Lenin's Chosen Capitalist

...Lacking financial or political support, the idea died quietly...

...In 1920 this led to disaster: Julius was convicted of manslaughter for a botched abortion that had really been performed—as his son later admitted to a mistress, who told Epstein—by Armand...

...This would mean that at the age of 18, living in New York, he knew about the 22-year-old Lenin, then studying for the bar exam at his mother's house in deepest Russia...

...Her $8 million fortune disposed of his debts and supplied the capital for the takeover of Occidental Petroleum...

...By the time they returned to the U.S...

...But they do little to clarify its subject's motives...

...But Occidental couldn't borrow enough in the market, so Hammer, in his usual parody of capitalism, wangled a loan from the U.S...

...Eventually, the Soviet government came to the rescue by giving Julius and Armand a pencil manufacturing concession...

...and all were built on lies and chicanery...

...Moreover, Hammer had promised the Libyan officials who gave him the concession a large ongoing payoff...

...The Hammers could not pay off loans from foreign banks...

...Julius had a medical practice as well as a business, so Armand, a second-year medical student, handled most of the patients while his father saw to the firm...

...Hammer now cooked up a grandiose scheme...

...In any case, when the U.S...

...it made him, at least in his own eyes, a figure of global importance...

...Julius first met Lenin in 1907, at an international Socialist conference, and they remained in contact thereafter...

...in some cases they had much higher expenses than anyone had expected, in others the regime siphoned off the earnings...

...Export-Import Bank...

...entered the War he was evidently in the good graces of the Roosevelt Administration, because he received a great favor...

...In 1919, Julius helped set up one of two rival U.S...

...In 1921, with Julius in Sing Sing, Lenin chose his company to receive the first of the concessions—an asbestos mine—granted to foreign enterprises in the Soviet Union during the NEP period...

...As a child he dreamed of becoming his father's partner, and in 1919 he actually did...

...to help us [the Soviets] in our financial operations abroad...

...In the 1930s, he presided over a scheme hatched by the Soviet economic commissar Anastas I. Mikoyan to raise funds for the Soviet Union by selling Russian cultural artifacts in the West...

...to act as a broker selling furs, caviar and other Russian goods for U.S...

...Armand Hammer, who matriculated at Columbia University in 1915, went on to earn his MD at Columbia College of Physicians and Surgeons...

...aid to Britain, spurred into action, Epstein hypothesizes, by a Kremlin eager to promote British resistance to Hitler and thereby gain time for itself...

...He was skilled at finding the means to live luxuriously, and, as Epstein writes, "A dazzling aura of success was attached to his various enterprises...

...No matter: Hammer took advantage of Qaddafi's rise by secretly diverting the payoff money to his own account...

...In 1961 he went to Moscow, meeting his old comrade Mikoyan, as wel 1 as Party chief Nikita S. Khrushchev, who quite wrongly saw the very marginal entrepreneur as an opening to "capitalist circles...

...Occidental also had a stake in the oil business—notably the Libyan fields it obtained in 1967 mainly because the government there hoped to use this relatively lightweight contender as a weapon against the seven petroleum giants...

...These and other new materials easily justify the appearance of the absorbing Dossier: The Secret History of Armand Hammer (Random, 448 pp., $30.00) by Edward Jay Epstein...

...The next year Soviet defector Anatoly M. Golitsyn told the CIA that the KGB had decided, late in the previous decade, to reactivate an agent known as the Capitalist Prince...

...But in the early 1970s the Soviets signaled interest in it, and he put forward a larger version, involving vast expenditures, loans and risks...

...But in 1943 Hammer purchased several distilleries, and in 1944 he was granted a very large beverage alcohol quota...

...each was obtained through political connections...

...He left little or nothing in his will to relatives, mistresses and others who had expectations of him...

...wheat...

...During the hostilities only a limited amount of alcohol could be distilled for recreational purposes...

...Epstein claims—unbelievably and without evidence—that by 1907 the father already "had been vicariously following" the Bolshevik leader "for the past 15 years...

...in late 1931, it is no longer clear who is running the show, or why...

...Yet despite Armand Hammer's later claims that he had struck it rich in Russia, the businesses the family ran there were unprofitable...

...But it was undeserved...

...This campaign to merchandise what an art historian later called "the debris of Russian hotels, monasteries, shops, and palaces" as the "Romanoff Treasure" was not very successful...

...In addition to accepting the mine, Armand agreed to help the USSR and Germany evade the Treaty of Versailles by importing equipment to make airplanes for the two countries...

...None of his undertakings made money...

...Still, he exploited his Soviet connection...

...Here, as in Russia, Hammer had better luck courting the authorities than potential customers...

...This was not the zenith of his egoism: In fact he gave thousands of interviews, wrote two autobiographies and subsidized a biography—all with no less a goal than the Nobel Peace Prize...

...The project went through, eventually incurring losses of $2.5 billion...

...Although Oxy's holdings were the richest in the country, they were not very profitable: Construction expenses and taxes were extremely high, and in the '60s and early '70s oil was cheap...

...Blackmail might have been...

...Hammer wasof course the leading suspect...

...Hammer's memory would thus have been blackened even if the Soviet Union's collapse had not exposed documents clarifying his role in the 1920s...

...Hammer claimed to have invented the idea of lend-lease—exchanging bases in Britain's Caribbean colonies for military supplies—an assertion the author takes seriously, though the only direct evidence comes from Hammer...

...In 1940, he emerged as an active supporter of U.S...

...He used this money to establish such personal monuments as a major private art collection housed in a museum named for himself...

...Communist parties formed that year...

...When the Hammers first set up shop in the USSR, the imprisoned Julius was the real head...

...Nevertheless, Armand continued to serve the USSR...

...The distinctive thing about what wealth he did have is that so much of it was secret and therefore wholly at his disposal...

...When "young Hammer" arrived in Moscow that summer representing his father, Lenin granted him an audience...

...After the War, of course, Hammer lost this advantage over his rivals, and by 1953 he had to sell off the liquor assets...

...Although the Hammers lived well, Julius used much of his income to fund the far Left Socialist Labor Party...

...They produced a lot of pencils, but most of them were sold in the USSR for rubles that could not be converted into hard currencies to retire overseas debts...

...Yet Hammer's effort to control the way future generations viewed him was strangely incompetent...

...He was said to be the son of an American millionaire who had spent the 1920s in Russia...

...This was Hammer's last failure, in a lifetime full of failures...

...The Soviet experience set the mold for the rest of Armand Hammer's life...

...Particularly once Julius came to Moscow in 1923, the Hammers lived lavishly...

...For he was such a profoundly corrupt and cynical man that his services to the Soviet state did not necessarily make him a Communist—any more than his efforts on behalf of the Democratic Party from the 1930s to the 1960s made him a Democrat, or his strenuous attempts to woo Richard M. Nixon and Ronald Reagan made him a Republican...

...Occidental Petroleum had acquired a number of major fertilizer companies...

...The distrust was well-founded: Documents recently discovered in Moscow show that, as J. Edgar Hoover surmised in the 1920s, the enterprises the Hammer family ran in the USSR during Lenin's New Economic Policy (NEP) years financed espionage in the United States...

...and to set up a bank to send "a stream of gold to Russia...

...If he truly served as a Soviet "agent of influence," Communist zeal was not the reason...

...Besides the bribes he was paying himself, his discretionary income was swelled by the substantial funds Occidental Petroleum donated to the Armand Hammer Foundation...

...As Epstein speculates, he "may not have had the ideological commitment his father did to communism" at any time...

...He proposed a $ 1 billion plan to set up 10 Siberian factories and produce 50 million tons of phosphate fertilizer annually from concentrate Oxy would produce in the U.S...

...By producing a quart of so-called blended whiskey for less than a cent and reselling it for $5, he at last made real money...

...In revenge, they poured out their anger to Epstein...

...Armand's remarkable father, Julius, was born in Odessa in 1874, emigrated to America in 1890, went to medical school, and started a successful drugstore chain...

...After the concession was withdrawn in 1929, the family still owed some $500,000...

...He apparently felt that fate had dealt him the Soviet card and forced him to play it for all he could...

...Armand's beliefs are hard to make out...

...The truth is that Hammer was nothing like the billionaire he was widely assumed to be: On his death in 1990, his $40 million estate faced claims by upward of 100 parties...

...in 1898, he named his first son, Armand, for its arm and sledgehammer insignia...

...Julius—who at this point fades into the background, finally dying in 1946—was a committed Communist...

...When Muammar Qaddafi overthrew them in 1969, the company retained its fields but was allowed to extract less and less petroleum...

...Hammer was saved from these straits by his third marriage—the first two ended in divorce—to a widow named Frances Tolman in 1956...