially supported domestic
revolutionary organizations and anticapitalist writings.24 And
we have presented in this chapter irrefutable documentary evidence that
the Morgan interests were also effecting control of a Soviet agent,
interceding on his behalf and, more important, generally intervening in
behalf of Soviet interests with the U.S. government. These activities
centered at a single address: 120 Broadway, New York City.
Footnotes:
1By a quirk the papers of incorporation for the Equitable Office
Building were drawn up by Dwight W. Morrow, later a Morgan partner, but
then a member of the law firm of Simpson, Thacher & Bartlett. The
Thacher firm contributed two members to the 1917 American Red Cross
Mission to Russia (see chapter five).
3Carroll Quigley, Tragedy and Hope (New York: Macmillan, 1966), p. 938.
Quigley was writing in 1965, so this places the start of the
infiltration at about 1915, a date consistent with the evidence here
presented.
4Frank A. Vanderlip, From Farm Boy to Financier (New York: A.
Appleton-Century, 1935).
5Ibid., p. 267.
6Ibid., pp. 268-69. It should be noted that several names mentioned by
Vanderlip turn up elsewhere in this book: Rockefeller, Armour, Guaranty
Trust, and (Otto) Kahn all had some connection more or less with the
Bolshevik Revolution and its aftermath.
7Ibid., p. 269.
8U.S. Stale Dept. Decimal File, 861.00/961.
9Sands memorandum to Lansing, p. 9.
10William Franklin Sands wrote several books, including Undiplomatic
Memoirs (New York: McGraw-Hill, 1930), a biography covering the years to
1904. Later he wrote Our .Jungle Diplomacy (Chapel Hill: University of
North Carolina Press, 1941), an unremarkable treatise on imperialism in
Latin America. The latter work is notable only for a minor point on page
102: the willingness to blame a particularly unsavory imperialistic
adventure on Adolf Stahl, a New York banker, while pointing oust quite
unnecessarily that Stahl was of "German-Jewish origin." In August 1918
he published an article, "Salvaging Russia," in Asia, toexplain support
of the Bolshevik regime.
11All the above in U.S. State Dept. Decimal File, 861.00/969.
12The author cannot forbear comparing the treatment of academic
researchers. In 1973, for example, the writer was still denied access to
some State Department files dated 1919.
13U.S. State Dept. Decimal File, 861.51/333.
14U.S. State Dept. Decimal File, 861.516 84, September 2, 1919.
15Ibid.
16Other contributors to the Masses mentioned in this book were
journalist Robert Minor, chairman of the, U.S. Public Info, marion
Committee; George Creel; Carl Sandburg, poet-historian; and Boardman
Robinson, an artist.
17Granville Hicks, John Reed, 1887-1920 (New York: Macmillan, 1936), p.
215.
18U.S. State Dept. Decimal File, 860d.1121 R 25/4.
19Ibid., 360d.1121/R25/18. According to Granville Hicks in John Reed,
"Masses could not pay his [Reed's] expenses. Finally, friends of the
magazine, notably Eugene Boissevain, raised the money" (p. 249).
20U.S. State Dept. Decimal File, 360. D. II21.R/20/221/2, /R25 (John
Reed). The letter was transferred by Mr. Polk to the State Department
archives on May 2, 1935. All italics added.
21Ibid., 360d.1121 R 25/72.
22Ibid.
23This was addressed to Bainbridge Colby, ibid., 360d.1121 R 25/30.
Another letter, dated April 14, 1920, and addressed to the secretary of
state from 100 Broadway, New York, was from W. Bourke Cochrane; it also
pleaded for the release of John Reed.
24Quigley, op. cit.
*The John MacGregor Grant Co., agent for the Russo-Asiatic Bank
(involved in financing the Bolsheviks), was at 120 Broadway and
financed by Guaranty Trust Company.
**Sir Ernest Cassel, prominent British financier
Chapter IV
GUARANTY TRUST GOES TO RUSSIA
Soviet Govemment desire Guarantee [sic] Trust Company to become fiscal
agent in United States for all Soviet operations and contemplates
American purchase Eestibank with a view to complete linking of Soviet
fortunes with American financial interests.
William H. Coombs, reporting to the U.S. embassy in London, June 1, 1920
(U.S. State Dept. Decimal File, 861.51/752). ("Eestibank" was an
Estonian bank)
In 1918 the Soviets faced a bewildering array of internal and external
problems. They occupied a mere fraction of Russia. To subdue the
remainder, they needed foreign arms, imported food, outside financial
support, diplomatic recognition, and above all foreign trade. To
gain diplomatic recognition and foreign trade, the Soviets first needed
representation abroad, and representation in turn required financing
through gold or foreign currencies. As we have already seen, the first
step was to establish the Soviet Bureau in New York under Ludwig
Martens. At the same time, efforts were made to transfer funds to the
United States and Europe for purchases of needed goods. Then influence
was exerted in the U.S. to gain recognition or to obtain the export
licenses needed to ship goods to Russia.
New York bankers and lawyers provided significant in some cases,
critical assistance for each of these tasks. When Professor George V.
Lomonossoff, the Russian technical expert in the Soviet Bureau, needed
to transfer funds from the chief Soviet agent in Scandinavia, a
prominant Wall Street attorney came to his assistance using official
State Department channels and the acting secretary of state as an
intermediary. When gold had to be transferred to the United States, it
was American International Corporation, Kuhn, Loeb & Co., and Guaranty
Trust that requested the facilities and used their influence in
Washington to smooth the way. And when it came to recognition, we find
American firms pleading .with Congress and with the public to endorse
the Soviet regime.
Lest the reader should deduce too hastily from these assertions that
Wall Street was indeed tinged with Red, or that Red flags were flying in
the street (see frontispiece), we also in a later chapter present
evidence that the J.P. Morgan firm financed Admiral Kolchak in Siberia.
Aleksandr Kolchak was fighting the Bolsheviks, to install his own brand
of authoritarian rule. The firm also contributed to the anti-Communist
United Americans organization.
WALL STREET COMES TO THE AID OF PROFESSOR LOMONOSSOFF
The case of Professor Lomonossoff is a detailed case history of Wall
Street assistance to the early Soviet regime. In late 1918 George V.
Lomonossoff, member of the Soviet Bureau in New York and later first
Soviet commissar of railroads, found himself stranded in the United
States without funds. At this time Bolshevik funds were denied entry
into the United States; indeed, there was no official recognition of the
regime at all. Lomonossoff was the subject of a letter of October 24,
1918, from the U.S. Department of Justice to the Department of State.1 The
letter referred to Lomonossoff's Bolshevik attributes and pro-Bolshevik
speeches. The investigator concluded, "Prof. Lomonossoff is not a
Bolshevik although his speeches constitute unequivocal support for the
Bolshevik cause." Yet Lomonossoff was able to pull strings at the
highest levels of the administration to have $25,000 transferred from
the Soviet Union through a Soviet espionage agent in Scandinavia (who
was himself later to become confidential assistant to Reeve Schley, a
vice president of Chase Bank). All this with the assistance of a member
of a prominent Wall Street firm of attorneys!2
The evidence is presented in detail because the details themselves point
up the close relationship between certain interests that up to now have
been thought of as bitter enemies. The first indication of
Lornonossoff's problem is a letter dated January 7, 1919, from Thomas L.
Chadbourne of Chadbourne, Babbitt 8e Wall of 14 Wall Street (same
Address as William Boyce Thompson's) to Frank Polk, acting secretary of
state. Note the friendly salutation and casual reference to Michael
Gruzenberg, alias Alexander Gumberg, chief Soviet agent in Scandinavia
and later Lomonossoff's assistant:
Dear Frank: You were kind enough to say that if I could inform you of
the status of the $25,000 item of personal funds belonging to Mr. & Mrs.
Lomonossoff you would set in motion the machinery necessary to obtain it
here for them.
I have communicated with Mr. Lomonossoff with respect to it, and he
tells me that Mr. Michael Gruzenberg, who went to Russia for Mr.
Lomonossoff prior to the difficulties between Ambassador Bakhmeteff and
Mr. Lomonossoff, transmitted the information to him respecting this
money through three Russians who recently arrived from Sweden, and Mr.
Lomonossoff believes that the money is held at the Russian embassy in
Stockholm, Milmskilnad Gaten 37. If inquiry from the State Department
should develop this to be not the place where the money is on deposit,
then the Russian embassy in Stockholm can give the exact address of Mr.
Gruzenberg, who can give the proper information respecting it. Mr.
Lomonossoff does not receive letters from Mr. Gruzenberg, although he is
informed that they have been written: nor have any of his letters to Mr.
Gruzenberg been delivered, he is also informed. For this reason it is
impossible to be more definite than I have been, but I hope something
can be done to relieve his and his wife's embarrassment for lack of
funds, and it only needs a little help to secure this money which
belongs to them to aid them on this side of the water.
Thanking you in advance for anything you can do, I beg to remain, as
ever,
Yours sincerely,
Thomas L. Chadbourne.
In 1919, at the time this letter was written, Chadbourne was a
dollar-a-year man in Washington, counsel and director of the U.S. War
Trade Board, and a director of the U.S. Russian Bureau Inc., an official
front company of the U.S. government. Previously, in 1915, Chadbourne
organized Midvale Steel and Ordnance to take advantage of war business.
In 1916 he became chairman of the Democratic Finance Committee and later
a director of Wright Aeronautical and o[ Mack Trucks.
The reason Lomonossoff was not receiving letters from Gruzenberg is that
they were, in all probability, being intercepted by one of several
governments taking a keen interest in the latter's activities.
On January 11, 1919, Frank Polk cabled the American legation in
Stockholm:
Department is in receipt of information that $25,000, personal funds of
.... Kindly inquire of the Russian Legation informally and personally if
such funds are held thus. Ascertain, if not, address of Mr. Michael
Gruzenberg, reported to be in possession of information on this subject.
Department not concerned officially, merely undertaking inquiries on
behalf of a former Russian official in this country.
Polk, Acting
Polk appears in this letter to be unaware of Lomonossoff's Bolshevik
connections, and refers to him as "a former Russian official in this
country." Be that as it may, within three days Polk received a reply
from Morris at the U.S. Legation in Stockholm:
January 14, 3 p.m. 3492. Your January 12, 3 p.m., No. 1443.
Sum of $25,000 of former president of Russian commission of ways of
communication in United States not known to Russian legation; neither
can address of Mr. Michael Gruzenberg be obtained.
Morris
Apparently Frank Polk then wrote to Chadbourne (the letter is not
included in the source) and indicated that State could find neither
Lomonossoff nor Michael Gruzenberg. Chadbourne replied on January 21,
1919:
Dear Frank: Many thanks for your letter of January 17. I understand that
there are two Russian legations in Sweden, one being the soviet and the
other the Kerensky, and I presume your inquiry was directed to the
soviet legation as that was the address I gave you in my letter, namely,
Milmskilnad Gaten 37, Stockholm.
Michael Gruzenberg's address is, Holmenkollen Sanitarium, Christiania,
Norway, and I think the soviet legation could find out all about the
funds through Gruzenberg if they will communicate with him.
Thanking you for taking this trouble and assuring you of my deep
appreciation, I remain,
Sincerely yours,
Thomas L. Chadbourne
We should note that a Wall Street lawyer had the address of Gruzenberg,
chief Bolshevik agent in Scandinavia, at a time when the acting
secretary of state and the U.S. Stockholm legation had no record of the
address; nor could the legation track it down. Chadbourne also presumed
that the Soviets were the official government of Russia, although that
government was not recognized by the United States, and Chadbourne's
official government position on the War Trade Board would require him to
know that.
Frank Polk then cabled the American legation at Christiania, Norway,
with the address of Michael Gruzenberg. It is not known whether Polk
knew he was passing on the address of an espionage agent, but his
message was as follows:
To American Legation, Christiania. January 25, 1919. It is reported that
Michael Gruzenberg is at Holmenkollen Sanitarium. Is it possible for you
to locate him and inquire if he has any knowledge respecting disposition
of $25,000 fund belonging to former president of Russian mission of ways
of communication in the United States, Professor Lomonossoff.
Polk, Acting
The U.S. representative (Schmedeman) at Christiania knew Gruzenberg
well. Indeed, the name had figured in reports from Schmedeman to
Washington concerning Gruzenberg's pro-Soviet activities in Norway.
Schmedeman replied:
January 29, 8 p.m. 1543. Important. Your January 25, telegram No. 650.
Before departing to-day for Russia, Michael Gruzenberg informed our
naval attache that when in Russia some few months ago he had received,
at Lomonossoff's request, $25,000 from the Russian Railway Experimental
Institute, of which Prof. Lomonossoff was president. Gruzenberg claims
that to-day he cabled attorney for Lomonossoff in New York, Morris
Hillquitt [sic], that he, Gruzenberg, is in possession of the money, and
before forwarding it is awaiting further instructions from the United
States, requesting in the cablegram that Lomonossoff be furnished with
living expenses for himself and family by Hillquitt pending the receipt
of the money.3
As Minister Morris was traveling to Stockholm on the same train as
Gruzenberg, the latter stated that he would advise further with Morris
in reference to this subject.
Schmedeman
The U.S. minister traveled with Gruzenberg to Stockholm where he
received the following cable from Polk:
It is reported by legation at Christiania that Michael Gruzenberg, has
for Prof. G. Lomonossoff, the . . . sum of $25,000, received from
Russian Railway Experimental Institute. If you can do so without being
involved with Bolshevik authorities, department will be glad for you to
facilitate transfer of this money to Prof. Lomonossoff in this country.
Kindly reply.
Polk, Acting
This cable produced results, for on February 5, 1919, Frank Polk wrote
to Chadbourne about a "dangerous bolshevik agitator," Gruzenberg:
My Dear Tom: I have a telegram from Christiania indicating that Michael
Gruzenberg has the $25,000 of Prof. Lomonossoff, and received it from
the Russian Railway Experimental Institute, and that he had cabled
Morris Hillquitt [sic], at New York, to furnish Prof. Lomonossoff money
for living expenses until the fund in question can be transmitted to
him. As Gruzenberg has just been deported from Norway as a dangerous
bolshevik agitator, he may have had difficulties in telegraphing from
that country. I understand he has now gone to Christiania, and while it
is somewhat out of the department's line of action, I shall be glad, if
you wish, to see if I can have Mr. Gruzenberg remit the money to Prof.
Lomonossoff from Stockholm, and am telegraphing our minister there to
find out if that can be done.
Very sincerely, yours,
Frank L. Polk
The telegram from Christiania referred to in Polk's letter reads as
follows:
February 3, 6 p.m., 3580. Important. Referring department's january 12,
No. 1443, $10,000 has now been deposited in Stockholm to my order to be
forwarded to Prof. Lomonossoff by Michael Gruzenberg, one of the former
representatives of the bolsheviks in Norway. I informed him before
accepting this money that I would communicate with you and inquire if it
is your wish that this money be forwarded to Lomonossoff. Therefore I
request instructions as to my course of action.
Morris
Subsequently Morris, in Stockholm, requested disposal instructions for a
$10,000 draft deposited in a Stockholm bank. His phrase "[this] has been
my only connection with the affair" suggests that Morris was aware that
the Soviets could, and probably would, claim this as an officially
expedited monetary transfer, since this action impliedapproval by the
U.S. of such monetary transfers. Up to this time the Soviets had been
required to smuggle money into the U.S.
Four p.m. February 12, 3610, Routine.
With reference to my February 3, 6 p.m., No. 3580, and your February 8,
7 p.m., No. 1501. It is not clear to me whether it is your wish for me
to transfer through you the $10,000 referred to Prof. Lomonossoff. Being
advised by Gruzenberg that he had deposited this money to the order of
Lomonossoff in a Stockholm bank and has advised the bank that this draft
could be sent to America through me, provided I so ordered, has been my
only connection with the affair. Kindly wire instructions.
Morris
Then follows a series of letters on the transfer of the $10,000 from A/B
Nordisk Resebureau to Thomas L. Chadbourne at 520 Park Avenue, New York
City, through the medium of the State Department. The first letter
contains instructions from Polk, on the mechanics of the transfer; the
second, from Morris to Polk, contains $10,000; the third, from Morris to
A/B Nordisk Resebureau, requesting a draft; the fourth is a reply from
the bank with a check; and the fifth is the acknowledgment.
Your February 12, 4 p.m., No. 3610.
Money may be transmitted direct to Thomas L. Chadbourne, 520 Park
Avenue, New York City,
Polk, Acting
* * * * *
Dispatch, No. 1600, March 6, 1919:
The Honorable the Secretary of State,
Washington
Sir: Referring to my telegram, No. 3610 of February 12, and to the
department's reply, No. 1524 of February 19 in regard to the sum of
$10,000 for Professor Lomonossoff, I have the honor herewith to inclose a
copy of a letter which I addressed on February 25 to A. B. Nordisk
Resebureau, the bankers with whom this money was deposited; a copy of
the reply of A. B. Nordisk Resebureau, dated February 26; and a copy of
my letter to the A. B. Nordisk Resebureau, dated February 27.
It will be seen from this correspondence that the bank was desirous of
having this money forwarded to Professor Lomonossoff. I explained to
them, however, as will be seen from my letter of February 27, that I had
received authorization to forward it directly to Mr. Thomas L.
Chadbourne, 520 Park Avenue, New York City. I also inclose herewith an
envelope addressed to Mr. Chadbourne, in which are inclosed a letter to
him, together with a check on the National City Bank of New York for
$10,000.
I have the honor to be,
sir, Your obedient servant,
Ira N. Morris
* * * * *
A. B. Nordisk Reserbureau,
No. 4 Vestra Tradgardsgatan, Stockholm.
Gentlemen: Upon receipt of your letter of January 30, stating that you
had received $10,000 to be paid out to Prof. G. V. Lomonossoff, upon my
request, I immediately telegraphed to my Government asking whether they
wished this money forwarded to Prof. Lomonossoff. I am to-day in receipt
of a reply authorizing me to forward the money direct to Mr. Thomas L.
Chadbourne, payable to Prof. Lomonossoff. I shall be glad to forward it
as instructed by my Government.
I am, gentlemen,
Very truly, yours,
Ira N. Morris
* * * * *
Mr. I. N. Morris,
American Minister, Stockholm
Deal Sir: We beg to acknowledge the receipt of your favor of yesterday
regarding payment of dollars 10,000 to Professor G. V. Lomonossoff,
and we hereby have the pleasure to inclose a check for said amount to
the order of Professor G. V. Lomonossoff, which we understand that you
are kindly forwarding to this gentleman. We shall be glad to have your
receipt for same, arid beg to remain,
Yours, respectfully,
A. B. Nordisk Reserbureau
E. Molin
* * * * *
A. B. Nordisk Resebureau.
Stockholm
Gentlemen: I beg to acknowledge receipt of your letter of February 26,
inclosing a check for $10,000 payable to Professor G. V. Lomonossoff. As
I advised you in my letter of February 25, I have been authorized to
forward this check to Mr. Thomas L. Chadbourne, 520 Park Avenue, New
York City, and I shall forward it to this gentleman within the next few
days, unless you indicate a wish to the contrary.
Very truly, yours,
Ira N. Morris
Then follow an internal State Department memorandum and Chadbourne's
acknowledgment:
Mr. Phillips to Mr. Chadbourne, April 3, 1919.
Sir: Referring to previous correspondence regarding a remittance of ten
thousand dollars from A. B. Norsdisk Resebureau to Professor G. V.
Lomonossoff, which you requested to be transmitted through the American
Legation at Stockholm, the department informs you that it is in receipt
of a dispatch from the American minister at Stockholm dated March 6,
1919, covering the enclosed letter addressed to you, together with a
check for the amount referred to, drawn to the order to Professor
Lomonossoff.
I am, sir, your obedient servant
William Phillips,
Acting Secretary of State.
Inclosure: Sealed letter addressed Mr. Thomas L. Chadbourne, inclosed
with 1,600 from Sweden.
* * * * *
Reply of Mr. Chadbourne, April 5, 1919.
Sir: I beg to acknowledge receipt of your letter of April 3, enclosing
letter addressed to me, containing check for $10,000 drawn to the order
of Professor Lomonossoff, which check I have to-day delivered.
I beg to remain, with great respect,
Very truly, yours,
Thomas L. Chadbourne
Subsequently the Stockholm legation enquired concerning Lomonossoff's
address in the U.S. and was informed by the State Department that
"as far as the department is aware Professor George V. Lomonossoff can
be reached in care of Mr. Thomas L. Chadbourne, 520 Park Avenue, New
York City."
It is evident that the State Department, for the reason either of
personal friendship between Polk and Chadbourne or of political
influence, felt it had to go along and act as bagman for a Bolshevik
agent just ejected from Norway. But why would a prestigious
establishment law firm be so intimately interested in the health and
welfare of a Bolshevik emissary? Perhaps a contemporary State Department
report gives the clue:
Martens, the Bolshevik representative, and Professor Lomonossoff are
banking on the fact that Bullitt and his party will make a favorable
report to the Mission and the President regarding conditions in Soviet
Russia and that on the basis of this report the Government of the United
States will favor dealing with the Soviet Government as, proposed by
Martens. March 29, 1919.4
THE STAGE IS SET FOR COMMERCIAL EXPLOITATION OF RUSSIA
It was commercial exploitation of Russia that excited Wall Street, and
Wall Street had lost no time in preparing its program. On May 1, 1918
an auspicious date for Red revolutionaries the American League to Aid
and Cooperate with Russia was established, and its program approved in a
conference held in the Senate Office Building, Washington, D.C. The
officers and executive committee of the league represented some
superficially dissimilar factions. Its president was Dr. Frank J.
Goodnow, president of Johns Hopkins University. Vice presidents were the
ever active William Boyce Thompson, Oscar S. Straus, James Duncan, and
Frederick C. Howe, who wroteConfessions of a Monopolist, the rule book
by which monopolists could control society. The Treasurer was George P.
Whalen, vice president of Vacuum Oil Company. Congress was represented
by Senator William Edgar Borah and Senator John Sharp Williams, of the
Senate Foreign Relations Committee; Senator William N. Calder; and
Senator Robert L. Owen, chairman of the Banking and Currency Committee.
House members were Henry R. Cooper and Henry D. Flood, chairman of the
House Foreign Affairs Committee. American business was represented by
Henry Ford; Charles A. Coffin, chairman of the board of General Electric
Company; and M. A. Oudin, then foreign manager of General Electric.
George P. Whalen represented Vacuum Oil Company, and Daniel Willard was
president of the Baltimore & Ohio Railroad. The more overtly
revolutionary element was represented by Mrs. Raymond Robins, whose name
was later found to be prominent in the Soviet Bureau files and in the
Lusk Committee hearings; Henry L. Slobodin, described as a "prominent
patriotic socialist"; and Lincoln Steffens, a domestic Communist of
note.
In other words, this was a hybrid executive committee; it represented
domestic revolutionary elements, the Congress of the United States, and
financial interests prominently involved with Russian affairs.
Approved by the executive committee was a program that emphasized the
establishment of an official Russian division in the U.S. government
"directed by strong men." This division would enlist the aid of
universities, scientific organizations, and other institutions to study
the "Russian question," would coordinate and unite organizations within
the United States "for the safeguarding of Russia," would arrange for a
"special intelligence committee for the investigation of the Russian
matter," and, generally, would itself study and investigate what was
deemed to be the "Russian question." The executive committee then passed
a resolution supporting President Woodrow Wilson's message to the Soviet
congress in Moscow and the league affirmed its own support for the new
Soviet Russia.
A few weeks later, on May 20, 1918, Frank J. Goodnow and Herbert A.
Carpenter, representing the league, called upon Assistant Secretary of
State William Phillips and impressed upon him the necessity for
establishing an "official Russian Division of the Government to
coordinate all Russian matters. They asked me [wrote Phillips] whether
they should take this matter up with the President."5
Phillips reported this directly to the secretary of state and on the
next day wrote Charles R. Crane in New York City requesting his views on
the American League to Aid and Cooperate with Russia. Phillips besought
Crane, "I really want your advice as to how we should treat the league
.... We do not want to stir up trouble by refusing to cooperate with
them. On the other hand it is a queer committee and I don't quite 'get
it.'"6
In early June there arrived at the State Department a letter from
William Franklin Sands of American International Corporation for
Secretary of State Robert Lansing. Sands proposed that the United States
appoint an administrator in Russia rather than a commission, and opined
that "the suggestion of an allied military force in Russia at the
present moment seems to me to be a very dangerous one."7 Sands
emphasized the possibility of trade with Russia and that this
possibility could be advanced "by a well chosen administrator enjoying
the full confidence of the government"; he indicated that "Mr. Hoover"
might fit the role.8 The
letter was passed to Phillips by Basil Miles, a former associate of
Sands, with the expression, "I think the Secretary would find it
worthwhile to look through."
In early June the War Trade Board, subordinate to the State Department,
passed a resolution, and a committee of the board comprising Thomas L.
Chadbourne (Professor Lomonossoff's contact), Clarence M. Woolley, and
John Foster Dulles submitted a memorandum to the Department of State,
urging consideration of ways and means "to bring about closer and more
friendly commercial relations between the United States and Russia." The
board recommended a mission to Russia and reopened the question whether
this should result from an invitation from the Soviet government.
Then on June 10, M. A. Oudin, foreign manager of General Electric
Company, expressed his views on Russia and clearly favored a
"constructive plan for the economic assistance" of Russia.9 In
August 1918 Cyrus M. McCormick of International Harvester wrote to Basil
Miles at the State Department and praised the President's program for
Russia, which McCormick thought would be "a golden opportunity."10
Consequently, we find in mid-1918 a concerted effort by a segment of
American business obviously prepared to open up trade to take
advantage of its own preferred position regarding the Soviets.
GERMANY AND THE UNITED STATES STRUGGLE FOR RUSSIAN BUSINESS
In 1918 such assistance to the embryonic Bolshevik regime was justified
on the grounds of defeating Germany and inhibiting German exploitation
of Russia. This was the argument used by W. B. Thompson and Raymond
Robins in sending Bolshevik revolutionaries and propaganda teams into
Germany in 1918. The argument was also employed by Thompson in 1917 when
conferring with Prime Minister Lloyd George about obtaining British
support for the emerging Bolshevik regime. In June 1918 Ambassador
Francis and his staff returned from Russia and urged President Wilson
"to recognize and aid the Soviet government of Russia."11 These
reports made by the embassy staff to the State Department were leaked to
the press and widely printed. Above all, it was claimed that delay in
recognizing the Soviet Union would aid Germany "and helps the German
plan to foster reaction and counter-revolution."12 Exaggerated
statistics were cited to support the proposal for example, that the
Soviet government represented ninety percent of the Russian people "and
the other ten percent is the former propertied and governing class ....
Naturally they are displeased."13 A
former American official was quoted as saying, "If we do nothing that
is, if we just let things drift we help weaken the Russian Soviet
Government. And that plays Germany's game."14 So,
it was recommended that "a commission armed with credit and good
business advice could help much."
Meanwhile, inside Russia the economic situation had become critical and
the inevitability of an embrace with capitalism dawned on the Communist
Party and its planners. Lenin crystallized this awareness before the
Tenth Congress of the Russian Communist Party:
Without the assistance of capital it will be impossible for us to retain
proletarian power in an incredibly ruined country in which the
peasantry, also ruined, constitutes the overwhelming majority and, of
course, for this assistance capital will squeeze hundreds per cent out
of us. This is what we have to understand. Hence, either this type of
economic relations or nothing ....15
Then Leon Trotsky was quoted as saying, "What we need here is an
organizer like Bernard M. Baruch."16
Soviet awareness of its impending economic doom suggests that American
and German business was attracted by the opportunity of exploiting the
Russian market for needed goods; the Germans, in fact, made an early
start in 1918. The first deals made by the Soviet Bureau in New York
indicate that earlier American financial and moral support of the
Bolsheviks was paying off in the form of contracts.
The largest order in 1919-20 was contracted to Morris & Co., Chicago
meatpackers, for fifty million pounds of food products, valued at
approximately $10 million. The Morris meatpacking family was related to
the Swift family. Helen Swift, later connected with the Abraham Lincoln
Center "Unity," was married to Edward Morris (of the meatpacking firm)
and was also the brother of Harold H. Swift, a "major" in the 1917
Thompson Red Cross Mission to Russia.
Table: CONTRACTS
MADE IN 1919 BY THE SOVIET BUREAU WITH U.S. FIRMS
Ludwig Martens was formerly vice president of Weinberg & Posner, located
at 120 Broadway, New York City, and this firm was given a $3 million
order.
SOVIET GOLD AND AMERICAN BANKS
Gold was the only practical means by which the Soviet Union could pay
for its foreign purchases and the international bankers were quite
willing to facilitate Soviet gold shipments. Russian gold exports,
primarily imperial gold coins, started in early 1920, to Norway and
Sweden. These were transshipped to Holland and Germany for other world
destinations, including the United States.
In August 1920, a shipment of Russian gold coins was received at the Den
Norske Handelsbank in Norway as a guarantee for payment of 3,000 tons of
coal by Niels Juul and Company in the U.S. in behalf of the Soviet
government. These coins were transferred to the Norges Bank for
safekeeping. The coins were examined and weighed, were found to have
been minted before the outbreak of war in 1914, and were therefore
genuine imperial Russian coins.17
Shortly after this initial episode, the Robert Dollar Company of San
Francisco received gold bars, valued at thirty-nine million Swedish
kroner, in its Stockholm account; the gold "bore the stamp of the old
Czar Government of Russia." The Dollar Company agent in Stockholm
applied to the American Express Company for facilities to ship the gold
to the United States. American Express refused to handle the shipment.
Robert Dollar, it should be noted, was a director of American
International Company; thus AIC was linked to the first attempt at
shipping gold direct to America.18
Simultaneously it was reported that three ships had left Reval on the
Baltic Sea with Soviet gold destined for the U.S. The S.S. Gauthod loaded
216 boxes of gold under the supervision of Professor Lomonossoff now
returning to the United States. The S.S. Carl Line loaded 216 boxes of
gold under the supervision of three Russian agents. The S.S. Ruheleva was
laden with 108 boxes of gold. Each box contained three poods of gold
valued at sixty thousand gold rubles each. This was followed by a
shipment on the S.S. Wheeling Mold.
Kuhn, Loeb & Company, apparently acting in behalf of Guaranty Trust
Company, then inquired of the State Department concerning the official
attitude towards the receipt of Soviet gold. In a report the department
expressed concern because if acceptance was refused, then "the gold
[would] probably come back on the hands of the War Department, causing
thereby direct governmental responsibility and increased embarrassment."19 The
report, written by Merle Smith in conference with Kelley and Gilbert,
argues that unless the possessor has definite knowledge as to imperfect
title, it would be impossible to refuse acceptance. It was anticipated
that the U.S. would be requested to melt the gold in the assay office,
and it was thereupon decided to telegraph Kuhn, Loeb & Company that no
restrictions would be imposed on the importation of Soviet gold into the
United States.
The gold arrived at the New York Assay Office and was deposited not by
Kuhn, Loeb & Company but by Guaranty Trust Company of New York City.
Guaranty Trust then inquired of the Federal Reserve Board, which in turn
inquired of the U.S. Treasury, concerning acceptance and payment. The
superintendent of the New York Assay Office informed the Treasury that
the approximately seven million dollars of gold had no identifying marks
and that "the bars deposited have already been melted in United States
mint bars." The Treasury suggested that the Federal Reserve Board
determine whether Guaranty Trust Company had acted "for its own account,
or the account of another in presenting the gold," and particularly
"whether or not any transfer of credit or exchange transaction has
resulted from the importation or deposit of the gold."20
On November 10, 1920, A. Breton, a vice president of the Guaranty Trust,
wrote to Assistant Secretary Gilbert of the Treasury Department
complaining that Guaranty had not received from the assay office the
usual immediate advance against deposits of "yellow metal left with them
for reduction." The letter states that Guaranty Trust had received
satisfactory assurances that the bars were the product of melting French
and Belgium coins, although it had purchased the metal in Holland. The
letter requested that the Treasury expedite payment for the gold. In
reply the Treasury argued that it "does not purchase gold tendered to
the United States mint or assay offices which is known or suspected to
be of Soviet origin," and in view of known Soviet sales of gold in
Holland, the gold submitted by Guaranty Trust Company was held to be a
"doubtful case, with suggestions of Soviet origin." It suggested that
the Guaranty Trust Company could withdraw the gold from the assay office
at any time it wished or could "present such further evidence to the
Treasury, the Federal Reserve Bank of New York or the Department of
State as may be necessary to clear the gold of any suspicion of Soviet
origin."21
There is no file record concerning final disposition of this case but
presumably the Guaranty Trust Company was paid for the shipment.
Obviously this gold deposit was to implement the mid-1920 fiscal
agreement between Guaranty Trust and the Soviet government under which
the company became the Soviet agent in the United States (see epigraph
to this chapter).
It was determined at a later date that Soviet gold was also being sent
to the Swedish mint. The Swedish mint "melts Russian gold, assays it and
affixes the Swedish mint stamp at the request of Swedish banks or other
Swedish subjects owing the gold."22 And
at the same time Olof Aschberg, head of Svenska Ekonomie A/B (the Soviet
intermediary and affiliate of Guaranty Trust), was offering "unlimited
quantities of Russian gold" through Swedish banks.23
In brief, we can tie American International Corporation, the influential
Professor Lomonossoff, Guaranty Trust, and Olof Aschberg (whom we've
previously identified) to the first attempts to import Soviet gold into
the United States.
MAX MAY OF GUARANTY TRUST BECOMES DIRECTOR OF RUSKOMBANK
Guaranty Trust's interest in Soviet Russia was renewed in 1920 in the
form of a letter from Henry C. Emery, assistant manager of the Foreign
Department of Guaranty Trust, to De Witt C. Poole in the State
Department. The letter was dated January 21, 1920, just a few weeks
before Allen Walker, the manager of the Foreign Department, became
active in forming the virulent anti-Soviet organization United Americans
(see page 165). Emery posed numerous questions about the legal basis of
the Soviet government and banking in Russia and inquired whether the
Soviet government was the de facto government in Russia.24 "Revolt
before 1922 planned by Reds," claimed United Americans in 1920, but
Guaranty Trust had started negotiations with these same Reds and was
acting as the Soviet agent in the U.S. in mid-1920.
In January 1922 Secretary of Commerce Herbert Hoover, interceded with
the State Department in behalf of a Guaranty Trust scheme to set up
exchange relations with the "New State Bank at Moscow." This scheme,
wrote Herbert Hoover, "would not be objectionable if a stipulation were
made that all monies coming into their possession should be used for the
purchase of civilian commodities in the United States"; and after
asserting that such relations appeared to be in line with general
policy, Hoover added, "It might be advantageous to have these
transactions organized in such a manner that we know what the movement
is instead of disintegrated operations now current."25 Of
course, such "disintegrated operations" are consistent with the
operations of a free market, but this approach Herbert Hoover rejected
in favor of channeling the exchange through specified and controllable
sources in New York. Secretary of State Charles E. Hughes expressed
dislike of the Hoover-Guaranty Trust scheme, which he thought could be
regarded as de facto recognition of the Soviets while the foreign
credits acquired might be used to the disadvantage of the United States.26 A
noncommittal reply was sent by State to Guaranty Trust. However,
Guaranty went ahead (with Herbert Hoover's support),27 participated
in formation of the first Soviet international bank, and Max May of
Guaranty Trust became head of the foreign department of the new
Ruskombank.28
Footnotes:
1U.S. State Dept. Decimal File, 861.00/3094.
2This section is from U.S., Senate, Russian Propaganda, hearings before
a subcommittee of the Committee on Foreign Relations, 66th Cong., 2d
sess., 1920.
3Morris Hillquit was the intermediary between New York banker Eugene
Boissevain and John Reed in Petrograd.
4U.S. State Dept. Decimal File, 861.00/4214a.
5Ibid., 861.00/1938.
6Ibid.
7Ibid., 861.00/2003.
8Ibid.
9Ibid., 861.00/2002.
10Ibid.
11Ibid., M 316-18-1306.
12Ibid.
13Ibid.
14Ibid.
15V. 1. Lenin, Report to the Tenth Congress of the Russian Communist
Party, (Bolshevik), March 15, 1921.
16William Reswick, I Dreamt Revolution (Chicago: Henry Regnery, 1952),
p. 78.
17U.S. State Dept. Decimal File, 861.51/815.
18Ibid., 861.51/836.
19Ibid., 861.51,/837, October 4, 1920.
20Ibid., 861.51/837, October 24, 1920.
21Ibid., 861.51/853, November 11, 1920.
22Ibid., 316-119, 1132.
23Ibid., 316-119-785. This report has more data on transfers of Russian
gold through other countries and intermediaries. See also 316-119-846.
24Ibid., 861.516/86
Chapter X
J.P. MORGAN GIVES A LITTLE HELP TO THE OTHER SIDE
I would not sit down to lunch with a Morgan except possibly to learn
something of his motives and attitudes.
William E. Dodd, Ambassador Dodd's Diary, 1933-1938
So far our story has revolved around a single major financial house
Guaranty Trust Company, the largest trust company in the United States
and controlled by the J.P. Morgan firm. Guaranty Trust used Olof
Aschberg, the Bolshevik banker, as its intermediary in Russia before and
after the revolution. Guaranty was a backer of Ludwig Martens and his
Soviet Bureau, the first Soviet representatives in the United States.
And in mid-1920 Guaranty was the Soviet fiscal agent in the U.S.; the
first shipments of Soviet gold to the United States also traced back to
Guaranty Trust.
There is a startling reverse side to this pro-Bolshevik activity
Guaranty Trust was a founder of United Americans, a virulent anti-Soviet
organization which noisily threatened Red invasion by 1922, claimed that
$20 million of Soviet funds were on the way to fund Red revolution, and
forecast panic in the streets and mass starvation in New York City. This
duplicity raises, of course, serious questions about the intentions of
Guaranty Trust and its directors. Dealing with the Soviets, even backing
them, can be explained by apolitical greed or simply profit motive. On
the other hand, spreading propaganda designed to create fear and panic
while at the same time encouraging the conditions that give rise to the
fear and panic is a considerably more serious problem. It suggests utter
moral depravity. Let's first look more closely at the anti-Communist
United Americans.
UNITED AMERICANS FORMED TO FIGHT COMMUNISM1
In 1920 the organization United Americans was founded. It was limited to
citizens of the United States and planned for five million members,
"whose sole purpose would be to combat the teachings of the socialists,
communists, I.W.W., Russian organizations and radical farmers
societies."
In other words, United Americans was to fight all those institutions and
groups believed to be anticapitalist.
The officer's of the preliminary organization established to build up
United Americans were Allen Walker of the Guaranty Trust Company; Daniel
Willard, president of the Baltimore 8c Ohio Railroad; H. H.
Westinghouse, of Westinghouse Air Brake Company; and Otto H. Kahn, of
Kuhn, Loeb 8c Company and American International Corporation. These Wall
Streeters were backed up by assorted university presidents arid Newton
W. Gilbert (former governor of the Philippines). Obviously, United
Americans was, at first glance, exactly the kind of organization that
establishment capitalists would be expected to finance and join. Its
formation should have brought no great surprise.
On the other hand, as we have already seen, these financiers were also
deeply involved in supporting the new Soviet regime in Russia although
this support was behind the scenes, recorded only in government files,
and not to be made public for 50 years. As part of United Americans,
Walker, Willard, Westinghouse, and Kahn were playing a double game. Otto
H. Kahn, a founder of the anti-Communist organization, was reported by
the British socialist J. H. Thomas as having his "face towards the
light." Kahn wrote the preface to Thomas's book. In 1924 Otto Kahn
addressed the League for Industrial Democracy and professed common
objectives with this activist socialist group (see page 49). The
Baltimore & Ohio Railroad (Willard's employer) was active in the
development of Russia during the 1920s. Westinghouse in 1920, the year
United Americans was founded, was operating a plant in Russia that had
been exempted from nationalization. And the role of Guaranty Trust has
already been minutely described.
UNITED AMERICANS REVEALS "STARTLING DISCLOSURES" ON REDS
In March 1920 the New York Times headlined an extensive, detailed scare
story about Red invasion of the United States within two years, an
invasion which was to be financed by $20 million of Soviet funds
"obtained by the murder and robbery of the Russian nobility."2
United Americans had, it was revealed, made a survey of "radical
activities" in the United States, and had done so in its role as an
organization formed to "preserve the Constitution of the United States
with the representative form of government and the right of individual
possession which the Constitution provides."
Further, the survey, it was proclaimed, had the backing of the executive
board, "including Otto H. Kahn, Allen Walker of the Guaranty Trust
Company, Daniel Willard," and others. The survey asserted that
the radical leaders are confident of effecting a revolution within two
years, that the start is to be made in New York City with a general
strike, that Red leaders have predicted much bloodshed and that the
Russian Soviet Government has contributed $20,000,000 to the American
radical movement.
The Soviet gold shipments to Guaranty Trust in mid-1920 (540 boxes of
three poods each) were worth roughly $15,000,000 (at $20 a troy ounce),
and other gold shipments through Robert Dollar and Olof Aschberg brought
the total very close to $20 million. The information about Soviet gold
for the radical movement was called "thoroughly reliable" and was "being
turned over to the Government." The Reds, it was asserted, planned to
starve New York into submission within four days:
Meanwhile the Reds count on a financial panic within the next few weeks
to help their cause along. A panic would cause distress among the
workingmen and thus render them more susceptible to revolution doctrine.
The United Americans' report grossly overstated the number of radicals
in the United States, at first tossing around figures like two or five
million and then settling for precisely 3,465,000 members in four
radical organizations. The report concluded by emphasizing the
possibility of bloodshed and quoted "Skaczewski, President of the
International Publishing Association, otherwise the Communist Party,
[who] boasted that.the time was coming soon when the Communists would
destroy utterly the present form of society."
In brief, United Americans published a report without substantiating
evidence, designed to scare the man in the street into panic: The
significant point of course is that this is the same group that was
responsible for protecting and subsidizing, indeed assisting, the
Soviets so they could undertake these same plans.
CONCLUSIONS CONCERNING UNITED AMERICANS
Is this a case of the right hand not knowing what the left hand was
doing? Probably not. We are talking about heads of companies, eminently
successful companies at that. So United Americans was probably a ruse to
divert public and official attention from the subterranean efforts
being made to gain entry to the Russian market.
United Americans is the only documented example known to this writer of
an organization assisting the Soviet regime and also in the forefront of
opposition to the Soviets. This is by no means an inconsistent course of
action, and further research should at least focus on the following
aspects:
(a) Are there other examples of double-dealing by influential groups
generally known as the establishment?
(b) Can these examples be extended into other areas? For example, is
there evidence that labor troubles have been instigated by these groups?
(c) What is the ultimate purpose of these pincer tactics? Can they be
related to the Marxian axiom: thesis versus antithesis yields synthesis?
It is a puzzle why the Marxist movement would attack capitalism head-on
if its objective was a Communist world and if it truly accepted the
dialectic. If the objective is a Communist world that is, if communism
is the desired synthesis and capitalism is the thesis, then something
apart from capitalism or communism has to be antithesis. Could therefore
capitalism be the thesis and communism the antithesis, with the
objective of the revolutionary groups and their backers being a
synthesizing of these two systems into some world system yet undescribed?
MORGAN AND ROCKEFELLER AID KOLCHAK
Concurrently with these efforts to aid the Soviet Bureau and United
Americans, the J.P. Morgan firm, which controlled Guaranty Trust, was
providing financial assistance for one of the Bolshevik's primary
opponents, Admiral Aleksandr Kolchak in Siberia. On June 23, 1919,
Congressman Mason introduced House Resolution 132 instructing the State
Department "to make inquiry as to all and singular as to the truth of .
. . press reports" charging that Russian bondholders had used their
influence to bring about the "retention of American troops in Russia" in
order to ensure continued payment of interest on Russian bonds.
According to a file memorandum by Basil Miles, an associate of William
F. Sands, Congressman Mason charged that certain banks were attempting
to secure recognition of Admiral Kolchak in Siberia to get payment on
former Russian bonds.
Then in August 1919 the secretary of state, Robert Lansing, received
from the Rockefeller-influenced National City Bank of New York a letter
requesting official comment on a proposed loan of $5 million to Admiral
Kolchak; and from J.P. Morgan & Co. and other bankers another letter
requesting the views of the department concerning an additional proposed
£10 million sterling loan to Kolchak by a consortium of British and
American bankers.3
Secretary Lansing informed the bankers that the U.S. had not recognized
Kolchak and, although prepared to render him assistance, "the Department
did not feel it could assume the responsibility of encouraging such
negotiations but that, nevertheless, there seemed to be no objection to
the loan provided the bankers deemed it advisable to make it."4
Subsequently, on September 30, Lansing informed the American consul
general at Omsk that the "loan has since gone through in regular course"5 Two
fifths was taken up by British banks and three fifths by American banks.
Two thirds of the total was to be spent in Britain and the United States
and the remaining one third wherever the Kolchak Government wished. The
loan was secured by Russian gold (Kolchak's) that was shipped to San
Francisco. The timing of the previously described Soviet exports of gold
suggests that cooperation with the Soviets on gold sales was determined
on the heels of the Kolchak gold-loan agreement.
The Soviet gold sales and the Kolchak loan also suggest that Carroll
Quigley's statement that Morgan interests infiltrated the domestic left
applied also to overseas revolutionary and counterrevolutionary
movements. Summer 1919 was a time of Soviet military reverses in the
Crimea and the Ukraine and this black picture may have induced British
and American bankers to mend their fences with the anti-Bolshevik
forces. The obvious rationale would be to have a foot in all camps, and
so be in a favorable position to negotiate for concessions and business
after the revolution or counterrevolution had succeeded and a new
government stabilized. As the outcome of any conflict cannot be seen at
the start, the idea is to place sizable bets on all the horses in the
revolutionary race. Thus assistance was given on the one hand to the
Soviets and on the other to Kolchak while the British government was
supporting Denikin in the Ukraine and the French government went to the
aid of the Poles.
In autumn 1919 the Berlin newspaper Berliner Zeitung am Mittak (October
8 and 9) accused the Morgan firm of financing the West Russian
government and the Russian-German forces in the Baltic fighting the
Bolsheviks both allied to Kolchak. The Morgan firm strenuously denied
the charge: "This firm has had no discussion, or meeting, with the West
Russian Government or with anyone pretending to represent it, at any
time."6 But
if the financing charge was inaccurate there is evidence of
collaboration. Documents found by Latvian government intelligence among
the papers of Colonel Bermondt, commander of the Western Volunteer Army,
confirm "the relations claimed existing between Kolchak's London Agent
and the German industrial ring which was back of Bermondt."7
In other words, we know that J.P. Morgan, London, and New. York bankers
financed Kolchak. There is also evidence that connects Kolchak and his
army with other anti-Bolshevik armies. And there seems to be little
question that German industrial and banking circles were financing the
all-Russian anti-Bolshevik army in the Baltic. Obviously bankers' funds
have no national flag.
Footnotes:
1New York Times, June 21, 1919.
2Ibid., March 28, 1920.
3U.S. State Dept. Decimal File, 861.51/649.
4Ibid., 861.51/675
5Ibid., 861.51/656
6Ibid., 861.51/767 a letter from J. P. Morgan to Department of State,
November 11, 1919. The financing itself was a hoax (see AP report in
State Department files following the Morgan letter).
7Ibid., 861.51/6172 and /6361
Chapter XI
THE ALLIANCE OF BANKERS AND REVOLUTION
The name Rockefeller does not connote a revolutionary, and my life
situation has fostered a careful and cautious attitude that verges on
conservatism. I am not given to errant causes...
John D. Rockefeller III, The Second American Revolution (New York:
Harper & Row. 1973)
THE EVIDENCE PRESENTED: A SYNOPSIS
Evidence already published by George Katkov, Stefan Possony, and Michael
Futrell has established that the return to Russia of Lenin and his party
of exiled Bolsheviks, followed a few weeks later by a party of
Mensheviks, was financed and organized by the German government.1 The
necessary funds were transferred in part through the Nya Banken in
Stockholm, owned by Olof Aschberg, and the dual German objectives were:
(a) removal of Russia from the war, and (b) control of the postwar
Russian market.2
We have now gone beyond this evidence to establish a continuing working
relationship between Bolshevik banker Olof Aschberg and the
Morgan-controlled Guaranty Trust Company in New York before, during, and
after the Russian Revolution. In tsarist times Aschberg was the Morgan
agent in Russia and negotiator for Russian loans in the United States;
during 1917 Aschberg was financial intermediary for the revolutionaries;
and after the revolution Aschberg became head of Ruskombank, the first
Soviet international bank, while Max May, a vice president of the
Morgan-controlled Guaranty Trust, became director and chief of the
Ruskom-bank foreign department. We have presented documentary evidence
of a continuing working relationship between the Guaranty Trust Company
and the Bolsheviks. The directors of Guaranty Trust in 1917 are listed
in Appendix 1.
Moreover, there is evidence of transfers of funds from Wall Street
bankers to international revolutionary activities. For example, there is
the statement (substantiated by a cablegram) by William Boyce Thompson
a director of the Federal Reserve Bank of New York, a large stockholder
in the Rockefeller-controlled Chase Bank, and a financial associate of
the Guggenheims and the Morgans that he (Thompson) contributed $1
million to the Bolshevik Revolution for propaganda purposes. Another
example is John Reed, the American member of the Third International
executive committee who was financed and supported by Eugene Boissevain,
a private New York banker, and who was employed by Harry Payne
Whitney's Metropolitan magazine. Whitney was at that time a director of
Guaranty Trust. We also established that Ludwig Martens, the first
Soviet "ambassador" to the United States, was (according to British
Intelligence chief Sir Basil Thompson) backed by funds from Guaranty
Trust Company. In tracing Trotsky's funding in the U.S. we arrived at
German sources, yet to be identified, in New York. And though we do not
know the precise German sources of Trotsky's funds, we do know that Von
Pavenstedt, the chief German espionage paymaster in the U.S., was also
senior partner of Amsinck & Co. Amsinck was owned by the ever-present
American International Corporation also controlled by the J.P. Morgan
firm.
Further, Wall Street firms including Guaranty Trust were involved with
Carranza's and Villa's wartime revolutionary activities in Mexico. We
also identified documentary evidence concerning. a Wall Street
syndicate's financing of the 1912 Sun Yat-sen revolution in China, a
revolution that is today hailed by the Chinese Communists as the
precursor of Mao's revolution in China. Charles B. Hill, New York
attorney negotiating with Sun Yat-sen in behalf of this syndicate, was a
director of three Westinghouse subsidiaries, and we have found that
Charles R. Crane of Westinghouse in Russia was involved in the Russian
Revolution.
Quite apart from finance, we identified other, and possibly more
significant, evidence of Wall Street involvement in the Bolshevik cause.
The American Red Cross Mission to Russia was a private venture of
William B. Thompson, who publicly proffered partisan support to the
Bolsheviks. British War Cabinet papers now available record that British
policy was diverted towards the Lenin-Trotsky regime by the personal
intervention of Thompson with Lloyd George in December 1917. We have
reproduced statements by director Thompson and deputy chairman William
Lawrence Saunders, both of the Federal Reserve Bank of New York,
strongly favoring the Bolshevists. John Reed not only was financed from
Wall Street, but had consistent support for his activities, even to the
extent of intervention with the State Department from William Franklin
Sands, executive secretary of American International Corporation. In the
sedition case of Robert Minor there are strong indications and some
circumstantial evidence that Colonel Edward House intervened to have
Minor released. The significance of the Minor case is that William B.
Thompson's program for Bolshevik revolution in Germany was the very
program Minor was implementing when arrested in Germany.
Some international agents, for example Alexander Gumberg, worked for
Wall Street and the Bolsheviks. In 1917 Gumberg was the representative
of a U.S. firm in Petrograd, worked for Thompson's American Red Cross
Mission, became chief Bolshevik agent in Scandinavia until he was
deported from Norway, then became confidential assistant to Reeve Schley
of Chase Bank in New York and later to Floyd Odium of Atlas Corporation.
This activity in behalf of the Bolsheviks originated in large part from
a single address: 120 Broadway, New York City. The evidence for this
observation is outlined but no conclusive reason is given for the
unusual concentration of activity at a single address, except to state
that it appears to be the foreign counterpart of Carroll Quigley's claim
that J.P. Morgan infiltrated the domestic left. Morgan also infiltrated
the international left.
The Federal Reserve Bank of New York was at 120 Broadway. The vehicle
for this pro-Bolshevik activity was American International Corporation
at 120 Broadway. AIC views on the Bolshevik regime were requested by
Secretary of State Robert Lansing only a few weeks after the revolution
began, and Sands, executive secretary of AIC, could barely restrain his
enthusiasm for the Bolshevik cause. Ludwig Martens, the Soviet's first
ambassador, had been vice president of Weinberg & Posner, which was also
located at 120-Broadway. Guaranty Trust Company was next door at 140
Broadway but Guaranty Securities Co. was at 120 Broadway. In 1917 Hunt,
Hill & Betts was at 120 Broadway, and Charles B. Hill of this firm was
the negotiator in the Sun Yat-sen dealings. John MacGregor Grant Co.,
which was financed by Olof Aschberg in Sweden and Guaranty Trust in the
United States, and which was on the Military Intelligence black list,
was at 120 Broadway. The Guggenheims and the executive heart of General
Electric (also interested in American International) were at 120
Broadway. We find it therefore hardly surprising that the Bankers Club
was also at 120 Broadway, on the top floor (the thirty-fourth).
It is significant that support for the Bolsheviks did not cease with
consolidation of the revolution; therefore, this support cannot be
wholly explained in terms of the war with Germany. The American-Russian
syndicate formed in 1918 to obtain concessions in Russia was backed by
the White, Guggenheim, and Sinclair interests. Directors of companies
controlled by these three financiers included Thomas W. Lamont (Guaranty
Trust), William Boyce Thompson (Federal Reserve Bank), and John Reed's
employer Harry Payne Whitney (Guaranty Trust). This strongly suggests
that the syndicate was formed to cash in on earlier support for the
Bolshevik cause in the revolutionary period. And then we found that
Guaranty Trust financially backed the Soviet Bureau in New York in 1919.
The first really concrete signal that previous political and financial
support was paying off came in 1923 when the Soviets formed their first
international bank, Ruskombank. Morgan associate Olof Aschberg became
nominal head of this Soviet bank; Max May, a vice president of Guaranty
Trust, became a director of Ruskom-bank, and the Ruskombank promptly
appointed Guaranty Trust Company its U.S. agent.
THE EXPLANATION FOR THE UNHOLY ALLIANCE
What motive explains this coalition of capitalists and Bolsheviks?
Russia was then and is today the largest untapped market in the
world. Moreover, Russia, then and now, constituted the greatest
potential competitive threat to American industrial and financial
supremacy. (A glance at a world map is sufficient to spotlight the
geographical difference between the vast land mass of Russia and the
smaller United States.) Wall Street must have cold shivers when it
visualizes Russia as a second super American industrial giant.
But why allow Russia to become a competitor and a challenge to U.S.
supremacy? In the late nineteenth century, Morgan/Rockefeller, and
Guggenheim had demonstrated their monopolistic proclivities.
In Railroads and Regulation 1877-1916 Gabriel Kolko has demonstrated how
the railroad owners, not the farmers, wanted state control of railroads
in order to preserve their monopoly and abolish competition. So the
simplest explanation of our evidence is that a syndicate of Wall Street
financiers enlarged their monopoly ambitions and broadened horizons on a
global scale. The gigantic Russian market was to be converted into a
captive market and a technical colony to be exploited by a few
high-powered American financiers and the corporations under their
control. What the Interstate Commerce Commission and the Federal Trade
Commission under the thumb of American industry could achieve for that
industry at home, a planned socialist government could achieve for it
abroad given suitable support and inducements from Wall Street and
Washington, D.C.
Finally, lest this explanation seem too radical, remember that it was
Trotsky who appointed tsarist generals to consolidate the Red Army; that
it was Trotsky who appealed for American officers to control
revolutionary Russia and intervene in behalf of the Soviets; that it was
Trotsky who squashed first the libertarian element in the Russian
Revolution and then the workers and peasants; and that recorded
history totally ignores the 700,000-man Green Army composed of
ex-Bolsheviks, angered at betrayal of the revolution, who fought the
Whites and the Reds. In other words, we are suggesting that the
Bolshevik Revolution was an alliance of statists: statist
revolutionaries and statist financiers aligned against the genuine
revolutionary libertarian elements in Russia.3
'The question now in the readers' minds must be, were these bankers also
secret Bolsheviks? No, of course not. The financiers were without
ideology. It would be a gross misinterpretation to assume that
assistance for the Bolshevists was ideologically motivated, in any
narrow sense. The financiers were power-motivated and therefore
assistedany political vehicle that would give them an entree to power:
Trotsky, Lenin, the tsar, Kolchak, Denikin all received aid, more or
less. All, that is, but those who wanted a truly free individualist
society.
Neither was aid restricted to statist Bolsheviks and statist
counter-Bolsheviks. John P. Diggins, in Mussolini and Fascism: The View
from America,4 has
noted in regard to Thomas Lamont of Guaranty Trust that
Of all American business leaders, the one who most vigorously patronized
the cause of Fascism was Thomas W. Lamont. Head of the powerful J.P.
Morgan banking network, Lamont served as something of a business
consultant for the government of Fascist Italy.
Lamont secured a $100 million loan for Mussolini in 1926 at a
particularly crucial time for the Italian dictator. We might remember
too that the director of Guaranty Trust was the father of Corliss
Lamont, a domestic Communist. This evenhanded approach to the twin
totalitarian systems, communism and fascism, was not confined to the
Lamont family. For example, Otto Kahn, director of American
International Corporation and of Kuhn, Leob & Co., felt sure that
"American capital invested in Italy will find safety, encouragement,
opportunity and reward."5 This
is the same Otto Kahn who lectured the socialist League of Industrial
Democracy in 1924 that its objectives were hisobjectives.6 They
differed only according to Otto Kahn over the means of achieving
these objectives.
Ivy Lee, Rockefeller's public relations man, made similar
pronouncements, and was responsible for selling the Soviet regime to the
gullible American public in the late 1920s. We also have observed that
Basil Miles, in charge of the Russian desk at the State Department and a
former associate of William Franklin Sands, was decidedly helpful to the
businessmen promoting Bolshevik causes; but in 1923 the same Miles
authored a profascist article, "Italy's Black Shirts and Business."7 "Success
of the Fascists is an expression of Italy's youth," wrote Miles while
glorifying the fascist movement and applauding its esteem for American
business.
THE MARBURG PLAN
The Marburg Plan, financed by Andrew Carnegie's ample heritage, was
produced in the early years of the twentieth century. It suggests
premeditation for this kind of superficial schizophrenia, which in fact
masks an integrated program of power acquisition: "What then if Carnegie
and his unlimited wealth, the international financiers and the
Socialists could be organized in a movement to compel the formation of a
league to enforce peace."8
The governments of the world, according to the Marburg Plan, were to be
socialized while the ultimate power would remain in the hands of the
international financiers "tocontrol its councils and enforce peace [and
so] provide a specific for all the political ills of mankind."9
This idea was knit with other elements with similar objectives. Lord
Milner in England provides the transatlantic example of banking
interests recognizing the virtues and possibilities of Marxism. Milner
was a banker, influential in British wartime policy, and pro-Marxist.10 In
New York the socialist "X" club was founded in 1903. It counted among
its members not only the Communist Lincoln Steffens, the socialist
William English Walling, and the Communist banker Morris Hillquit, but
also John Dewey, James T. Shotwell, Charles Edward Russell, and Rufus
Weeks (vice president of New York Life Insurance Company). The annual
meeting of the Economic Club in the Astor Hotel, New York, witnessed
socialist speakers. In 1908, when A. Barton Hepburn, president of Chase
National Bank, was president of the Economic Club, the main speaker was
the aforementioned Morris Hillquit, who "had abundant opportunity to
preach socialism to a gathering which represented wealth and financial
interests."11
From these unlikely seeds grew the modern internationalist movement,
which included not only the financiers Carnegie, Paul Warburg, Otto
Kahn, Bernard Baruch, and Herbert Hoover, but also the Carnegie
Foundation and its progeny International Conciliation. The trustees of
Carnegie were, as we have seen, prominent on the board of American
International Corporation. In 1910 Carnegie donated $10 million to found
the Carnegie Endowment for International Peace, and among those on the
board of trustees were Elihu Root (Root Mission to Russia, 1917),
Cleveland H. Dodge (a financial backer of President Wilson), George W.
Perkins (Morgan partner), G. J. Balch (AIC and Amsinck), R. F. Herrick
(AIC), H. W. Pritchett (AIC), and other Wall Street luminaries. Woodrow
Wilson came under the powerful influence of and indeed was financially
indebted to this group of internationalists. As Jennings C. Wise has
written, "Historians must never forget that Woodrow Wilson... made it
possible for Leon Trotsky to enter Russia with an American passport."12
But Leon Trotsky also declared himself an internationalist. We have
remarked with some interest his high-level internationalist connections,
or at least friends, in Canada. Trotsky then was not pro-Russian, or
pro-Allied, or pro-German, as many have tried to make him out to be.
Trotsky was for world revolution, for world dictatorship; he was, in one
word, an internationalist.13 Bolshevists
and bankers have then this significant common ground internationalism.
Revolution and international finance are not at all inconsistent if the
result of revolution is to establish more centralized authority.
International finance prefers to deal with central governments. The last
thing the banking community wants is laissez-faire economy and
decentralized power because these would disperse power.
This, therefore, is an explanation that fits the evidence. This handful
of bankers and promoters was not Bolshevik, or Communist, or socialist,
or Democrat, or even American. Above all else these men wanted markets,
preferably captive international markets and a monopoly of the captive
world market as the ultimate goal. They wanted markets that could be
exploited monopolistically without fear of competition from Russians,
Germans, or anyone else including American businessmen outside the
charmed circle. This closed group was apolitical and amoral. In 1917, it
had a single-minded objective a captive market in Russia, all
presented under, and intellectually protected by, the shelter of a
league to enforce the peace.
Wall Street did indeed achieve its goal. American firms controlled by
this syndicate were later to go on and build the Soviet Union, and today
are well on their way to bringing the Soviet military-industrial complex
into the age of the computer.
Today the objective is still alive and well. John D. Rockefeller
expounds it in his book The Second American Revolution which sports a
five-pointed star on the title page.14 The
book contains a naked plea for humanism, that is, a plea that our first
priority is to work for others. In other words, a plea for collectivism.
Humanism is collectivism. It is notable that the Rockefellers, who have
promoted this humanistic idea for a century, have not turned their OWN
property over to others.. Presumably it is implicit in their
recommendation that we all work for the Rockefellers. Rockefeller's book
promotes collectivism under the guises of "cautious conservatism" and
"the public good." It is in effect a plea for the continuation of the
earlier Morgan-Rockefeller support of collectivist enterprises and mass
subversion of individual rights.
In brief, the public good has been, and is today, used as a device and
an excuse for self-aggrandizement by an elitist circle that pleads for
world peace and human decency. But so long as the reader looks at world
history in terms of an inexorable Marxian conflict between capitalism
and communism, the objectives of such an alliance between international
finance and international revolution remain elusive. So will the
ludicrousness of promotion of the public good by plunderers. If these
alliances still elude the reader, then he should ponder the obvious fact
that these same international interests and promoters are always willing
to determine what other people should do, but are signally unwilling to
be first in line to give up their own wealth and power. Their mouths are
open, their pockets are closed.
This technique, used by the monopolists to gouge society, was set forth
in the early twentieth century by Frederick C. Howe in The Confessions
of a Monopolist.15 First,
says Howe, politics is a necessary part of business. To control
industries it is necessary to control Congress and the regulators and
thus make society go to work for you, the monopolist. So, according to
Howe, the two principles of a successful monopolist are, "First, let
Society work for you; and second, make a business of politics."16 These,
wrote Howe, are the basic "rules of big business."
Is there any evidence that this magnificently sweeping objective was
also known to Congress and the academic world? Certainly the possibility
was known and known publicly. For example, witness the testimony of
Albert Rhys Williams, an astute commentator on the revolution, before
the Senate Overman Committee:
. . . it is probably true that under the soviet government industrial
life will perhaps be much slower in development than under the usual
capitalistic system. But why should a great industrial country like
America desire the creation and consequent competition of another great
industrial rival? Are not the interests of America in this regard in
line with the slow tempo of development which soviet Russia projects for
herself?
Senator Wolcott: Then your argument is that it would be to the interest
of America to have Russia repressed?
MR. WILLIAMS: Not repressed ....
SENATOR WOLCOTT: You say. Why should America desire Russia to become an
industrial competitor with her?
MR. WILLIAMS: This is speaking from a capitalistic standpoint. The whole
interest of America is not, I think, to have another great industrial
rival, like Germany, England, France, and Italy, thrown on the market in
competition. I think another government over there besides the Soviet
government would perhaps increase the tempo or rate of development of
Russia, and we would have another rival. Of course, this is arguing from
a capitalistic standpoint.
SENATOR WOLCOTT: So you are presenting an argument here which you think
might appeal to the American people, your point being this, that if we
recognize the Soviet government of Russia as it is constituted we will
be recognizing a government that can not compete with us in industry for
a great many years?
MR. WILLIAMS: That is a fact.
SENATOR WOLCOTT: That is an argument that under the Soviet government
Russia is in no position, for a great many years at least, to approach
America industrially?
MR. WILLIAMS: Absolutely.17
And in that forthright statement by Albert Rhys Williams is the basic
clue to the revisionist interpretation of Russian history over the past
half century.
Wall Street, or rather the Morgan-Rockefeller complex represented at 120
Broadway and 14 Wall Street, had something very close to Williams'
argument in mind. Wall Street went to bat in Washington for the
Bolsheviks. It succeeded. The Soviet totalitarian regime survived. In
the 1930s foreign firms, mostly of the Morgan-Rockefeller group, built
the five-year plans. They have continued to build Russia, economically
and militarily.18 On
the other hand, Wall Street presumably did not foresee the Korean War
and the Vietnam War in which 100,000 Americans and countless allies
lost their lives to Soviet armaments built with this same imported U.S.
technology. What seemed a farsighted, and undoubtedly profitable, policy
for a Wall Street syndicate, became a nightmare for millions outside the
elitist power circle and the ruling class.
Footnotes:
1Michael Futrell, Northern Underground (London: Faber and Faber, 1963);
Stefan Possony, Lenin: The Compulsive Revolutionary (London: George
Allen & Unwin, 1966); and George Katkov, "German Foreign Office
Documents on Financial Support to the Bolsheviks in 1917," International
Affairs 32 (Royal Institute of International Affairs, 1956).
2Ibid., especially Katkov.
3See also Voline (V.M. Eichenbaum), Nineteen-Seventeen: The Russian
Revolution Betrayed (New York: Libertarian Book Club, n.d.).
4Princeton, N.J.: Princeton University Prss, 1972.
5Ibid., p. 149.
6See p. 49.
7Nation's Business, February 1923, pp. 22-23.
8Jennings C. Wise, Woodrow Wilson: Disciple of Revolution (New York:
Paisley Press, 1938), p.45
9Ibid., p.46
10See p. 89.
11Morris Hillquit, Loose Leaves from a Busy Life (New York: Macmillan,
1934), p. 81.
12Wise, op. cit., p. 647
13Leon Trotsky, The Bolsheviki and World Peace (New York: Boni &
Liveright, 1918).
14In May 1973 Chase Manhattan Bank (chairman, David Rockefeller) opened
it Moscow office at 1 Karl Marx Square, Moscow. The New York office is
at 1 Chase Manhattan Plaza.
15Chicago: Public Publishin, n.d.
16Ibid.
17U.S., Senate, Bolshevik Propaganda, hearings before a subcommittee of
the Committee on the Judiciary, 65th Cong., pp. 679-80. See also herein
p. 107 for the role of Williams in Radek's Press Bureau.
18See Antony C. Sutton, Western Technology and Soviet Economic
Development, 3 vols. (Stanford, Calif.: Hoover Institution, 1968, 1971,
1973); see alsoNational Suicide: Military Aid to the Soviet Union (New
York: Arlington House, 1973)
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