THE SECRET HISTORY OF ARMAND HAMMER
by Edward Jay Epstein
Armand Hammer was one of the odder, more odious characters of American
business and politics, "famous" chiefly because he was rich
enough to promote his mammoth ego. He has met his match in investigative
writer Edward Jay Epstein, who performs the ultimate unmasking of a man
who deceived, even betrayed, his country, his family and the hired toadies
who posed as his friends.
The public persona that Hammer polished, at great expense, was that of a
renegade oilman who made billions from Libyan oil, chummed around with
politicians up to White House level and adorned acres of galleries with
paintings, some priceless, others fake. Hammer's lawyers bedeviled honest
journalists who tried to write otherwise while he was alive, and they
mostly succeeded. Steve Weinberg, author of an earlier critical biography,
estimated to me that his British publisher spent $2 million defending a
libel suit; it died when Hammer did, at age 92, in 1990.
But now that the wretch is dead, let's get on with the deferred fun. For
Mr. Epstein, the story actually began in 1981, when he interviewed Hammer
for the New York Times Magazine. Hammer put on the charm, taking Mr.
Epstein to dine with the paper's publisher, Arthur O. "Punch"
Sulzberger, and treating him to six months of travel aboard the Oxy One,
owned by his Occidental Petroleum.
Unfortunately for Hammer, another of Mr. Epstein's sources, James Jesus
Angleton, head of counterintelligence for the Central Intelligence Agency,
whispered a tip about a Soviet agent of influence whom a defector
identified as "The Capitalist Prince." Mr. Angleton would not
accuse Hammer directly but suggested that "another side" of his
activities could be found in documents in a 1927 raid on Arcos, the Soviet
trade mission in London.
Mr. Epstein's Times article suggested that Hammer's trade with the Soviet
Union helped Soviet interests, including espionage, but he had no direct
proof. Now the evidence is at hand, and in damning detail, straight from
old Soviet archives. The account is of a man who bribed and cheated his
way to great wealth --- and started with Soviet gold.
Hammer came to communism legitimately. His father, Julius, a Russian
immigrant, linked up with Vladimir Lenin at a socialist conference in
Berlin in 1907 and "agreed to become part of the elite underground
cadre that Lenin would depend on to change the world." A physician by
training, Julius built a small drug chain into Allied Drug and Chemical,
purveyor of skin creams and herbal medicines.
When the Bolsheviks seized Russia in 1919, Julius worked with Ludwig
Martens, Lenin's de facto "ambassador" in the United States.
Julius used Allied, of which Martens was the covert half-owner, to launder
sales proceeds of smuggled diamonds --- money that financed a
revolutionary Communist Labor Party (CLP) dedicated to "overthrowing
the government, expropriating banks, and establishing a proletarian
dictatorship." Julius held card No. 1. The CLP eventually became the
Communist Party USA and part of the Communist International (Comintern).
On another level, Julius used Allied Drug to ship equipment to the Soviet
Union for which the U.S. government refused export licenses. Julius
certified that the shipments were bound for Latvia; in fact, they
continued on to Russia. The Soviets were so pleased with Julius' services
that they offered Allied a trading concession that stood to earn him
Then, disaster. Julius ran a small clinic in which young Armand worked
while attending medical school. In 1919, the wife of a czarist-era Russian
diplomat went to the clinic for an abortion; she died the next day. Julius
would not deny that an abortion had been performed, but he insisted that
it had been medically justified. A judge disagreed and sent him off to
three and one half to twelve years of hard labor. Years later, Armand
Hammer confided to a mistress that the wrong Hammer went to jail, that in
fact he had performed the fatal operation. Julius had reasoned that a
licensed doctor might beat the charge but that a medical student stood no
With his father in jail, in 1921 Armand took over the import deals and
left for Moscow on the first leg of an odyssey that would make him
"one of the great con men of the twentieth century," in Mr.
Hammer's cover story was that he helped feed starving Bolsheviks. This was
a lie. The Soviets, from Lenin on down, saw him as the ultimate
"useful tool" in breaking the Soviet Union out of economic
isolation and in providing a conduit through which Moscow could finance
espionage and subversion abroad. Mr. Epstein tells in gripping detail how
the Soviets used the willing Hammer as a financial errand boy.
Lenin's grand scheme was to "advance the image of a non-threatening
and potentially profitable Soviet Russia." Lenin relied on capitalist
greed to make U.S. German and British businesses vie for Russian
concessions and to force their governments to lift trade restrictions.
When one of Lenin's aides asked where he would obtain the rope with which
to hang the capitalists, he replied famously, "They'll supply us with
Lenin used Hammer as his opening pawn in this economic chess game,
offering him an abandoned asbestos mine in return for a promise to bring
in wheat. Everyone concerned realized the mine was worthless, but it gave
the Soviets a means to transfer money to Comintern agents. Lenin issued
orders to" make note of Armand Hammer and in every way help him on my
behalf if he applies." There were admonitions to keep the
relationship secret lest there be a "fatal effect" on Hammer.
Expansion was swift. Hammer persuaded automaker Henry Ford to move into
the Soviet Union to develop the "Fordson" tractor. There were
fur deals, and a Hammer pencil factory was given a Soviet monopoly. The
Soviets permitted Hammer sweetheart deals on sales abroad of precious
czarist art. (When Hammer depleted his stock of Faberge eggs, no problem:
He counterfeited them in New York.)
The most important element was Allied Drug, which acted as the Soviets' de
facto banker in the United States, laundering millions of Soviet dollars
through sham transactions. Hammer eventually made millions in such
enterprises as liquor, oil refining and art. The constant element,
according to Mr. Epstein, was bribery and sharp dealing, including his
capstone deal, the acquisition of Libyan oil rights for his Occidental
Hammer never deceived the FBI's J. Edgar Hoover, who in 1919 began
creating a massive file, "61-280 --- Armand Hammer, Internal Security
--- Russia," scrawling across the front, "a rotten bunch."
Hoover knew that Hammer financed Comintern agents but did not move,
knowing that "it is often more profitable not to arrest a detected
courier" when there is no assurance that the replacement will be
Hammer recognized the utility of buying politicians, and here Mr. Epstein
understates one of his juicier stories: how the impecunious Senator
Albert Gore Sr. got the wealth to enable him to live in splendor in
Washington's Fairfax Hotel and to send son, Al Jr., now the vice
president, to the pricey St. Albans school.
In 1950, Hammer made Mr. Gore "a partner in a cattle-breeding
business, from which the Senator made a substantial profit."
Thereafter, Gore was Hammer's designated door-opener in official
Washington. When Mr. Gore retired, Hammer made him president of
Occidental's coal division, where he "earned more than $500,000 a
Son Al next put the family's Senate seat at Hammer's service. At the 1981
inauguration of Ronald Reagan, Junior managed for Hammer to be seated in a
section reserved for senators. Hammer lurked in the doorway, hoping to
glad-hand the president, but Mr. Reagan brushed by him without a glance,
and with reason. Years earlier, Alexandre de Marenches, the head of French
intelligence, had warned him that Hammer was a Soviet "agent of
If Hades has a reading room, I hope, for the sake of various souls who are
damned to share eternity with this sleazy character, that it stocks Mr.
Epstein's book. A rousing read!