Chapter X
J.P. MORGAN
GIVES A LITTLE HELP TO THE OTHER SIDE
I would not
sit down to lunch with a Morgan — except possibly to learn something
of his motives and attitudes.
William E. Dodd,
Ambassador Dodd's Diary,
1933-1938
So far our
story has revolved around a single major financial house — Guaranty
Trust Company, the largest trust company in the United States and
controlled by the J.P. Morgan firm. Guaranty Trust used Olof Aschberg,
the Bolshevik banker, as its intermediary in Russia before and after the
revolution. Guaranty was a backer of Ludwig Martens and his Soviet
Bureau, the first Soviet representatives in the United States. And in
mid-1920 Guaranty was the Soviet fiscal agent in the U.S.; the first
shipments of Soviet gold to the United States also traced back to
Guaranty Trust.
There is a
startling reverse side to this pro-Bolshevik activity — Guaranty Trust
was a founder of United Americans, a virulent anti-Soviet organization
which noisily threatened Red invasion by 1922, claimed that $20 million
of Soviet funds were on the way to fund Red revolution, and forecast
panic in the streets and mass starvation in New York City. This
duplicity raises, of course, serious questions about the intentions of
Guaranty Trust and its directors. Dealing with the Soviets, even backing
them, can be explained by apolitical greed or simply profit motive. On
the other hand, spreading propaganda designed to create fear and panic
while at the same time encouraging the conditions that give rise to the
fear and panic is a considerably more serious problem. It suggests utter
moral depravity. Let's first look more closely at the anti-Communist
United Americans.
UNITED AMERICANS
FORMED TO FIGHT COMMUNISM1
In 1920 the
organization United Americans was founded. It was limited to citizens of
the United States and planned for five million members, "whose sole
purpose would be to combat the teachings of the socialists, communists,
I.W.W., Russian organizations and radical farmers societies."
In other words,
United Americans was to fight all those institutions and groups believed
to be anticapitalist.
The officer's
of the preliminary organization established to build up United Americans
were Allen Walker of the Guaranty Trust Company; Daniel Willard,
president of the Baltimore 8c Ohio Railroad; H. H. Westinghouse, of
Westinghouse Air Brake Company; and Otto H. Kahn, of Kuhn, Loeb 8c
Company and American International Corporation. These Wall Streeters
were backed up by assorted university presidents arid Newton W. Gilbert
(former governor of the Philippines). Obviously, United Americans was,
at first glance, exactly the kind of organization that establishment
capitalists would be expected to finance and join. Its formation should
have brought no great surprise.
On the other
hand, as we have already seen, these financiers were also deeply
involved in supporting the new Soviet regime in Russia — although
this support was behind the scenes, recorded only in government files,
and not to be made public for 50 years. As part of United Americans,
Walker, Willard, Westinghouse, and Kahn were playing a double game. Otto
H. Kahn, a founder of the anti-Communist organization, was reported by
the British socialist J. H. Thomas as having his "face towards the
light." Kahn wrote the preface to Thomas's book. In 1924 Otto Kahn
addressed the League for Industrial Democracy and professed common
objectives with this activist socialist group (see page 49). The
Baltimore & Ohio Railroad (Willard's employer) was active in the
development of Russia during the 1920s. Westinghouse in 1920, the year
United Americans was founded, was operating a plant in Russia that had
been exempted from nationalization. And the role of Guaranty Trust has
already been minutely described.
UNITED AMERICANS REVEALS "STARTLING DISCLOSURES" ON REDS
In March 1920
the New York Times headlined an extensive, detailed scare story
about Red invasion of the United States within two years, an invasion
which was to be financed by $20 million of Soviet funds "obtained by the
murder and robbery of the Russian nobility."2
United
Americans had, it was revealed, made a survey of "radical activities" in
the United States, and had done so in its role as an organization formed
to "preserve the Constitution of the United States with the
representative form of government and the right of individual possession
which the Constitution provides."
Further, the
survey, it was proclaimed, had the backing of the executive board,
"including Otto H. Kahn, Allen Walker of the Guaranty Trust Company,
Daniel Willard," and others. The survey asserted that
the radical
leaders are confident of effecting a revolution within two years,
that the start is to be made in New York City with a general strike,
that Red leaders have predicted much bloodshed and that the Russian
Soviet Government has contributed $20,000,000 to the American
radical movement.
The Soviet gold
shipments to Guaranty Trust in mid-1920 (540 boxes of three poods each)
were worth roughly $15,000,000 (at $20 a troy ounce), and other gold
shipments through Robert Dollar and Olof Aschberg brought the total very
close to $20 million. The information about Soviet gold for the radical
movement was called "thoroughly reliable" and was "being turned over to
the Government." The Reds, it was asserted, planned to starve New York
into submission within four days:
Meanwhile
the Reds count on a financial panic within the next few weeks to
help their cause along. A panic would cause distress among the
workingmen and thus render them more susceptible to revolution
doctrine.
The United
Americans' report grossly overstated the number of radicals in the
United States, at first tossing around figures like two or five million
and then settling for precisely 3,465,000 members in four radical
organizations. The report concluded by emphasizing the possibility of
bloodshed and quoted "Skaczewski, President of the International
Publishing Association, otherwise the Communist Party, [who] boasted
that.the time was coming soon when the Communists would destroy utterly
the present form of society."
In brief,
United Americans published a report without substantiating evidence,
designed to scare the man in the street into panic: The significant
point of course is that this is the same group that was responsible for
protecting and subsidizing, indeed assisting, the Soviets so they could
undertake these same plans.
CONCLUSIONS CONCERNING
UNITED AMERICANS
Is this a case
of the right hand not knowing what the left hand was doing? Probably
not. We are talking about heads of companies, eminently successful
companies at that. So United Americans was probably a ruse to divert
public — and official — attention from the subterranean efforts being
made to gain entry to the Russian market.
United
Americans is the only documented example known to this writer of an
organization assisting the Soviet regime and also in the forefront of
opposition to the Soviets. This is by no means an inconsistent course of
action, and further research should at least focus on the following
aspects:
(a) Are
there other examples of double-dealing by influential groups
generally known as the establishment?
(b) Can
these examples be extended into other areas? For example, is there
evidence that labor troubles have been instigated by these groups?
(c) What is
the ultimate purpose of these pincer tactics? Can they be related to
the Marxian axiom: thesis versus antithesis yields synthesis? It is
a puzzle why the Marxist movement would attack capitalism head-on if
its objective was a Communist world and if it truly accepted the
dialectic. If the objective is a Communist world — that is, if
communism is the desired synthesis — and capitalism is the thesis,
then something apart from capitalism or communism has to be
antithesis. Could therefore capitalism be the thesis and communism
the antithesis, with the objective of the revolutionary groups and
their backers being a synthesizing of these two systems into some
world system yet undescribed?
MORGAN AND ROCKEFELLER AID
KOLCHAK
Concurrently
with these efforts to aid the Soviet Bureau and United Americans, the
J.P. Morgan firm, which controlled Guaranty Trust, was providing
financial assistance for one of the Bolshevik's primary opponents,
Admiral Aleksandr Kolchak in Siberia. On June 23, 1919, Congressman
Mason introduced House Resolution 132 instructing the State Department
"to make inquiry as to all and singular as to the truth of . . . press
reports" charging that Russian bondholders had used their influence to
bring about the "retention of American troops in Russia" in order to
ensure continued payment of interest on Russian bonds. According to a
file memorandum by Basil Miles, an associate of William F. Sands,
Congressman Mason charged that certain banks were attempting to secure
recognition of Admiral Kolchak in Siberia to get payment on former
Russian bonds.
Then in August
1919 the secretary of state, Robert Lansing, received from the
Rockefeller-influenced National City Bank of New York a letter
requesting official comment on a proposed loan of $5 million to Admiral
Kolchak; and from J.P. Morgan & Co. and other bankers another letter
requesting the views of the department concerning an additional proposed
£10 million sterling loan to Kolchak by a consortium of British and
American bankers.3
Secretary
Lansing informed the bankers that the U.S. had not recognized Kolchak
and, although prepared to render him assistance, "the Department did not
feel it could assume the responsibility of encouraging such negotiations
but that, nevertheless, there seemed to be no objection to the loan
provided the bankers deemed it advisable to make it."4
Subsequently,
on September 30, Lansing informed the American consul general at Omsk
that the "loan has since gone through in regular course"5
Two fifths was taken up by British banks and three fifths by American
banks. Two thirds of the total was to be spent in Britain and the United
States and the remaining one third wherever the Kolchak Government
wished. The loan was secured by Russian gold (Kolchak's) that was
shipped to San Francisco. The timing of the previously described Soviet
exports of gold suggests that cooperation with the Soviets on gold sales
was determined on the heels of the Kolchak gold-loan agreement.
The Soviet gold
sales and the Kolchak loan also suggest that Carroll Quigley's statement
that Morgan interests infiltrated the domestic left applied also to
overseas revolutionary and counterrevolutionary movements. Summer
1919 was a time of Soviet military reverses in the Crimea and the
Ukraine and this black picture may have induced British and American
bankers to mend their fences with the anti-Bolshevik forces. The obvious
rationale would be to have a foot in all camps, and so be in a favorable
position to negotiate for concessions and business after the revolution
or counterrevolution had succeeded and a new government stabilized. As
the outcome of any conflict cannot be seen at the start, the idea is to
place sizable bets on all the horses in the revolutionary race. Thus
assistance was given on the one hand to the Soviets and on the other to
Kolchak — while the British government was supporting Denikin in the
Ukraine and the French government went to the aid of the Poles.
In autumn 1919
the Berlin newspaper Berliner Zeitung am Mittak (October 8 and 9)
accused the Morgan firm of financing the West Russian government and the
Russian-German forces in the Baltic fighting the Bolsheviks — both
allied to Kolchak. The Morgan firm strenuously denied the charge: "This
firm has had no discussion, or meeting, with the West Russian Government
or with anyone pretending to represent it, at any time."6
But if the financing charge was inaccurate there is evidence of
collaboration. Documents found by Latvian government intelligence among
the papers of Colonel Bermondt, commander of the Western Volunteer Army,
confirm "the relations claimed existing between Kolchak's London Agent
and the German industrial ring which was back of Bermondt."7
In other words,
we know that J.P. Morgan, London, and New. York bankers financed Kolchak.
There is also evidence that connects Kolchak and his army with other
anti-Bolshevik armies. And there seems to be little question that German
industrial and banking circles were financing the all-Russian
anti-Bolshevik army in the Baltic. Obviously bankers' funds have no
national flag.
Footnotes:
1New York Times, June
21, 1919.
2Ibid., March 28,
1920.
3U.S. State Dept.
Decimal File, 861.51/649.
4Ibid., 861.51/675
5Ibid., 861.51/656
6Ibid., 861.51/767 —
a letter from J. P. Morgan to Department of State, November 11,
1919. The financing itself was a hoax (see AP report in State
Department files following the Morgan letter).
7Ibid., 861.51/6172
and /6361.