WALL STREET
AND THE
BOLSHEVIK
REVOLUTION
By Antony C. Sutton
Chapter III
By Antony C. Sutton
Chapter III
LENIN AND GERMAN ASSISTANCE
FOR THE BOLSHEVIK REVOLUTION
It was not until the Bolsheviks had received from us a steady flow of funds
through various channels and under varying labels that they were in a
position to be able to build up their main organ Pravda, to conduct
energetic propaganda and appreciably to extend the originally narrow
base of their party.
Von Kühlmann, minister of
foreign affairs, to the kaiser,
December 3, 1917
In April 1917 Lenin and a party of 32 Russian revolutionaries, mostly Bolsheviks, journeyed
by train from Switzerland across Germany through Sweden to Petrograd, Russia. They were on
their way to join Leon Trotsky to "complete the revolution." Their trans-Germany transit was
approved, facilitated, and financed by the German General Staff. Lenin's transit to Russia was
part of a plan approved by the German Supreme Command, apparently not immediately known
to the kaiser, to aid in the disintegration of the Russian army and so eliminate Russia from
World War I. The possibility that the Bolsheviks might be turned against Germany and Europe
did not occur to the German General Staff. Major General Hoffman has written, "We neither
knew nor foresaw the danger to humanity from the consequences of this journey of the
Bolsheviks to Russia."1
Theobald von Bethmann-Hollweg
At the highest level the German political officer who approved Lenin's journey to Russia was
Chancellor Theobald von Bethmann-Hollweg, a descendant of the Frankfurt banking family
Bethmann, which achieved great prosperity in the nineteenth century. Bethmann-Hollweg was
appointed chancellor in 1909 and in November 1913 became the subject of the first vote of
censure ever passed by the German Reichstag on a chancellor. It was Bethmann-Hollweg who
in 1914 told the world that the German guarantee to Belgium was a mere "scrap of paper." Yet
on other war matters — such as the use of unrestricted submarine warfare — Bethmann-Hollweg
was ambivalent; in January 1917 he told the kaiser, "I can give Your Majesty neither my assent
to the unrestricted submarine warfare nor my refusal." By 1917 Bethmann-Hollweg had lost
the Reichstag's support and resigned — but not before approving transit of Bolshevik
revolutionaries to Russia. The transit instructions from Bethmann-Hollweg went through the
state secretary Arthur Zimmermann — who was immediately under Bethmann-Hollweg and
who handled day-to-day operational details with the German ministers in both Bern and
Copenhagen — to the German minister to Bern in early April 1917. The kaiser himself was not
aware of the revolutionary movement until after Lenin had passed into Russia.
While Lenin himself did not know the precise source of the assistance, he certainly knew that
the German government was providing some funding. There were, however, intermediate links
between the German foreign ministry and Lenin, as the following shows:
LENIN'S TRANSFER TO RUSSIA IN APRIL 1917
Final decision BETHMANN-HOLLWEG (Chancellor)
Intermediary I ARTHUR
ZIMMERMANN
(State Secretary)
Intermediary II BROCK DORFFRANTZAU
(German Minister in
Copenhagen)
Intermediary III ALEXANDER ISRAEL
HELPHAND
(alias PARVUS)
Intermediary IV JACOB FURSTENBERG
(alias GANETSKY)
LENIN, in Switzerland
From Berlin Zimmermann and Bethmann-Hollweg communicated with the German minister in
Copenhagen, Brockdorff-Rantzau. In turn, Brockdorff-Rantzau was in touch with Alexander
Israel Helphand (more commonly known by his alias, Parvus), who was located in
Copenhagen.2 Parvus was the connection to Jacob Furstenberg, a Pole descended from a
wealthy family but better known by his alias, Ganetsky. And Jacob Furstenberg was the
immediate link to Lenin.
Although Chancellor Bethmann-Hollweg was the final authority for Lenin's transfer, and
although Lenin was probably aware of the German origins of the assistance, Lenin cannot be
termed a German agent. The German Foreign Ministry assessed Lenin's probable actions in
Russia as being consistent with their own objectives in the dissolution of the existing power
structure in Russia. Yet both parties also had hidden objectives: Germany wanted priority
access to the postwar markets in Russia, and Lenin intended to establish a Marxist dictatorship.
The idea of using Russian revolutionaries in this way can be traced back to 1915. On August 14
of that year, Brockdorff-Rantzau wrote the German state undersecretary about a conversation
with Helphand (Parvus), and made a strong recommendation to employ Helphand, "an
extraordinarily important man whose unusual powers I feel we must employ for duration of the
war .... "3 Included in the report was a warning: "It might perhaps be risky to want to use the
powers ranged behind Helphand, but it would certainly be an admission of our own weakness if
we were to refuse their services out of fear of not being able to direct them."4
Brockdorff-Rantzau's ideas of directing or controlling the revolutionaries parallel, as we shall
see, those of the Wall Street financiers. It was J.P. Morgan and the American International
Corporation that attempted to control both domestic and foreign revolutionaries in the United
States for their own purposes.
A subsequent document 5 outlined the terms demanded by Lenin, of which the most interesting
was point number seven, which allowed "Russian troops to move into India"; this suggested
that Lenin intended to continue the Czarist expansionist program. Zeman also records the role of
Max Warburg in establishing a Russian publishing house and adverts to an agreement dated
August 12, 1916, in which the German industrialist Stinnes agreed to contribute two million
rubles for financing a publishing house in Russia.6
Consequently, on April 16, 1917, a trainload of thirty-two, including Lenin, his wife Nadezhda
Krupskaya, Grigori Zinoviev, Sokolnikov, and Karl Radek, left the Central Station in Bern en
route to Stockholm. When the party reached the Russian frontier only Fritz Plattan and Radek
were denied entrance into Russia. The remainder of the party was allowed to enter. Several
months later they were followed by almost 200 Mensheviks, including Martov and Axelrod.
It is worth noting that Trotsky, at that time in New York, also had funds traceable to German
sources. Further, Von Kuhlmann alludes to Lenin's inability to broaden the base of his
Bolshevik party until the Germans supplied funds. Trotsky was a Menshevik who turned
Bolshevik only in 1917. This suggests that German funds were perhaps related to Trotsky's
change of party label.
THE SISSON DOCUMENTS
In early 1918 Edgar Sisson, the Petrograd representative of the U.S. Committee on Public
Information, bought a batch of Russian documents purporting to prove that Trotsky, Lenin, and
the other Bolshevik revolutionaries were not only in the pay of, but also agents of, the German
government.
These documents, later dubbed the "Sisson Documents," were shipped to the United States in
great haste and secrecy. In Washington, D.C. they were submitted to the National Board for
Historical Service for authentication. Two prominent historians, J. Franklin Jameson and
Samuel N. Harper, testified to their genuineness. These historians divided the Sisson papers
into three groups. Regarding Group I, they concluded:
We have subjected them with great care to all the applicable tests to which
historical students are accustomed and . . . upon the basis of these
investigations, we have no hesitation in declaring that we see no reason to
doubt the genuineness or authenticity of these fifty-three documents.7
The historians were less confident about material in Group II. This group was not rejected as.
outright forgeries, but it was suggested that they were copies of original documents. Although
the historians made "no confident declaration" on Group III, they were not prepared to reject
the documents as outright forgeries.
George Creel
The Sisson Documents were published by the Committee on Public Information, whose
chairman was George Creel, a former contributor to the pro-Bolshevik Masses. The American
press in general accepted the documents as authentic. The notable exception was the New York
Evening Post, at that time owned by Thomas W. Lamont, a partner in the Morgan firm. When
only a few installments had been published, the Post challenged the authenticity of all the
documents.8
We now know that the Sisson Documents were almost all forgeries: only one or two of the
minor German circulars were genuine. Even casual examination of the German letterhead
suggests that the forgers were unusually careless forgers perhaps working for the gullible
American market. The German text was strewn with terms verging on the ridiculous: for
example, Bureau instead of the German word Büro; Central for the German Zentral; etc.
That the documents are forgeries is the conclusion of an exhaustive study by George Kennan 9
and of studies made in the 1920's by the British government. Some documents were based on
authentic information and, as Kennan observes, those who forged them certainly had access to
some unusually good information. For example, Documents 1, 54, 61, and 67 mention that the
Nya Banken in Stockholm served as the conduit for Bolshevik funds from Germany. This
conduit has been confirmed in more reliable sources. Documents 54, 63, and 64 mention
Furstenberg as the banker-intermediary between the Germans and the Bolshevists;
Furstenberg's name appears elsewhere in authentic documents.Sisson's Document 54 mentions
Olof Aschberg, and Olof Aschberg by his own statements was the "Bolshevik Banker."
Aschberg in 1917 was the director of Nya Banken. Other documents in the Sisson series list
names and institutions, such as the German Naptha-Industrial Bank, the Disconto Gesellschaft,
and Max Warburg, the Hamburg banker, but hard supportive evidence is more elusive. In
general, the Sisson Documents, while themselves outright forgeries, are nonetheless based
partly on generally authentic information.
One puzzling aspect in the light of the story in this book is that the documents came to Edgar
Sisson from Alexander Gumberg (alias Berg, real name Michael Gruzenberg), the Bolshevik
agent in Scandinavia and later a confidential assistant to Chase National Bank and Floyd
Odium of Atlas Corporation. The Bolshevists, on the other hand, stridently repudiated the
Sisson material. So did John Reed, the American representative on the executive of the Third
International and whose paycheck came from Metropolitan magazine, which was owned by
J.P. Morgan interests.10 So did Thomas Lamont, the Morgan partner who owned the New York
Evening Post. There are several possible explanations. Probably the connections between the
Morgan interests in New York and such agents as John Reed and Alexander Gumberg were
highly flexible. This could have been a Gumberg maneuver to discredit Sisson and Creel by
planting forged documents; or perhaps Gumberg was working in his own interest.
The Sisson Documents "prove" exclusive German involvement with the Bolsheviks. They also
have been used to "prove" a Jewish-Bolshevik conspiracy theory along the lines of that of the
Protocols of Zion. In 1918 the U.S. government wanted to unite American opinion behind an
unpopular war with Germany, and the Sisson Documents dramatically "proved" the exclusive
complicity of Germany with the Bolshevists. The documents also provided a smoke screen
against public knowledge of the events to be described in this book.
THE TUG-OF-WAR IN WASHINGTON 11
A review of documents in the State Department Decimal File suggests that the State
Department and Ambassador Francis in Petrograd were quite well informed about the
intentions and progress of the Bolshevik movement. In the summer of 1917, for example, the
State Department wanted to stop the departure from the U.S. of "injurious persons" (that is,
returning Russian revolutionaries) but was unable to do so because they were using new
Russian and American passports. The preparations for the Bolshevik Revolution itself were
well known at least six weeks before it came about. One report in the State Department files
states, in regard to the Kerensky forces, that it was "doubtful whether government . . . [can]
suppress outbreak." Disintegration of the Kerensky government was reported throughout
September and October as were Bolshevik preparations for a coup. The British government
warned British residents in Russia to leave at least six weeks before the Bolshevik phase of the
revolution.
The first full report of the events of early November reached Washington on December 9,
1917. This report described the low-key nature of the revolution itself, mentioned that General
William V. Judson had made an unauthorized visit to Trotsky, and pointed out the presence of
Germans in Smolny — the Soviet headquarters.
On November 28, 1917, President Woodrow Wilson ordered no interference with the
Bolshevik Revolution. This instruction was apparently in response to a request by Ambassador
Francis for an Allied conference, to which Britain had already agreed. The State Department
argued that such a conference was impractical. There were discussions in Paris between the
Allies and Colonel Edward M. House, who reported these to Woodrow Wilson as "long and
frequent discussions on Russia." Regarding such a conference, House stated that England was
"passively willing," France "indifferently against," and Italy "actively so." Woodrow Wilson,
shortly thereafter, approved a cable authored by Secretary of State Robert Lansing, which
provided financial assistance for the Kaledin movement (December 12, 1917). There were also
rumors filtering into Washington that "monarchists working with the Bolsheviks and same
supported by various occurrences and circumstances"; that the Smolny government was
absolutely under control of the German General Staff; and rumors elsewhere that "many or
most of them [that is, Bolshevists] are from America."
In December, General Judson again visited Trotsky; this was looked upon as a step towards
recognition by the U.S., although a report dated February 5, 1918, from Ambassador Francis to
Washington, recommended against recognition. A memorandum originating with Basil Miles
in Washington argued that "we should deal with all authorities in Russia including Bolsheviks."
And on February 15, 1918, the State Department cabled Ambassador Francis in Petrograd,
stating that the "department desires you gradually to keep in somewhat closer and informal
touch with the Bolshevik authorities using such channels as will avoid any official
recognition."
The next day Secretary of State Lansing conveyed the following to the French ambassador J. J.
Jusserand in Washington: "It is considered inadvisable to take any action which will antagonize
at this time any of the various elements of the people which now control the power in Russia .."12
On February 20, Ambassador Francis cabled Washington to report the approaching end of the
Bolshevik government. Two weeks later, on March 7, 1918, Arthur Bullard reported to Colonel
House that German money was subsidizing the Bolsheviks and that this subsidy was more
substantial than previously thought. Arthur Bullard (of the U.S. Committee on Public
Information) argued: "we ought to be ready to help any honest national government. But men
or money or equipment sent to the present rulers of Russia will be used against Russians at
least as much as against Germans."13
This was followed by another message from Bullard to Colonel House: "I strongly advise
against giving material help to the present Russian government. Sinister elements in Soviets
seem to be gaining control."
Basil Miles
But there were influential counter forces at work. As early as November 28, 1917, Colonel
House cabled President Woodrow Wilson from Paris that it was "exceedingly important" that
U.S. newspaper comments advocating that "Russia should be treated as an enemy" be
"suppressed." Then next month William Franklin Sands, executive secretary of the Morgan controlled
American International Corporation and a friend of the previously mentioned Basil
Miles, submitted a memorandum that described Lenin and Trotsky as appealing to the masses
and that urged the U.S. to recognize Russia. Even American socialist Walling complained to
the Department of State about the pro-Soviet attitude of George Creel (of the U.S. Committee
on Public Information), Herbert Swope, and William Boyce Thompson (of the Federal Reserve
Bank of New York).
On December 17, 1917, there appeared in a Moscow newspaper an attack on Red Cross colonel
Raymond Robins and Thompson, alleging a link between the Russian Revolution and
American bankers:
Why are they so interested in enlightenment? Why was the money given the
socialist revolutionaries and not to the constitutional democrats? One would
suppose the latter nearer and dearer to hearts of bankers.
The article goes on to argue that this was because American capital viewed Russia as a future
market and thus wanted to get a firm foothold. The money was given to the revolutionaries
because
the backward working men and peasants trust the social revolutionaries. At the
time when the money was passed the social revolutionaries were in power and
it was supposed they would remain in control in Russia for some time.
Robert L Owen,
Another report, dated December 12, 1917, and relating to Raymond Robins, details
"negotiation with a group of American bankers of the American Red Cross Mission"; the
"negotiation" related to a payment of two million dollars. On January 22, 1918, Robert L
Owen, chairman of the U.S. Senate Committee on Banking and Currency and linked to Wall
Street interests, sent a letter to Woodrow Wilson recommending de facto recognition of Russia,
permission for a shipload of goods urgently needed in Russia, the appointment of
representatives to Russia to offset German influence, and the establishment of a career-service
group in Russia.
Raymond Robins
This approach was consistently aided by Raymond Robins in Russia. For example, on February
15, 1918, a cable from Robins in Petrograd to Davison in the Red Cross in Washington (and to
be forwarded to William Boyce Thompson) argued that support be given to the Bolshevik
authority for as long as possible, and that the new revolutionary Russia will turn to the United
States as it has "broken with the German imperialism." According to Robins, the Bolsheviks
wanted United States assistance and cooperation together with railroad reorganization, because
"by generous assistance and technical advice in reorganizing commerce and industry America
may entirely exclude German commerce during balance of war."
In brief, the tug-of-war in Washington reflected a struggle between, on one side, old-line
diplomats (such as Ambassador Francis) and lower-level departmental officials, and, on the
other, financiers like Robins, Thompson, and Sands with allies such as Lansing and Miles in
the State Department and Senator Owen in the Congress.
Chapter IV
WALL STREET AND
WORLD REVOLUTION
What you Radicals and we who hold opposing views differ about, is not so
much the end as the means, not so much what should be brought about as
how it should, and can, be brought about ....
Otto H. Kahn, director, American
International Corp., and partner,
Kuhn,
Loeb & Co., speaking
to the League/or Industrial
Democracy, New York,
December 30, 1924
Before World War I, the financial and business structure of the United States was dominated by
two conglomerates: Standard Oil, or the Rockefeller enterprise, and the Morgan complex of
industries — finance and transportation companies. Rockefeller and Morgan trust alliances
dominated not only Wall Street but, through interlocking directorships, almost the entire
economic fabric of the United States.1 Rockefeller interests monopolized the petroleum and
allied industries, and controlled the copper trust, the smelters trust, and the gigantic tobacco
trust, in addition to having influence in some Morgan properties such as the U.S. Steel
Corporation as well as in hundreds of smaller industrial trusts, public service operations,
railroads, and banking institutions. National City Bank was the largest of the banks influenced
by Standard Oil-Rockefeller, but financial control extended to the United States Trust
Company and Hanover National Bank as well as to major life insurance companies — Equitable
Life and Mutual of New York.
The great Morgan enterprises were in steel, shipping, and the electrical industry; they included
General Electric, the rubber trust, and railroads. Like Rockefeller, Morgan controlled financial
corporations — the National Bank of Commerce and the Chase National Bank, New York Life
Insurance, and the Guaranty Trust Company. The names J.P. Morgan and Guaranty Trust
Company occur repeatedly throughout this book. In the early part of the twentieth century the
Guaranty Trust Company was dominated by the Harriman interests. When the elder Harriman
(Edward Henry) died in 1909, Morgan and associates bought into Guaranty Trust as well as
into Mutual Life and New York Life. In 1919 Morgan also bought control of Equitable Life,
and the Guaranty Trust Company absorbed an additional six lesser trust companies. Therefore,
at the end of World War I the Guaranty Trust and Bankers Trust were, respectively, the first
and second largest trust companies in the United States, both dominated by Morgan interests.2
American financiers associated with these groups were involved in financing revolution even
before 1917. Intervention by the Wall Street law firm of Sullivan & Cromwell into the Panama
Canal controversy is recorded in 1913 congressional hearings. The episode is summarized by
Congressman Rainey:
It is my contention that the representatives of this Government [United States] made possible the revolution on the isthmus of Panama. That had it not been for the interference of this Government a successful revolution could not possibly have occurred, and I contend that this Government violated the treaty of 1846. I will be able to produce evidence to show that the declaration of independence which was promulgated in Panama on the 3rd day of November, 1903, was prepared right here in New York City and carried down there — prepared in the office of Wilson (sic) Nelson Cromwell ....3
Congressman Rainey went on to state that only ten or twelve of the top Panamanian revolutionists plus "the officers of the Panama Railroad & Steamship Co., who were under the control of William Nelson Cromwell, of New York and the State Department officials in Washington," knew about the impending revolution.4 The purpose of the revolution was to deprive Colombia, of which Panama was then a part, of $40 million and to acquire control of the Panama Canal.
The best-documented example of Wall Street intervention in revolution is the operation of a New York syndicate in the Chinese revolution of 1912, which was led by Sun Yat-sen. Although the final gains of the syndicate remain unclear, the intention and role of the New York financing group are fully documented down to amounts of money, information on affiliated Chinese secret societies, and shipping lists of armaments to be purchased. The New York bankers syndicate for the Sun Yat-sen revolution included Charles B. Hill, an attorney with the law firm of Hunt, Hill & Betts. In 1912 the firm was located at 165 Broadway, New York, but in 1917 it moved to 120 Broadway (see chapter eight for the significance of this address). Charles B. Hill was director of several Westinghouse subsidiaries, including Bryant Electric, Perkins Electric Switch, and Westinghouse Lamp — all affiliated with Westinghouse Electric whose New York office was also located at 120 Broadway. Charles R. Crane, organizer of Westinghouse subsidiaries in Russia, had a known role in the first and second phases of the Bolshevik Revolution (see page 26).
The work of the 1910 Hill syndicate in China is recorded in the Laurence Boothe Papers at the Hoover Institution.5 These papers contain over 110 related items, including letters of Sun Yatsen to and from his American backers. In return for financial support, Sun Yat-sen promised the Hill syndicate railroad, banking, and commercial concessions in the new revolutionary China.
Wall Street involvement in these Mexican border raids was the subject of a letter (October 6, 1916) from Lincoln Steffens, an American Communist, to Colonel House, an aide' to Woodrow Wilson:
My dear Colonel House:
Just before I left New York last Monday, I was told convincingly that "Wall Street" had completed arrangements for one more raid of Mexican bandits into the United States: to be so timed and so atrocious that it would settle the election ....8
Once in power in Mexico, the Carranza government purchased additional arms in the United States. The American Gun Company contracted to ship 5,000 Mausers and a shipment license was issued by the War Trade Board for 15,000 guns and 15,000,000 rounds of ammunition. The American ambassador to Mexico, Fletcher, "flatly refused to recommend or sanction the shipment of any munitions, rifles, etc., to Carranza."9 However, intervention by Secretary of State Robert Lansing reduced the barrier to one of a temporary delay, and "in a short while . . . [the American Gun Company] would be permitted to make the shipment and deliver."10
The raids upon the U.S. by the Villa and the Carranza forces were reported in the New York Times as the "Texas Revolution" (a kind of dry run for the Bolshevik Revolution) and were undertaken jointly by Germans and Bolsheviks. The testimony of John A. Walls, district attorney of Brownsville, Texas, before the 1919 Fall Committee yielded documentary evidence of the link between Bolshevik interests in the United States, German activity, and the Carranza forces in Mexico.11 Consequently, the Carranza government, the first in the world with a Soviet-type constitution (which was written by Trotskyites), was a government with support on Wall Street. The Carranza revolution probably could not have succeeded without American munitions and Carranza would not have remained in power as long as he did without American help.12
Similar intervention in the 1917 Bolshevik Revolution in Russia revolves around Swedish banker and intermediary Olof Aschberg. Logically the story begins with prerevolutionary tsarist loans by Wall Street bank syndicates.
When the Morgan house floated war loans for Britain and France in 1915, J.P. Morgan argued that these were not war loans at all but merely a means of facilitating international trade. Such a distinction had indeed been elaborately made by President Wilson in October 1914; he explained that the sale of bonds in the U.S. for foreign governments was in effect a loan of savings to belligerent governments and did not finance a war. On the other hand, acceptance of Treasury notes or other evidence of debt in payment for articles was only a means of facilitating trade and not of financing a war effort.13
Documents in the State Department files demonstrate that the National City Bank, controlled by Stillman and Rockefeller interests, and the Guaranty Trust, controlled by Morgan interests, jointly raised substantial loans for the belligerent Russia before U.S. entry into the war, and that these loans were raised alter the State Department pointed out to these firms that they were contrary to international law. Further, negotiations for the loans were undertaken through official U.S. government communications facilities under cover of the top-level "Green Cipher" of the State Department. Below are extracts from State Department cables that will make the case.
On May 24, 1916, Ambassador Francis in Petrograd sent the following cable to the State Department in Washington for forwarding to Frank Arthur Vanderlip, then chairman of the National City Bank in New York. The cable was sent in Green Cipher and was enciphered and deciphered by U.S. State Department officers in Petrograd and Washington at the taxpayers' expense (file 861.51/110).
563, May 94, 1 p.m.
For Vanderlip National City Bank New York. Five. Our previous opinions credit strengthened. We endorse plan cabled as safe investment plus very attractive speculation in roubles. In view of guarantee of exchange rate have placed rate somewhat above present market. Owing unfavorable opinion created by long delay have on own responsibility offered take twenty-five million dollars. We think large portion of all should be retained by bank and allied institutions. With clause respect customs bonds become practical lien on more than one hundred and fifty million dollars per annum customs making absolute security and secures market even if defect. We consider three [years?] option on bonds very valuable and for that reason amount of rouble credit should be enlarged by group or by distribution to close friends. American International should take block and we would inform Government. Think group should be formed at once to take and issue of bonds . . . should secure full cooperation guaranty. Suggest you see Jack personally, use every endeavor to get them really work otherwise cooperate guarantee form new group. Opportunities here during the next ten years very great along state and industrial financiering and if this transaction consummated doubtless should be established. In answering bear in mind situation regarding cable. MacRoberts Rich.
It is my contention that the representatives of this Government [United States] made possible the revolution on the isthmus of Panama. That had it not been for the interference of this Government a successful revolution could not possibly have occurred, and I contend that this Government violated the treaty of 1846. I will be able to produce evidence to show that the declaration of independence which was promulgated in Panama on the 3rd day of November, 1903, was prepared right here in New York City and carried down there — prepared in the office of Wilson (sic) Nelson Cromwell ....3
Congressman Rainey went on to state that only ten or twelve of the top Panamanian revolutionists plus "the officers of the Panama Railroad & Steamship Co., who were under the control of William Nelson Cromwell, of New York and the State Department officials in Washington," knew about the impending revolution.4 The purpose of the revolution was to deprive Colombia, of which Panama was then a part, of $40 million and to acquire control of the Panama Canal.
The best-documented example of Wall Street intervention in revolution is the operation of a New York syndicate in the Chinese revolution of 1912, which was led by Sun Yat-sen. Although the final gains of the syndicate remain unclear, the intention and role of the New York financing group are fully documented down to amounts of money, information on affiliated Chinese secret societies, and shipping lists of armaments to be purchased. The New York bankers syndicate for the Sun Yat-sen revolution included Charles B. Hill, an attorney with the law firm of Hunt, Hill & Betts. In 1912 the firm was located at 165 Broadway, New York, but in 1917 it moved to 120 Broadway (see chapter eight for the significance of this address). Charles B. Hill was director of several Westinghouse subsidiaries, including Bryant Electric, Perkins Electric Switch, and Westinghouse Lamp — all affiliated with Westinghouse Electric whose New York office was also located at 120 Broadway. Charles R. Crane, organizer of Westinghouse subsidiaries in Russia, had a known role in the first and second phases of the Bolshevik Revolution (see page 26).
The work of the 1910 Hill syndicate in China is recorded in the Laurence Boothe Papers at the Hoover Institution.5 These papers contain over 110 related items, including letters of Sun Yatsen to and from his American backers. In return for financial support, Sun Yat-sen promised the Hill syndicate railroad, banking, and commercial concessions in the new revolutionary China.
Von Rintelen
Another case of revolution supported by New York financial institutions concerned that of
Mexico in 1915-16. Von Rintelen, a German espionage agent in the United States,6 was
accused during his May 1917 trial in New York City of attempting to "embroil" the U.S. with
Mexico and Japan in order to divert ammunition then flowing to the Allies in Europe.7
Payment for the ammunition that was shipped from the United States to the Mexican
revolutionary Pancho Villa, was made through Guaranty Trust Company. Von Rintelen's
adviser, Sommerfeld, paid $380,000 via Guaranty Trust and Mississippi Valley Trust Company
to the Western Cartridge Company of Alton, Illinois, for ammunition shipped to El Paso, for
forwarding to Villa. This was in mid-1915. On January 10, 1916, Villa murdered seventeen
American miners at Santa Isabel and on March 9, 1916, Villa raided Columbus, New Mexico,
and killed eighteen more Americans. Wall Street involvement in these Mexican border raids was the subject of a letter (October 6, 1916) from Lincoln Steffens, an American Communist, to Colonel House, an aide' to Woodrow Wilson:
My dear Colonel House:
Just before I left New York last Monday, I was told convincingly that "Wall Street" had completed arrangements for one more raid of Mexican bandits into the United States: to be so timed and so atrocious that it would settle the election ....8
Once in power in Mexico, the Carranza government purchased additional arms in the United States. The American Gun Company contracted to ship 5,000 Mausers and a shipment license was issued by the War Trade Board for 15,000 guns and 15,000,000 rounds of ammunition. The American ambassador to Mexico, Fletcher, "flatly refused to recommend or sanction the shipment of any munitions, rifles, etc., to Carranza."9 However, intervention by Secretary of State Robert Lansing reduced the barrier to one of a temporary delay, and "in a short while . . . [the American Gun Company] would be permitted to make the shipment and deliver."10
The raids upon the U.S. by the Villa and the Carranza forces were reported in the New York Times as the "Texas Revolution" (a kind of dry run for the Bolshevik Revolution) and were undertaken jointly by Germans and Bolsheviks. The testimony of John A. Walls, district attorney of Brownsville, Texas, before the 1919 Fall Committee yielded documentary evidence of the link between Bolshevik interests in the United States, German activity, and the Carranza forces in Mexico.11 Consequently, the Carranza government, the first in the world with a Soviet-type constitution (which was written by Trotskyites), was a government with support on Wall Street. The Carranza revolution probably could not have succeeded without American munitions and Carranza would not have remained in power as long as he did without American help.12
Similar intervention in the 1917 Bolshevik Revolution in Russia revolves around Swedish banker and intermediary Olof Aschberg. Logically the story begins with prerevolutionary tsarist loans by Wall Street bank syndicates.
AMERICAN BANKERS AND TSARIST LOANS
In August 1914 Europe went to war. Under international law neutral countries (and the United
States was neutral until April 1917) could not raise loans for belligerent countries. This was a
question of law as well as morality. When the Morgan house floated war loans for Britain and France in 1915, J.P. Morgan argued that these were not war loans at all but merely a means of facilitating international trade. Such a distinction had indeed been elaborately made by President Wilson in October 1914; he explained that the sale of bonds in the U.S. for foreign governments was in effect a loan of savings to belligerent governments and did not finance a war. On the other hand, acceptance of Treasury notes or other evidence of debt in payment for articles was only a means of facilitating trade and not of financing a war effort.13
Documents in the State Department files demonstrate that the National City Bank, controlled by Stillman and Rockefeller interests, and the Guaranty Trust, controlled by Morgan interests, jointly raised substantial loans for the belligerent Russia before U.S. entry into the war, and that these loans were raised alter the State Department pointed out to these firms that they were contrary to international law. Further, negotiations for the loans were undertaken through official U.S. government communications facilities under cover of the top-level "Green Cipher" of the State Department. Below are extracts from State Department cables that will make the case.
On May 24, 1916, Ambassador Francis in Petrograd sent the following cable to the State Department in Washington for forwarding to Frank Arthur Vanderlip, then chairman of the National City Bank in New York. The cable was sent in Green Cipher and was enciphered and deciphered by U.S. State Department officers in Petrograd and Washington at the taxpayers' expense (file 861.51/110).
563, May 94, 1 p.m.
For Vanderlip National City Bank New York. Five. Our previous opinions credit strengthened. We endorse plan cabled as safe investment plus very attractive speculation in roubles. In view of guarantee of exchange rate have placed rate somewhat above present market. Owing unfavorable opinion created by long delay have on own responsibility offered take twenty-five million dollars. We think large portion of all should be retained by bank and allied institutions. With clause respect customs bonds become practical lien on more than one hundred and fifty million dollars per annum customs making absolute security and secures market even if defect. We consider three [years?] option on bonds very valuable and for that reason amount of rouble credit should be enlarged by group or by distribution to close friends. American International should take block and we would inform Government. Think group should be formed at once to take and issue of bonds . . . should secure full cooperation guaranty. Suggest you see Jack personally, use every endeavor to get them really work otherwise cooperate guarantee form new group. Opportunities here during the next ten years very great along state and industrial financiering and if this transaction consummated doubtless should be established. In answering bear in mind situation regarding cable. MacRoberts Rich.
FRANCIS, AMERICAN AMBASSADOR 14
There are several points to note about the above cable to understand the story that follows.
First, note the reference to American International Corporation, a Morgan firm, and a name that
turns up again and again in this story. Second, "guarantee" refers to Guaranty Trust Company.
Third, "MacRoberts" was Samuel MacRoberts, a vice president and the executive manager of
National City Bank.
On May 24, 1916, Ambassador Francis cabled a message from Rolph Marsh of Guaranty Trust
in Petrograd to Guaranty Trust in New York, again in the special Green Cipher and again using
the facilities of the State Department. This cable reads as follows:
565, May 24, 6 p.m.
for Guaranty Trust Company New York:
Three.
Olof and self consider the new proposition takes care Olof and will help rather
than harm your prestige. Situation such co-operation necessary if big things
are to be accomplished here. Strongly urge your arranging with City to
consider and act jointly in all big propositions here. Decided advantages for
both and prevents playing one against other. City representatives here desire
(hand written) such co-operation. Proposition being considered eliminates our
credit in name also option but we both consider the rouble credit with the bond
option in propositions. Second paragraph offers wonderful profitable
opportunity, strongly urge your acceptance. Please cable me full authority to
act in connection with City. Consider our entertaining proposition satisfactory
situation for us and permits doing big things. Again strongly urge your taking
twenty-five million of rouble credit. No possibility loss and decided
speculative advantages. Again urge having Vice President upon the ground.
Effect here will be decidedly good. Resident Attorney does not carry same
prestige and weight. This goes through Embassy by code answer same way.
See cable on possibilities.
ROLPH MARSH.
FRANCIS,
AMERICAN AMBASSADOR
Note:—
Entire Message in Green Cipher.
TELEGRAPH ROOM 15
"Olof" in the cable was Olof Aschberg, Swedish banker and head of the Nya Banken in
Stockholm. Aschberg had been in New York in 1915 conferring with the Morgan firm on these
Russian loans. Now, in 1916, he was in Petrograd with Rolph Marsh of Guaranty Trust and
Samuel MacRoberts and Rich of National City Bank ("City" in cable) arranging loans for a
Morgan-Rockefeller consortium. The following year, Aschberg, as we shall see later, would be
known as the "Bolshevik Banker," and his own memoirs reproduce evidence of his right to the
title.
The State Department files also contain a series of cables between Ambassador Francis, Acting
Secretary Frank Polk, and Secretary of State Robert Lansing concerning the legality and
propriety of transmitting National City Bank and Guaranty Trust cables at public expense. On
May 25, 1916, Ambassador Francis cabled Washington as follows and referred to the two
previous cables:
569, May 25, one p.m.
My telegram 563 and 565 May twenty-fourth are sent for local representatives
of institutions addressed in the hope of consummating loan which would
largely increase international trade and greatly benefit [diplomatic relations?].
Prospect for success promising. Petrograd representatives consider terms
submitted very satisfactory but fear such representations to their institutions
would prevent consummation loan if Government here acquainted these
proposals.
FRANCIS, AMERICAN AMBASSADOR.16
The basic reason cited by Francis for facilitating the cables is "the hope of consummating loan
which would largely increase international trade." Transmission of commercial messages using
State Department facilities had been prohibited, and on June 1, 1916, Polk cabled Francis:
842
In view of Department's regulation contained in its circular telegraphic
instruction of March fifteenth, (discontinuance of forwarding Commercial
messages)17 1915, please explain why messages in your 563, 565 and 575,
should be communicated.
Hereafter please follow closely Department's instructions.
Acting.
Polk
861.51/112
/110
Then on June 8, 1916, Secretary of State Lansing expanded the prohibition and clearly stated
that the proposed loans were illegal:
860 Your 563, 565, May 24, g: 569 May 25.1 pm Before delivering messages
to Vanderlip and Guaranty Trust Company, I must inquire whether they refer
to Russian Government loans of any description. If they do, I regret that the
Department can not be a party to their transmission, as such action would
submit it to justifiable criticism because of participation by this Government in
loan transaction by a belligerent for the purpose of carrying on its hostile
operations. Such participation is contrary to the accepted rule of international
law that neutral Governments should not lend their assistance to the raising of
war loans by belligerents.
The last line of the Lansing cable as written, was not transmitted to Petrograd. The line read:
"Cannot arrangements be made to send these messages through Russian channels?"
How can we assess these cables and the parties involved?
Clearly the Morgan-Rockefeller interests were not interested in abiding by international law.
There is obvious intent in these cables to supply loans to belligerents. There was no hesitation
on the part of these firms to use State Department facilities for the negotiations. Further, in
spite of protests, the State Department allowed the messages to go through. Finally, and most
interesting for subsequent events, Olof Aschberg, the Swedish banker, was a prominent
participant and intermediary in the negotiations on behalf of Guaranty Trust. Let us therefore
take a closer look at Olof Aschberg.
OLOF ASCHBERG IN NEW YORK, 1916
Olof Aschberg, the "Bolshevik Banker" (or "Bankier der Weltrevolution," as he has been called
in the German press), was owner of the Nya Banken, founded 1912 in Stockholm. His
codirectors included prominent members of Swedish cooperatives and Swedish socialists,
including G. W. Dahl, K. G. Rosling, and C. Gerhard Magnusson.18 In 1918 Nya Banken was
placed on the Allied black-list for its financial operations in behalf of Germany. In response to
the blacklisting, Nya Banken changed its name to Svensk Ekonomiebolaget. The bank
remained under the control of Aschberg, and was mainly owned by him. The bank's London
agent was the British Bank of North Commerce, whose chairman was Earl Grey, former
associate of Cecil Rhodes. Others in Aschberg's interesting circle of business associates
included Krassin, who was until the Bolshevik Revolution (when he changed color to emerge
as a leading Bolshevik) Russian manager of Siemens-Schukert in Petrograd; Carl Furstenberg,
minister of finance in the first Bolshevik government; and Max May, vice president in charge
of foreign operations for Guaranty Trust of New York. Olof Aschberg thought so highly of
Max May that a photograph of May is included in Aschberg's book.19
In the summer of 1916 Olof Aschberg was in New York representing both Nya Banken and
Pierre Bark, the tsarist minister of finance. Aschberg's prime business in New York, according
to the New York Times (August 4, 1916), was to negotiate a $50 million loan for Russia with an
American banking syndicate headed by Stillman's National City Bank. This business was
concluded on June 5, 1916; the results were a Russian credit of $50 million in New York at a
bank charge of 7 1/2 percent per annum, and a corresponding 150-million-ruble credit for the
NCB syndicate in Russia. The New York syndicate then turned around and issued 6 1/2 percent
certificates in its own name in the U.S. market to the amount of $50 million. Thus, the NCB
syndicate made a profit on the $50 million loan to Russia, floated it on the American market for
another profit, and obtained a 150-million-ruble credit in Russia.
During his New York visit on behalf of the czarist Russian government, Aschberg made some
prophetic comments concerning the future for America in Russia:
The opening for American capital and American initiative, with the awakening
brought by the war, will be country-wide when the struggle is over. There are
now many Americans in Petrograd, representatives of business firms, keeping
in touch with the situation, and as soon as the change comes a huge American
trade with Russia should spring up.20
OLOF ASCHBERG IN THE BOLSHEVIK REVOLUTION
While this czarist loan operation was being floated in New York, Nya Banken and Olof
Aschberg were funneling funds from the German government to Russian revolutionaries, who
would eventually bring down the "Kerensky committee" and establish the Bolshevik regime.
The evidence for Olof Aschberg's intimate connection with financing the Bolshevik Revolution
comes from several sources, some of greater value than others. The Nya Banken and Olof
Aschberg are prominently cited in the Sisson papers (see chapter three); however, George
Kennan has systematically analyzed these papers and shown them to be forged, although they
are probably based in part on authentic material. Other evidence originates with Colonel B. V.
Nikitine, in charge of counterintelligence in the Kerensky government, and consists of twentynine
telegrams transmitted from Stockholm to Petrograd, and vice versa, regarding financing of
the Bolsheviks. Three of these telegrams refer to banks — telegrams 10 and 11 refer to Nya
Banken, and telegram 14 refers to the Russo-Asiatic Bank in Petrograd. Telegram 10 reads as
follows:
Gisa Furstenberg Saltsjobaden. Funds very low cannot assist if really urgent
give 500 as last payment pencils huge loss original hopeless instruct Nya
Banken cable further 100 thousand Sumenson.
Telegram 11 reads:
Kozlovsky Sergievskaya 81. First letters received Nya Banken telegraphed
cable who Soloman offering local telegraphic agency refers to Bronck
Savelievich Avilov.
Fürstenberg was the intermediary between Parvus (Alexander I. Helphand) and the German
government. About these transfers, Michael Futrell concludes:
It was discovered that during the last few months she [Evegeniya Sumenson]
had received nearly a million rubles from Furstenberg through the Nya Banken
in Stockholm, and that this money came from German sources.21
Telegram 14 of the Nikitine series reads: "Furstenberg Saltsjöbaden. Number 90 period hundred
thousand into Russo-Asiatic Sumenson." The U.S. representative for Russo-Asiatic was
MacGregor Grant Company at 120 Broadway, New York City, and the bank was financed by
Guaranty Trust in the U.S. and Nya Banken in Sweden.
Another mention of the Nya Banken is in the material "The Charges Against the Bolsheviks,"
which was published in the Kerensky period. Particularly noteworthy in that material is a
document signed by Gregory Alexinsky, a former member of the Second State Duma, in
reference to monetary transfers to the Bolsheviks. The document, in part, reads as follows:
In accordance with the information just received these trusted persons in
Stockholm were: the Bolshevik Jacob Furstenberg, better known under the
name of "Hanecki" (Ganetskii), and Parvus (Dr. Helfand); in Petrograd: the
Bolshevik attorney, M. U. Kozlovsky, a woman relative of Hanecki —
Sumenson, engaged in speculation together with Hanecki, and others.
Kozlovsky is the chief receiver of German money, which is transferred from
Berlin through the "Disconto-Gesellschaft" to the Stockholm "Via Bank," and
thence to the Siberian Bank in Petrograd, where his account at present has a
balance of over 2,000,000 rubles. The military censorship has unearthed an
uninterrupted exchange of telegrams of a political and financial nature
between the German agents and Bolshevik leaders [Stockholm-Petrograd].22
Further, there is in the State Dept. files a Green Cipher message from the U.S. embassy in
Christiania (named Oslo, 1925), Norway, dated February 21, 1918, that reads: "Am informed
that Bolshevik funds are deposited in Nya Banken, Stockholm, Legation Stockholm advised.
Schmedeman."23
Finally, Michael Furtell, who interviewed Olof Aschberg just before his death, concludes that
Bolshevik funds were indeed transferred from Germany through Nya Banken and Jacob
Furstenberg in the guise of payment for goods shipped. According to Futrell, Aschberg
confirmed to him that Furstenberg had a commercial business with Nya Banken and that
Furstenberg had also sent funds to Petrograd. These statements are authenticated in Aschberg's
memoirs (see page 70). In sum, Aschberg, through his Nya Banken, was undoubtedly a channel
for funds used in the Bolshevik Revolution, and Guaranty Trust was indirectly linked through
its association with Aschberg and its interest in MacGregor Grant Co., New York, agent of the
Russo-Asiatic Bank, another transfer vehicle.
NYA BANKEN AND GUARANTY TRUST
JOIN RUSKOMBANK
Several years later, in the fall of 1922, the Soviets formed their first international bank. It was
based on a syndicate that involved the former Russian private bankers and some new
investment from German, Swedish, American, and British bankers. Known as the Ruskombank
(Foreign Commercial Bank or the Bank of Foreign Commerce), it was headed by Olof
Aschberg; its board consisted of tsarist private bankers, representatives of German, Swedish,
and American banks, and, of course, representatives of the Soviet Union. The U.S. Stockholm
legation reported to Washington on this question and noted, in a reference to Aschberg, that
"his reputation is poor. He was referred to in Document 54 of the Sisson documents and
Dispatch No. 138 of January 4, 1921 from a legation in Copenhagen."24
The foreign banking consortium involved in the Ruskombank represented mainly British
capital. It included Russo-Asiatic Consolidated Limited, which was one of the largest private
creditors of Russia, and which was granted £3 million by the Soviets to compensate for damage
to its properties in the Soviet Union by nationalization. The British government itself had
already purchased substantial interests in the Russian private banks; according to a State
Department report, "The British Government is heavily invested in the consortium in
question."25
The consortium was granted extensive concessions in Russia and the bank had a share capital
of ten million gold rubles. A report in the Danish newspaper National Titende stated that
"possibilities have been created for cooperation with the Soviet government where this, by
political negotiations, would have been impossible."26 In other words, as the newspaper goes
on to say, the politicians had failed to achieve cooperation with the Soviets, but "it may be
taken for granted that the capitalistic exploitation of Russia is beginning to assume more
definite forms."27
In early October 1922 Olof Aschberg met in Berlin with Emil Wittenberg, director of the
Nationalbank fur Deutschland, and Scheinmann, head of the Russian State Bank. After
discussions concerning German involvement in the Ruskombank, the three bankers went to
Stockholm and there met with Max May, vice president of the Guaranty Trust Company. Max
May was then designated director of the Foreign Division of the Ruskombank, in addition to
Schlesinger, former head of the Moscow Merchant Bank; Kalaschkin, former head of the
Junker Bank; and Ternoffsky, former head of the Siberian Bank. The last bank had been partly
purchased by the British government in 1918. Professor Gustav Cassell of Sweden agreed to
act as adviser to Ruskombank. Cassell was quoted in a Swedish newspaper (Svenskadagbladet
of October 17, 1922) as follows:
That a bank has now been started in Russia to take care of purely banking
matters is a great step forward, and it seems to me that this bank was
established in order to do something to create a new economic life in Russia.
What Russia needs is a bank to create internal and external commerce. If there
is to be any business between Russia and other countries there must be a bank
to handle it. This step forward should be supported in every way by other
countries, and when I was asked my advice I stated that I was prepared to give
it. I am not in favor of a negative policy and believe that every opportunity
should be seized to help in a positive reconstruction. The great question is how
to bring the Russian exchange back to normal. It is a complicated question and
will necessitate thorough investigation. To solve this problem I am naturally
more than willing to take part in the work. To leave Russia to her own
resources and her own fate is folly.28
The former Siberian Bank building in Petrograd was used as the head office of the
Ruskombank, whose objectives were to raise short-term loans in foreign countries, to introduce
foreign capital into the Soviet Union, and generally to facilitate Russian overseas trade. It
opened on December 1, 1922, in Moscow and employed about 300 persons.
In Sweden Ruskombank was represented by the Svenska Ekonomibolaget of Stockholm, Olof
Aschberg's Nya Banken under a new name, and in Germany by the Garantie und Creditbank
fur Den Osten of Berlin. In the United States the bank was represented by the Guaranty Trust
Company of New York. On opening the bank, Olof Aschberg commented:
The new bank will look after the purchasing of machinery and raw material
from England and the United States and it will give guarantees for the
completion of contracts. The question of purchases in Sweden has not yet
arisen, but it is hoped that such will be the case later on.29
On joining Ruskombank, Max May of Guaranty Trust made a similar statement:
The United States, being a rich country with well developed industries, does
not need to import anything from foreign countries, but... it is greatly
interested in exporting its products to other countries and considers Russia the
most suitable market for that purpose, taking into consideration the vast
requirements of Russia in all lines of its economic life.30
May stated that the Russian Commercial Bank was "very important" and that it would "largely
finance all lines of Russian industries."
From the very beginning the operations of the Ruskombank were restricted by the Soviet
foreign-trade monopoly. The bank had difficulties in obtaining advances on Russian goods
deposited abroad. Because they were transmitted in the name of Soviet trade delegations, a
great deal of Ruskombank funds were locked up in deposits with the Russian State Bank.
Finally, in early 1924 the Russian Commercial Bank was fused with the Soviet foreign-trade
commissariat, and Olof Aschberg was dismissed from his position at the bank because, it was
claimed in Moscow, he had misused bank funds. His original connection with the bank was
because of his friendship with Maxim Litvinov. Through this association, so runs a State
Department report, Olof Aschberg had access to large sums of money for the purpose of
meeting payments on goods ordered by Soviets in Europe:
These sums apparently were placed in the Ekonomibolaget, a private banking
company, owned by Mr. Aschberg. It is now alleged [sic] that a large portion
of these funds were employed by Mr. Aschberg for making investments for his
personal account and that he is now endeavoring to maintain his position in the
bank through his possession of this money. According to my informant Mr.
Aschberg has not been the sole one to profit by his operations with the Soviet
funds, but has divided the gains with those who are responsible for his
appointment in the Russian Commerce Bank, among them being Litvinoff.31
Ruskombank then became Vneshtorg, by which it is known today.
We now have to retrace our steps and look at the activities of Aschberg's New York associate,
Guaranty Trust Company, during World War I, to lay the foundation for examination of its role
in the revolutionary era in Russia.
GUARANTY TRUST AND
GERMAN ESPIONAGE IN
THE UNITED STATES, 1914-
1917 32
During World War I Germany raised considerable funds in New York for espionage and covert
operations in North America and South America. It is important to record the flow of these
funds because it runs from the same firms — Guaranty Trust and American International
Corporation — that were involved in the Bolshevik Revolution and its aftermath. Not to mention
the fact (outlined in chapter three) that the German government also financed Lenin's
revolutionary activities.
A summary of the loans granted by American banks to German interests in World War I was
given to the 1919 Overman Committee of the United States Senate by U.S. Military
Intelligence. The summary was based on the deposition of Karl Heynen, who came to the
United States in April 1915 to assist Dr. Albert with the commercial and financial affairs of the
German government. Heynen's official work was the transportation of goods from the United
States to Germany by way of Sweden, Switzerland, and Holland. In fact, he was up to his ears
in covert operations.
The major German loans raised in the United States between 1915 and 1918, according to
Heynen, were as follows: The first loan, of $400,000, was made about September 1914 by the
investment bankers Kuhn, Loeb & Co. Collateral of 25 million marks was deposited with Max
M. Warburg in Hamburg, the German affiliate of Kuhn, Loeb & Co. Captain George B. Lester
of U.S. Military Intelligence told the Senate that Heynen's reply to the question "Why did you
go to Kuhn, Loeb & Co?" was, "Kuhn, Loeb & Co. we considered the natural bankers of the
German government and the Reichsbank."
The second loan, of $1.3 million, did not come directly from the United States but was
negotiated by John Simon, an agent of the Suedeutsche Disconto-Gesellschaft, to secure funds
for making shipments to Germany.
The third loan was from the Chase National Bank (in the Morgan group) in the amount of three
million dollars. The fourth loan was from the Mechanics and Metals National Bank in the
amount of one million dollars. These loans financed German espionage activities in the United
States and Mexico. Some funds were traced to Sommerfeld, who was an adviser to Von
Rintelen (another German espionage agent) and who was later associated with Hjalmar Schacht
and Emil Wittenberg. Sommerfeld was to purchase ammunition for use in Mexico. He had an
account with the Guaranty Trust Company and from this payments were made to Western
Cartridge Co. of Alton, Illinois, for ammunition that was shipped to El Paso for use in Mexico
by Pancho Villa's bandits. About $400,000 was expended on ammunition, Mexican
propaganda, and similar activities.
The then German ambassador Count Von Bernstorff has recounted his friendship with Adolph
von Pavenstedt, a senior partner of Amsinck & Co., which was controlled and in November
1917 owned by American International Corporation. American International figures
prominently in later chapters; its board of directors contained the key names on Wall Street:
Rockefeller, Kahn, Stillman, du Pont, Winthrop, etc. According to Von Bernstorff, Von
Pavenstedt was "intimately acquainted with all the members of the Embassy."33 Von Bernstorff
himself regarded Von Pavenstedt as one of the most respected, "if not the most respected
imperial German in New York."34 Indeed, Von Pavenstedt was "for many years a Chief pay
master of the German spy system in this country."35 In other words, there is no question that
Armsinck & Co., controlled by American International Corporation, was intimately associated
with the funding of German wartime espionage in the United States. To clinch Von Bernstorff's
last statement, there exists a photograph of a check in favor of Amsinck & Co., dated
December 8, 1917 — just four weeks after the start of the Bolshevik Revolution in Russia —
signed Von Papen (another German espionage operator), and having a counterfoil bearing the
notation "travelling expenses on Von W [i.e., Von Wedell]." French Strothers,36 who published
the photograph, has stated that this check is evidence that Von Papen "became an accessory
after the fact to a crime against American laws"; it also makes Amsinck & Co. subject to a
similar charge.
Paul Bolo-Pasha, yet another German espionage agent, and a prominent French financier
formerly in the service of the Egyptian government, arrived in New York in March 1916 with a
letter of introduction to Von Pavenstedt. Through the latter, Bolo-Pasha met Hugo Schmidt,
director of the Deutsche Bank in Berlin and its representative in the United States. One of BoloPasha's
projects was to purchase foreign newspapers so as to slant their editorials in favor of
Germany. Funds for this program were arranged in Berlin in the form of credit with Guaranty
Trust Company, with the credit subsequently made available to Amsinck & Co. Adolph von
Pavenstedt, of Amsinck, in turn made the funds available to Bolo-Pasha.
In other words, both Guaranty Trust Company and Amsinck & Co., a subsidiary of American
International Corporation, were directly involved in the implementation of German espionage
and other activities in the United States. Some links can be established from these firms to each
of the major German operators in the U.S. — Dr. Albert, Karl Heynen, Von Rintelen, Von
Papan, Count Jacques Minotto (see below), and Paul Bolo-Pasha.
In 1919 the Senate Overman Committee also established that Guaranty Trust had an active role
in financing German World War I efforts in an "unneutral" manner. The testimony of the U.S.
intelligence officer Becker makes this clear:
In this mission Hugo Schmidt [of Deutsche Bank] was very largely assisted by
certain American banking institutions. It was while we were neutral, but they
acted to the detriment of the British interests, and I have considerable data on
the activity of the Guaranty Trust Co. in that respect, and would like to know
whether the committee wishes me to go into it.
SENATOR NELSON: That is a branch of the City Bank, is it not?
MR. BECKER: No.
SENATOR OVERMAN: If it was inimical to British interests it was
unneutral, and I think you had better let it come out.
SENATOR KING: Was it an ordinary banking transaction?
MR. BECKER: That would be a matter of opinion. It has to do with
camouflaging exchange so as to make it appear to be neutral exchange, when it
was really German exchange on London. As a result of those operations in
which the Guaranty Trust Co. mainly participated between August 1, 1914,
and the time America entered the war, the Deutsche Banke in its branches in
South America succeeded in negotiating £4,670,000 of London exchange in
war time.
SENATOR OVERMAN: I think that is competent.37
What is really important is not so much that financial assistance was given to Germany, which
was only illegal, as that directors of Guaranty Trust were financially assisting the Allies at the
same time. In other words, Guaranty Trust was financing both sides of The conflict. This raises
the question of morality.
THE GUARANTY TRUST-
MINOTTO-CAILLAUX THREADS. 38
Count Jacques Minotto is a most unlikely but verifiable and persistent thread that links the
Bolshevik Revolution in Russia with German banks, German World War I espionage in the
United States, the Guaranty Trust Company in New York, the abortive French Bolshevik
revolution, and the related Caillaux-Malvy espionage trials in France.
Jacques Minotto was born February 17, 1891, in Berlin, the son of an Austrian father
descended from Italian nobility, and a German mother. Young Minotto was educated in Berlin
and then entered employment with the Deutsche Bank in Berlin in 1912. Almost immediately
Minotto was sent to the United States as assistant to Hugo Schmidt, deputy director of the
Deutsche Bank and its New York representative. After a year in New York, Minotto was sent
by the Deutsche Bank to London, where he circulated in prominent political and diplomatic
circles. At the outbreak of World War I, Minotto returned to the United States and immediately
met with the German ambassador Count Von Bernstorff, after which he entered the employ of
Guaranty Trust Company in New York. At Guaranty Trust, Minotto was under the direct orders
of Max May, director of its foreign department and an associate of Swedish banker Olof
Aschberg. Minotto was no minor bank official. The interrogatories of the Caillaux trials in
Paris in 1919 established that Minotto worked directly under Max May.39 On October 25,
1914, Guaranty Trust sent Jacques Minotto to South America to make a report on the political,
financial, and commercial situation. As he did in London, Washington, and New York, so
Minotto moved in the highest diplomatic and political circles here. One purpose of Minotto's
mission in Latin America was to establish the mechanism by which Guaranty Trust could be
used as an intermediary for the previously mentioned German fund raising on the London
money market, which was then denied to Germany because of World War I. Minotto returned
to the United States, renewed his association with Count Von Bernstorff and Count Luxberg,
and subsequently, in 1916, attempted to obtain a position with U.S. Naval Intelligence. After
this he was arrested on charges of pro-German activities. When arrested Minotto was working
at the Chicago plant of his father-in-law Louis Swift, of Swift & Co., meatpackers. Swift put up
the security for the $50,000 bond required to free Minotto, who was represented by Henry
Veeder, the Swift & Co. attorney. Louis Swift was himself arrested for pro-German activities at
a later date. As an interesting and not unimportant coincidence, "Major" Harold H. Swift,
brother of Louis Swift, was a member of the William Boyce Thompson 1917 Red Cross
Mission to Petrograd — that is, one of the group of Wall Street lawyers and businessmen whose
intimate connections with the Russian Revolution are to be described later. Helen Swift
Neilson, sister of Louis and Harold Swift, was later connected with the pro-Communist
Abraham Lincoln Center "Unity." This established a minor link between German banks,
American. banks, German espionage, and, as we shall see later, the Bolshevik Revolution.40
Joseph Caillaux was a famous (sometimes called notorious) French politician. He was also
associated with Count Minotto in the latter's Latin America operations for Guaranty Trust, and
was later implicated in the famous French espionage cases of 1919, which had Bolshevik
connections. In 1911, Caillaux became minister of finance and later in the same year became
premier of France. John Louis Malvy became undersecretary of state in the Caillaux
government. Several years later Madame Caillaux murdered Gaston Calmette, editor of the
prominent Paris newspaper Figaro. The prosecution charged that Madame Caillaux murdered
Calmette to prevent publication of certain compromising documents. This affair resulted in the
departure of Caillaux and his wife from France. The couple went to Latin America and there
met with Count Minotto, the agent of the Guaranty Trust Company who was in Latin America
to establish intermediaries for German finance. Count Minotto was socially connected with the
Caillaux couple in Rio de Janeiro and Sao Paulo, Brazil, in Montevideo, Uruguay, and in
Buenos Aires, Argentina. In other words, Count Minotto was a constant companion of the
Caillaux couple while they were in Latin America.41 On returning to France, Caillaux and his
wife stayed at Biarritz as guests of Paul Bolo-Pasha, who was, as we have seen, also a German
espionage operator in the United States and France.42 Later, in July 1915, Count Minotto
arrived in France from Italy, met with the Caillaux couple; the same year the Caillaux couple
also visited Bolo-Pasha again in Biarritz. In other words, in 1915 and 1916 Caillaux established
a continuing social relationship with Count Minotto and Bolo-Pasha, both of whom were
German espionage agents in the United States.
Bolo-Pasha's work in France was to gain influence for Germany in the Paris newspapers Le
Temps and Figaro. Bolo-Pasha then went to New York, arriving February 24, 1916. Here he
was to negotiate a loan of $2 million — and here he was associated with Von Pavenstedt, the
prominent German agent with Amsinck & Co.43 Severance Johnson, in The Enemy Within, has
connected Caillaux and Malvy to the 1918 abortive French Bolshevik revolution, and states
that if the revolution had succeeded, "Malvy would have been the Trotsky of France had
Caillaux been its Lenin."44 Caillaux and Malvy formed a radical socialist party in France using
German funds and were brought to trial for these subversive efforts. The court interrogatories
in the 1919 French espionage trials introduce testimony concerning New York bankers and
their relationship with these German espionage operators. They also set forth the links between
Count Minotto and Caillaux, as well as the relationship of the Guaranty Trust Company to the
Deutsche Bank and the cooperation between Hugo Schmidt of Deutsche Bank and Max May of
Guaranty Trust Company. The French interrogatory (page 940) has the following extract from
the New York deposition of Count Minotto (page 10, and retranslated from the French):
QUESTION: Under whose orders were you at Guaranty Trust?
REPLY: Under the orders of Mr. Max May.
QUESTION: He was a Vice President?
ANSWER: He was Vice President and Director of the Foreign Department.
Later, in 1922, Max May became a director of the Soviet Ruskom-bank and represented the
interests of Guaranty Trust in that bank. The French interrogatory establishes that Count
Minotto, a German espionage agent, was in the employ of Guaranty Trust Company; that Max
May was his superior officer; and that Max May was also closely associated with Bolshevik
banker Olof Aschberg. In brief: Max May of Guaranty Trust was linked to illegal fund raising
and German espionage in the United States during World War I; he was linked indirectly to the
Bolshevik Revolution and directly to the establishment of Ruskombank, the first international
bank in the Soviet Union.
It is too early to attempt an explanation for this seemingly inconsistent, illegal, and sometimes
immoral international activity. In general, there are two plausible explanations: the first, a
relentless search for profits; the second — which agrees with the words of Otto Kahn of Kuhn,
Loeb & Co. and of American International Corporation in the epigraph to this chapter — the
realization of socialist aims, aims which "should, and can, be brought about" by nonsocialist
means.
Footnotes:Chapter 3
1 Max Hoffman, War Diaries and Other Papers (London: M. Secker, 1929),
2:177.
2 Z. A. B. Zeman and W. B. Scharlau, The Merchant of Revolution.. The Life of
A1exander Israel Helphand (Parvus), 1867-1924 (New York: Oxford
University Press, 1965).
3 Z. A. B. Zeman, Germany and the Revolution in Russia, 1915-1918.
Documents from the Archives of the German Foreign Ministry (London:
Oxford University Press, 1958), p. ????5.
4 Ibid.
5 Ibid., p. 6, doc. 6, reporting a conversation with the Fstonian intermediary
Keskula.
6 Ibid., p. 92, n. 3.
7 U.S., Committee on Public Information, The German-Bolshevik Conspiracy,
War Information Series, no. 20, October 1918.
8 New York Evening Post, September 16-18, 21; October 4, 1918. It is also
interesting, but not conclusive of anything, that the Bolsheviks also stoutly
questioned the authenticity of the documents.
9 George F. Kennan, "The Sisson Documents," Journal of Modern History 27-
28 (1955-56): 130-154.
10 John Reed, The Sisson Documents (New York: Liberator Publishing, n.d.).
11 This part is based on section 861.00 o[ the U.S. State Dept. Decimal File,
also available as National Archives rolls 10 and 11 of microcopy 316.
12 U.S. State Dept. Decimal File, 861.00/1117a. The same message was
conveyed to the Italian ambassador.
13 See Arthur Bullard papers at Princeton University.
Footnotes: Chapter 4
1 John Moody, The Truth about the Trusts (New York: Moody Publishing, 1904).
2 The J. P. Morgan Company was originally founded in London as George Peabody and Co. in 1838. It was not incorporated until March 21, 1940. The company ceased to exist in April 1954 when it merged with the Guaranty Trust Company, then its most important commercial bank subsidiary, and is today known as the Morgan Guarantee Trust Company of New York.
3 United States, House, Committee on Foreign Affairs, The Story of Panama, Hearings on the Rainey Resolution, 1913. p. 53.
4 Ibid., p. 60. 5 Stanford, Calif. See also the Los Angeles Times, October 13, 1966.
6 Later codirector with Hjalmar Schacht (Hitler's banker) and Emil Wittenberg, of the Nationalbank für Deutschland.
7 United States, Senate, Committee on Foreign Relations, Investigation of Mexican Affairs, 1920.
8 Lincoln Steffens, The Letters of Lincoln Steffens (New York: Harcourt, Brace, 1941, I:386
9 U.S., Senate, Committee on Foreign Relations, Investigation of Mexican Affairs, 1920, pts. 2, 18, p. 681.
10 Ibid.
11 New York Times, January 23, 1919.
12 U.S., Senate, Committee on Foreign Relations, op. cit., pp. 795-96.
13 U.S., Senate, Hearings Before the Special Committee Investigating the Munitions Industry, 73-74th Cong., 1934-37, pt. 25, p. 7666.
14 U.S. State Dept. Decimal File, 861.51/110 (316-116-682).
15 U.S. State Dept. Decimal File, 861.51/112.
16 U.S. State Dept. Decimal File, 861.51/111.
17 Handwritten in parentheses.
18 Olof Aschberg, En Vandrande Jude Frän Glasbruksgatan (Stockholm: Albert Bonniers Förlag, n.d.), pp. 98-99, which is included in Memoarer (Stockholm: Albert Bonniers Förlag, 1946). See also Gästboken (Stockholm: Tidens Förlag, 1955) for further material on Aschberg.
19 Aschberg, p. 123.
20 New York Times, August 4, 1916.
21 Michael Futrell, Northern Underground (London: Faber and Faber, 1963), p. 162.
22 See Robert Paul Browder and Alexander F. Kerensky, The Russian Provisional government, 1917 (Stanford, Calif.: Stanford University Perss, 1961), 3: 1365. "Via Bank" is obviously Nya Banken.
23 U.S. State Dept. Decimal File, 861.00/1130.
24 U.S. State Dept. Decimal File, 861.516/129, August 28, 1922. A State Dept. report from Stockholm, dated October 9, 1922 (861.516/137), states in regard to Aschberg, "I met Mr. Aschberg some weeks ago and in the conversation with him he substantially stated all that appeared in this report. He also asked me to inquire whether he could visit the United States and gave as references some of the prominent banks. In connection with this, however, I desire to call the department's attention to Document 54 of the Sisson Documents, and also to many other dispatches which this legation wrote concerning this man during the war, whose reputation and standing is not good. He is undoubtedly working closely in connection with the Soviets, and during the entire war he was in close cooperation with the Germans" (U.S. State Dept. Decimal File, 861.516/137, Stockholm, October 9, 1922. The report was signed by Ira N. Morris).
25 Ibid., 861.516/130, September 13, 1922. 26 Ibid.
27 Ibid.
28 Ibid., 861.516/140, Stockholm, October 23, 1922.
29 Ibid., 861.516/147, December 8, 1922.
30 Ibid., 861.516/144, November 18, 1922.
31 Ibid., 861.316/197, Stockholm, March 7, 1924.
32 This section is based on the Overman Committee hearings, U.S., Senate, Brewing and Liquor Interests and German and Bolshevik Propaganda, Hearings before the Subcommittee on the Judiciary, 65th Cong., 1919, 2:2154- 74.
33 Count Von Bernstorff, My Three Years in America (New York: Scribner's, 1920), p. 261.
34 Ibid.
35 Ibid.
36 French Strothers, Fighting Germany's Spies (Garden City, N.Y.: Doubleday, Page, 1918), p. 152.
37 U.S., Senate, Overman Committee, 2:2009.
38 This section is based on the following sources (as well as those cited elsewhere): Jean Bardanne, Le Colonel Nicolai: espion de genie (Paris: Editions Siboney, n.d.); Cours de Justice, Affaire Caillaux, Loustalot et Comby: Procedure Generale Interrogatoires (Paris, 1919), pp. 349-50, 937- 46; Paul Vergnet, L'Affaire Caillaux (Paris 1918), especially the chapter titled "Marx de Mannheim"; Henri Guernut, Emile Kahn, and Camille M. Lemercier, Etudes documentaires sur L'Affaire Caillaux (Paris, n.d.), pp. 1012- 15; and George Adam, Treason and Tragedy: An Account of French War Trials (London: Jonathan Cape, 1929).
39 See p. 70.
40 This Interrelationship is dealt with extensively in the three-volume Overman Committee report of 1919. See bibliography.
41 See Rudolph Binion, Defeated Leaders (New York: Columbia University Press, 1960).
42 George Adam, Treason and Tragedy: An Account of French War Trials (London: Jonathan Cape, 1929).
43 Ibid.
44 The Enemy Within (London: George Allen & Unwin, 1920)
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