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Chapter One

The
Matrix

On September 18, 1920, Julius Hammer entered Sing Sing State Prison, in manacles and leg irons, as prisoner 71516. He stood naked while clerks examined his body for scars and other identifying marks. They found none. The prison's entry blotter describes him as "age 46, 5 foot 11 inches, 195 pounds, Hebrew religion."

    Julius Hammer was in fact an extraordinary man.

    He was born in the Jewish ghetto of Odessa on October 3, 1874, to Jacob and Victoria Hammer. Jacob Hammer made his living as a merchant, moving back and forth between America and Russia. Julius spent most of his youth in Russia, and when he was sixteen, he immigrated to the United States with his family. His father had already become a naturalized U.S. citizen, which made Julius a U.S. citizen.

    The Hammer family first lived in Branford, Connecticut, where Julius worked in a foundry, and in 1892 they moved to New York City's Lower East Side, where Julius found employment as a clerk in a drugstore. Like many other immigrants who came from czarist Russia in the 1890s, he was seeking a better life and the freedom America offered. As a teenager, he was quickly drawn to socialism. He assiduously read every pamphlet and polemical tract he could get his hands on. By the time he was eighteen, he had joined what was probably the most radical faction of the socialist movement, the Socialist Labor Party, whose slogan was "Down with the Political State, Up with the Industrial State." Most of its other members were like him: young, poor, andfiercely idealistic. The leader of this party was Daniel De Leon, a bearded Marxist who wore an opera cloak and advocated civil war.

    Julius's social as well as political life revolved around the Socialist Labor Party, and he became the friend and close associate of a veteran revolutionary, Boris Reinstein, who was some ten years older than he was. Reinstein had been expelled first from Russia and then from Germany, Switzerland, and France for his radical activities. In France, he had served two years in prison for his involvement in a terrorist bombing. He was now a druggist in Buffalo, New York. Julius admired Reinstein and found they had much in common. They had both come from Jewish ghettos in the same area of southern Russia. They both spoke the same languages—Russian, Yiddish, German, and English. They had both immigrated to New York in the early 1890s, and they were both dedicated to the idea of total revolution.

    Hammer met his wife-to-be, Rose Lipshitz, at a Socialist Labor Party picnic in 1897. Rose was a seamstress who was working as a waitress. She had arrived in New York from Russia about a year before Julius had. Buxom and outspoken, she immediately appealed to him. They were married later that year, and Julius adopted her four-year-old son from a previous marriage, Harry. Their first home was a small cold-water flat in a tenement on the north side of Cherry Street in lower Manhattan. Cherry Street at that time was strictly divided between Jewish and Irish immigrants: the Jews on the north side, the Irish on the south side.

    Jewish socialists often met in the evening on the rooftops of Cherry Street to discuss politics in a multitude of eastern European languages. The burning issue was assimilation: should Jews remain within their own culture and seek a Judaic form of socialism, or should they seek a nonsectarian form? The Jewish radicals subscribed to the latter position. They passionately rejected ghettoization. In doing so, as the social critic Irving Howe points out, "The Jewish radicals ... hoped to move from the yeshiva to modern culture, from shtetl to urban sophistication, from blessing the Sabbath wine to declaring the strategy of international revolution. They yearned to bleach away their past and become men without, or above, a country." Julius Hammer, one of these radicals, was determined to accomplish this transformation.

    On May 21, 1898, Julius's first son was born, and he proudly named him Armand Hammer. He told friends that he had named him after the symbol of the Socialist Labor Party (and decades later, Armand would use the arm-and-hammer insignia as the flag on his yacht). A photograph of Armand taken a few months after his birth shows him to be a bright-eyed infant with a disproportionately large head and a bang across his brow. When he was about two and a half years old, he pulled a toy coffee grinder down from a shelf, puncturing his head and almost killing himself. His mother found Armand covered in blood and rushed him to the hospital. The wound left a permanent scar above his right temple. Armand's earliest memory was this trauma. He also recalled the horse-drawn carts in the narrow streets surrounding his house and the strong stench of the neighborhood.

    Now with a family to support, Julius enrolled in medical school at Columbia College of Physicians and Surgeons, which was then only a two-year program. To cut down on his expenses while at school, he moved his family to his father's home. In the 1900 census, Julius Hammer was listed as residing at Jacob Hammer's home on Lewis Street in Manhattan. In 1901, Rose gave him his second son, whom he named Victor after his mother, Victoria. When he graduated from medical school, Julius moved his family into a large new home in the Bronx, where many of his comrades in the Socialist Labor Party now lived. He opened his first medical practice there.

    There was a synagogue next door, but Julius had long since forsaken the Jewish religion for the secular religion of radical socialism. Armand Hammer recalled that neither he nor any other members of his family ever attended services at the synagogue. Nor were there any seders or other Jewish observances at home: No religious feasts or festivals were ever celebrated in their house.

    Julius Hammer began investing in drugstores. He bought them by issuing the previous owners his personal promissory notes, the only form of credit available to him, with the understanding that these were to be repaid out of future profits. By 1903, he owned eight drugstores. But instead of using the money he took in from them to repay his outstanding loans, he used much of it to finance the Socialist Labor Party, which was then in danger of running out of funds. He also contributed to Reinstein's chapter in Buffalo. For him, politics would always take precedence over business. The problem was that his political expenditures soon exceeded his business resources. When his creditors did not get paid, they took him to court, and still not quite thirty, he was forced to declare personal bankruptcy. For the next six years, he managed to evade his creditors by transferring his assets, in name only, to his wife's relatives. To maintain the fiction that he had no assets, he and his family lived a life of subterfuge. Even his young sons learned to conceal family business from outsiders, especially when the Red Squad took an interest in Julius.

    The New York City Police Department's Red Squad had been created in 1905 to counter a spate of anarchist bombings in Manhattan, but it soon got into the business of keeping left-wing socialists under surveillance. Because of Julius Hammer's political activities—and perhaps because of his association with Reinstein, who had been arrested several times in Buffalo for political agitation—the Red Squad placed his home under surveillance. At one point, it suspected that Julius Hammer might be involved in supplying the dynamite for bombs, and two plainclothes policemen were stationed round the clock outside his house, but no evidence was found to confirm the suspicion.

    In the summer of 1907, Julius got an opportunity to leave the United States. Reinstein arranged for Hammer to accompany him to the Seventh Congress of the Second International in Stuttgart, Germany. They both went as delegates of the Socialist Labor Party. At the conference, Julius Hammer saw the man whose words and deeds he had been vicariously following for the past fifteen years—Lenin.

    Lenin was then a thirty-seven-year-old political exile. He had a huge domed head, high cheekbones, and traces of fiery red hair at his temples. He had narrow, slanting eyes that were almost wolflike. His face was brought to a point by a reddish mustache and beard. Julius Hammer was introduced to him by Reinstein. It was a brief encounter, but one that would forever change his life and that of his family. By the time the Stuttgart conference ended, Julius Hammer had become part of the elite underground cadre that Lenin would depend on to change the world. This conspiratorial movement went a step beyond starry-eyed idealism and fiery rhetorical disputes about the nature of society. It sought to create the concrete means—networks of agents, sources of funds, secure communications, internal discipline—to bring about the desired world revolution. It was predicated on the Leninist principle that any means employed, no matter how much they diverged from Marxist ideology, were justified by the ends.

    Julius Hammer returned to New York that October with a solid commitment to the socialist cause. He would help lay the groundwork for Lenin's revolutionary apparatus in America. This would entail meeting with Lenin's backers at socialist conferences in Europe and linking them to sources of support they needed in America. To finance the enterprise, he would have to rebuild his pharmaceutical business. Julius also moved to free himself from entanglements at home. He sent his three sons to live with colleagues in the Socialist Labor Party. Victor moved to Pleasantville, New York, to live with the family of Daniel De Leon, Julius's ideological mentor. Harry moved to Waterbury, Connecticut, to live with the family of Saul Wellington, a socialist firebrand who had become a rabbi. Armand moved to Meriden, Connecticut, to live with the family of George Rose, who had helped De Leon found the Socialist Labor Party in 1890. The Hammer family would remain separated for nearly five years.

    Of the three Hammer children, Armand suffered the most from this exile from his parents. He had become in his early childhood so deeply attached to his father that he would at times refuse to speak to other family members when his father left on trips. Now nearly ten years old, he found himself suddenly transported to a small town in rural Connecticut, living with an unfamiliar family in a shabby working-class house on the wrong side of the railroad tracks. In the summers, he was sent to a camp that was organized for the children of socialists. "I was lonely," he recalled years later. When other children were having happy reunions with their parents, Hammer would go off by himself, "feeling very morose and neglected."

    Armand returned to his family in New York in 1914. He enrolled as a junior at Morris High School. On May 11, Daniel De Leon died suddenly, and Armand took off a day from school to hear his father eulogize him at a memorial service in Kessler's Theater in lower Manhattan. His father was now the principal financial angel of the Socialist Labor Party and the center of attention at the ceremony.

    That summer, the great powers of Europe—Germany, Russia, France, Austria-Hungary, and Britain—went to war, and the Socialist Labor Party strongly campaigned against the United States' joining in. Armand Hammer won his high school's gold medal for oratory by making a pacifist speech, "The Last War of Mankind," in which he inveighed against American parents' allowing their sons to fight a foreign war.

    Victor Hammer, who sat in the audience that day, was both impressed and surprised by this sudden flourish of rhetoric from his older brother. Since he had returned from Connecticut, Armand had tended to shy away from expressing himself. He would answer questions with either a simple yes or no, or he would just sit in brooding silence. Now Victor realized he had an extraordinary way with words.

    Julius Hammer was probably less surprised by Armand's speech. It echoed the Socialist Labor Party's rhetoric on the war. He had always treated Armand as the favored child, and now he did something else for him that he did not do for his other sons: he enrolled him in the party. Armand listed himself as a student on the application, which was approved by the party's executive committee.

    In 1915, Armand entered Columbia University. Julius was grooming him to follow in his footsteps as a doctor. Armand desperately wanted to emulate his father. "My dream of boyhood was to grow up to become my father's partner," he later wrote. At Columbia, Armand took part in a number of activities, including fencing and debating, but his main focus was preparing to go to medical school. Meanwhile, Julius Hammer continued to expand his business, which was now called Allied Drug and Chemical. It employed about eighty workers, who supplied skin creams and herbal medicines to drugstores. The Hammer family had two full-time servants and a chauffeur-driven car, and during the summers they vacationed at an ocean-side resort in Belmar, New Jersey. Julius could afford to send his sons to elite colleges at a time when 90 percent of the American population did not finish secondary school. While Armand was taking his examinations for medical school, Harry was at Columbia College of Pharmacology, preparing to work in the family business.

Despite his affluence, Julius Hammer never lost his commitment to Lenin. He chaired meetings of the Socialist Labor Party, drafted planks for the party platforms, adjudicated disputes between factions, served on committees, and raised funds. Bertram Wolfe, a member of the party who also attended these functions, described him as "a robust, stocky, swarthy man, always faultlessly dressed in a dark-blue or black suit. He wore ... a dignified black Vandyke." He also was, as Wolfe learned, "the most discreet and able of Lenin's 'men of confidence.'"

    In November 1917, Lenin seized power in Russia. He declared a "war on wars," taking Russia out of the Great War, and plotted a world revolution. With Lenin's sudden success, Julius Hammer took on an added responsibility: establishing a Bolshevik apparatus in the United States. Lenin had already sent to New York one of the most trusted agents in his inner circle, Ludwig Christian Alexander Karlovich Martens. A wiry-thin, energetic man with blond hair and a mustache, Martens spoke such perfect German, French, and English that he could have passed as being any one of those nationalities—and on occasion, he did. Indeed, he was often assumed to be a German businessman. But he was a Russian revolutionary.

    Martens was born in the village of Bachmut in southern Russia in 1875, and while still a youth he had joined Lenin's revolutionaries in Saint Petersburg. At the age of twenty-one, he was thrown into prison. Three years later, he was deported by the czar to Germany, where, since he was thought to be of German origin, he was dragooned into the German army. In 1905, he fled to Switzerland, where he became one of Lenin's aides and supervised the smuggling of explosives and pamphlets to the underground in Russia. He then went to Britain, where he set up a clandestine machine-gun-manufacturing facility for Lenin. After he came to the attention of British intelligence in 1914, he registered as a German alien and moved on again, to America. In New York, he took a job as an engineer with an import-export firm while developing Lenin's cadre in America.

    On January 2, 1919, Lenin named Martens his ambassador to the United States. This was a bold move on Lenin's part, since the U.S. government still recognized the prerevolutionary Russian government, which occupied the official Russian embassy in Washington, D.C. Ignoring the vigorous objections of the Americans, Martens set up an unofficial embassy in a shabby office at 11O West Fortieth Street in New York City. It was called the Russian Soviet Government Bureau. Its most urgent mission was to break the Western economic blockade imposed on Russia.

    Julius Hammer was given the unenviable job of generating support for the Russian Soviet Bureau. He became its financial adviser, administrative head, and "commercial attaché." Since Russian funds in bank accounts in the United States had been frozen by the federal government, Soviet couriers had been smuggling diamonds to New York to finance the operation. Julius Hammer arranged to sell this contraband to various jewelers, and after laundering the proceeds through Allied Drug, he paid the mounting debts of the Russian Soviet Bureau. He also recruited disciplined personnel. He selected Gregory Weinstein, a passionate advocate of Lenin and later an editor of the Socialist newspaper Novy Mir (New World), as "chief of chancellory," and Abraham A. Heller, a wealthy New York businessman who had been his partner in Allied Drug, as the head of the "commercial department." By March 1919, the Russian Soviet Bureau had thirty-nine employees, almost all of whom were dedicated Leninists.

    At its most public level, the Russian Soviet Bureau operated as a sort of glorified Bolshevik chamber of commerce. Hammer and Heller traveled to Washington, Detroit, and San Francisco to see executives of American companies—such as Ford Motor—that made products that could be exported to Soviet Russia. They then tried to convince them that Russia would be a lucrative market, hoping that pressure would be put on the U.S. government to end the isolation of the Soviet regime. While these were entirely legal activities, the Russian Soviet Bureau had other agendas that involved Julius Hammer.

    One of these missions was to create an American Bolshevik party. At this time, the majority of American socialists were anti-Bolshevik and took the position that national considerations should take precedence over international considerations. But a minority left-wing faction, of which Julius Hammer was a financial angel, took the opposite view. Hammer's faction, with the secret support of Martens, made more and more radical demands on the majority, calling, for example, for the creation of workmen's councils that would serve as instruments for overthrowing the government, expropriating banks, and establishing a proletarian dictatorship. Benjamin Gitlow, who worked with Julius Hammer on this program (and later was a Communist Party candidate for vice president of the United States), wrote in his autobiography, "To transform the Socialist Party into a Bolshevik party, we proposed the elimination of the reform planks in its platform, the building of revolutionary industrial unions, ... and the election of delegates to an International Conference to be held in Moscow, called by the Communist Party of Russia." He added, in retrospect, "Only lunatics or hopeless romantics could even consider such a program."

    These machinations, which intensified throughout the spring and summer of 1919, culminated in—as no doubt they were intended to—the expulsion of the left-wing faction, making it possible to achieve Lenin's objective of creating a Bolshevik party. On August 31, the expelled faction transformed itself into the Communist Labor Party. Julius Hammer held party card 1. Gitlow later wrote that Julius Hammer "not only paid the rent [for the party's national headquarters] but later bought the house and turned it over to our party." The Communist Labor Party, joining another extremist faction, then became the Communist Party of the United States—and joined the Communist International (the Comintern).

    Julius Hammer was also heavily involved at this time in a clandestine mission to provide Lenin's regime with equipment and spare parts for which the U.S. government refused to issue export licenses. Hammer used Allied Drug as a conduit. He also set up, with the help of Martens and Heller, other corporate fronts to camouflage the exports. The loophole he found was the Baltic port of Riga in Latvia, which was not subject to the Allied blockade of Russia. The goods destined for Soviet Russia were purchased in the name of the corporate fronts and transferred to Allied Drug with falsified export documents certifying that they were destined for use in Latvia. They were then shipped to Riga, where they were reshipped by rail into Russia.

    By the summer of 1919, such intrigues left Julius Hammer with little time for his medical practice, which he had maintained along with his pharmaceutical business. He needed help with his patients. Armand, who was now a twenty-one-year-old second-year medical student at Columbia College of Physicians and Surgeons, took off afternoons from classes to work at his father's clinic, on the ground floor of the family home. When his father was occupied elsewhere, he treated patients with routine ailments himself, although he was not yet legally permitted to practice medicine.

    That same summer, the roof fell in on Julius Hammer. First, a crusading anti-Red contingent of the New York state legislature, called the Lusk Committee, had the police raid the West Fortieth Street headquarters of the Russian Soviet Bureau, seize its documents, and arrest most of its personnel. Although Martens himself escaped the raid, he was forced to go underground. For a while, Martens hid out in the Hammer home.

    Then, on August 12, police told Julius Hammer that he was about to be charged with manslaughter. They claimed that a woman had died after undergoing an abortion at the clinic at Hammer's house. The dead woman was Marie Oganesoff, the thirty-three-year-old wife of a Russian diplomat who had come to America for the czarist regime. According to the testimony of her chauffeur, she had gone to the Hammer house for the abortion on July 5 and collapsed when she returned home later that day. No nurse had been present during the medical procedure, and there were no witnesses to it.

    When questioned by prosecutors, Julius Hammer did not deny that an abortion had been performed, but he claimed that it was medically justified, and that he, as her doctor, had the right to make such a decision. Nevertheless, he was indicted.

    The trial—which was interrupted by the charge that William Cope, a public relations man retained by Julius Hammer, had tried to bribe a juror—dragged on for the better part of a year. On June 26, 1920, the jury found Julius Hammer guilty of first-degree manslaughter. The judge then pronounced his sentence: three and one half to twelve years of hard labor at Sing Sing State Prison.

    Six months later, Martens and most of his associates were deported to Russia. In Moscow, Lenin appointed Martens to the Supreme Council on the National Economy, and his Russian Soviet Bureau was reorganized as a unit of the Commissariat of Foreign Trade. Though Martens was now operating from Moscow, he was still charged with the mission of opening a path to American business. He again turned his attention to Allied Drug, which in the chaos of the past year had been left with unpaid-for Russia-bound equipment stacked up in warehouses in New York and Riga. It had also incurred enormous debts. Martens had the idea of assigning a concession in Russia to Allied Drug, which would help the company out of its financial difficulties. Such a concession might then lure other corporations to Russia. In March 1921, Martens sent a letter to Allied Drug through the Soviet mission in Revel (now Tallinn), Estonia, inviting it to send a representative to Moscow.

    Martens's offer put Julius Hammer in a quandary. Though he had at least three more years to serve at Sing Sing, he did not want to miss the opportunity to get a potentially valuable concession that might revive the flagging fortunes of Allied Drug, whose ownership he had transferred to his two eldest sons, Harry and Armand. Harry Hammer was trying to save the pharmaceutical part of the business, and he could not leave New York. That left Armand, who was just completing his medical education. Julius fully realized, as he later noted in a letter, that Armand had no "business experience." Nor had Armand any experience in foreign travel. He had never gone more than one hundred miles from New York City. Moreover, he did not speak a word of Russian. Yet, as everyone in the Hammer family had come to realize, he was an exceptionally eager and resourceful young man. Julius had always considered Armand his successor in his professional life. He now called on his son to complete the concession deal for him in Moscow.