Hammer's First Kremlin Connection

On October 14, 1921, Lenin wrote:

“To the Centra! Committee. . . .

“Reinstein informed me yesterday that the American millionaire [Julius] Hammer, born in Russia (he is in jail accused of an illegal abortion, in reality because of his communism), is giving a million poods of grain to the Ural workers on very favorable terms (5 percent) and taking valuables from the Urals on commission for sale in America.

“In Russia is Hammer s son (and associate), a doctor, who presented [Public Health Commissar] Semashko with surgical instruments worth $60,000. This son was in the Urals with Martens and has decided to aid the reconstruction of Urals industry.”

Armand Hammer had just returned to Moscow from an expedition to the Urals, where he had signed agreements with the regional authorities to exchange American grain for Russian goods and to operate an asbestos mine. To complete these arrangements in the coming weeks, he would require the support of two Soviet officials mentioned by Lenin. Both had known his father, Julius, in America.

Ludwig Martens had received Julius Hammer’s assistance in 1919, when he set up a “Russian Soviet Government Bureau” in New York to represent the Soviet state, and later had forwarded medical supplies to Russia through the older Hammer’s firm, the Allied Drug and Chemical Corporation. As head of the Soviet metallurgical industry, Martens had taken Armand Hammer to the

Urals, and apparently it was Martens who first interested young Hammer in the asbestos works. Now in Moscow, Martens would negotiate the final contracts. Boris Reinstein had been prominently associated with Julius Hammer in the American Socialist Labor party before the Bolshevik Revolution, and was in 1921 a functionary in the Moscow headquarters of the Communist international. It was Reinstein who first told Lenin about the Hammers. Later he would bring Armand Hammer to meet Lenin in person.

Lenin may have encouraged Armand Hammer’s plan for the asbestos mine partly out of gratitude for his offer to send grain to the famine-stricken Urals. But certainly Lenin desired to infuse Russian industry with American technology, which he considered the world’s best. Moreover, the Hammer enterprise would publicize Lenin’s policy of attracting Western investment to Russia in the form of concessions. Thus, Lenin directed Martens: “Even if fictitious, it must be a concession (asbestos, or other valuables from the Urals, or whatever you wish). It is important for us to demonstrate and publish (later, after the start of implementation), that Americans have begun taking concessions. It is important politically.” There was also strategic significance. Lenin wrote to Foreign Affairs Commissar Chicherin that because Britain and France were planning to attack Russia next spring, “supremely important for us are agreements and concessions with Americans: we have something (not inconsiderable) with [Herbert] Hoover. We almost have something with Hammer.”

Lenin appears to have valued young Hammer’s pro-Soviet connections and his seeming sympathy for the Bolshevik government. Lenin wrote to him on November 3, 1921 (in English), “Please be so kind and greet your father, Jim Larkin, [Charles] Ruthenberg, and [Isaac] Ferguson, all best comrades now in American gaols.

My best sympathy and best wishes to all them.” Lenin wrote to Armand again on May 10, 1922, “Many thanks for Your present—a very kind letter from American comrades and friends who are in prison.” Later, Lenin approved a personal letter of recommendation for the young Hammer, averring that “Allied American [Armand’s new company] differs from regular capitalist companies because of its sympathetic attitude toward Soviet Russia.”

Although Hammer, on behalf of Allied Drug and Chemical, finally signed two contracts with the Moscow authorities (a grain-goods barter and an asbestos concession), only the concession contract of November 2, 1921, need concern us here. The body of the understanding stipulated that Hammer would receive the right to mine certain Urals asbestos deposits and sell the asbestos abroad or in Russia for twenty years. On his side, Hammer undertook to put up a $50,000 deposit, adhere to a timetable, pay 10 percent of production annually to the Soviet government, observe Russian labor and other codes, and utilize the “newest Western technology.” So far the contract was interesting, but unexceptional.

However, an appendix granted the concessionaire surprising privileges. Here the Soviets agreed to provide offices, warehouses, and guards; allow employees to travel freely about Russia, and enter and leave the country at will; permit personnel to utilize government radio and telegraph stations; render every possible assistance in prompt movement of freight cars and supply private cars to transport employees; and appoint a committee of two persons competent to settle all disputes “without loss of time.”

On October 27, Lenin had queried Martens: “Why are the additional points that Reinstein and Hammer showed me (in draft) not included?” Had Hammer, dissatisfied with the results of his parleys with Martens, drafted the amendments and seen Lenin with Reinstein on October 22 in order to request these supplemental provisions? In any case, Lenin approved and the appendix was added.

The following spring, when Hammer had returned to Russia, Lenin again sought to help. In particular, Lenin instructed Stalin: “I give Armand Hammer . . . my special recommendation and ask all Central Committee members to support these persons and their enterprises absolutely.

This is a little path leading to the American ‘business’ world and we should use it in every possible way.” Lenin’s assistance was to be invaluable—in the 1970s as well as in the 1920s.

— Philip S. Gillette