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WALL STREET AND WORLD REVOLUTION
What you Radicals and we who hold opposing views differ about, is not so much the end as the means, not so much what should be brought about as how it should, and can, be brought about ....
Otto H. Kahn, director, American International Corp., and partner, Kuhn, Loeb & Co., speaking to the League/or Industrial Democracy, New York, December 30, 1924
Before World War I, the financial and business structure of the United States was dominated by two conglomerates: Standard Oil, or the Rockefeller enterprise, and the Morgan complex of industries — finance and transportation companies.
Rockefeller and Morgan trust alliances dominated not only Wall Street but, through interlocking directorships, almost the entire economic fabric of the United States.-
Rockefeller interests monopolized the petroleum and allied industries, and controlled the copper trust, the smelters trust, and the gigantic tobacco trust, in addition to having influence in some Morgan properties such as the U.S. Steel Corporation as well as in hundreds of smaller industrial trusts, public service operations, railroads, and banking institutions.
National City Bank was the largest of the banks influenced by Standard Oil-Rockefeller, but financial control extended to the United States Trust Company and Hanover National Bank as well as to major life insurance companies — Equitable Life and Mutual of New York.
The great Morgan enterprises were in steel, shipping, and the electrical industry; they included General Electric, the rubber trust, and railroads.
Like Rockefeller, Morgan controlled financial corporations — the National Bank of Commerce and the Chase National Bank, New York Life Insurance, and the Guaranty Trust Company.
The names J.P. Morgan and Guaranty Trust Company occur repeatedly throughout this book.
In the early part of the twentieth century the Guaranty Trust Company was dominated by the Harriman interests.
When the elder Harriman (Edward Henry) died in 1909, Morgan and associates bought into Guaranty Trust as well as into Mutual Life and New York Life.
In 1919 Morgan also bought control of Equitable Life, and the Guaranty Trust Company absorbed an additional six lesser trust companies.
Therefore, at the end of World War I the Guaranty Trust and Bankers Trust were, respectively, the first and second largest trust companies in the United States, both dominated by Morgan interests.-
American financiers associated with these groups were involved in financing revolution even before 1917.
Intervention by the Wall Street law firm of Sullivan & Cromwell into the Panama Canal controversy is recorded in 1913 congressional hearings.
The episode is summarized by Congressman Rainey:
It is my contention that the representatives of this Government [United States] made possible the revolution on the isthmus of Panama.
That had it not been for the interference of this Government a successful revolution could not possibly have occurred, and I contend that this Government violated the treaty of 1846.
I will be able to produce evidence to show that the declaration of independence which was promulgated in Panama on the 3rd day of November, 1903, was prepared right here in New York City and carried down there — prepared in the office of Wilson (sic) Nelson Cromwell ....-
Congressman Rainey went on to state that only ten or twelve of the top Panamanian revolutionists plus "the officers of the Panama Railroad & Steamship Co., who were under the control of William Nelson Cromwell, of New York and the State Department officials in Washington," knew about the impending revolution.
The purpose of the revolution was to deprive Colombia, of which Panama was then a part, of $40 million and to acquire control of the Panama Canal.
The best-documented example of Wall Street intervention in revolution is the operation of a New York syndicate in the Chinese revolution of 1912, which was led by Sun Yat-sen.
Although the final gains of the syndicate remain unclear, the intention and role of the New York financing group are fully documented down to amounts of money, information on affiliated Chinese secret societies, and shipping lists of armaments to be purchased.
The New York bankers syndicate for the Sun Yat-sen revolution included Charles B. Hill, an attorney with the law firm of Hunt, Hill & Betts.
In 1912 the firm was located at 165 Broadway, New York, but in 1917 it moved to 120 Broadway (see chapter eight for the significance of this address).
Charles B. Hill was director of several Westinghouse subsidiaries, including Bryant Electric, Perkins Electric Switch, and Westinghouse Lamp — all affiliated with Westinghouse Electric whose New York office was also located at 120 Broadway.
Charles R. Crane, organizer of Westinghouse subsidiaries in Russia, had a known role in the first and second phases of the Bolshevik Revolution (see page 26).
The work of the 1910 Hill syndicate in China is recorded in the Laurence Boothe Papers at the Hoover Institution.
These papers contain over 110 related items, including letters of Sun Yat-sen to and from his American backers.
In return for financial support, Sun Yat-sen promised the Hill syndicate railroad, banking, and commercial concessions in the new revolutionary China.
Another case of revolution supported by New York financial institutions concerned that of Mexico in 1915-16.
Von Rintelen, a German espionage agent in the United States,- was accused during his May 1917 trial in New York City of attempting to "embroil" the U.S. with Mexico and Japan in order to divert ammunition then flowing to the Allies in Europe.
Payment for the ammunition that was shipped from the United States to the Mexican revolutionary Pancho Villa, was made through Guaranty Trust Company.
Von Rintelen's adviser, Sommerfeld, paid $380,000 via Guaranty Trust and Mississippi Valley Trust Company to the Western Cartridge Company of Alton, Illinois, for ammunition shipped to El Paso, for forwarding to Villa.
This was in mid-1915.
On January 10, 1916, Villa murdered seventeen American miners at Santa Isabel and on March 9, 1916, Villa raided Columbus, New Mexico, and killed eighteen more Americans.
Wall Street involvement in these Mexican border raids was the subject of a letter (October 6, 1916) from Lincoln Steffens, an American Communist, to Colonel House, an aide' to Woodrow Wilson:
My dear Colonel House:
Just before I left New York last Monday, I was told convincingly that "Wall Street" had completed arrangements for one more raid of Mexican bandits into the United States: to be so timed and so atrocious that it would settle the Q election ....
Once in power in Mexico, the Carranza government purchased additional arms in the United States.
The American Gun Company contracted to ship 5,000 Mausers and a shipment license was issued by the War Trade Board for 15,000 guns and 15,000,000 rounds of ammunition.
The American ambassador to Mexico, Fletcher, "flatly refused to recommend or sanction the shipment of any munitions, rifles, etc., to Carranza."
However, intervention by Secretary of State Robert Lansing reduced the barrier to one of a temporary delay, and "in a short while . . . [the American Gun Company] would be permitted to make the shipment and deliver."
The raids upon the U.S. by the Villa and the Carranza forces were reported in the New York Times as the "Texas Revolution" (a kind of dry run for the Bolshevik Revolution) and were undertaken jointly by Germans and Bolsheviks.
The testimony of John A. Walls, district attorney of Brownsville, Texas, before the 1919 Fall Committee yielded documentary evidence of the link between Bolshevik interests in the United States, German activity, and the Carranza forces in Mexico.—
Consequently, the Carranza government, the first in the world with a Soviet-type constitution (which was written by Trotskyites), was a government with support on Wall Street.
The Carranza revolution probably could not have succeeded without American munitions and Carranza would not have remained in power as long as he did without American help.
Similar intervention in the 1917 Bolshevik Revolution in Russia revolves around Swedish banker and intermediary Olof Aschberg.
Logically the story begins with prerevolutionary tsarist loans by Wall Street bank syndicates.
AMERICAN BANKERS AND TSARIST LOANS
In August 1914 Europe went to war.
Under international law neutral countries (and the United States was neutral until April 1917) could not raise loans for belligerent countries.
This was a question of law as well as morality.
When the Morgan house floated war loans for Britain and France in 1915, J.P. Morgan argued that these were not war loans at all but merely a means of facilitating international trade.
Such a distinction had indeed been elaborately made by President Wilson in October 1914; he explained that the sale of bonds in the U.S. for foreign governments was in effect a loan of savings to belligerent governments and did not finance a war.
On the other hand, acceptance of Treasury notes or other evidence of debt in payment for articles was only a means of facilitating trade and not of financing a war effort.
Documents in the State Department files demonstrate that the National City Bank, controlled by Stillman and Rockefeller interests, and the Guaranty Trust, controlled by Morgan interests, jointly raised substantial loans for the belligerent Russia before U.S. entry into the war, and that these loans were raised alter the State Department pointed out to these firms that they were contrary to international law.
Further, negotiations for the loans were undertaken through official U.S. government communications facilities under cover of the top-level "Green Cipher" of the State Department.
Below are extracts from State Department cables that will make the case.
On May 94, 1916, Ambassador Francis in Petrograd sent the following cable to the State Department in Washington for forwardin to Frank Arthur Vanderlip, then chairman of the National City Bank in New York.
The cable was sent in Green Cipher and was enciphered and deciphered by U.S. State Department officers in Petrograd and Washington at the taxpayers' expense (file 861.51/110).
563, May 94, 1 p.m.
For Vanderlip National City Bank New York.
Five.
Our previous opinions credit strengthened.
We endorse plan cabled as safe investment plus very attractive speculation in roubles.
In view of guarantee of exchange rate have placed rate somewhat above present market.
Owing unfavorable opinion created by long delay have on own responsibility offered take twenty-five million dollars.
We think large portion of all should be retained by bank and allied institutions.
With clause respect customs bonds become practical lien on more than one hundred and fifty million dollars per annum customs making absolute security and secures market even if defect.
We consider three [years?] option on bonds very valuable and for that reason amount of rouble credit should be enlarged by group or by distribution to close friends.
American International should take block and we would inform Government.
Think group should be formed at once to take and issue of bonds . . . should secure full cooperation guaranty.
Suggest you see Jack personally, use every endeavor to get them really work otherwise cooperate guarantee form new group.
Opportunities here during the next ten years very great along state and
industrial financiering and if this transaction consummated doubtless should be established.
In answering bear in mind situation regarding cable.
MacRoberts Rich.
FRANCIS, AMERICAN AMBASSADOR 14
There are several points to note about the above cable to understand the story that follows.
First, note the reference to American International Corporation, a Morgan firm, and a name that turns up again and again in this story.
Second, "guarantee" refers to Guaranty Trust Company.
Third, "MacRoberts" was Samuel MacRoberts, a vice president and the executive manager of National City Bank.
On May 24, 1916, Ambassador Francis cabled a message from Rolph Marsh of Guaranty Trust in Petrograd to Guaranty Trust in New York, again in the special Green Cipher and again using the facilities of the State Department.
This cable reads as follows:
565, May 24, 6 p.m.
for Guaranty Trust Company New York:
Three.
Olof and self consider the new proposition takes care Olof and will help rather than harm your prestige.
Situation such co-operation necessary if big things are to be accomplished here.
Strongly urge your arranging with City to consider and act jointly in all big propositions here.
Decided advantages for both and prevents playing one against other.
City representatives here desire (hand written) such co-operation.
Proposition being considered eliminates our credit in name also option but we both consider the rouble credit with the bond option in propositions.
Second paragraph offers wonderful profitable opportunity, strongly urge your acceptance.
Please cable me full authority to act in connection with City.
Consider our entertaining proposition satisfactory situation for us and permits doing big things.
Again strongly urge your taking twenty-five million of rouble credit.
No possibility loss and decided speculative advantages.
Again urge having Vice President upon the ground.
Effect here will be decidedly good.
Resident Attorney does not carry same prestige and weight.
This goes through Embassy by code answer same way. See cable on possibilities.
ROLPH MARSH.
FRANCIS,
AMERICAN AMBASSADOR
Note:
Entire Message in Green Cipher.
TELEGRAPH ROOM 11
"Olof" in the cable was Olof Aschberg, Swedish banker and head of the Nya Banken in Stockholm.
Aschberg had been in New York in 1915 conferring with the Morgan firm on these Russian loans.
Now, in 1916, he was in Petrograd with Rolph Marsh of Guaranty Trust and Samuel MacRoberts and Rich of National City Bank ("City" in cable) arranging loans for a Morgan-Rockefeller consortium.
The following year, Aschberg, as we shall see later, would be known as the "Bolshevik Banker," and his own memoirs reproduce evidence of his right to the title.
The State Department files also contain a series of cables between Ambassador Francis, Acting Secretary Frank Polk, and Secretary of State Robert Lansing concerning the legality and propriety of transmitting National City Bank and Guaranty Trust cables at public expense.
On May 25, 1916, Ambassador Francis cabled Washington as follows and referred to the two previous cables:
569, May 25, one p.m.
My telegram 563 and 565 May twenty-fourth are sent for local representatives of institutions addressed in the hope of consummating loan which would largely increase international trade and greatly benefit [diplomatic relations?].
Prospect for success promising.
Petrograd representatives consider terms submitted very satisfactory but fear such representations to their institutions would prevent consummation loan if Government here acquainted these proposals.
FRANCIS, AMERICAN AMBASSADOR.
The basic reason cited by Francis for facilitating the cables is "the hope of consummating loan which would largely increase international trade."
Transmission of commercial messages using State Department facilities had been prohibited, and on June 1, 1916, Polk cabled Francis:
842
In view of Department's regulation contained in its circular telegraphic instruction of March fifteenth, (discontinuance of forwarding Commercial messages)— 1915, please explain why messages in your 563, 565 and 575, should be communicated.
Hereafter please follow closely Department's instructions.
Acting.
Polk
861.51/112
/HO
Then on June 8, 1916, Secretary of State Lansing expanded the prohibition and clearly stated that the proposed loans were illegal:
860 Your 563, 565, May 24, g: 569 May 25.1 pm
Before delivering messages to Vanderlip and Guaranty Trust Company, I must inquire whether they refer to Russian Government loans of any description.
If they do, I regret that the Department can not be a party to their transmission, as such action would submit it to justifiable criticism because of participation by this Government in loan transaction by a belligerent for the purpose of carrying on its hostile operations.
Such participation is contrary to the accepted rule of international law that neutral Governments should not lend their assistance to the raising of war loans by belligerents.
The last line of the Lansing cable as written, was not transmitted to Petrograd.
The line read: "Cannot arrangements be made to send these messages through Russian channels?"
How can we assess these cables and the parties involved?
Clearly the Morgan-Rockefeller interests were not interested in abiding by international law.
There is obvious intent in these cables to supply loans to belligerents.
There was no hesitation on the part of these firms to use State Department facilities for the negotiations.
Further, in spite of protests, the State Department allowed the messages to go through.
Finally, and most interesting for subsequent events, Olof Aschberg, the Swedish banker, was a prominent participant and intermediary in the negotiations on behalf of Guaranty Trust.
Let us therefore take a closer look at Olof Aschberg.
OLOF ASCHBERG IN NEW YORK, 1916
Olof Aschberg, the "Bolshevik Banker" (or "Bankier der Weltre volution," as he has been called in the German press), was owner of the Nya Banken, founded 1912 in Stockholm.
His codirectors included prominent members of Swedish cooperatives and Swedish socialists, including G. W. Dahl, K. G. Rosling, and C. Gerhard Magnusson.
In 1918 Nya Banken was placed on the Allied black-list for its financial operations in behalf of Germany.
In response to the blacklisting, Nya Banken changed its name to Svensk Ekonomiebolaget.
The bank remained under the control of Aschberg, and was mainly owned by him.
The bank's London agent was the British Bank of North Commerce, whose chairman was Earl Grey, former associate of Cecil Rhodes.
Others in Aschberg's interesting circle of business associates included Krassin, who was until the Bolshevik Revolution (when he changed color to emerge as a leading Bolshevik) Russian manager of Siemens- Schukert in Petrograd; Carl Furstenberg, minister of finance in the first Bolshevik government; and Max May, vice president in charge of foreign operations for Guaranty Trust of New York.
Olof Aschberg thought so highly of Max May that a photograph of May is included in Aschberg's book.
In the summer of 1916 Olof Aschberg was in New York representing both Nya Banken and Pierre Bark, the tsarist minister of finance.
Aschberg's prime business in New York, according to the New York Times (August 4, 1916), was to negotiate a $50 million loan for Russia with an American banking syndicate headed by Stillman's National City Bank.
This business was concluded on June 5, 1916; the results were a Russian credit of $50 million in New York at a bank charge of 7 1/2 percent per annum, and a corresponding 150-million ruble credit for the NCB syndicate in Russia.
The New York syndicate then turned around and issued 6 1/2 percent certificates in its own name in the U.S. market to the amount of $50 million.
Thus, the NCB syndicate made a profit on the $50 million loan to Russia, floated it on the American market for another profit, and obtained a 150-million-ruble credit in Russia.
During his New York visit on behalf of the tsarist Russian government, Aschberg made some prophetic comments concerning the future for America in Russia:
The opening for American capital and American initiative, with the awakening brought by the war, will be country- wide when the struggle is over.
There are now many Americans in Petrograd, representatives of business firms, keeping in touch with the situation, and as soon as the change comes a huge American trade with Russia should spring up.
OLOF ASCHBERG IN THE BOLSHEVIK REVOLUTION
While this tsarist loan operation was being floated in New York, Nya Banken and Olof Aschberg were funneling funds from the German government to Russian revolutionaries, who would eventually bring down the "Kerensky committee" and establish the Bolshevik regime.
The evidence for Olof Aschberg's intimate connection with financing the Bolshevik Revolution comes from several sources, some of greater value than others.
The Nya Banken and Olof Aschberg are prominently cited in the Sisson papers (see chapter three); however, George Kennan has systematically analyzed these papers and shown them to be forged, although they are probably based in part on authentic material.
Other evidence originates with Colonel B. V. Nikitine, in charge of counterintelligence in the Kerensky government, and consists of twenty-nine telegrams transmitted from Stockholm to Petrograd, and vice versa, regarding financing of the Bolsheviks.
Three of these telegrams refer to banks — telegrams 10 and 11 refer to Nya Banken, and telegram 14 refers to the Russo-Asiatic Bank in Petrograd.
Telegram 10 reads as follows:
Gisa Furstenberg Saltsjobaden.
Funds very low cannot assist if really urgent give 500 as last payment pencils huge loss original hopeless instruct Nya Banken cable further 100 thousand Sumenson.
Telegram 11 reads:
Kozlovsky Sergiev skaya 81.
First letters received Nya Banken telegraphed cable who Soloman offering local telegraphic agency refers to Bronck Savelievich Avilov.
Furstenberg was the intermediary between Parvus (Alexander I. Helphand) and the German government.
About these transfers, Michael Futrell concludes:
It was discovered that during the last few months she [Evegeniya Sumenson] had received nearly a million dollars.
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