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Having survived two devastating wars, the First World War and the Civil War, and even a foreign military intervention, the Land of Soviets was in dire need of the support of a country with a well-developed industry. The United States was such a country.

Amtorg was created by the merger of Prodexco and Arcos America on May 1, 1924, in New York as a private joint-stock company for the performance of export-import operations and was allowed by the resolution of the Glavkontsessko at the Council of People's Commissars trade operations in the USSR.

The Soviet trade organization Amtorg was in fact a screen under which the USSR was actively engaged in espionage activities in the United States in the 1920s and 1940s. In 1921, Dr. Armand Hammer, who had just graduated from the Columbia University College of Medicine, went to Moscow. His father, Dr. Julius Hammer, an American from Odessa, a socialist, a longtime friend of the Russian Bolshevik leader, had a pharmaceutical company in the United States. He sent his son to Russia in the hope of recovering the money owed him: the Bolshevik government owed Julius Hammer $150,000, a huge sum for those times.

Lenin offered Hammer a long-term and very profitable cooperation with the Soviet Union. And in 1924, in fulfillment of the agreement, a joint American trade organization, Amtorg, was established. One of the Soviet leaders who helped Hammer in this matter was none other than Felix Edmundovich Dzerzhinsky, the founder and first chairman of the formidable All-Russian Extraordinary Commission.

AMTORG (American Trade Company) was created as an official sales representative and therefore was given the power to represent the interests of the Sovnarkhoz in the United States. But, due to the lack of diplomatic relations between Russia and the United States, Amtorg was forced to work exclusively as a private trading company. The identity of the true "master" of the organization was not recommended to talk about this, and therefore all the information was strictly confidential and not subject to disclosure. Otherwise, Russia risked losing the support of America's financiers and industrialists.

Most of Amtorg's employees were in fact employees of the Soviet secret services who illegally obtained industrial and military secrets from the United States, as well as recruiting Americans for spies, especially among members of the Communist Party.

The purchase of Amtorg's model of the JW Christie tank, secretly delivered from the US under the guise of an ordinary tractor, stands apart. In addition, a contract was signed with A. Kahn to draft the Stalingrad Tractor Plant. The close cooperation of Amtorg and Albert Kahn Incorporation resulted in a multiple extension of contracts. They also laid the foundation for the great construction projects in Stalingrad, Chelyabinsk, Kharkov: the first tractor factories were built exactly there, and Moscow and Nizhny Novgorod became the first cities where the car factories were built.

Soviet intelligence activities in the United States apparently began in 1919 when Ludwig Martens, Russian-born communist residing in the United States, assumed the mantle of representative of the new revolutionary Soviet government. The United States, like most other nations at the time, did not extend diplomatic recognition to the regime that had in effect, declared war on other nation states and called for violent revolution to overthrow the existing order. The attitude of the United States, like most other states at the time, was generally hostile. It must be remembered that it seemed that the worldwide convulsion that the Soviet Government called for was in fact a real possibility.

In the absence of diplomatic relations, which extended to 1933, the Soviets operated unofficially through envoys like Martens and Amtorg, a corporation that ostensibly was to facilitate US–Soviet trade. At this time, around 1920, espionage against the United States was not the highest priority of the Soviet intelligence apparatus.

The activities of Russian anti-Communist expatriates, operating primarily from European nations, especially France, commanded their interest. However, the United States did not escape the attention of the Soviet leadership a valuable target for their intelligence services. Lenin had specifically directed that the intelligence arms of the Soviet state function in the United States.

Probably the first identified Soviet intelligence officer was Arthur Adams, who described officially as director of the unofficial embassy’s “technical department.” Adams was deeply involved with the theft of American technology and would appear periodically in the United States over the next 30 years. Both Adams and Martens were deported in 1920 as aliens affiliated with an organization that advocated the overthrow by force or violence of the Government of the United States.

The Soviet intelligence apparatus, which was introduced into the United States around the same time as the CPUSA was founded in 1930, maintained intimate relations with the party from the start. The CPUSA provided a ready pool of eager volunteers, anxious to be of service to the revolutionary state. Party members such as Nick Dozenberg found themselves assigned to Soviet intelligence by party leaders. Usually, when this occurred, the party member was instructed not to engage in open party work or associations.

By the mid to late 1920s, there were three elements of Soviet power operating in the United States, despite the absence of formal diplomatic relations. They were the Comintern, military intelligence, and the forerunner of the KGB, the GPU. It appears that during the early 1920s, the Comintern was the dominant arm of service in the United States, although it was not unusual at that time for agents or officers to be switched from one service to another.

After the Red Scare collapsed in 1924, the Department of Justice and its investigative arm, the Bureau of Investigation, declined to investigate “radicalism.” The US military intelligence services, ONI and MID, to a certain extent filled the void, but these organizations were poorly funded after the war and not able to counter the scope of activities of the Soviets in the United States. The US State Department was investigating international communism and also had jurisdiction over investigations of passport fraud.

However, there was no central direction or focus to countering or investigating Soviet espionage during the 1920s and early 1930s. As a result, the Soviets had almost free run for about 12 years before the FBI was given the task again of monitoring Communist and Fascist activities in the United States.

The fact is that few Americans had any awareness of the existence of Soviet espionage in the United States and would have been shocked if such a thing were to be made known. At that time, no state openly admitted engaging in peacetime spying, which was considered disreputable and underhanded.

During the 1920s, Soviet intelligence in the United States focused on industry, specifically the aircraft and munitions industries, and to penetrating the mainline federal government bureaucracies such as the Departments of State and War. A favorite Soviet tactic in gathering intelligence on US industry was to exploit the desire of US firms to do business in Russia.

A Soviet representative would call on an American business and dangle the possibility of a lucrative contract with the USSR. However, the Soviets would insist on extensive plant inspections prior to actually signing a contract. After numerous visits and inspections by Soviet representatives, actually intelligence officers, some excuse for not doing business would be found. By then the Soviets would have extracted whatever technical information they were seeking. This tactic was repeated scores of times over the 1920s.

The role of Amtorg, the Soviet trading company, in Soviet intelligence operations was first revealed in 1929 by the first senior Soviet intelligence officer to defect to the West. Using the name George Agabekov, he had served in Turkey in the GPU residency. After his defection he wrote, “The first GPU resident in the U.S. was Tschatzky. As there was no Soviet diplomatic representation in the US, he was known as an employee of Amtorg….”

The decade of the 1930s saw a dramatic increase in activities of both the Soviet intelligence apparatus in the United States and the CPUSA. There were several factors at work that gave impetus to both phenomena. The economic depression, which gripped the industrial world, seemed to bear out Marxist predictions of the impending collapse of capitalism. Many American intellectuals embraced Marxism as the inevitable wave of the future. The international scene also worked to the Communists’ favor. The rise of Fascist and Nazi dictatorships seemed threatening to many, and the anti-Semitic nature of both regimes seemed to many Jewish Americans cause to defend the interests of the USSR, and by extension, the CPUSA.

Another boost to Soviet prestige, and also to Soviet intelligence in the United States, was the establishment of diplomatic relations in 1933. At last the Soviet intelligence organs in the United States could function under the protection and cover of diplomatic immunity. At the time, the United States had no real intelligence service operating in Moscow, other than a few military attachés. Aside from the embassy in Washington, the Soviets also established consulates in several large cities, including San Francisco and New York.

The N.K.V.T., or Peoples' Commissariat of Foreign Trade, through the offices of Amtorg and the Soviet Government Purchasing Commission, performed the functions attendant on Soviet purchases and Lend-Lease program in the United States. In connection with Lend-Lease activities, aspects of petroleum, synthetic rubber, and high octane gasoline manufacture. It also inspected shipbuilding facilities and heavy industry plants, and even the food industry was given attention. Amtorg Trading Cornoration was used extensively as a cover by various Russian agents, and was considered as one source of pay-off funds and a channel for forwarding data to Russia.

Subsequently, the Soviet Government Purchasing Commission, with its increased personnel and widespread activity carrying its representatives into almost every port and industrial facility in the nation, and its access to large funds made available by American taxpayers through Lend-Lease, was the successor to Amtorg. The Soviet Government Purchasing Comission sponsored technical missions to selected industries and plants for purposes of inspection of material and instruction in manufacturing methods. Although these missions were conducted with the official approval of this government, they constituted a potential medium of industrial espionage.

Many AMTORG representatives acted as an espionage service, and the US State Department suggested in March 1940 that in order to check or discourage the practice, the Department of State might inform the Soviet Government that this Government would not be prepared to approve the entry of Soviet technicians into American plants unless the Soviet Government was prepared to welcome American observers (either private or governmental) into Soviet plants.

By early 1940 there appeared to be no legal way for keeping Soviet engineers and technicians out of American plants. If the Army and Navy had strong feelings on this subject, however, it is possible that with the cooperation of other Departments of the Government and of various trade organizations they may exercise, at least during the period of the war, effective control over such visits.

It was possible, for instance, that the Army and Navy could arrange for such a control to be exercised, through some appropriate Governmental institution, such as the Army and Navy Munitions Board. This institution could prepare a list of the types of plants in which Soviet engineers would not be welcome and could notify the pertinent trade organizations, as well as particular plants, in certain instances, that for the protection of the public interests no foreign officials or technicians should be permitted to inspect American plants of the types contained in the list without permission in each individual case from the institution in question.

The visits of Soviet engineers in American plants resulted in little business. The engineers when once admitted made all kinds of requests for information and privileges; and that in the end it was found necessary to refuse some of these requests. So that frequently the visits result in the creation of bad feelings rather than in increased good will. Officials of American firms frequently said that they dislike to refuse to admit Soviet engineers in their plants, since such a refusal might result in their being placed on the Amtorg “black list”.

The Soviet Government took the attitude that Soviet engineers had some kind of an inherent right to enter American factories. By 1940, for many years Soviet engineers had been granted numerous courtesies in this respect by American industrialists, and they were continuing in relatively large numbers to inspect and study American industrial plants. They had shown a tendency, however, to take offense in case some industrialist, for military or other reasons, refused to allow them to enter his plant. American citizens had never been permitted to enter Soviet military factories or related industries, and it was rare that they were admitted into Soviet factories of any kind.

Amtorg was a corporation organized under the laws of the State of New York. Its capital, however, is owned 100 percent by the Soviet Government. During its first sixteen years of existence it had done more than two billion dollars worth of business, of which probably 80 percent consisted of Soviet purchases in the United States. While it was true that Amtorg is an American corporation, it was nevertheless much more than an American corporation. It was the chief purchasing agency in the United States of Soviet governmental organizations, and for many years it had been recognized as such by the American Government.

The American Government regarded Soviet officials and employees who had been sent to this country to carry out orders issued by Soviet governmental organizations as Soviet governmental officials and employees, regardless of the fact that they may be attached to Amtorg.

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Page last modified: 21-07-2018 06:03:22 ZULU