Chapter 10
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.
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.
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