Chapter 7
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.
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.
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