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
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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