Chapter VII
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
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.
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.
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.
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.
6See
Benjamin Gitlow, [U.S., House, Un-American Propaganda Activities (Washington,
1939), vols. 7-8, p. 4539.
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.
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.
16New
York Times, November 17,
1919.
19New
York Times, June 21, 1919.
21U.S.
State Dept. Decimal File, 861.51/411, November 23, 1918.
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.
26New
York Times, April 5, 1919.
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