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
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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