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.
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.
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.
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?
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.
3U.S. State Dept. Decimal File, 861.51/649.
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.
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