Antony C. Sutton - WALL STREET AND THE BOLSHEVIK REVOLUTION-B
Chapter IIILENIN AND GERMAN ASSISTANCE FOR THE BOLSHEVIK REVOLUTION
It was not until the Bolsheviks had received from us a steady flow of funds through various channels and under varying labels that they were in a position to be able to build up their main organ Pravda, to conduct energetic propaganda and appreciably to extend the originally narrow base of their party.Von Kühlmann, minister of foreign affairs, to the kaiser, December 3, 1917
In April 1917 Lenin and a party of 32 Russian revolutionaries, mostly Bolsheviks, journeyed by train from Switzerland across Germany through Sweden to Petrograd, Russia. They were on their way to join Leon Trotsky to "complete the revolution." Their trans-Germany transit was approved, facilitated, and financed by the German General Staff. Lenin's transit to Russia was part of a plan approved by the German Supreme Command, apparently not immediately known to the kaiser, to aid in the disintegration of the Russian army and so eliminate Russia from World War I. The possibility that the Bolsheviks might be turned against Germany and Europe did not occur to the German General Staff. Major General Hoffman has written, "We neither knew nor foresaw the danger to humanity from the consequences of this journey of the Bolsheviks to Russia."1At the highest level the German political officer who approved Lenin's journey to Russia was Chancellor Theobald von Bethmann-Hollweg, a descendant of the Frankfurt banking family Bethmann, which achieved great prosperity in the nineteenth century. Bethmann-Hollweg was appointed chancellor in 1909 and in November 1913 became the subject of the first vote of censure ever passed by the German Reichstag on a chancellor. It was Bethmann-Hollweg who in 1914 told the world that the German guarantee to Belgium was a mere "scrap of paper." Yet on other war matters — such as the use of unrestricted submarine warfare — Bethmann-Hollweg was ambivalent; in January 1917 he told the kaiser, "I can give Your Majesty neither my assent to the unrestricted submarine warfare nor my refusal." By 1917 Bethmann-Hollweg had lost the Reichstag's support and resigned — but not before approving transit of Bolshevik revolutionaries to Russia. The transit instructions from Bethmann-Hollweg went through the state secretary Arthur Zimmermann — who was immediately under Bethmann-Hollweg and who handled day-to-day operational details with the German ministers in both Bern and Copenhagen — to the German minister to Bern in early April 1917. The kaiser himself was not aware of the revolutionary movement until after Lenin had passed into Russia.While Lenin himself did not know the precise source of the assistance, he certainly knew that the German government was providing some funding. There were, however, intermediate links between the German foreign ministry and Lenin, as the following shows:
Although Chancellor Bethmann-Hollweg was the final authority for Lenin's transfer, and although Lenin was probably aware of the German origins of the assistance, Lenin cannot be termed a German agent. The German Foreign Ministry assessed Lenin's probable actions in Russia as being consistent with their own objectives in the dissolution of the existing power structure in Russia. Yet both parties also had hidden objectives: Germany wanted priority access to the postwar markets in Russia, and Lenin intended to establish a Marxist dictatorship.From Berlin Zimmermann and Bethmann-Hollweg communicated with the German minister in Copenhagen, Brockdorff-Rantzau. In turn, Brockdorff-Rantzau was in touch with Alexander Israel Helphand (more commonly known by his alias, Parvus), who was located in Copenhagen.2 Parvus was the connection to Jacob Furstenberg, a Pole descended from a wealthy family but better known by his alias, Ganetsky. And Jacob Furstenberg was the immediate link to Lenin.The idea of using Russian revolutionaries in this way can be traced back to 1915. On August 14 of that year, Brockdorff-Rantzau wrote the German state undersecretary about a conversation with Helphand (Parvus), and made a strong recommendation to employ Helphand, "an extraordinarily important man whose unusual powers I feel we must employ for duration of the war .... "3 Included in the report was a warning: "It might perhaps be risky to want to use the powers ranged behind Helphand, but it would certainly be an admission of our own weakness if we were to refuse their services out of fear of not being able to direct them."4Brockdorff-Rantzau's ideas of directing or controlling the revolutionaries parallel, as we shall see, those of the Wall Street financiers. It was J.P. Morgan and the American International Corporation that attempted to control both domestic and foreign revolutionaries in the United States for their own purposes.A subsequent document5 outlined the terms demanded by Lenin, of which the most interesting was point number seven, which allowed "Russian troops to move into India"; this suggested that Lenin intended to continue the tsarist expansionist program. Zeman also records the role of Max Warburg in establishing a Russian publishing house and adverts to an agreement dated August 12, 1916, in which the German industrialist Stinnes agreed to contribute two million rubles for financing a publishing house in Russia.6Consequently, on April 16, 1917, a trainload of thirty-two, including Lenin, his wife Nadezhda Krupskaya, Grigori Zinoviev, Sokolnikov, and Karl Radek, left the Central Station in Bern en route to Stockholm. When the party reached the Russian frontier only Fritz Plattan and Radek were denied entrance into Russia. The remainder of the party was allowed to enter. Several months later they were followed by almost 200 Mensheviks, including Martov and Axelrod.It is worth noting that Trotsky, at that time in New York, also had funds traceable to German sources. Further, Von Kuhlmann alludes to Lenin's inability to broaden the base of his Bolshevik party until the Germans supplied funds. Trotsky was a Menshevik who turned Bolshevik only in 1917. This suggests that German funds were perhaps related to Trotsky's change of party label.
THE SISSON DOCUMENTS
In early 1918 Edgar Sisson, the Petrograd representative of the U.S. Committee on Public Information, bought a batch of Russian documents purporting to prove that Trotsky, Lenin, and the other Bolshevik revolutionaries were not only in the pay of, but also agents of, the German government.These documents, later dubbed the "Sisson Documents," were shipped to the United States in great haste and secrecy. In Washington, D.C. they were submitted to the National Board for Historical Service for authentication. Two prominent historians, J. Franklin Jameson and Samuel N. Harper, testified to their genuineness. These historians divided the Sisson papers into three groups. Regarding Group I, they concluded:We have subjected them with great care to all the applicable tests to which historical students are accustomed and . . . upon the basis of these investigations, we have no hesitation in declaring that we see no reason to doubt the genuineness or authenticity of these fifty-three documents.7The historians were less confident about material in Group II. This group was not rejected as. outright forgeries, but it was suggested that they were copies of original documents. Although the historians made "no confident declaration" on Group III, they were not prepared to reject the documents as outright forgeries.The Sisson Documents were published by the Committee on Public Information, whose chairman was George Creel, a former contributor to the pro-Bolshevik Masses. The American press in general accepted the documents as authentic. The notable exception was the New York Evening Post, at that time owned by Thomas W. Lamont, a partner in the Morgan firm. When only a few installments had been published, the Post challenged the authenticity of all the documents.8We now know that the Sisson Documents were almost all forgeries: only one or two of the minor German circulars were genuine. Even casual examination of the German letterhead suggests that the forgers were unusually careless forgers perhaps working for the gullible American market. The German text was strewn with terms verging on the ridiculous: for example, Bureau instead of the German word Büro; Central for the German Zentral; etc.That the documents are forgeries is the conclusion of an exhaustive study by George Kennan9 and of studies made in the 1920s by the British government. Some documents were based on authentic information and, as Kennan observes, those who forged them certainly had access to some unusually good information. For example, Documents 1, 54, 61, and 67 mention that the Nya Banken in Stockholm served as the conduit for Bolshevik funds from Germany. This conduit has been confirmed in more reliable sources. Documents 54, 63, and 64 mention Furstenberg as the banker-intermediary between the Germans and the Bolshevists; Furstenberg's name appears elsewhere in authentic documents. Sisson's Document 54 mentions Olof Aschberg, and Olof Aschberg by his own statements was the "Bolshevik Banker." Aschberg in 1917 was the director of Nya Banken. Other documents in the Sisson series list names and institutions, such as the German Naptha-Industrial Bank, the Disconto Gesellschaft, and Max Warburg, the Hamburg banker, but hard supportive evidence is more elusive. In general, the Sisson Documents, while themselves outright forgeries, are nonetheless based partly on generally authentic information.One puzzling aspect in the light of the story in this book is that the documents came to Edgar Sisson from Alexander Gumberg (alias Berg, real name Michael Gruzenberg), the Bolshevik agent in Scandinavia and later a confidential assistant to Chase National Bank and Floyd Odium of Atlas Corporation. The Bolshevists, on the other hand, stridently repudiated the Sisson material. So did John Reed, the American representative on the executive of the Third International and whose paycheck came from Metropolitan magazine, which was owned by J.P. Morgan interests.10 So did Thomas Lamont, the Morgan partner who owned the New York Evening Post. There are several possible explanations. Probably the connections between the Morgan interests in New York and such agents as John Reed and Alexander Gumberg were highly flexible. This could have been a Gumberg maneuver to discredit Sisson and Creel by planting forged documents; or perhaps Gumberg was working in his own interest.The Sisson Documents "prove" exclusive German involvement with the Bolsheviks. They also have been used to "prove" a Jewish-Bolshevik conspiracy theory along the lines of that of the Protocols of Zion. In 1918 the U.S. government wanted to unite American opinion behind an unpopular war with Germany, and the Sisson Documents dramatically "proved" the exclusive complicity of Germany with the Bolshevists. The documents also provided a smoke screen against public knowledge of the events to be described in this book.
THE TUG-OF-WAR IN WASHINGTON11
A review of documents in the State Department Decimal File suggests that the State Department and Ambassador Francis in Petrograd were quite well informed about the intentions and progress of the Bolshevik movement. In the summer of 1917, for example, the State Department wanted to stop the departure from the U.S. of "injurious persons" (that is, returning Russian revolutionaries) but was unable to do so because they were using new Russian and American passports. The preparations for the Bolshevik Revolution itself were well known at least six weeks before it came about. One report in the State Department files states, in regard to the Kerensky forces, that it was "doubtful whether government . . . [can] suppress outbreak." Disintegration of the Kerensky government was reported throughout September and October as were Bolshevik preparations for a coup. The British government warned British residents in Russia to leave at least six weeks before the Bolshevik phase of the revolution.The first full report of the events of early November reached Washington on December 9, 1917. This report described the low-key nature of the revolution itself, mentioned that General William V. Judson had made an unauthorized visit to Trotsky, and pointed out the presence of Germans in Smolny — the Soviet headquarters.On November 28, 1917, President Woodrow Wilson ordered no interference with the Bolshevik Revolution. This instruction was apparently in response to a request by Ambassador Francis for an Allied conference, to which Britain had already agreed. The State Department argued that such a conference was impractical. There were discussions in Paris between the Allies and Colonel Edward M. House, who reported these to Woodrow Wilson as "long and frequent discussions on Russia." Regarding such a conference, House stated that England was "passively willing," France "indifferently against," and Italy "actively so." Woodrow Wilson, shortly thereafter, approved a cable authored by Secretary of State Robert Lansing, which provided financial assistance for the Kaledin movement (December 12, 1917). There were also rumors filtering into Washington that "monarchists working with the Bolsheviks and same supported by various occurrences and circumstances"; that the Smolny government was absolutely under control of the German General Staff; and rumors elsewhere that "many or most of them [that is, Bolshevists] are from America."In December, General Judson again visited Trotsky; this was looked upon as a step towards recognition by the U.S., although a report dated February 5, 1918, from Ambassador Francis to Washington, recommended against recognition. A memorandum originating with Basil Miles in Washington argued that "we should deal with all authorities in Russia including Bolsheviks." And on February 15, 1918, the State Department cabled Ambassador Francis in Petrograd, stating that the "department desires you gradually to keep in somewhat closer and informal touch with the Bolshevik authorities using such channels as will avoid any official recognition."The next day Secretary of State Lansing conveyed the following to the French ambassador J. J. Jusserand in Washington: "It is considered inadvisable to take any action which will antagonize at this time any of the various elements of the people which now control the power in Russia .... "12On February 20, Ambassador Francis cabled Washington to report the approaching end of the Bolshevik government. Two weeks later, on March 7, 1918, Arthur Bullard reported to Colonel House that German money was subsidizing the Bolsheviks and that this subsidy was more substantial than previously thought. Arthur Bullard (of the U.S. Committee on Public Information) argued: "we ought to be ready to help any honest national government. But men or money or equipment sent to the present rulers of Russia will be used against Russians at least as much as against Germans."13This was followed by another message from Bullard to Colonel House: "I strongly advise against giving material help to the present Russian government. Sinister elements in Soviets seem to be gaining control."But there were influential counterforces at work. As early as November 28, 1917, Colonel House cabled President Woodrow Wilson from Paris that it was "exceedingly important" that U.S. newspaper comments advocating that "Russia should be treated as an enemy" be "suppressed." Then next month William Franklin Sands, executive secretary of the Morgan-controlled American International Corporation and a friend of the previously mentioned Basil Miles, submitted a memorandum that described Lenin and Trotsky as appealing to the masses and that urged the U.S. to recognize Russia. Even American socialist Walling complained to the Department of State about the pro-Soviet attitude of George Creel (of the U.S. Committee on Public Information), Herbert Swope, and William Boyce Thompson (of the Federal Reserve Bank of New York).On December 17, 1917, there appeared in a Moscow newspaper an attack on Red Cross colonel Raymond Robins and Thompson, alleging a link between the Russian Revolution and American bankers:Why are they so interested in enlightenment? Why was the money given the socialist revolutionaries and not to the constitutional democrats? One would suppose the latter nearer and dearer to hearts of bankers.The article goes on to argue that this was because American capital viewed Russia as a future market and thus wanted to get a firm foothold. The money was given to the revolutionaries becausethe backward working men and peasants trust the social revolutionaries. At the time when the money was passed the social revolutionaries were in power and it was supposed they would remain in control in Russia for some time.Another report, dated December 12, 1917, and relating to Raymond Robins, details "negotiation with a group of American bankers of the American Red Cross Mission"; the "negotiation" related to a payment of two million dollars. On January 22, 1918, Robert L Owen, chairman of the U.S. Senate Committee on Banking and Currency and linked to Wall Street interests, sent a letter to Woodrow Wilson recommending de facto recognition of Russia, permission for a shipload of goods urgently needed in Russia, the appointment of representatives to Russia to offset German influence, and the establishment of a career-service group in Russia.This approach was consistently aided by Raymond Robins in Russia. For example, on February 15, 1918, a cable from Robins in Petrograd to Davison in the Red Cross in Washington (and to be forwarded to William Boyce Thompson) argued that support be given to the Bolshevik authority for as long as possible, and that the new revolutionary Russia will turn to the United States as it has "broken with the German imperialism." According to Robins, the Bolsheviks wanted United States assistance and cooperation together with railroad reorganization, because "by generous assistance and technical advice in reorganizing commerce and industry America may entirely exclude German commerce during balance of war."In brief, the tug-of-war in Washington reflected a struggle between, on one side, old-line diplomats (such as Ambassador Francis) and lower-level departmental officials, and, on the other, financiers like Robins, Thompson, and Sands with allies such as Lansing and Miles in the State Department and Senator Owen in the Congress.Footnotes:1Max Hoffman, War Diaries and Other Papers (London: M. Secker, 1929), 2:177.2Z. A. B. Zeman and W. B. Scharlau, The Merchant of Revolution.. The Life of A1exander Israel Helphand (Parvus), 1867-1924 (New York: Oxford University Press, 1965).3Z. A. B. Zeman, Germany and the Revolution in Russia, 1915-1918. Documents from the Archives of the German Foreign Ministry (London: Oxford University Press, 1958), p. ????5.4Ibid.5Ibid., p. 6, doc. 6, reporting a conversation with the Fstonian intermediary Keskula.6Ibid., p. 92, n. 3.7U.S., Committee on Public Information, The German-Bolshevik Conspiracy, War Information Series, no. 20, October 1918.8New York Evening Post, September 16-18, 21; October 4, 1918. It is also interesting, but not conclusive of anything, that the Bolsheviks also stoutly questioned the authenticity of the documents.9George F. Kennan, "The Sisson Documents," Journal of Modern History 27-28 (1955-56): 130-154.10John Reed, The Sisson Documents (New York: Liberator Publishing, n.d.).11This part is based on section 861.00 o[ the U.S. State Dept. Decimal File, also available as National Archives rolls 10 and 11 of microcopy 316.12U.S. State Dept. Decimal File, 861.00/1117a. The same message was conveyed to the Italian ambassador.13See Arthur Bullard papers at Princeton University.
Chapter IVWALL 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.l 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.2American 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 ....3Congressman Rainey went on to state that only ten or twelve of the top Panamanian revolutionists plus "the officers of the Panama Railroad & Steamship Co., who were under the control of William Nelson Cromwell, of New York and the State Department officials in Washington," knew about the impending revolution.4 The purpose of the revolution was to deprive Colombia, of which Panama was then a part, of $40 million and to acquire control of the Panama Canal.The best-documented example of Wall Street intervention in revolution is the operation of a New York syndicate in the Chinese revolution of 1912, which was led by Sun Yat-sen. Although the final gains of the syndicate remain unclear, the intention and role of the New York financing group are fully documented down to amounts of money, information on affiliated Chinese secret societies, and shipping lists of armaments to be purchased. The New York bankers syndicate for the Sun Yat-sen revolution included Charles B. Hill, an attorney with the law firm of Hunt, Hill & Betts. In 1912 the firm was located at 165 Broadway, New York, but in 1917 it moved to 120 Broadway (see chapter eight for the significance of this address). Charles B. Hill was director of several Westinghouse subsidiaries, including Bryant Electric, Perkins Electric Switch, and Westinghouse Lamp — all affiliated with Westinghouse Electric whose New York office was also located at 120 Broadway. Charles R. Crane, organizer of Westinghouse subsidiaries in Russia, had a known role in the first and second phases of the Bolshevik Revolution (see page 26).The work of the 1910 Hill syndicate in China is recorded in the Laurence Boothe Papers at the Hoover Institution.5 These papers contain over 110 related items, including letters of Sun 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,6 was accused during his May 1917 trial in New York City of attempting to "embroil" the U.S. with Mexico and Japan in order to divert ammunition then flowing to the Allies in Europe.7 Payment for the ammunition that was shipped from the United States to the Mexican revolutionary Pancho Villa, was made through Guaranty Trust Company. Von Rintelen's adviser, Sommerfeld, paid $380,000 via Guaranty Trust and Mississippi Valley Trust Company to the Western Cartridge Company of Alton, Illinois, for ammunition shipped to El Paso, for forwarding to Villa. This was in mid-1915. On January 10, 1916, Villa murdered seventeen American miners at Santa Isabel and on March 9, 1916, Villa raided Columbus, New Mexico, and killed eighteen more Americans.Wall Street involvement in these Mexican border raids was the subject of a letter (October 6, 1916) from Lincoln Steffens, an American Communist, to Colonel House, an aide' to Woodrow Wilson:My dear Colonel House:Just before I left New York last Monday, I was told convincingly that "Wall Street" had completed arrangements for one more raid of Mexican bandits into the United States: to be so timed and so atrocious that it would settle the election ....8Once in power in Mexico, the Carranza government purchased additional arms in the United States. The American Gun Company contracted to ship 5,000 Mausers and a shipment license was issued by the War Trade Board for 15,000 guns and 15,000,000 rounds of ammunition. The American ambassador to Mexico, Fletcher, "flatly refused to recommend or sanction the shipment of any munitions, rifles, etc., to Carranza."9 However, intervention by Secretary of State Robert Lansing reduced the barrier to one of a temporary delay, and "in a short while . . . [the American Gun Company] would be permitted to make the shipment and deliver."10The raids upon the U.S. by the Villa and the Carranza forces were reported in the New York Times as the "Texas Revolution" (a kind of dry run for the Bolshevik Revolution) and were undertaken jointly by Germans and Bolsheviks. The testimony of John A. Walls, district attorney of Brownsville, Texas, before the 1919 Fall Committee yielded documentary evidence of the link between Bolshevik interests in the United States, German activity, and the Carranza forces in Mexico.11 Consequently, the Carranza government, the first in the world with a Soviet-type constitution (which was written by Trotskyites), was a government with support on Wall Street. The Carranza revolution probably could not have succeeded without American munitions and Carranza would not have remained in power as long as he did without American help.12Similar 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.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.13Documents 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.
FRANCIS, AMERICAN AMBASSADOR14
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.
Note:—Entire Message in Green Cipher.
"Olof" in the cable was Olof Aschberg, Swedish banker and head of the Nya Banken in Stockholm. Aschberg had been in New York in 1915 conferring with the Morgan firm on these Russian loans. Now, in 1916, he was in Petrograd with Rolph Marsh of Guaranty Trust and Samuel MacRoberts and Rich of National City Bank ("City" in cable) arranging loans for a Morgan-Rockefeller consortium. The following year, Aschberg, as we shall see later, would be known as the "Bolshevik Banker," and his own memoirs reproduce evidence of his right to the title.The State Department files also contain a series of cables between Ambassador Francis, Acting Secretary Frank Polk, and Secretary of State Robert Lansing concerning the legality and propriety of transmitting National City Bank and Guaranty Trust cables at public expense. On May 25, 1916, Ambassador Francis cabled Washington as follows and referred to the two previous cables:569, May 25, one p.m.My telegram 563 and 565 May twenty-fourth are sent for local representatives of institutions addressed in the hope of consummating loan which would largely increase international trade and greatly benefit [diplomatic relations?]. Prospect for success promising. Petrograd representatives consider terms submitted very satisfactory but fear such representations to their institutions would prevent consummation loan if Government here acquainted these proposals.
FRANCIS, AMERICAN AMBASSADOR.16
The basic reason cited by Francis for facilitating the cables is "the hope of consummating loan which would largely increase international trade." Transmission of commercial messages using State Department facilities had been prohibited, and on June 1, 1916, Polk cabled Francis:842In view of Department's regulation contained in its circular telegraphic instruction of March fifteenth, (discontinuance of forwarding Commercial messages)17 1915, please explain why messages in your 563, 565 and 575, should be communicated.Hereafter please follow closely Department's instructions.
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, the "Bolshevik Banker" (or "Bankier der Weltrevolution," as he has been called in the German press), was owner of the Nya Banken, founded 1912 in Stockholm. His codirectors included prominent members of Swedish cooperatives and Swedish socialists, including G. W. Dahl, K. G. Rosling, and C. Gerhard Magnusson.18 In 1918 Nya Banken was placed on the Allied black-list for its financial operations in behalf of Germany. In response to the blacklisting, Nya Banken changed its name to Svensk Ekonomiebolaget. The bank remained under the control of Aschberg, and was mainly owned by him. The bank's London agent was the British Bank of North Commerce, whose chairman was Earl Grey, former associate of Cecil Rhodes. Others in Aschberg's interesting circle of business associates included Krassin, who was until the Bolshevik Revolution (when he changed color to emerge as a leading Bolshevik) Russian manager of Siemens-Schukert in Petrograd; Carl Furstenberg, minister of finance in the first Bolshevik government; and Max May, vice president in charge of foreign operations for Guaranty Trust of New York. Olof Aschberg thought so highly of Max May that a photograph of May is included in Aschberg's book.19In 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.20While 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 Sergievskaya 81. First letters received Nya Banken telegraphed cable who Soloman offering local telegraphic agency refers to Bronck Savelievich Avilov.Fürstenberg was the intermediary between Parvus (Alexander I. Helphand) and the German government. About these transfers, Michael Futrell concludes:It was discovered that during the last few months she [Evegeniya Sumenson] had received nearly a million rubles from Furstenberg through the Nya Banken in Stockholm, and that this money came from German sources.21Telegram 14 of the Nikitine series reads: "Furstenberg Saltsjöbaden. Number 90 period hundred thousand into Russo-Asiatic Sumenson." The U.S. representative for Russo-Asiatic was MacGregor Grant Company at 120 Broadway, New York City, and the bank was financed by Guaranty Trust in the U.S. and Nya Banken in Sweden.Another mention of the Nya Banken is in the material "The Charges Against the Bolsheviks," which was published in the Kerensky period. Particularly noteworthy in that material is a document signed by Gregory Alexinsky, a former member of the Second State Duma, in reference to monetary transfers to the Bolsheviks. The document, in part, reads as follows:In accordance with the information just received these trusted persons in Stockholm were: the Bolshevik Jacob Furstenberg, better known under the name of "Hanecki" (Ganetskii), and Parvus (Dr. Helfand); in Petrograd: the Bolshevik attorney, M. U. Kozlovsky, a woman relative of Hanecki — Sumenson, engaged in speculation together with Hanecki, and others. Kozlovsky is the chief receiver of German money, which is transferred from Berlin through the "Disconto-Gesellschaft" to the Stockholm "Via Bank," and thence to the Siberian Bank in Petrograd, where his account at present has a balance of over 2,000,000 rubles. The military censorship has unearthed an uninterrupted exchange of telegrams of a political and financial nature between the German agents and Bolshevik leaders [Stockholm-Petrograd].22Further, there is in the State Dept. files a Green Cipher message from the U.S. embassy in Christiania (named Oslo, 1925), Norway, dated February 21, 1918, that reads: "Am informed that Bolshevik funds are deposited in Nya Banken, Stockholm, Legation Stockholm advised. Schmedeman."23Finally, Michael Furtell, who interviewed Olof Aschberg just before his death, concludes that Bolshevik funds were indeed transferred from Germany through Nya Banken and Jacob Furstenberg in the guise of payment for goods shipped. According to Futrell, Aschberg confirmed to him that Furstenberg had a commercial business with Nya Banken and that Furstenberg had also sent funds to Petrograd. These statements are authenticated in Aschberg's memoirs (see page 70). In sum, Aschberg, through his Nya Banken, was undoubtedly a channel for funds used in the Bolshevik Revolution, and Guaranty Trust was indirectly linked through its association with Aschberg and its interest in MacGregor Grant Co., New York, agent of the Russo-Asiatic Bank, another transfer vehicle.Several years later, in the fall of 1922, the Soviets formed their first international bank. It was based on a syndicate that involved the former Russian private bankers and some new investment from German, Swedish, American, and British bankers. Known as the Ruskombank (Foreign Commercial Bank or the Bank of Foreign Commerce), it was headed by Olof Aschberg; its board consisted of tsarist private bankers, representatives of German, Swedish, and American banks, and, of course, representatives of the Soviet Union. The U.S. Stockholm legation reported to Washington on this question and noted, in a reference to Aschberg, that "his reputation is poor. He was referred to in Document 54 of the Sisson documents and Dispatch No. 138 of January 4, 1921 from a legation in Copenhagen."24The foreign banking consortium involved in the Ruskombank represented mainly British capital. It included Russo-Asiatic Consolidated Limited, which was one of the largest private creditors of Russia, and which was granted £3 million by the Soviets to compensate for damage to its properties in the Soviet Union by nationalization. The British government itself had already purchased substantial interests in the Russian private banks; according to a State Department report, "The British Government is heavily invested in the consortium in question."25The consortium was granted extensive concessions in Russia and the bank had a share capital of ten million gold rubles. A report in the Danish newspaper National Titende stated that "possibilities have been created for cooperation with the Soviet government where this, by political negotiations, would have been impossible."26 In other words, as the newspaper goes on to say, the politicians had failed to achieve cooperation with the Soviets, but "it may be taken for granted that the capitalistic exploitation of Russia is beginning to assume more definite forms."27In early October 1922 Olof Aschberg met in Berlin with Emil Wittenberg, director of the Nationalbank fur Deutschland, and Scheinmann, head of the Russian State Bank. After discussions concerning German involvement in the Ruskombank, the three bankers went to Stockholm and there met with Max May, vice president of the Guaranty Trust Company. Max May was then designated director of the Foreign Division of the Ruskombank, in addition to Schlesinger, former head of the Moscow Merchant Bank; Kalaschkin, former head of the Junker Bank; and Ternoffsky, former head of the Siberian Bank. The last bank had been partly purchased by the British government in 1918. Professor Gustav Cassell of Sweden agreed to act as adviser to Ruskombank. Cassell was quoted in a Swedish newspaper (Svenskadagbladet of October 17, 1922) as follows:That a bank has now been started in Russia to take care of purely banking matters is a great step forward, and it seems to me that this bank was established in order to do something to create a new economic life in Russia. What Russia needs is a bank to create internal and external commerce. If there is to be any business between Russia and other countries there must be a bank to handle it. This step forward should be supported in every way by other countries, and when I was asked my advice I stated that I was prepared to give it. I am not in favor of a negative policy and believe that every opportunity should be seized to help in a positive reconstruction. The great question is how to bring the Russian exchange back to normal. It is a complicated question and will necessitate thorough investigation. To solve this problem I am naturally more than willing to take part in the work. To leave Russia to her own resources and her own fate is folly.28The former Siberian Bank building in Petrograd was used as the head office of the Ruskombank, whose objectives were to raise short-term loans in foreign countries, to introduce foreign capital into the Soviet Union, and generally to facilitate Russian overseas trade. It opened on December 1, 1922, in Moscow and employed about 300 persons.In Sweden Ruskombank was represented by the Svenska Ekonomibolaget of Stockholm, Olof Aschberg's Nya Banken under a new name, and in Germany by the Garantie und Creditbank fur Den Osten of Berlin. In the United States the bank was represented by the Guaranty Trust Company of New York. On opening the bank, Olof Aschberg commented:The new bank will look after the purchasing of machinery and raw material from England and the United States and it will give guarantees for the completion of contracts. The question of purchases in Sweden has not yet arisen, but it is hoped that such will be the case later on.29On joining Ruskombank, Max May of Guaranty Trust made a similar statement:The United States, being a rich country with well developed industries, does not need to import anything from foreign countries, but... it is greatly interested in exporting its products to other countries and considers Russia the most suitable market for that purpose, taking into consideration the vast requirements of Russia in all lines of its economic life.30May stated that the Russian Commercial Bank was "very important" and that it would "largely finance all lines of Russian industries."From the very beginning the operations of the Ruskombank were restricted by the Soviet foreign-trade monopoly. The bank had difficulties in obtaining advances on Russian goods deposited abroad. Because they were transmitted in the name of Soviet trade delegations, a great deal of Ruskombank funds were locked up in deposits with the Russian State Bank. Finally, in early 1924 the Russian Commercial Bank was fused with the Soviet foreign-trade commissariat, and Olof Aschberg was dismissed from his position at the bank because, it was claimed in Moscow, he had misused bank funds. His original connection with the bank was because of his friendship with Maxim Litvinov. Through this association, so runs a State Department report, Olof Aschberg had access to large sums of money for the purpose of meeting payments on goods ordered by Soviets in Europe:These sums apparently were placed in the Ekonomibolaget, a private banking company, owned by Mr. Aschberg. It is now alledged [sic] that a large portion of these funds were employed by Mr. Aschberg for making investments for his personal account and that he is now endeavoring to maintain his position in the bank through his possession of this money. According to my informant Mr. Aschberg has not been the sole one to profit by his operations with the Soviet funds, but has divided the gains with those who are responsible for his appointment in the Russian Commerce Bank, among them being Litvinoff.31Ruskombank then became Vneshtorg, by which it is known today.We now have to retrace our steps and look at the activities of Aschberg's New York associate, Guaranty Trust Company, during World War I, to lay the foundation for examination of its role in the revolutionary era in Russia.During World War I Germany raised considerable funds in New York for espionage and covert operations in North America and South America. It is important to record the flow of these funds because it runs from the same firms — Guaranty Trust and American International Corporation — that were involved in the Bolshevik Revolution and its aftermath. Not to mention the fact (outlined in chapter three) that the German government also financed Lenin's revolutionary activities.A summary of the loans granted by American banks to German interests in World War I was given to the 1919 Overman Committee of the United States Senate by U.S. Military Intelligence. The summary was based on the deposition of Karl Heynen, who came to the United States in April 1915 to assist Dr. Albert with the commercial and financial affairs of the German government. Heynen's official work was the transportation of goods from the United States to Germany by way of Sweden, Switzerland, and Holland. In fact, he was up to his ears in covert operations.The major German loans raised in the United States between 1915 and 1918, according to Heynen, were as follows: The first loan, of $400,000, was made about September 1914 by the investment bankers Kuhn, Loeb & Co. Collateral of 25 million marks was deposited with Max M. Warburg in Hamburg, the German affiliate of Kuhn, Loeb & Co. Captain George B. Lester of U.S. Military Intelligence told the Senate that Heynen's reply to the question "Why did you go to Kuhn, Loeb & Co?" was, "Kuhn, Loeb & Co. we considered the natural bankers of the German government and the Reichsbank."The second loan, of $1.3 million, did not come directly from the United States but was negotiated by John Simon, an agent of the Suedeutsche Disconto-Gesellschaft, to secure funds for making shipments to Germany.The third loan was from the Chase National Bank (in the Morgan group) in the amount of three million dollars. The fourth loan was from the Mechanics and Metals National Bank in the amount of one million dollars. These loans financed German espionage activities in the United States and Mexico. Some funds were traced to Sommerfeld, who was an adviser to Von Rintelen (another German espionage agent) and who was later associated with Hjalmar Schacht and Emil Wittenberg. Sommerfeld was to purchase ammunition for use in Mexico. He had an account with the Guaranty Trust Company and from this payments were made to Western Cartridge Co. of Alton, Illinois, for ammunition that was shipped to El Paso for use in Mexico by Pancho Villa's bandits. About $400,000 was expended on ammunition, Mexican propaganda, and similar activities.The then German ambassador Count Von Bernstorff has recounted his friendship with Adolph von Pavenstedt, a senior partner of Amsinck & Co., which was controlled and in November 1917 owned by American International Corporation. American International figures prominently in later chapters; its board of directors contained the key names on Wall Street: Rockefeller, Kahn, Stillman, du Pont, Winthrop, etc. According to Von Bernstorff, Von Pavenstedt was "intimately acquainted with all the members of the Embassy."33 Von Bernstorff himself regarded Von Pavenstedt as one of the most respected, "if not the most respected imperial German in New York."34 Indeed, Von Pavenstedt was "for many years a Chief pay master of the German spy system in this country."35 In other words, there is no question that Armsinck & Co., controlled by American International Corporation, was intimately associated with the funding of German wartime espionage in the United States. To clinch Von Bernstorff's last statement, there exists a photograph of a check in favor of Amsinck & Co., dated December 8, 1917 — just four weeks after the start of the Bolshevik Revolution in Russia — signed Von Papen (another German espionage operator), and having a counterfoil bearing the notation "travelling expenses on Von W [i.e., Von Wedell]." French Strothers,36 who published the photograph, has stated that this check is evidence that Von Papen "became an accessory after the fact to a crime against American laws"; it also makes Amsinck & Co. subject to a similar charge.Paul Bolo-Pasha, yet another German espionage agent, and a prominent French financier formerly in the service of the Egyptian government, arrived in New York in March 1916 with a letter of introduction to Von Pavenstedt. Through the latter, Bolo-Pasha met Hugo Schmidt, director of the Deutsche Bank in Berlin and its representative in the United States. One of Bolo-Pasha's projects was to purchase foreign newspapers so as to slant their editorials in favor of Germany. Funds for this program were arranged in Berlin in the form of credit with Guaranty Trust Company, with the credit subsequently made available to Amsinck & Co. Adolph von Pavenstedt, of Amsinck, in turn made the funds available to Bolo-Pasha.In other words, both Guaranty Trust Company and Amsinck & Co., a subsidiary of American International Corporation, were directly involved in the implementation of German espionage and other activities in the United States. Some links can be established from these firms to each of the major German operators in the U.S. — Dr. Albert, Karl Heynen, Von Rintelen, Von Papan, Count Jacques Minotto (see below), and Paul Bolo-Pasha.In 1919 the Senate Overman Committee also established that Guaranty Trust had an active role in financing German World War I efforts in an "unneutral" manner. The testimony of the U.S. intelligence officer Becker makes this clear:In this mission Hugo Schmidt [of Deutsche Bank] was very largely assisted by certain American banking institutions. It was while we were neutral, but they acted to the detriment of the British interests, and I have considerable data on the activity of the Guaranty Trust Co. in that respect, and would like to know whether the committee wishes me to go into it.SENATOR NELSON: That is a branch of the City Bank, is it not?MR. BECKER: No.SENATOR OVERMAN: If it was inimical to British interests it was unneutral, and I think you had better let it come out.SENATOR KING: Was it an ordinary banking transaction?MR. BECKER: That would be a matter of opinion. It has to do with camouflaging exchange so as to make it appear to be neutral exchange, when it was really German exchange on London. As a result of those operations in which the Guaranty Trust Co. mainly participated between August 1, 1914, and the time America entered the war, the Deutsche Banke in its branches in South America succeeded in negotiating £4,670,000 of London exchange in war time.SENATOR OVERMAN: I think that is competent.37What is really important is not so much that financial assistance was given to Germany, which was only illegal, as that directors of Guaranty Trust were financially assisting the Allies at the same time. In other words, Guaranty Trust was financing both sides of The conflict. This raises the question of morality.Count Jacques Minotto is a most unlikely but verifiable and persistent thread that links the Bolshevik Revolution in Russia with German banks, German World War I espionage in the United States, the Guaranty Trust Company in New York, the abortive French Bolshevik revolution, and the related Caillaux-Malvy espionage trials in France.Jacques Minotto was born February 17, 1891, in Berlin, the son of an Austrian father descended from Italian nobility, and a German mother. Young Minotto was educated in Berlin and then entered employment with the Deutsche Bank in Berlin in 1912. Almost immediately Minotto was sent to the United States as assistant to Hugo Schmidt, deputy director of the Deutsche Bank and its New York representative. After a year in New York, Minotto was sent by the Deutsche Bank to London, where he circulated in prominent political and diplomatic circles. At the outbreak of World War I, Minotto returned to the United States and immediately met with the German ambassador Count Von Bernstorff, after which he entered the employ of Guaranty Trust Company in New York. At Guaranty Trust, Minotto was under the direct orders of Max May, director of its foreign department and an associate of Swedish banker Olof Aschberg. Minotto was no minor bank official. The interrogatories of the Caillaux trials in Paris in 1919 established that Minotto worked directly under Max May.39 On October 25, 1914, Guaranty Trust sent Jacques Minotto to South America to make a report on the political, financial, and commercial situation. As he did in London, Washington, and New York, so Minotto moved in the highest diplomatic and political circles here. One purpose of Minotto's mission in Latin America was to establish the mechanism by which Guaranty Trust could be used as an intermediary for the previously mentioned German fund raising on the London money market, which was then denied to Germany because of World War I. Minotto returned to the United States, renewed his association with Count Von Bernstorff and Count Luxberg, and subsequently, in 1916, attempted to obtain a position with U.S. Naval Intelligence. After this he was arrested on charges of pro-German activities. When arrested Minotto was working at the Chicago plant of his father-in-law Louis Swift, of Swift & Co., meatpackers. Swift put up the security for the $50,000 bond required to free Minotto, who was represented by Henry Veeder, the Swift & Co. attorney. Louis Swift was himself arrested for pro-German activities at a later date. As an interesting and not unimportant coincidence, "Major" Harold H. Swift, brother of Louis Swift, was a member of the William Boyce Thompson 1917 Red Cross Mission to Petrograd — that is, one of the group of Wall Street lawyers and businessmen whose intimate connections with the Russian Revolution are to be described later. Helen Swift Neilson, sister of Louis and Harold Swift, was later connected with the pro-Communist Abraham Lincoln Center "Unity." This established a minor link between German banks, American. banks, German espionage, and, as we shall see later, the Bolshevik Revolution.40Joseph Caillaux was a famous (sometimes called notorious) French politician. He was also associated with Count Minotto in the latter's Latin America operations for Guaranty Trust, and was later implicated in the famous French espionage cases of 1919, which had Bolshevik connections. In 1911, Caillaux became minister of finance and later in the same year became premier of France. John Louis Malvy became undersecretary of state in the Caillaux government. Several years later Madame Caillaux murdered Gaston Calmette, editor of the prominent Paris newspaper Figaro. The prosecution charged that Madame Caillaux murdered Calmette to prevent publication of certain compromising documents. This affair resulted in the departure of Caillaux and his wife from France. The couple went to Latin America and there met with Count Minotto, the agent of the Guaranty Trust Company who was in Latin America to establish intermediaries for German finance. Count Minotto was socially connected with the Caillaux couple in Rio de Janeiro and Sao Paulo, Brazil, in Montevideo, Uruguay, and in Buenos Aires, Argentina. In other words, Count Minotto was a constant companion of the Caillaux couple while they were in Latin America.41 On returning to France, Caillaux and his wife stayed at Biarritz as guests of Paul Bolo-Pasha, who was, as we have seen, also a German espionage operator in the United States and France.42 Later, in July 1915, Count Minotto arrived in France from Italy, met with the Caillaux couple; the same year the Caillaux couple also visited Bolo-Pasha again in Biarritz. In other words, in 1915 and 1916 Caillaux established a continuing social relationship with Count Minotto and Bolo-Pasha, both of whom were German espionage agents in the United States.Bolo-Pasha's work in France was to gain influence for Germany in the Paris newspapers Le Temps and Figaro. Bolo-Pasha then went to New York, arriving February 24, 1916. Here he was to negotiate a loan of $2 million — and here he was associated with Von Pavenstedt, the prominent German agent with Amsinck & Co.43 Severance Johnson, in The Enemy Within, has connected Caillaux and Malvy to the 1918 abortive French Bolshevik revolution, and states that if the revolution had succeeded, "Malvy would have been the Trotsky of France had Caillaux been its Lenin."44 Caillaux and Malvy formed a radical socialist party in France using German funds and were brought to trial for these subversive efforts. The court interrogatories in the 1919 French espionage trials introduce testimony concerning New York bankers and their relationship with these German espionage operators. They also set forth the links between Count Minotto and Caillaux, as well as the relationship of the Guaranty Trust Company to the Deutsche Bank and the cooperation between Hugo Schmidt of Deutsche Bank and Max May of Guaranty Trust Company. The French interrogatory (page 940) has the following extract from the New York deposition of Count Minotto (page 10, and retranslated from the French):QUESTION: Under whose orders were you at Guaranty Trust?REPLY: Under the orders of Mr. Max May.QUESTION: He was a Vice President?ANSWER: He was Vice President and Director of the Foreign Department.Later, in 1922, Max May became a director of the Soviet Ruskom-bank and represented the interests of Guaranty Trust in that bank. The French interrogatory establishes that Count Minotto, a German espionage agent, was in the employ of Guaranty Trust Company; that Max May was his superior officer; and that Max May was also closely associated with Bolshevik banker Olof Aschberg. In brief: Max May of Guaranty Trust was linked to illegal fund raising and German espionage in the United States during World War I; he was linked indirectly to the Bolshevik Revolution and directly to the establishment of Ruskombank, the first international bank in the Soviet Union.It is too early to attempt an explanation for this seemingly inconsistent, illegal, and sometimes immoral international activity. In general, there are two plausible explanations: the first, a relentless search for profits; the second — which agrees with the words of Otto Kahn of Kuhn, Loeb & Co. and of American International Corporation in the epigraph to this chapter — the realization of socialist aims, aims which "should, and can, be brought about" by nonsocialist means.Footnotes:1John Moody, The Truth about the Trusts (New York: Moody Publishing, 1904).2The J. P. Morgan Company was originally founded in London as George Peabody and Co. in 1838. It was not incorporated until March 21, 1940. The company ceased to exist in April 1954 when it merged with the Guaranty Trust Company, then its most important commercial bank subsidiary, and is today known as the Morgan Guarantee Trust Company of New York.3United States, House, Committee on Foreign Affairs, The Story of Panama, Hearings on the Rainey Resolution, 1913. p. 53.4Ibid., p. 60.5Stanford, Calif. See also the Los Angeles Times, October 13, 1966.6Later codirector with Hjalmar Schacht (Hitler's banker) and Emil Wittenberg, of the Nationalbank für Deutschland.7United States, Senate, Committee on Foreign Relations, Investigation of Mexican Affairs, 1920.8Lincoln Steffens, The Letters of Lincoln Steffens (New York: Harcourt, Brace, 1941, I:3869U.S., Senate, Committee on Foreign Relations, Investigation of Mexican Affairs, 1920, pts. 2, 18, p. 681.10Ibid.11New York Times, January 23, 1919.12U.S., Senate, Committee on Foreign Relations, op. cit., pp. 795-96.13U.S., Senate, Hearings Before the Special Committee Investigating the Munitions Industry, 73-74th Cong., 1934-37, pt. 25, p. 7666.14U.S. State Dept. Decimal File, 861.51/110 (316-116-682).15U.S. State Dept. Decimal File, 861.51/112.16U.S. State Dept. Decimal File, 861.51/111.17Handwritten in parentheses.18Olof Aschberg, En Vandrande Jude Frän Glasbruksgatan (Stockholm: Albert Bonniers Förlag, n.d.), pp. 98-99, which is included in Memoarer (Stockholm: Albert Bonniers Förlag, 1946). See also Gästboken (Stockholm: Tidens Förlag, 1955) for further material on Aschberg.19Aschberg, p. 123.20New York Times, August 4, 1916.21Michael Futrell, Northern Underground (London: Faber and Faber, 1963), p. 162.22See Robert Paul Browder and Alexander F. Kerensky, The Russian Provisional government, 1917 (Stanford, Calif.: Stanford University Perss, 1961), 3: 1365. "Via Bank" is obviously Nya Banken.23U.S. State Dept. Decimal File, 861.00/1130.24U.S. State Dept. Decimal File, 861.516/129, August 28, 1922. A State Dept. report from Stockholm, dated October 9, 1922 (861.516/137), states in regard to Aschberg, "I met Mr. Aschberg some weeks ago and in the conversation with him he substantially stated all that appeared in this report. He also asked me to inquire whether he could visit the United States and gave as references some of the prominent banks. In connection with this, however, I desire to call the department's attention to Document 54 of the Sisson Documents, and also to many other dispatches which this legation wrote concerning this man during the war, whose reputation and standing is not good. He is undoubtedly working closely in connection with the Soviets, and during the entire war he was in close cooperation with the Germans" (U.S. State Dept. Decimal File, 861.516/137, Stockholm, October 9, 1922. The report was signed by Ira N. Morris).25Ibid., 861.516/130, September 13, 1922.26Ibid.27Ibid.28Ibid., 861.516/140, Stockholm, October 23, 1922.29Ibid., 861.516/147, December 8, 1922.30Ibid., 861.516/144, November 18, 1922.31Ibid., 861.316/197, Stockholm, March 7, 1924.32This section is based on the Overman Committee hearings, U.S., Senate, Brewing and Liquor Interests and German and Bolshevik Propaganda, Hearings before the Subcommittee on the Judiciary, 65th Cong., 1919, 2:2154-74.33Count Von Bernstorff, My Three Years in America (New York: Scribner's, 1920), p. 261.34Ibid.35Ibid.36French Strothers, Fighting Germany's Spies (Garden City, N.Y.: Doubleday, Page, 1918), p. 152.37 U.S., Senate, Overman Committee, 2:2009.38This section is based on the following sources (as well as those cited elsewhere): Jean Bardanne, Le Colonel Nicolai: espion de genie (Paris: Editions Siboney, n.d.); Cours de Justice, Affaire Caillaux, Loustalot et Comby: Procedure Generale Interrogatoires (Paris, 1919), pp. 349-50, 937-46; Paul Vergnet, L'Affaire Caillaux (Paris 1918), especially the chapter titled "Marx de Mannheim"; Henri Guernut, Emile Kahn, and Camille M. Lemercier,Etudes documentaires sur L'Affaire Caillaux (Paris, n.d.), pp. 1012-15; and George Adam, Treason and Tragedy: An Account of French War Trials (London: Jonathan Cape, 1929).39See p. 70.40This Interrelationship is dealt with extensively in the three-volume Overman Committee report of 1919. See bibliography.41See Rudolph Binion, Defeated Leaders (New York: Columbia University Press, 1960).42George Adam, Treason and Tragedy: An Account of French War Trials (London: Jonathan Cape, 1929).43Ibid.44The Enemy Within (London: George Allen & Unwin, 1920).