WALL STREET AND THE
BOLSHEVIK REVOLUTION
By Antony C. Sutton
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Chapter VII By Antony C. Sutton
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,
1919[1]
Following on the initial successes of the revolution, the Soviets wasted little time in attempting
through former U.S. residents to establish diplomatic relations with and propaganda outlets in
the United States. In June 1918 the American consul in Harbin cabled Washington:
Albert R. Williams, bearer Department passport 52,913 May 15, 1917
proceeding United States to establish information bureau for Soviet
Government for which he has written authority. Shall I visa?2
Washington denied the visa and so Williams was unsuccessful in his attempt to establish an
information bureau here. Williams was followed by Alexander Nyberg (alias Santeri
Nuorteva), a former Finnish immigrant to the United States in January 1912, who became the
first operative Soviet representative in the United States. Nyberg was an active 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 Department 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
A RAID ON THE SOVIET
BUREAU IN NEW YORK
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 of 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 too 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. Endeavor 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 foodstuffs
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 for 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.
CORPORATE ALLIES FOR
THE SOVIET BUREAU
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:
According 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 Chicago 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 & Co., meat packers — listed as "Armour Leather" and
"Armour & Co. Union Stock Yards, Chicago." Morris Go., meat packers, 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 & 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 for 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. firm's 20 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.
EUROPEAN BANKERS
AID THE BOLSHEVIKS
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 pre-revolutionary
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 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 money 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 czarist 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.
Chapter VIII
120 BROADWAY,
NEW YORK CITY
William B. Thompson, who was in Petrograd from July until November
last, has made a personal contribution of $1,000,000 to the Bolsheviki for
the purpose of spreading their doctrine in Germany and Austria ....
Washington Post,
February
2, 1918
While collecting material for this book a single location and address in the Wall Street area
came to the fore — 120 Broadway, New York City. Conceivably, this book could have been
written incorporating only persons, firms, and organizations located at 120 Broadway in the
year 1917. Although this research method would have been forced and unnatural, it would have
excluded only a relatively small segment of the story.
The original building at 120 Broadway was destroyed by fire before World War I.
Subsequently the site was sold to the Equitable Office Building Corporation, organized by
General T. Coleman DuPont, president of DuPont de Nemours Powder Company.1 A new
building was completed in 1915 and the Equitable Life Assurance Company moved back to its
old site.2 In passing we should note an interesting interlock in Equitable history. In 1916 the
cashier of the Berlin Equitable Life office was William Schacht, the father of Hjalmar Horace
Greeley Schacht — later to become Hitler's banker, and financial genie. William Schacht was an
American citizen, worked thirty years for Equitable in Germany, and owned a Berlin house
known as "Equitable Villa." Before joining Hitler, young Hjalmar Schacht served as a member
of the Workers and Soldiers Council (a soviet) of Zehlendoff; this he left in 1918 to join the
board of the Nationalbank fur Deutschland. His codirector at DONAT was Emil Wittenberg,
who, with Max May of Guaranty Trust Company of New York, was a director of the first
Soviet international bank, Ruskombank.
In any event, the building at 120 Broadway was in 1917 known as the Equitable Life Building.
A large building, although by no means the largest office building in New York City, it
occupies a one-block area at Broadway and Pine, and has thirty-four floors. The Bankers Club
was located on the thirty-fourth floor. The tenant list in 1917 in effect reflected American
involvement in the Bolshevik Revolution and its aftermath. For example, the headquarters of
the No. 2 District of the Federal Reserve System — the New York area — by far the most
important of the Federal Reserve districts, was located at 120 Broadway. The offices of several
individual directors of the Federal Reserve Bank of New York and, most important, the
American International Corporation were also at 120 Broadway. By way of contrast, Ludwig
Martens, appointed by the Soviets as the first Bolshevik "ambassador" to the United States and
head of the Soviet Bureau, was in 1917 the vice president of Weinberg & Posner — and also had
offices at 120 Broadway.*
Is this concentration an accident? Does the geographical contiguity have any significance?
Before attempting to suggest an answer, we have to switch our frame of reference and abandon
the left-right spectrum of political analysis.
With an almost unanimous lack of perception the academic world has described and analyzed
international political relations in the context of an unrelenting conflict between capitalism and
communism, and rigid adherence to this Marxian formula has distorted modern history. Tossed
out from time to time are odd remarks to the effect that the polarity is indeed spurious, but
these are quickly dispatched to limbo. For example, Carroll Quigley, professor of international
relations at Georgetown University, made the following comment on the House of Morgan:
More than fifty years ago the Morgan firm decided to infiltrate the Left-wing
political movements in the United States. This was relatively easy to do, since
these groups were starved for funds and eager for a voice to reach the people.
Wall Street supplied both. The purpose was not to destroy, dominate or take
over...3
Professor Quigley's comment, apparently based on confidential documentation, has all the
ingredients of an historical bombshell if it can be supported. We suggest that the Morgan firm
infiltrated not only the domestic left, as noted by Quigley, but also the foreign left — that is, the
Bolshevik movement and the Third International. Even further, through friends in the U.S.
State Department, Morgan and allied financial interests, particularly the Rockefeller family,
have exerted a powerful influence on U.S.-Russian relations from World War I to the present.
The evidence presented in this chapter will suggest that two of the operational vehicles for
infiltrating or influencing foreign revolutionary movements were located at 120 Broadway: the
first, the Federal Reserve Bank of New York, heavily laced with Morgan appointees; the
second, the Morgan-controlled American International Corporation. Further, there was an
important interlock between the Federal Reserve Bank of New York and the American
International Corporation — C. A. Stone, the president of American International, was also a
director of the Federal Reserve Bank.
The tentative hypothesis then is that this unusual concentration at a single address was a
reflection of purposeful actions by specific firms and persons and that these actions and events
cannot be analyzed within the usual spectrum of left-right political antagonism.
AMERICAN
INTERNATIONAL
CORPORATION
The American International Corporation (A.I.C) was organized in New York on November 22,
1915, by the J.P. Morgan interests, with major participation by Stillman's National City Bank
and the Rockefeller interests. The general office of A.I.C was at 120 Broadway. The company's
charter authorized it to engage in any kind of business, except banking and public utilities, in
any country in the world. The stated purpose of the corporation was to develop domestic and
foreign enterprises, to extend American activities abroad, and to promote the interests of
American and foreign bankers, business and engineering.
Frank A. Vanderlip has described in his memoirs how American International was formed and
the excitement created on Wall Street over its business potential.4 The original idea was
generated by a discussion between Stone & Webster — the international railroad contractors
who "were convinced there was not much more railroad building to be done in the United
States" — and Jim Perkins and Frank A. Vanderlip of National City Bank (NCB).5 The original
capital authorization was $50 million and the board of directors represented the leading lights
of the New York financial world. Vanderlip records that he wrote as follows to NCB president
Stillman, enthusing over the enormous potential for American International Corporation:
James A. Farrell and Albert Wiggin have been invited to be on the board but
had to consult their committees before accepting. I also have in mind asking
Henry Walters and Myron T. Herrick. Mr. Herrick is objected to by Mr.
Rockefeller quite strongly but Mr. Stone wants him and I feel strongly that he
would be particularly desirable in France. The whole thing has gone along
with a smoothness that has been gratifying and the reception of it has been
marked by an enthusiasm which has been surprising to me even though I was
so strongly convinced we were on the right track.
I saw James J. Hill today, for example. He said at first that he could not
possibly think of extending his responsibilities, but after I had finished telling
him what we expected to do, he said he would be glad to go on the board,
would take a large amount of stock and particularly wanted a substantial
interest in the City Bank and commissioned me to buy him the stock at the
market.
I talked with Ogden Armour about the matter today for the first time. He sat in
perfect silence while I went through the story, and, without asking a single
question, he said he would go on the board and wanted $500,000 stock.
Mr. Coffin [of General Electric] is another man who is retiring from
everything, but has 'become so enthusiastic over this that he was willing to go
on the board, and offers the most active cooperation.
I felt very good over getting Sabin. The Guaranty Trust is altogether the most
active competitor we have in the field and it is of great value to get them into
the fold in this way. They have been particularly enthusiastic at Kuhn, Loeb's.
They want to take up to $2,500,000. There was really quite a little competition
to see who should get on the board, but as I had happened to talk with Kahn
and had invited him first, it was decided he should go on. He is perhaps the
most enthusiastic of any one. They want half a million stock for Sir Ernest
Castle** to whom they have cabled the plan and they have back from him
approval of it.
I explained the whole matter to the Board [of the City Bank] Tuesday and got
nothing but favorable comments.6
Everybody coveted the A.I.C stock. Joe Grace (of W. R. Grace & Co.) wanted $600,000 in
addition to his interest in National City Bank. Ambrose Monell wanted $500,000. George
Baker wanted $250,000. And "William Rockefeller tried, vainly, to get me to put him down for
$5,000,000 of the common."7
By 1916 A.I.C investments overseas amounted to more than $23 million and in 1917 to more
than $27 million. The company established representation in London, Paris, Buenos Aires, and
Peking as well as in Petrograd, Russia. Less than two years after its formation A.I.C was
operating on a substantial scale in Australia, Argentina, Uruguay, Paraguay, Colombia, Brazil,
Chile, China, Japan, India, Ceylon, Italy, Switzerland, France, Spain, Cuba, Mexico, and other
countries in Central America.
American International owned several subsidiary companies outright, had substantial interests
in yet other companies, and operated still other firms in the United States and abroad. The
Allied Machinery Company of America was founded in February 1916 and the entire share
capital taken up by American International Corporation. The vice president of American
International Corporation was Frederick Holbrook, an engineer and formerly head of the
Holbrook Cabot & Rollins Corporation. In January 1917 the Grace Russian Company was
formed, the joint owners being W. R. Grace & Co. and the San Galli Trading Company of
Petrograd. American International Corporation had a substantial investment in the Grace
Russian Company and through Holbrook an interlocking directorship.
A.I.C also invested in United Fruit Company, which was involved in Central American
revolutions in the 1920's. The American International Shipbuilding Corporation was wholly
owned by A.I.C and signed substantial contracts for war vessels with the Emergency Fleet
Corporation: one contract called for fifty vessels, followed by another contract for forty
vessels, followed by yet another contract for sixty cargo vessels. American International
Shipbuilding was the largest single recipient of contracts awarded by the U.S. government
Emergency Fleet Corporation. Another company operated by A.I.C was G. Amsinck & Co., Inc.
of New York; control of the company was acquired in November 1917. Amsinck was the
source of financing for German espionage in the United States (see page 66). In November
1917 the American International Corporation formed and wholly owned the Symington Forge
Corporation, a major government contractor for shell forgings. Consequently, American
International Corporation had significant interest in war contracts within the United States and
overseas. It had, in a word, a vested interest in the continuance of World War I.
The directors of American International and some of their associations were (in 1917):
J. OGDEN ARMOUR Meat packer, of Armour & Company, Chicago; director
of the National City Bank of New York; and mentioned by A. A. Heller in
connection with the Soviet Bureau (see p. 119).
GEORGE JOHNSON BALDWIN Of Stone & Webster, 120 Broadway.
During World War I Baldwin was chairman of the board of American
International Shipbuilding, senior vice president of American International
Corporation, director of G. Amsinck (Von Pavenstedt of Amsinck was a
German espionage paymaster in the U.S., see page 65), and a trustee of the
Carnegie Foundation, which financed the Marburg Plan for international
socialism to be controlled behind the scenes by world finance (see page 174-
6).
C.A. COFFIN Chairman of General Electric (executive office: 120
Broadway), chairman of cooperation committee of the American Red Cross.
W.E. COREY (14 Wall Street) Director of American Bank Note Company,
Mechanics and Metals Bank, Midvale Steel and Ordnance, and International
Nickel Company; later director of National City Bank.
ROBERT DOLLAR San Francisco shipping magnate, who attempted in behalf
of the Soviets to import czarist gold rubles into U.S. in 1920, in contravention
of U.S. regulations.
PIERRE S. DUPONT Of the DuPont family.
PHILIP A.S. FRANKLIN Director of National City Bank.
J.P. GRACE Director of National City Bank.
R.F. HERRICK Director, New York Life Insurance; former president of the
American Bankers Association; trustee of Carnegie Foundation.
OTTO H. KAHN Partner in Kuhn, Loeb. Kahn's father came to America in
1948, "having taken part in the unsuccessful German revolution of that year."
According to J. H. Thomas (British socialist, financed by the Soviets), "Otto
Kahn's face is towards the light."
H.W. PRITCHETT Trustee of Carnegie Foundation.
PERCY A. ROCKEFELLER Son of John D. Rockefeller; married to Isabel,
daughter of J. A. Stillman of National City Bank.
JOHN D. RYAN Director of copper-mining companies, National City Bank,
and Mechanics and Metals Bank. (See frontispiece to this book.)
W.L. SAUNDERS Director the Federal Reserve Bank of New York, 120
Broadway, and chairman of Ingersoll-Rand. According to the National Cyclopedia (26:81): "Throughout the war he was one of the President's most
trusted advisers." See page 15 for his views on the Soviets.
J.A. STILLMAN President of National City Bank, after his father (J.
Stillman, chairman of NCB) died in March 1918.
C.A. STONE Director (1920-22) of Federal Reserve Bank of New York, 120
Broadway; chairman of Stone & Webster, 120 Broadway; president (1916-23)
of American International Corporation, 120 Broadway.
T.N. VAIL President of National City Bank of Troy, New York
F.A. VANDERLIP President of National City Bank.
E.S. WEBSTER Of Stone & Webster, 120 Broadway.
A.H. WIGGIN Director of Federal Reserve Bank of New York in the early
1930's.
BECKMAN WINTHROPE Director of National City Bank.
WILLIAM WOODWARD Director of Federal Reserve Bank of New York,
120 Broadway, and Hanover National Bank.
The interlock of the twenty-two directors of American International Corporation with other
institutions is significant. The National City Bank had no fewer than ten directors on the board
of A.I.C; Stillman of N.C.B was at that time an intermediary between the Rockefeller and Morgan
interests, and both the Morgan and the Rockefeller interests were represented directly on A.I.C.
Kuhn, Loeb and the DuPont's each had one director. Stone & Webster had three directors. No
fewer than four directors of A.I.C (Saunders, Stone, Wiggin, Woodward) either were directors of
or were later to join the Federal Reserve Bank of New York. We have noted in an earlier
chapter that William Boyce Thompson, who contributed funds and his considerable prestige to
the Bolshevik Revolution, was also a director of the Federal Reserve Bank of New York — the
directorate of the F.R.B of New York comprised only nine members.
THE INFLUENCE OF
AMERICAN INTERNATIONAL
ON THE REVOLUTION
Having identified the directors of A.I.C we now have to identify their revolutionary influence.
As the Bolshevik Revolution took hold in central Russia, Secretary of State Robert Lansing
requested the views of American International Corporation on the policy to be pursued towards
the Soviet regime. On January 16, 1918 — barely two months after the takeover in Petrograd
and Moscow, and before a fraction of Russia had come under Bolshevik control — William
Franklin Sands, executive secretary of American International Corporation, submitted the
requested memorandum on the Russian political situation to Secretary Lansing. Sands covering
letter, headed 120 Broadway, began:
January 16, 1918
To the Honorable
Secretary of State
Washington D.C.
Sir
I have the honor to enclose herewith the memorandum which you requested
me to make for you on my view of the political situation in Russia.
I have separated it into three parts; an explanation of the historical causes of
the Revolution, told as briefly as possible; a suggestion as to policy and a
recital of the various branches of American activity at work now in Russia ....8
Although the Bolsheviks had only precarious control in Russia — and indeed were to come near
to losing even this in the spring of 1918 — Sands wrote that already (January 1918) the United
States had delayed too long in recognizing "Trotzky." He added, "Whatever ground may have
been lost, should be regained now, even at the cost of a slight personal triumph for Trotzky."9
Firms located at, or near,
120 Broadway:
American International Corp
120 Broadway
National City Bank 55 Wall
Street
Bankers Trust Co Bldg 14
Wall Street
New York Stock Exchange
13 Wall Street/12 Broad
Morgan Building corner
Wall & Broad
Federal Reserve Bank of NY
120 Broadway
Equitable Building 120
Broadway
Bankers Club 120 Broadway
Simpson, Thather & Bartlett
62 Cedar St
William Boyce Thompson
14 Wall Street
Hazen, Whipple & Fuller
42nd Street Building
Chase National Bank 57
Broadway
McCann Co 61 Broadway
Stetson,Jennings&Russell 15 Broad Street
Guggenheim Exploration
120 Broadway
Weinberg & Posner 120
Broadway
Soviet Bureau 110 West
40th Street
John MacGregor Grant Co
120 Broadway
Stone & Webster 120
Broadway
General Electric Co 120
Broadway
Morris Plan of NY 120
Broadway
Sinclair Gulf Corp 120
Broadway
Guaranty Securities 120
Broadway
Guaranty Trust 140
Broadway
Map of Wall Street Area Showing Office Locations
Sands then elaborates the manner in which the U.S. could make up for lost time, parallels the
Bolshevik Revolution to "our own revolution," and concludes: "I have every reason to believe
that the Administration plans for Russia will receive all possible support from Congress, and
the hearty endorsement of public opinion in the United States."
In brief, Sands, as executive secretary of a corporation whose directors were the most
prestigious on Wall Street, provided an emphatic endorsement of the Bolsheviks and the
Bolshevik Revolution, and within a matter of weeks after the revolution started. And as a
director of the Federal Reserve Bank of New York, Sands had just contributed $1 million to the
Bolsheviks — such endorsement of the Bolsheviks by banking interests is at least consistent.
Moreover, William Sands of American International was a man with truly uncommon
connections and influence in the State Department.
Sands' career had alternated between the State Department and Wall Street, In the late
nineteenth and early twentieth century he held various U.S. diplomatic posts. In 1910 he left
the department to join the banking firm of James Speyer to negotiate an Ecuadorian loan, and
for the next two years represented the Central Aguirre Sugar Company in Puerto Rico. In 1916
he was in Russia on "Red Cross work" — actually a two-man "Special Mission" with Basil
Miles — and returned to join the American International Corporation in New York.10
In early 1918 Sands became the known and intended recipient of certain Russian "secret
treaties." If the State Department files are to be believed, it appears that Sands was also a
courier, and that he had some prior access to official documents — prior, that is, to U.S.
government officials. On January 14, 1918, just two days before Sands wrote his memo on
policy towards the Bolsheviks, Secretary Lansing caused the following cable to be sent in
Green Cipher to the American legation in Stockholm: "Important official papers for Sands to
bring here were left at Legation. Have you forwarded them? Lansing." The reply of January 16
from Morris in Stockholm reads: "Your 460 January 14, 5 pm. Said documents forwarded
Department in pouch number 34 on December 28th." To these documents is attached another
memo, signed "BM" (Basil Miles, an associate of Sands): "Mr. Phillips. They failed to give
Sands 1st installment of secret treaties which he brought from Petrograd to
Stockholm."11
Putting aside the question why a private citizen would be carrying Russian secret treaties and
the question of the content of such secret treaties (probably an early version of the so-called
Sisson Documents), we can at least deduce that the A.I.C executive secretary traveled from
Petrograd to Stockholm in late 1917 and must indeed have been a privileged and influential
citizen to have access to secret treaties.12
A few months later, on July 1, 1918, Sands wrote to Treasury Secretary McAdoo suggesting a
commission for "economic assistance to Russia." He urged that since it would be difficult for a
government commission to "provide the machinery" for any such assistance, "it seems,
therefore, necessary to call in the financial, commercial and manufacturing interest of the
United States to provide such machinery under the control of the Chief Commissioner or
whatever official is selected by the President for this purpose."13 In other words, Sands
obviously intended that any commercial exploitation of Bolshevik Russia was going to include
120 Broadway.
THE FEDERAL RESERVE
BANK OF NEW YORK
The certification of incorporation of the Federal Reserve Bank of New York was filed May 18,
1914. It provided for three Class A directors representing member banks in the district, three
Class B directors representing commerce, agriculture, and industry, and three Class C directors
representing the Federal Reserve Board. The original directors were elected in 1914; they
proceeded to generate an energetic program. In the first year of organization the Federal
Reserve Bank of New York held no fewer than 50 meetings.
From our viewpoint what is interesting is the association between, on the one hand, the
directors of the Federal Reserve Bank (in the New York district) and of American International
Corporation, and, on the other, the emerging Soviet Russia.
In 1917 the three Class A directors were Franklin D. Locke, William Woodward, and Robert
H. Treman. William Woodward was a director of American International Corporation (120
Broadway) and of the Rockefeller-controlled Hanover National Bank. Neither Locke nor
Treman enters our story. The three Class B directors in 1917 were William Boyce Thompson,
Henry R. Towne, and Leslie R. Palmer. We have already noted William B. Thompson's
substantial cash contribution to the Bolshevik cause. Henry R. Towne was chairman of the
board of directors of the Morris Plan of New York, located at 120 Broadway; his seat was later
taken by Charles A. Stone of American International Corporation (120 Broadway) and of Stone
& Webster (120 Broadway). Leslie R. Palmer does not come into our story. The three Class C
directors were Pierre Jay, W. L. Saunders, and George Foster Peabody. Nothing is known
about Pierre Jay, except that his office was at 120 Broadway and he appeared to be significant
only as the owner of Brearley School, Ltd. William Lawrence Saunders was also a director of
American International Corporation; he openly avowed, as we have seen, pro-Bolshevik
sympathies, disclosing them in a letter to President Woodrow Wilson (see page 15). George
Foster Peabody was an active socialist (see page 99-100).
In brief, of the nine directors of the Federal Reserve Bank of New York, four were physically
located at 120 Broadway and two were then connected with American International
Corporation. And at least four members of A.I.C's board were at one time or another directors of
the F.R.B of New York. We could term all of this significant, but regard it not necessarily as a
dominant interest.
AMERICAN-RUSSIAN
INDUSTRIAL SYNDICATE INC.
William Franklin Sands' proposal for an economic commission to Russia was not adopted.
Instead, a private vehicle was put together to exploit Russian markets and the earlier support
given the Bolsheviks. A group of industrialists from 120 Broadway formed the American-Russian
Industrial Syndicate Inc. to develop and foster these opportunities. The financial
backing for the new firm came from the Guggenheim Brothers, 120 Broadway, previously
associated with William Boyce Thompson (Guggenheim controlled American Smelting and
Refining, and the Kennecott and Utah copper companies); from Harry F. Sinclair, president of
Sinclair Gulf Corp., also 120 Broadway; and from James G. White of J. G. White Engineering
Corp. of 43 Exchange Place — the address of the American-Russian Industrial Syndicate.
In the fall of 1919 the U.S. embassy in London cabled Washington about Messrs. Lubovitch and Rossi "representing American-Russian Industrial Syndicate Incorporated What is the
reputation and the attitude of the Department toward the syndicate and the individuals?"14
To this cable State Department officer Basil Miles, a former associate of Sands, replied:
. . . Gentlemen mentioned together with their corporation are of good standing
being backed financially by the White, Sinclair and Guggenheim interests for
the purpose of opening up business relations with Russia.15
So we may conclude that Wall Street interests had quite definite ideas of the manner in which
the new Russian market was to be exploited. The assistance and advice proffered in behalf of
the Bolsheviks by interested parties in Washington and elsewhere were not to remain
unrewarded.
JOHN REED: ESTABLISHMENT
REVOLUTIONARY
Quite apart from American International's influence in the State Department is its intimate
relationship — which A.I.C itself called "control" — with a known Bolshevik: John Reed. Reed
was a prolific, widely read author of the World War I era who contributed to the Bolshevik oriented
Masses.16 and to the Morgan-controlled journal Metropolitan. Reed's book on the
Bolshevik Revolution, Ten Days That Shook the World, sports an introduction by Nikolai
Lenin, and became Reed's best-known and most widely read literary effort. Today the book
reads like a superficial commentary on current events, is interspersed with Bolshevik
proclamations and decrees, and is permeated with that mystic fervor the Bolsheviks know will
arouse foreign sympathizers. After the revolution Reed became an American member of the
executive committee of the Third International. He died of typhus in Russia in 1920.
The crucial issue that presents itself here is not Reed's known pro-Bolshevik tenor and
activities, but how Reed who had the entire confidence of Lenin ("Here is a book I should like
to see published in millions of copies and translated into all languages," commented Lenin in
Ten Days), who was a member of the Third International, and who possessed a Military
Revolutionary Committee pass (No. 955, issued November 16, 1917) giving him entry into the
Smolny Institute (the revolutionary headquarters) at any time as the representative of the
"American Socialist press," was also — despite these things — a puppet under the "control" of
the Morgan financial interests through the American International Corporation. Documentary
evidence exists for this seeming conflict (see below and Appendix 3).
Let's fill in the background. Articles for the Metropolitan and the Masses gave John Reed a
wide audience for reporting the Mexican and the Russian Bolshevik revolutions. Reed's
biographer Granville Hicks has suggested, in John Reed, that "he was . . . the spokesman of the
Bolsheviks in the United States." On the other hand, Reed's financial support from 1913 to
1918 came heavily from the Metropolitan — owned by Harry Payne Whitney, a director of the
Guaranty Trust, an institution cited in every chapter of this book — and also' from the New
York private banker and merchant Eugene Boissevain, who channeled funds to Reed both
directly and through the pro-Bolshevik Masses. In other words, John Reed's financial support
came from two supposedly competing elements in the political spectrum. These funds were for
writing and may be classified as: payments from Metropolitan from 1913 onward for articles;
payments from Masses from 1913 onward, which income at least in part originated with
Eugene Boissevain. A third category should be mentioned: Reed received some minor and
apparently unconnected payments from Red Cross commissioner Raymond Robins in
Petrograd. Presumably he also received smaller sums for articles written for other journals, and
book royalties; but no evidence has been found giving the amounts of such payments.
JOHN REED AND THE
METROPOLITAN MAGAZINE
The Metropolitan supported contemporary establishment causes including, for example, war
preparedness. The magazine was owned by Harry Payne Whitney (1872-1930), who founded
the Navy League and was partner in the J.P. Morgan firm. In the late 1890's Whitney became a
director of American Smelting and Refining and of Guggenheim Exploration. Upon his father's
death in 1908, he became a director of numerous other companies, including Guaranty Trust
Company. Reed began writing for Whitney's Metropolitan in July 1913 and contributed a half dozen
articles on the Mexican revolutions: "With Villa in Mexico," "The Causes
Behind/Mexico's Revolution," "If We Enter Mexico," "With Villa on the March," etc. Reed's
sympathies were with revolutionist Pancho Villa. You will recall the link (see page 65)
between Guaranty Trust and Villa's ammunition supplies.
In any event, Metropolitan was Reed's main source of income. In the words of biographer Granville Hicks, "Money meant primarily work for the Metropolitan and incidentally articles and stories for other paying magazines." But employment by Metropolitan did not inhibit Reed from writing articles critical of the Morgan and Rockefeller interests. One such piece, "At the Throat of the Republic" (Masses, July 1916), traced the relationship between munitions industries, the national security-preparedness lobby, the interlocking directorates of the Morgan Rockefeller interest, "and showed that they dominated both the preparedness societies and the newly formed American International Corporation, organized for the exploitation of backward countries."17
In 1915 John Reed was arrested in Russia by Czarist authorities, and the Metropolitan intervened with the State Department in Reed's behalf. On June 21, 1915, H. J. Whigham wrote Secretary of State Robert Lansing informing him that John Reed and Boardman Robinson (also arrested and also a contributor to the Masses) were in Russia "with commission from the Metropolitan magazine to write articles and to make illustrations in the Eastern field of the War." Whigham pointed out that neither had "any desire or authority from us to interfere with the operations of any belligerent powers that be." Whigham's letter continues:
If Mr. Reed carried letters of introduction from Bucharest to people in Galicia of an anti-Russian frame of mind I am sure that it was done innocently with the simple intention of meeting as many people as possible ....
Whigham points out to Secretary Lansing that John Reed was known at the White House and had given "some assistance" to the administration on Mexican affairs; he concludes: "We have the highest regard for Reed's great qualities as a writer and thinker and we are very anxious as regards his safety."18 The Whigham letter is not, let it be noted, from an establishment journal in support of a Bolshevik writer; it is from an establishment journal in support of a Bolshevik writer for the Masses and similar revolutionary sheets, a writer who was also the author of trenchant attacks ("The Involuntary Ethics of Big Business: A Fable for Pessimists," for example) on the same Morgan interests that owned Metropolitan.
The evidence of finance by the private banker Boissevain is incontrovertible. On February 23, 1918, the American legation at Christiania, Norway, sent a cable to Washington in behalf of John Reed for delivery to Socialist Party leader Morris Hillquit. The cable stated in part: "Tell Boissevain must draw on him but carefully." A cryptic note by Basil Miles in the State Department files, dated April 3, 1918, states, "If Reed is coming home he might as well have money. I understand alternatives are ejection by Norway or polite return. If this so latter seems preferable." This protective note is followed by a cable dated April 1, 1918, and again from the American legation at Christiania: "John Reed urgently request Eugene Boissevain, 29 Williams Street, New York, telegraph care legation $300.00."19 This cable was relayed to Eugene Boissevain by the State Department on April 3, 1918.
Reed apparently received his funds and arrived safely back in the United States. The next document in the State Department files is a letter to William Franklin Sands from John Reed, dated June 4, 1918, and written from Crotonon-Hudson, New York. In the letter Reed asserts that he has drawn up a memorandum for the State Department, and appeals to Sands to use his influence to get release of the boxes of papers brought back from Russia. Reed concludes, "Forgive me for bothering you, but I don't know where else to turn, and I can't afford another trip to Washington." Subsequently, Frank Polk, acting secretary of state, received a letter from Sands regarding the release of John Reed's papers. Sands' letter, dated June 5, 1918, from 120 Broadway, is here reproduced in full; it makes quite explicit statements about control of Reed:
120 BROADWAY NEW YORK
June fifth, 1918
My dear Mr. Polk:
I take the liberty of enclosing to you an appeal from John ("Jack") Reed to help him, if possible, to secure the release of the papers which he brought into the country with him from Russia.
I had a conversation with Mr. Reed when he first arrived, in which he sketched certain attempts by the Soviet Government to initiate constructive development, and expressed the desire to place whatever observations he had made or information he had obtained through his connection with Leon Trotzky, at the disposal of our Government. I suggested that he write a memorandum on this subject for you, and promised to telephone to Washington to ask you to give him an interview for this purpose. He brought home with him a mass of papers which were taken from him for examination, and on this subject also he wished to speak to someone in authority, in order to voluntarily offer any information they might contain to the Government, and to ask for the release of those which he needed for his newspaper and magazine work.
I do not believe that Mr. Reed is either a "Bolshevik" or a "dangerous anarchist," as I have heard him described. He is a sensational journalist, without doubt, but that is all. He is not trying to embarrass our Government, and for this reason refused the "protection" which I understand was offered to him by Trotzky, when he returned to New York to face the indictment against him in the "Masses" trial. He is liked by the Petrograd Bolsheviki, however, and, therefore, anything which our police may do which looks like "persecution" will be resented in Petrograd, which I believe to be undesirable because unnecessary. He can be handled and controlled much better by other means than through the police.
I have not seen the memorandum he gave to Mr. Bullitt — I wanted him to let me see it first and perhaps to edit it, but he had not the opportunity to do so.
I hope that you will not consider me to be intrusive in this matter or meddling with matters which do not concern me. I believe it to be wise not to offend the Bolshevik leaders unless and until it may become necessary to do so — if it should become necessary — and it is unwise to look on every one as a suspicious or even dangerous character, who has had friendly relations with the Bolsheviki in Russia. I think it better policy to attempt to use such people for our own purposes in developing our policy toward Russia, if it is possible to do so. The lecture which Reed was prevented by the police from delivering in Philadelphia (he lost his head, came into conflict with the police and was arrested) is the only lecture on Russia which I would have paid to hear, if I had not already seen his notes on the subject. It covered a subject which we might quite possibly find to be a point of contact with the Soviet Government, from which to begin constructive work!
Can we not use him, instead of embittering him and making him an enemy? He is not well balanced, but he is, unless I am very much mistaken, susceptible to discreet guidance and might be quite useful.
The Honorable
Frank Lyon Polk
Counselor for the Department
of State Washington, D.C.
W.F.S:A.O
Enclosure 20
The significance of this document is the hard revelation of direct intervention by an officer (executive secretary) of American International Corporation in behalf of a known Bolshevik. Ponder a few of Sands' statements about Reed: "He can be handled and controlled much better by other means than through the police"; and, "Can we not use him, instead of embittering him and making him an enemy? . . . he is, unless I am very much mistaken, susceptible to discreet guidance and might be quite useful." Quite obviously, the American International Corporation viewed John Reed as an agent or a potential agent who could be, and probably had already been, brought under its control. The fact that Sands was in a position to request editing a memorandum by Reed (for Bullitt) suggests some degree of control had already been established.
Then note Sands' potentially hostile attitude towards — and barely veiled intent to provoke — the Bolsheviks: "I believe it to be wise not to offend the Bolshevik leaders unless and until it may become necessary to do so — if it should become necessary . . ." (italics added).
This is an extraordinary letter in behalf of a Soviet agent from a private U.S. citizen whose counsel the State Department had sought, and continued to seek.
A later memorandum, March 19, 1920, in the State files reported the arrest of John Reed by the Finnish authorities at Abo, and Reed's possession of English, American and German passports. Reed, traveling under the alias of Casgormlich, carried diamonds, a large sum of money, Soviet propaganda literature, and film. On April 21, 1920, the American legation at Helsingfors cabled the State Department:
Am forwarding by the next pouch certified copies of letters from Emma Goldman, Trotsky, Lenin and Sirola found in Reed's possession. Foreign Office has promised to furnish complete record of the Court proceedings.
Once again Sands intervened: "I knew Mr. Reed personally."21 And, as in 1915, Metropolitan magazine also came to Reed's aid. H. J. Whigham wrote on April 15, 1920, to Bainbridge Colby in the State Department: "Have heard John Reed in danger of being executed in Finland. Hope the State Dept. can take immediate steps to see that he gets proper trial. Urgently request prompt action."22 This was in addition to an April 13, 1920 telegram from Harry Hopkins, who was destined for fame under President Roosevelt:
Understand State Dept. has information Jack Reed arrested Finland, will be executed. As one of his friends and yours and on his wife's behalf urge you take prompt action prevent execution and secure release. Feel sure can rely your immediate and effective intervention.23
John Reed was subsequently released by the Finnish authorities.
This paradoxical account on intervention in behalf of a Soviet agent can have several explanations. One hypothesis that fits other evidence concerning Wall Street and the Bolshevik Revolution is that John Reed was in effect an agent of the Morgan interests — perhaps only half aware of his double role — that his anti-capitalist writing maintained the valuable myth that all capitalists are in perpetual warfare with all socialist revolutionaries. Carroll Quigley, as we have already noted, reported that the Morgan interests financially supported domestic revolutionary organizations and anti-capitalist writings.24 And we have presented in this chapter irrefutable documentary evidence that the Morgan interests were also effecting control of a Soviet agent, interceding on his behalf and, more important, generally intervening in behalf of Soviet interests with the U.S. government. These activities centered at a single address: 120 Broadway, New York City.
next
GUARANTY TRUST GOES TO RUSSIA
In any event, Metropolitan was Reed's main source of income. In the words of biographer Granville Hicks, "Money meant primarily work for the Metropolitan and incidentally articles and stories for other paying magazines." But employment by Metropolitan did not inhibit Reed from writing articles critical of the Morgan and Rockefeller interests. One such piece, "At the Throat of the Republic" (Masses, July 1916), traced the relationship between munitions industries, the national security-preparedness lobby, the interlocking directorates of the Morgan Rockefeller interest, "and showed that they dominated both the preparedness societies and the newly formed American International Corporation, organized for the exploitation of backward countries."17
In 1915 John Reed was arrested in Russia by Czarist authorities, and the Metropolitan intervened with the State Department in Reed's behalf. On June 21, 1915, H. J. Whigham wrote Secretary of State Robert Lansing informing him that John Reed and Boardman Robinson (also arrested and also a contributor to the Masses) were in Russia "with commission from the Metropolitan magazine to write articles and to make illustrations in the Eastern field of the War." Whigham pointed out that neither had "any desire or authority from us to interfere with the operations of any belligerent powers that be." Whigham's letter continues:
If Mr. Reed carried letters of introduction from Bucharest to people in Galicia of an anti-Russian frame of mind I am sure that it was done innocently with the simple intention of meeting as many people as possible ....
Whigham points out to Secretary Lansing that John Reed was known at the White House and had given "some assistance" to the administration on Mexican affairs; he concludes: "We have the highest regard for Reed's great qualities as a writer and thinker and we are very anxious as regards his safety."18 The Whigham letter is not, let it be noted, from an establishment journal in support of a Bolshevik writer; it is from an establishment journal in support of a Bolshevik writer for the Masses and similar revolutionary sheets, a writer who was also the author of trenchant attacks ("The Involuntary Ethics of Big Business: A Fable for Pessimists," for example) on the same Morgan interests that owned Metropolitan.
The evidence of finance by the private banker Boissevain is incontrovertible. On February 23, 1918, the American legation at Christiania, Norway, sent a cable to Washington in behalf of John Reed for delivery to Socialist Party leader Morris Hillquit. The cable stated in part: "Tell Boissevain must draw on him but carefully." A cryptic note by Basil Miles in the State Department files, dated April 3, 1918, states, "If Reed is coming home he might as well have money. I understand alternatives are ejection by Norway or polite return. If this so latter seems preferable." This protective note is followed by a cable dated April 1, 1918, and again from the American legation at Christiania: "John Reed urgently request Eugene Boissevain, 29 Williams Street, New York, telegraph care legation $300.00."19 This cable was relayed to Eugene Boissevain by the State Department on April 3, 1918.
Reed apparently received his funds and arrived safely back in the United States. The next document in the State Department files is a letter to William Franklin Sands from John Reed, dated June 4, 1918, and written from Crotonon-Hudson, New York. In the letter Reed asserts that he has drawn up a memorandum for the State Department, and appeals to Sands to use his influence to get release of the boxes of papers brought back from Russia. Reed concludes, "Forgive me for bothering you, but I don't know where else to turn, and I can't afford another trip to Washington." Subsequently, Frank Polk, acting secretary of state, received a letter from Sands regarding the release of John Reed's papers. Sands' letter, dated June 5, 1918, from 120 Broadway, is here reproduced in full; it makes quite explicit statements about control of Reed:
120 BROADWAY NEW YORK
June fifth, 1918
My dear Mr. Polk:
I take the liberty of enclosing to you an appeal from John ("Jack") Reed to help him, if possible, to secure the release of the papers which he brought into the country with him from Russia.
I had a conversation with Mr. Reed when he first arrived, in which he sketched certain attempts by the Soviet Government to initiate constructive development, and expressed the desire to place whatever observations he had made or information he had obtained through his connection with Leon Trotzky, at the disposal of our Government. I suggested that he write a memorandum on this subject for you, and promised to telephone to Washington to ask you to give him an interview for this purpose. He brought home with him a mass of papers which were taken from him for examination, and on this subject also he wished to speak to someone in authority, in order to voluntarily offer any information they might contain to the Government, and to ask for the release of those which he needed for his newspaper and magazine work.
I do not believe that Mr. Reed is either a "Bolshevik" or a "dangerous anarchist," as I have heard him described. He is a sensational journalist, without doubt, but that is all. He is not trying to embarrass our Government, and for this reason refused the "protection" which I understand was offered to him by Trotzky, when he returned to New York to face the indictment against him in the "Masses" trial. He is liked by the Petrograd Bolsheviki, however, and, therefore, anything which our police may do which looks like "persecution" will be resented in Petrograd, which I believe to be undesirable because unnecessary. He can be handled and controlled much better by other means than through the police.
I have not seen the memorandum he gave to Mr. Bullitt — I wanted him to let me see it first and perhaps to edit it, but he had not the opportunity to do so.
I hope that you will not consider me to be intrusive in this matter or meddling with matters which do not concern me. I believe it to be wise not to offend the Bolshevik leaders unless and until it may become necessary to do so — if it should become necessary — and it is unwise to look on every one as a suspicious or even dangerous character, who has had friendly relations with the Bolsheviki in Russia. I think it better policy to attempt to use such people for our own purposes in developing our policy toward Russia, if it is possible to do so. The lecture which Reed was prevented by the police from delivering in Philadelphia (he lost his head, came into conflict with the police and was arrested) is the only lecture on Russia which I would have paid to hear, if I had not already seen his notes on the subject. It covered a subject which we might quite possibly find to be a point of contact with the Soviet Government, from which to begin constructive work!
Can we not use him, instead of embittering him and making him an enemy? He is not well balanced, but he is, unless I am very much mistaken, susceptible to discreet guidance and might be quite useful.
Sincerely yours,
William Franklin Sands
The Honorable
Frank Lyon Polk
Counselor for the Department
of State Washington, D.C.
W.F.S:A.O
Enclosure 20
The significance of this document is the hard revelation of direct intervention by an officer (executive secretary) of American International Corporation in behalf of a known Bolshevik. Ponder a few of Sands' statements about Reed: "He can be handled and controlled much better by other means than through the police"; and, "Can we not use him, instead of embittering him and making him an enemy? . . . he is, unless I am very much mistaken, susceptible to discreet guidance and might be quite useful." Quite obviously, the American International Corporation viewed John Reed as an agent or a potential agent who could be, and probably had already been, brought under its control. The fact that Sands was in a position to request editing a memorandum by Reed (for Bullitt) suggests some degree of control had already been established.
Then note Sands' potentially hostile attitude towards — and barely veiled intent to provoke — the Bolsheviks: "I believe it to be wise not to offend the Bolshevik leaders unless and until it may become necessary to do so — if it should become necessary . . ." (italics added).
This is an extraordinary letter in behalf of a Soviet agent from a private U.S. citizen whose counsel the State Department had sought, and continued to seek.
A later memorandum, March 19, 1920, in the State files reported the arrest of John Reed by the Finnish authorities at Abo, and Reed's possession of English, American and German passports. Reed, traveling under the alias of Casgormlich, carried diamonds, a large sum of money, Soviet propaganda literature, and film. On April 21, 1920, the American legation at Helsingfors cabled the State Department:
Am forwarding by the next pouch certified copies of letters from Emma Goldman, Trotsky, Lenin and Sirola found in Reed's possession. Foreign Office has promised to furnish complete record of the Court proceedings.
Once again Sands intervened: "I knew Mr. Reed personally."21 And, as in 1915, Metropolitan magazine also came to Reed's aid. H. J. Whigham wrote on April 15, 1920, to Bainbridge Colby in the State Department: "Have heard John Reed in danger of being executed in Finland. Hope the State Dept. can take immediate steps to see that he gets proper trial. Urgently request prompt action."22 This was in addition to an April 13, 1920 telegram from Harry Hopkins, who was destined for fame under President Roosevelt:
Understand State Dept. has information Jack Reed arrested Finland, will be executed. As one of his friends and yours and on his wife's behalf urge you take prompt action prevent execution and secure release. Feel sure can rely your immediate and effective intervention.23
John Reed was subsequently released by the Finnish authorities.
This paradoxical account on intervention in behalf of a Soviet agent can have several explanations. One hypothesis that fits other evidence concerning Wall Street and the Bolshevik Revolution is that John Reed was in effect an agent of the Morgan interests — perhaps only half aware of his double role — that his anti-capitalist writing maintained the valuable myth that all capitalists are in perpetual warfare with all socialist revolutionaries. Carroll Quigley, as we have already noted, reported that the Morgan interests financially supported domestic revolutionary organizations and anti-capitalist writings.24 And we have presented in this chapter irrefutable documentary evidence that the Morgan interests were also effecting control of a Soviet agent, interceding on his behalf and, more important, generally intervening in behalf of Soviet interests with the U.S. government. These activities centered at a single address: 120 Broadway, New York City.
next
GUARANTY TRUST GOES TO RUSSIA
Footnotes:
Chapter 7
1.Copy in U.S. State Dept. Decimal File, 316-22-656.
2.Ibid., 861.00/1970.
3.U.S., House, Committee on Foreign Affairs, Conditions in Russia, 66th
Cong., 3d sess., 1921, p. 78.
4.U.S. State Dept. Decimal File, 316-19-1120.
5.Ibid.
6.See Benjamin Gitlow, [U.S., House, Un-American Propaganda Activities
(Washington, 1939), vols. 7-8, p. 4539.
7.See p. 119.
8.Copy in [U.S. State Dept. Decimal File, 316-22-656. Confirmation of
Guaranty Trust involvement tomes in later intelligence reports.
9.On 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.
10.The 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.
11.Julius Hammer was the father of Armand Hammer, who today is chairman
of the Occidental Petroleum Corp. of Los Angeles.
12.See Appendix 3.
13.V. I. Lenin, Polnoe Sobranie Sochinenii, 5th ed. (Moscow, 1958), 53:267.
14.U.S., House, Committee. on Foreign Affairs, Conditions in Russia, 66th
Cong., 3d sess., 1921, p. 75. "Bill" was William Bobroff, Soviet agent.
15.Ibid., p. 78.
16.New York Times, November 17, 1919.
17.Ibid.
18.Ibid.
19.New York Times, June 21, 1919.
20.See p. 119.
21.U.S. State Dept. Decimal File, 861.51/411, November 23, 1918.
22.Ibid., 316-125-1212.
23.U.S., Department of State, Foreign Relations of the United States: 1918,
Russia, 1:373.
24.U.S. State Dept. Decimal File, 861.00/4878, July,' 21, 1919.
25.Ibid., 316-21-115/21.
26.New York Times, April 5, 1919.
27.Ibid.
Chapter 8
Footnotes:
1.By a quirk the papers of incorporation for the Equitable Office Building were drawn up by Dwight W. Morrow, later a Morgan partner, but then a member of the law firm of Simpson, Thacher & Bartlett. The Thacher firm contributed two members to the 1917 American Red Cross Mission to Russia (see chapter five).
3.Carroll Quigley, Tragedy and Hope (New York: Macmillan, 1966), p. 938. Quigley was writing in 1965, so this places the start of the infiltration at about 1915, a date consistent with the evidence here presented.
4.Frank A. Vanderlip, From Farm Boy to Financier (New York: A. AppletonCentury, 1935).
5.Ibid., p. 267.
6.Ibid., pp. 268-69. It should be noted that several names mentioned by Vanderlip turn up elsewhere in this book: Rockefeller, Armour, Guaranty Trust, and (Otto) Kahn all had some connection more or less with the Bolshevik Revolution and its aftermath.
7.Ibid., p. 269.
8.U.S. Stale Dept. Decimal File, 861.00/961.
9.Sands memorandum to Lansing, p. 9.
10.William Franklin Sands wrote several books, including Undiplomatic Memoirs (New York: McGraw-Hill, 1930), a biography covering the years to 1904. Later he wrote Our .Jungle Diplomacy (Chapel Hill: University of North Carolina Press, 1941), an unremarkable treatise on imperialism in Latin America. The latter work is notable only for a minor point on page 102: the willingness to blame a particularly unsavory imperialistic adventure on Adolf Stahl, a New York banker, while pointing oust quite unnecessarily that Stahl was of "German-Jewish origin." In August 1918 he published an article, "Salvaging Russia," in Asia, to explain support of the Bolshevik regime.
11.All the above in U.S. State Dept. Decimal File, 861.00/969.
12.The author cannot forbear comparing the treatment of academic researchers. In 1973, for example, the writer was still denied access to some State Department files dated 1919.
13.U.S. State Dept. Decimal File, 861.51/333.
14.U.S. State Dept. Decimal File, 861.516 84, September 2, 1919.
15.Ibid.
16.Other contributors to the Masses mentioned in this book were journalist Robert Minor, chairman of the, U.S. Public Info, marion Committee; George Creel; Carl Sandburg, poet-historian; and Boardman Robinson, an artist.
17.Granville Hicks, John Reed, 1887-1920 (New York: Macmillan, 1936), p. 215.
18.U.S. State Dept. Decimal File, 860d.1121 R 25/4.
19.Ibid., 360d.1121/R25/18. According to Granville Hicks in John Reed, "Masses could not pay his [Reed's] expenses. Finally, friends of the magazine, notably Eugene Boissevain, raised the money" (p. 249).
20.U.S. State Dept. Decimal File, 360. D. II21.R/20/221/2, /R25 (John Reed). The letter was transferred by Mr. Polk to the State Department archives on May 2, 1935. All italics added.
21.Ibid., 360d.1121 R 25/72.
22.Ibid.
23.This was addressed to Bainbridge Colby, ibid., 360d.1121 R 25/30. Another letter, dated April 14, 1920, and addressed to the secretary of state from 100 Broadway, New York, was from W. Bourke Cochrane; it also pleaded for the release of John Reed.
24.Quigley, op. cit.
*The John MacGregor Grant Co., agent for the Russo-Asiatic Bank (involved in financing the Bolsheviks), was at 120 Broadway — and financed by Guaranty Trust Company.
**Sir Ernest Cassel, prominent British financier.
Chapter 8
Footnotes:
1.By a quirk the papers of incorporation for the Equitable Office Building were drawn up by Dwight W. Morrow, later a Morgan partner, but then a member of the law firm of Simpson, Thacher & Bartlett. The Thacher firm contributed two members to the 1917 American Red Cross Mission to Russia (see chapter five).
3.Carroll Quigley, Tragedy and Hope (New York: Macmillan, 1966), p. 938. Quigley was writing in 1965, so this places the start of the infiltration at about 1915, a date consistent with the evidence here presented.
4.Frank A. Vanderlip, From Farm Boy to Financier (New York: A. AppletonCentury, 1935).
5.Ibid., p. 267.
6.Ibid., pp. 268-69. It should be noted that several names mentioned by Vanderlip turn up elsewhere in this book: Rockefeller, Armour, Guaranty Trust, and (Otto) Kahn all had some connection more or less with the Bolshevik Revolution and its aftermath.
7.Ibid., p. 269.
8.U.S. Stale Dept. Decimal File, 861.00/961.
9.Sands memorandum to Lansing, p. 9.
10.William Franklin Sands wrote several books, including Undiplomatic Memoirs (New York: McGraw-Hill, 1930), a biography covering the years to 1904. Later he wrote Our .Jungle Diplomacy (Chapel Hill: University of North Carolina Press, 1941), an unremarkable treatise on imperialism in Latin America. The latter work is notable only for a minor point on page 102: the willingness to blame a particularly unsavory imperialistic adventure on Adolf Stahl, a New York banker, while pointing oust quite unnecessarily that Stahl was of "German-Jewish origin." In August 1918 he published an article, "Salvaging Russia," in Asia, to explain support of the Bolshevik regime.
11.All the above in U.S. State Dept. Decimal File, 861.00/969.
12.The author cannot forbear comparing the treatment of academic researchers. In 1973, for example, the writer was still denied access to some State Department files dated 1919.
13.U.S. State Dept. Decimal File, 861.51/333.
14.U.S. State Dept. Decimal File, 861.516 84, September 2, 1919.
15.Ibid.
16.Other contributors to the Masses mentioned in this book were journalist Robert Minor, chairman of the, U.S. Public Info, marion Committee; George Creel; Carl Sandburg, poet-historian; and Boardman Robinson, an artist.
17.Granville Hicks, John Reed, 1887-1920 (New York: Macmillan, 1936), p. 215.
18.U.S. State Dept. Decimal File, 860d.1121 R 25/4.
19.Ibid., 360d.1121/R25/18. According to Granville Hicks in John Reed, "Masses could not pay his [Reed's] expenses. Finally, friends of the magazine, notably Eugene Boissevain, raised the money" (p. 249).
20.U.S. State Dept. Decimal File, 360. D. II21.R/20/221/2, /R25 (John Reed). The letter was transferred by Mr. Polk to the State Department archives on May 2, 1935. All italics added.
21.Ibid., 360d.1121 R 25/72.
22.Ibid.
23.This was addressed to Bainbridge Colby, ibid., 360d.1121 R 25/30. Another letter, dated April 14, 1920, and addressed to the secretary of state from 100 Broadway, New York, was from W. Bourke Cochrane; it also pleaded for the release of John Reed.
24.Quigley, op. cit.
*The John MacGregor Grant Co., agent for the Russo-Asiatic Bank (involved in financing the Bolsheviks), was at 120 Broadway — and financed by Guaranty Trust Company.
**Sir Ernest Cassel, prominent British financier.
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