Lenin’s Willing Industrialist: The Saga of Armand Hammer, Part 2: A Lucrative Relationship with Lenin and Stealing German Technology
Armand Hammer made his first fortune in Russia. In his autobiography, Hammer, he speaks without irony about how the Romanovs, “those once-powerful rulers…treated Russia as their playground and their treasure house” (140). It is hard to read about Hammer’s time in Russia without concluding that he is projecting, that he enjoyed the good life among the relics and treasures of liquidated royalty while the people outside of the palace where he resided (more on that later) were immiserated.
The power of the Politburo certainly seduced him, and even more was he seduced by the cult and charisma of Vladimir Lenin, whom he “knew personally” (Blumay 29), concluding that he had “never met a gentler, more compassionate man” (Ibid.). The Bolshevik Revolution had a profound impact on the entire Hammer family. When it happened on November 7, 1917, Armand was only nineteen years-old. His brother, Victor, who was four years younger, recalled it as “a dream come true” (Blumay 40). In his words, “A mere 11,000 men had seized control of one-sixth of the world! We saw…Lenin and Trotsky as gods” (Ibid.)—an entirely mainstream attitude among American Jews at the time.
It wasn’t enough for Armand Hammer to merely cultivate a relationship with Lenin, however. He had designs of modeling himself in the man’s image. His brother Victor claimed that “Armand began to harbor the notion that someday he could be just as powerful and important as Lenin. The only difference is that Armand wanted to be a lot richer” (Blumay 45).
Hammer established a relationship with Lenin and his credibility with the Communists by acting as his father’s proxy in deals between the Comintern and Russia. To “combat rampant inflation, the Russians began issuing gold-backed currency, the chervonetz. In order to obtain the mining concession for Armand, Julius agreed from Sing-Sing to put up $50,000 in gold as collateral, which was to be used to help underwrite the new currency” (Blumay 45). In return for acting as a conduit between his father and the Russians, Armand Hammer was granted his first major concession in Russia, ostensibly to sell wheat to help the starving Russians. This was in addition to acquiring an asbestos mining concession. Both Armand Hammer and the Communist government would profit from the business transaction. The Russians themselves didn’t get much out of the deal, especially those starving peasants from whom Hammer was nominally agreeing to import grain, in exchange for extracting money and asbestos.
Early passages in Armand Hammer’s autobiography are soaked with Hammer’s crocodile tears over the suffering of the starving, wretched masses he passed on his train-rides through the Russian countryside, but the tears of laughter falling from his brother Victor’s eyes were more genuine, as he related the real nature of Armand’s intent:
‘The grain really wasn’t going to be used to feed starving Russians but to feed our mine workers. Therefore, what we really were doing was shipping grain to our own overseas business, and we took only a five percent commission on either end.’ My flabbergasted expression made Victor laugh so hard there were tears in his eyes (Blumay 45)
Whether Armand Hammer was ever the kind of starry-eyed socialist as his father is debatable. What’s not up for debate is that after a time doing business in Moscow, Hammer learned that some in the workers’ paradise were more equal than others, and that the perks of helping Lenin establish his New Economic Policy and stabilize his currency were bountiful. “When Lenin saw what I could do for him,” Armand Hammer said, “he made sure all my needs were taken care of” (Blumay 90). Although the average Russian peasant was starving and perhaps without even a draft animal to slaughter and eat, Hammer claims that “he could buy the finest foods in specialty stores” (Ibid.). He also rode in a “chauffeur-driven limousine” (Ibid.) which chaperoned him to and from his mansion near the Kremlin. The giant house he lived in had formerly belonged to a rich beet-sugar merchant who was ejected from his home after the Revolution.
This comment on his life in the Soviet Union is reminiscent of Yuri Slezkine’s comment in The Jewish Century on the Jewish elite in the USSR during the same period:
In 1937 the prototypical Jew who moved from the Pale of Settlement to Moscow to man elite positions in the Soviet state “probably would have been living in elite housing in downtown Moscow…with access to special stores, a house in the country (dacha), and a live-in peasant nanny or maid.…At least once a year, she would have traveled to a Black Sea sanatorium or a mineral spa in the Caucasus.” (p. 256)
What makes Armand Hammer’s opulence especially perverse is that he not only knew the misery that the average Russian was enduring at this time, but he bears witness to such horrifying and sad tales in the pages of his autobiography, sometimes in the same breath that he brags about living high off the hog. He juxtaposes his own lifestyle of luxury, domestic servants, and a wine cellar stocked with vintages against stories like that of a man building his own coffin in the frozen village tundra, or sitting in a train and staring out the window at emaciated villagers and dead bodies littering the roadside. His descriptions of seeing what a payok (a sort of food coupon) could buy him, “a hunk of black bread that looked as if it was made out of mud and sawdust, and a handful of moldy potatoes” (Hammer 104–105) are intersersed with his own stories of savoring roast duck. His melodramatic lament about “shabbily dressed” (Ibid.) women with babies in tow are contrasted with the dashing figure he cuts in his “London tweeds” (Ibid.). He mentions how he would “rather starve than deprive a single one of them of the precious handful of food which was so far from adequate to their daily needs” (Ibid.), but this seems a slightly less heroic sacrifice when a few pages later he is debating whether to send his servant to the cellar for the Johannesburg stock or the standard burgundy.
When not wallowing in the pleasures of the “Bohemian wonderland” (Blumay 91) that was Lenin’s Russia, enjoying “orgies, prostitutes, and private gambling clubs” (Ibid.), Armand Hammer was experiencing the joy that came from exercising the greatest power a man can feel — a story that explains the perhaps strongest intoxicant he found that came with being friends with Lenin.
The story of how Armand had a man killed has been related many times and by many witnesses to his telling of the tale. And while rumors of Hammer’s intimidation tactics and various threats are usually a matter of speculation, this instance of killing-on-command appears to have been a point of pride for Armand Hammer, and formed part of his stock of stories. He liked to brag about it. According to his brother Victor:
Once when a railroad train carrying food to our asbestos mine was detained. … Armand complained, and the Cheka shot and killed the official who caused the delay. After another official hinted that he wanted a payoff, Armand reported him also and the Cheka arrested the man. Before they had a chance to shoot him, he committed suicide. (Blumay 91)
Hammer had entered a realm not only where terms like “capitalist” and “communist” were relativized, but where they had been rendered meaningless, both to him and to Lenin, his business partner. There were those with power and those who suffered them; finer-grained distinctions weren’t necessary.
In addition to helping Lenin in business, Hammer also allowed his transactions to act as good public relations for the Communist regime. It was in some ways simple, and reciprocal. “We were PR spokesman for the Bolshevik government,” Victor Hammer said. “In return the Soviets allowed us to make a lot of money and have one hell of a good time” (Blumay 91).
The Hammers remained under the constant surveillance of the OGPU during their time in Russia, and the brothers Hammer were never recorded to say a word against Lenin or his Revolution. Armand Hammer was the ultimate agent vliyana, or agent of influence. And while the typical agent was “a Western journalist who took bribes in return for exerting influence in his own country by writing articles” (Blumay 91), Armand would use all his business acumen and his own fortune to help Lenin and several of his successors. He would also use industrial espionage to undermine and exfiltrate company secrets from a German firm that had been in business since the eighteenth century (and is still partially in family hands after eight generations and counting, despite Hammer’s attacks on it while while working with Lenin).
According to Edward Jay Epstein, “Hammer’s pencil business was a unique enterprise” (115) in that it was the “only foreign-owned manufacturer of products for the domestic and foreign markets” in Russia and abroad. It was also an enterprise that enjoyed continuity from Lenin’s government to Stalin’s and on into the years of Nikita Khrushchev’s tenure. Moving the locus of production from its origins in Nuremberg to Moscow was no small feat. Germany had been selling military technology to Russia since at least the Treaty of Brest-Litovsk but the art of pencil-making was a craft involving fine and closely guarded trade secrets.
How did Armand Hammer manage to acquire the concession in the first place?
He circumvented local German laws “prohibiting foreign businesses from hiring workers” (Blumay 115) in possession of trade secrets by “using the corporate fronts he had set up in Berlin years earlier for shipping German aviation components to Russia” (Ibid.). Hammer had previously operated in Germany as a Schieber (profiteer) before putting down stakes in Russia. The fact that the Revolution had failed in Germany with the abortive Spartacist League putsch probably caused the Doctor to migrate eastward to where the Left had enjoyed the ultimate success. Hammer used his connections in Germany, including “lines of credit guaranteed by Soviet trade organizations” (Ibid.). With that “he bought precision tools and other equipment on the pretext that they were part of the ongoing clandestine German-Soviet rearmament effort” (Ibid.) using the temporary thaw between the great Eastern and Central powers to set up a major concession which would benefit Russia well into the Cold War years.
Buying people proved to be a bit more challenging than buying machinery, but Armand Hammer was already an old hand at using a mixture of blandishments and threats (bribery, blackmail, etc.) to get others to bend to his will. In this instance, nothing more than forged travel documents fabricated by the Soviet Embassy in Berlin were necessary to help get the ball rolling. The defecting German workers would be well-compensated and pampered, rewarded for their disloyalty to their firm by living in “steam-heated cottages” (Blumay 116) equipped with “a commissary, a clubhouse, a school, and a medical center.”
Hammer describes the destruction of the organic, multi-generational institution built by German craftsmen with the same tone of relish he adopts when talking of enjoying the high life among the heirlooms of the executed Czar and his family:
Most jobs within [the pencil factories] had been held by the same families for generations, passed from father to son in a long line of patient craftsmen, each perfect in his job. In their eagerness to retain the monopoly of pencil-making, the Fabers had been careful never to let any of their subordinates know more than one part of their complicated organization; knowledge of the whole was reserved for members of the family and a few trusted adherents. (Hammer 163)
He further boasted that “our pencils and pens were used in every school and educational institution in the Soviet Union” (Hammer 171), and most importantly “the name Hammer” (Ibid.) was stamped on every pencil and became familiar to every Russian schoolchild and bureaucrat. “When I met Nikita Khrushchev in 1961 he told me with great glee that he had learned to write using our pencils, and the same story had been told to me by a succession of Soviet leaders, including Leonid Brezhnev and Constantine Chernenko” (Ibid.).
The Hammer name would be scrubbed from the factory during Stalin’s reign, and instead named after Sacco and Vanzetti, the “anarchist martyrs of the Red Scare in America in the late twenties” (Hammer 199) who became folk heroes to everyone from Joan Baez to Upton Sinclair (new evidence suggests these “martyrs” were guilty as sin). The factory’s symbol during the Hammer tenure was the Statue of Liberty. Once Stalin assumed control of the country (and the concession) the symbol was promptly changed to the hammer-and-sickle, the same symbol after which Armand Hammer had been named.
Armand didn’t demonstrate his usual penchant for praising dictators when it came to the Man of Steel. “I never met Stalin — I never had any desire to do so — and I never had any dealings with him” (Hammer 173). Anyone tempted to attribute Hammer’s attitude to something like an objection to a little thing like mass murder is beyond naïve. Armand Hammer, after all, found Nicolai Ceausescu and Vladimir Lenin to be warm-hearted types. It’s obvious that Doctor Hammer’s prime and perhaps only objection to Joseph Stalin is that he adopted an inward-looking policy toward the U.S.S.R., and that, however brutal Uncle Joe was, he didn’t harbor the global worldview that could benefit “foreign concessionaires and private enterprise (Ibid.); “it was perfectly clear to me that Stalin was not a man with whom you could do business,” and since Hammer claimed, “business was my sole reason for being there,” he recognized that it was time for him depart from Russia.
For all of his faults (and crimes) Joseph Stalin was too pragmatic to conform to the image of a Bolshevik revolutionary that had first ignited Julius Hammer’s imagination, and then fed the desires and dreams of his eldest son. “Pop” Hammer had in fact lent “the Soviets $110,000 to buy oil machinery, and then charged them $50,000 in interest” (Blumay 39) at one point, and even went to meet the cash-poor Leon Trotsky in New York, helping the Commissar of War/Foreign Affairs exchange the negotiable securities he’d brought along for hard cash to fund the Revolution. Julius Hammer had brought along his progeny (at least one son) to the meeting, and Victor was struck by the impression the Bolshevik leader made as “‘a real intellectual and idealist. He also had a huge ego, and you couldn’t argue with him. I think Trotsky craved power and didn’t like sharing center-stage with Lenin’” (Blumay 39–40).
It is not hard to imagine that if Trotsky had not been murdered on orders from Stalin, he might have consolidated his power and (being more internationalist in the scope of his ambitions) might have helped to foment world revolution throughout the anglosphere. This alternative outcome / timeline could have resulted in even more bloodshed than that produced by Stalin, a true world revolution like the one the Hammers dreamed about since leaving Russia and arriving on America’s shores. One shudders to think, but it is not hard to imagine that in a world where roughly 10,000 men gained control of one-sixth of the planet in very short order, a similar feat could have been accomplished on American soil. No doubt the Hammers would have welcomed such an outcome, since they did everything they could to bring it to fruition. And Armand may have dealt with recalcitrant Americans in a manner similar to the one he adopted when using the Cheka to remove obstacles he found on his road to fortune in Russia.
Blumay, Carl. The Dark Side of Power: The Real Armand Hammer. Simon & Schuster, 1992
Epstein, Edward J. Dossier: The Secret History of Armand Hammer. Random House, 1996.
Hammer, Armand and Neil Lydon. Hammer: The Armand Hammer Story. Perigee Trade, 1988.
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