ISSN: 2158-7051 ==================== INTERNATIONAL JOURNAL OF RUSSIAN STUDIES ==================== ISSUE NO. 1 ( 2012/1 ) |
Responses of
International CAPITAL to the Russian Revolutions
K. R. BOLTON
Summary
Monopoly capitalism and socialism are by no means irreconcilable. There are sufficient historical examples of a cordial relationship between the two to question the universal validity of the ‘socialism versus capitalism’ dichotomy. There have also been circumstances in which monopoly capitalism has not been adverse to even violent social revolutions in order to overthrow systems that were considered economically antiquated and not suitable for allowing the full potential for industrialisation and capital investment.
This essay examines the response of significant sections of international capital towards both the March and the November 1917 Revolutions in Russia. This includes the funding by New York banker Jacob Schiff of revolutionary propaganda among the Russian POWs of the Russo-Japanese War that laid foundations for the revolutionary cadres of the 1917 revolutions; the enthusiasm with which the March Revolution was greeted by important sections of international finance in London and New York, the efforts of business interests to secure the diplomatic recognition of the embryonic Bolshevik Government, the aims of the American Red Cross Mission and its initiator William Boyce Thompson, the efforts of Washington Vanderlip to secure early concessions from the Soviet state, the first Soviet international bank Ruskombank and the involvement of Western capital, the first foreign concessionaire Armand Hammer and the role his father Julius had in hosting the Trotsky family in the USA, and the differing outlooks of Trotsky and Stalin towards foreign capital. Also considered is the ‘militarisation of labour’ by the Soviet state as being helpful to foreign business, and the intrinsic relationship between Big Business and revolution.
Key words: Armand Hammer, Bolshevism, Council on Foreign Relations, Czarist Russia, George Kennan, Henry Wickham Steed, Jacob Schiff, Lenin, Ruskombank, Samuel Gompers, Soviet Russia, Spengler, Stalin, Trotsky, William Boyce Thompson.
Funding the Revolutionary Cadres
There was more to funding the Russian
revolutionary movement than Stalin’s extortions and robberies. The first
process for the revolutionary overthrow of the Czarist regime was to turn the outside
world, and in particular the
The individual most responsible for turning American
opinion, including government and diplomatic opinion, against Czarist Russia was
the journalist George Kennan[1],
who was sponsored by Jacob Schiff, a senior partner in Kuhn, Loeb & Co.,
The source of the revolutionary funding “by groups in the
Mr Kennan told of the work of the Friends of Russian Freedom in the
revolution.
He said that during the Russian-Japanese war he was in
The Japanese authorities favoured it and gave him permission. After
which he sent to
“The movement was financed by a
Then was read a telegram from Jacob H Schiff, part of which is as follows: “Will you say for me to those present at tonight’s meeting how deeply I regret my inability to celebrate with the Friends of Russian Freedom the actual reward of what we had hoped and striven for these long years.”[3]
The reaction to the Russian revolution by Schiff and by
other bankers in the
May I through your columns give expression to
my joy that the Russian nation, a great and good people, have at last effected their deliverance from centuries of autocratic
oppression and through an almost bloodless revolution have now come into their
own. Praised be God on high! Jacob H. Schiff.[4]
Writing to The Evening Post in response to a
question about revolutionary
Replying to your request for my opinion of the
effects of the revolution upon Russia’s finances, I am quite convinced that
with the certainty of the development of the country’s enormous resources,
which, with the shackles removed from a great people, will follow present
events, Russia will before long take rank financially amongst the most favoured
nations in the money markets of the world.[5]
Schiff’s reply reflected the general attitude of
These bankers and industrialists are cited in these
articles as regarding the revolution as being able to eliminate pro-German
influences in the Russian government and as likely to pursue a more vigorous
course against
This
common interest in the exploitation of Russian resources beyond any national
consideration was discerned by two widely different sources, Henry Wickham
Steed of The London Times, and Samuel Gompers, the
What Gompers claimed was similarly expressed by Henry
Wickham Steed, editor of The London Times, based on his own experiences.
In a first-hand account of the Paris Peace Conference of 1919, Steed stated
that proceedings were interrupted by the return from Moscow of William C. Bullitt and Lincoln Steffens, “who had been sent to
Russia towards the middle of February by Colonel House and Mr. Lansing, for the
purpose of studying conditions, political and economic, therein for the benefit
of the American Commissioners plenipotentiary to negotiate peace.”[15]
Steed also refers to British Prime Minister Lloyd George as being likely to
have known of the
Potent international
financial interests were at work in favour of the immediate recognition of the
Bolshevists. Those influences had been largely responsible for the
Anglo-American proposal in January to call Bolshevist representatives to
In return for diplomatic recognition Tchitcherin, the Bolshevist Commissary for Foreign Affairs, was offering
“extensive commercial and economic concessions.”
Wickham Steed in alliance with The London Times’
proprietor Lord Northcliffe campaigned to expose the machinations going on to
secure recognition of the Bolsheviks by international finance, on the premise
that the post-war peace being inaugurated by Pres. Woodrow Wilson under the
banner of high moral principles, and a League of Nations, would appal American,
British and other public opinion.
Wickham Steed next relates that he was called upon by Pres.
Wilson’s primary adviser, Edward Mandel House, who was concerned at Steed’s
exposé of the relationship between the Bolshevists and international financers:
That day Colonel House asked me to call upon him. I found
him worried both by my criticism of any recognition of the Bolshevists and by
the certainty, which he had not previously realized, that if the President were
to recognize the Bolshevists in return for commercial concessions his whole
“idealism” would be hopelessly compromised as commercialism in disguise. I
pointed out to him that not only would
Wickham Steed then stated to House that it was Jacob
Schiff, Warburg and other bankers who were behind the diplomatic moves in
favour of the Bolsheviks:
I insisted that, unknown to him, the prime
movers were Jacob Schiff, Warburg, and other international financiers, who
wished above all to bolster up the Jewish Bolshevists in order to secure a
field for German and Jewish exploitation of
Wickham Steed here reveals an uncharacteristic naiveté in
stating that Edward House would not have known of the plans of Schiff,
Warburg, et al. House was throughout his career close to these same bankers and
was involved with them in setting up the influential think tank, the Council on
Foreign Relations immediately following the world war, in order to help shape
post-war US foreign policy in favour of an international orientation. It was
Schiff and Paul Warburg and other Wall Street bankers who called on House in
1913 to get House’s support for the creation of the Federal Reserve Bank.[20]
House disingenuously asked Wickham Steed to compromise; to
support a move that would supposedly secure benefits for both the pro-
Bolshevik and non-Bolshevik Russian masses in terms of humanitarian aid.
Wickham Steed agreed to consider this, but soon after talking with House found
out that British Prime Minister Lloyd George and Wilson were to proceed with
recognition the following day. Steed therefore wrote the leading article for the
…Who are the tempters that would dare whisper into the ears of the Allied and Associated Governments? They are not far removed from the men who preached peace with profitable dishonour to the British people in July, 1914. They are akin to, if not identical with, the men who sent Trotsky and some scores of associate desperadoes to ruin the Russian Revolution as a democratic, anti-German force in the spring of 1917.[21]
What is of special interest in this passage is that Wickham Steed identified Schiff, Warburg, et al as similar to or identical with those prominent individuals who allowed Trotsky in New York and Lenin in Switzerland to proceed to Russia in 1917 to foment the Bolshevik Revolution.
Charles Crane[22],
who had recently talked with
As mentioned, Col. House attempted to persuade Wickham
Steed on the idea of relations with Bolshevik Russia ostensibly for the purpose
of humanitarian aid for the Russian people. This is the type of activity that
had already been undertaken just after the Bolshevik Revolution, when the regime
was far from certain, under the guise of the American Red Cross Mission. Col.
William Boyce Thompson, a director of the NY Federal Reserve Bank, organised
the American Red Cross Mission to
We know from the files of the
The original intention of the Red Cross Mission, hastily organised by Thompson in light of revolutionary events, was “nothing less than to shore up the Provisional regime,” according to the historian William Harlane Hale, formerly of the United States Foreign Service.[27]
Thompson set himself up in royal manner in
The "Bolshevic of Wall Street"
Such was Thompson's enthusiasm for Bolshevism that he was
jocularly nicknamed “the Bolshevik of Wall Street” by others on Wall Street.
Thompson gave a lengthy interview with The New York Times just after his
four month tour with the American Red Cross Mission, lauding the Bolsheviks and
assuring the American public that the Bolsheviks were not about to make a
separate peace with Germany.[32]
The article is an interesting indication of how Wall Street viewed their
supposedly “deadly enemies”, the Bolsheviks at the time the Soviets were still
far from secure. Thompson stated that while the “reactionaries” if they assumed
power might seek peace with
Colonel Thompson is a banker and a
capitalist, and he has large manufacturing interests. He is not
a sentimentalist nor a “radical.” But he has come back from his official
visit to
While Thompson did not consider Bolshevism the final form
of government, he did see it as the most promising step towards a
“representative government” and that it was the “duty” of the
The present government in
Thompson saw the prospects of the
Bolshevik Government being transformed as it incorporated a more Centrist
position and included employers. If Bolshevism did not proceed thus, then “God
help the world,” warned Thompson.
The Times article ends: “At home in
CFR
Report
The Council on Foreign Relations (CFR) had been established in 1921 by President
Wilson's chief adviser Edward Mandel House out of a previous think tank called
The Inquiry, formed in 1917-1918 to advise Pres. Wilson on the Paris Peace
Conference of 1919. It was this conference about which Wickham Steed had
detailed his observations when he stated that there were financial interests
trying to secure the recognition of the Bolsheviks.[34]
Peter
Grosse in the semi-official history of the CFR writes of it as a think tank
combining academe and big business that had emerged from The Inquiry group:
…But it was a more discreet club of
The
CFR's report on Soviet Russia at this early period is instructive as to the
relationship that influential sections of big business wished to pursue in
regard to the Bolshevik regime. Grosse writes of this period:
Awkward in the records of The Inquiry had
been the absence of a single study or background paper on the subject of
Bolshevism. Perhaps this was simply beyond the academic imagination of the
times. Not until early 1923 could the Council summon the expertise to mobilize
a systematic examination of the Bolshevik regime, finally entrenched after
civil war in
This is not to say that certain corporations had
not already, at the earliest stages of the Bolshevik regime, sought concessions
with the new government.
Big Business and Communism:
High and Low Roads to Collectivism?
H G Wells observed first-hand a certain accord between Communism and big
business when he had visited Bolshevik Russia. Travelling to
The only Power capable of playing this
role of eleventh-hour helper to
In addressing concerns that were being expressed among Bolshevik Party “activists” at a meeting of the Moscow Organisation of the party, Lenin sought to reassure them that the Government was not selling out to foreign capitalism, but that, in view of what Lenin believed to be an inevitable war between the USA and Japan, a US interest in Kamchatka would be favourable to Soviet Russia. Lenin said of Vanderlip:
We must take advantage of the situation
that has arisen. That is the whole purpose of the
Of the meeting with Vanderlip, Lenin
indicated that it was based on a secret diplomacy that was being denied by the
US Administration, while Vandrelip himself returned to the
…I expressed the hope that friendly relations between the two states would be a basis not only for the granting of a concession, but also for the normal development of reciprocal economic assistance. It all went off in that kind of vein. Then telegrams came telling what Vanderlip had said on arriving home from abroad. Vanderlip had compared Lenin with Washington and Lincoln. Vanderlip had asked for my autographed portrait. I had declined, because when you present a portrait you write, “To Comrade So-and-so”, and I could not write, “To Comrade Vanderlip”. Neither was it possible to write: “To the Vanderlip we are signing a concession with” because that concession agreement would be concluded by the Administration when it took office. I did not know what to write. It would have been illogical to give my photograph to an out-and-out imperialist. Yet these were the kind of telegrams that arrived; this affair has clearly played a certain part in imperialist politics. When the news of the Vanderlip concessions came out, Harding—the man who has been elected President, but who will take office only next March issued an official denial, declaring that he knew nothing about it, had no dealings with the Bolsheviks and had heard nothing about any concessions. That was during the elections, and, for all we know, to confess, during elections, that you have dealings with the Bolsheviks may cost you votes. That was why he issued an official denial. He had this report sent to all the newspapers that are hostile to the Bolsheviks and are on the pay roll of the imperialist parties…[39]
This mysterious Vanderlip was in fact
Washington Vanderlip who had, according to Armand Hammer, come to
The Vanderlip syndicate holds concessions
for the exploitation of coal, oil and timber lands, fisheries, etc., east of
the 160th parallel in
Ruskombank
In 1922 Soviet Russia’s first international
bank was created, Ruskombank, headed by Olof Aschberg of the Nye Banken,
Guaranty Trust Company became intimately
involved with Soviet economic transactions. A Scotland Yard Intelligence
Report stated as early as 1919 the connection between Guaranty Trust and
Ludwig C A K Martens, head of the Soviet Bureau in
The AIC’s man in Russia at the time of the
revolutionary tumult was its executive secretary William Franklin Sands, who
was asked by US Secretary of State Robert Lansing for a report on the situation
and what the US response should be. Sand’s attitude toward the Bolsheviks was,
like that of Thompson, enthusiastic. Sands wrote a memorandum to
Hammer - First Concessionaire
One of those closely associated with Ludwig
Martens and the Soviet Bureau was Dr Julius Hammer, an emigrant from
The intimate association of the Hammer
family with Soviet Russia was to be maintained from start to finish, with an
interlude of withdrawal during the Stalinist period. Julius’ son Armand,
chairman of Occidental Petroleum Corporation, was the first foreigner to obtain
commercial concessions from the Soviet Government. Armand was in
Hammer met Trotsky, who
asked him whether “financial circles” in the
Inasmuch as
Regimented Labour
A further major factor in the enthusiasm certain capitalist interests had for the Bolsheviks was the regimentation of labour under the so-called “dictatorship of the proletariat”. The workers’ state provided foreign capitalists with a controlled workforce. Trotsky had stated:
The militarisation of labour is the indispensable basic method for the organisation of our labour forces… Is it true that compulsory labour is always unproductive?… This is the most wretched and miserable liberal prejudice: chattel slavery too was productive… Compulsory slave labour was in its time a progressive phenomenon. Labour obligatory for the whole country, compulsory for every worker, is the basis of socialism…. Wages must not be viewed from the angle of securing the personal existence of the individual worker [but should] measure the conscientiousness, and efficiency of the work of every labourer.[56]
Hammer related of his experiences in the young Soviet state that although lengthy negotiations had to be undertaken with each of the trades unions involved in an enterprise, “the great power and influence of the trade unions was not without its advantages to the employer of labor in Russia. Once the employer had signed a collective agreement with the union branch there was little risk of strikes or similar trouble.”
Breaches of the codes as negotiated could result in dismissal, with recourse by the sacked worker to a labour court which, in Hammer’s experience, did not generally find in the worker’s favour, and which would mean that there would be little chance of the sacked worker getting another job.[57]
As the Council on
Foreign Relations of 1923 had warned, however, matters favourable to foreign
capital might not last indefinitely, and this could indeed be seen with the
assumption to power of Stalin. Under Stalinism Russia did not develop as
individuals such as William Boyce Thompson had hoped. As for Hammer, the
veteran of foreign concessionaires, despite his greatly expanding and diverse
businesses in the
I never met Stalin – I
never had any desire to do so – and I never had any dealings with him. However
it was perfectly clear to me in 1930 that Stalin was not a man with whom you
could do business. Stalin believed that the state was capable of running
everything without the support of foreign concessionaires and private enterprise.
That is the main reason I left
Foreign capital did nonetheless continue to do business with the USSR[59] as best as it was able, but the promising start that some capitalists saw in the March and November revolutions for a new Russia that would replace the antiquated Czarist system with a modern economy from which they could reap the rewards was, as the 1923 CFR report warned, short-lived. Gorbachev and Yeltsin provided a brief interregnum of hope for foreign capital, to be disappointed again, with the rise of Putin and a revival of nationalism and opposition to the oligarchs. The policy of continuing economic relations with the USSR even during the era of the Cold War was promoted as a strategy in the immediate aftermath of World War II when a CFR report by George S Franklin recommended attempting to work with the USSR as much as possible, “unless and until it becomes entirely evident that the U.S.S.R. is not interested in achieving cooperation…”
The
We must take every opportunity to work with the Soviets now, when their power is still far inferior to ours, and hope that we can establish our cooperation on a firmer basis for the not so distant future when they will have completed their reconstruction and greatly increased their strength…. The policy we advocate is one of firmness coupled with moderation and patience.[60]
Since Putin, the CFR again sees
Revolutionary Nature of Capital
Should this scenario of international
capital having viewed the March and even the November Revolutions with optimism
be seen as an anomaly of history? Oswald Spengler was
one of the first historians to expose the connections between capital and
revolution. In The Decline of The West he called
socialism “capitalistic” because it does not aim to replace money-based values,
“but to
possess them”. H G Wells, it will be recalled, said something similar.
Spengler stated of socialism that it is “nothing but a trusty henchman of Big Capital, which knows perfectly
well how to make use of it”. He elaborated in a footnote:
Herein lies the secret of why all radical
(i.e. poor) parties necessarily become the tools of the money-powers, the Equites,
the Bourse. Theoretically their enemy is capital, but practically they
attack, not the Bourse, but Tradition on behalf of the Bourse.
This is as true today as it was for the Gracchuan age, and in all countries…[62]
As noted above Spengler referred revolutions as far back
as the Gracchuan age of
It was the Equites, the big-money party, which made Tiberius Gracchu’s popular movement possible at all; and as soon as that part of the reforms that was advantageous to themselves had been successfully legalized, they withdrew and the movement collapsed.[63]
In our own time we can see for ourselves the role played by “big-money” in assisting revolutions - whether one views them as for good or ill being a matter of personal perspective - by the backing George Soros in particular gives to the so-called “colour revolutions” especially in the former Soviet bloc. The Russian Revolutions were then neither the first nor the last of political upheaval to get the support of such interests.
< http://www.cfr.org/publication/9997/>
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*K. R. Bolton - Contributing writer for Foreign Policy Journal, and Fellow of the Academy of Social & Political Research, Athens.
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