Armand Hammer

• 1. Introduction

  ›

  Armand Hammer died in Los Angeles in December 1990, aged 92, and was buried directly across the street from the headquarters of Occidental Petroleum - the company he had run for 33 years. That proximity was fitting. Hammer spent his life making sure power was always within reach. Born on the 21st of May 1898 in New York City, he was the son of a Russian-born communist activist who money-laundered diamond proceeds to fund Soviet interests in America. He trained as a physician, never practiced medicine, and went on to become one of the most connected businessmen of the twentieth century. He bribed Soviet officials, broke American campaign finance laws, ferried supplies to Chernobyl survivors, funded a Nobel Prize-hungry philanthropic campaign, and was described by the press as "Lenin's chosen capitalist." How does a doctor's son from the Bronx end up as a go-between for five Soviet General Secretaries and seven U.S. Presidents? The answer begins with his father's arrest.

• 2. The Father's Shadow

  ›

  Julius Hammer came to the United States in 1875 and settled in the Bronx, where he ran a general medical practice and five drugstores. He was also, simultaneously, a leading figure in radical left politics - his faction of the Socialist Labor Party of America split off to become a founding element of the Communist Party USA. As the administrative head of the Soviet Russian Government Bureau, Julius laundered the proceeds of smuggled diamond sales through his company Allied Drug to finance Soviet operations in America.

  On the 5th of July 1919, federal agents watched as a 33-year-old Russian woman named Marie Oganesoff entered Julius's medical office in his Bronx home. Six days after an abortion procedure, Oganesoff died of pneumonia. A Bronx County grand jury indicted Julius for first-degree manslaughter. The criminal prosecutor told the jury that Julius had let his patient "die like a dog." In 1920, a judge sentenced Julius Hammer to three and a half years in Sing Sing prison.

  Author Edward Jay Epstein, in his book Dossier: The Secret History of Armand Hammer, put forward the claim that it was Armand - then a medical student - who performed the abortion, with Julius assuming the blame to present a more convincing medical defense. Epstein's source was Bettye Murphy, who had been Armand's mistress. Most historians, including Beverly Gage and Nigel West, maintain it was Julius.

  The name Armand Hammer itself carried the family's political signature. Hammer originally claimed his father named him after the character Armand Duval in Alexandre Dumas's novel La Dame aux Camelias. Late in life, he confirmed a different origin: the "arm and hammer" symbol of the Socialist Labor Party, in which his father held a leadership role.

• 3. The Soviet Years

  ›

  In 1921, while waiting for his internship to begin at Bellevue Hospital, Armand Hammer boarded a ship for the Soviet Union. The trip lasted until late 1930. He was 23, could not speak Russian, and carried a package from Lenin's American attorney Charles Recht to deliver to Ludwig Martens in Moscow.

  J. Edgar Hoover, then 26 and the Justice Department's expert on subversives, knew the real nature of Hammer's trip. Hoover had been tipped off that Hammer was a courier for the COMINTERN and ensured that foreign intelligence agencies were notified of his travels. In his passport application, Hammer had stated he intended to visit only Western Europe.

  Once inside Soviet Russia, Hammer allowed the Cheka - the Soviet secret police who later became known as the KGB - to take control of Allied Drug and Chemical. Lenin granted him an asbestos concession for 25 years to mine asbestos from the Urals. Hammer also claimed he brought $60,000 in medical supplies to aid a typhus epidemic and negotiated a deal for a million bushels of surplus American wheat in exchange for furs, caviar, and jewelry the Soviet state had expropriated.

  During Lenin's New Economic Policy, Hammer became the mediator for 38 international companies in their dealings with the USSR. He also moved to the Soviet Union to oversee a large manufacturing operation producing pens and pencils. Alexander Barmine, assigned by the Central Committee to compete with Hammer, noted that the party spent five million gold rubles on stationery from Hammer-controlled factories. The Soviets could eventually duplicate most items but, Barmine contended, never matched the quality of Hammer's pencils, so that concession became permanent.

  Hammer's company also brokered something more complicated than pencils. Back in the United States between 1930 and 1933, Hammer was sold Faberge eggs by the Soviets. Géza von Habsburg reported that Hammer's brother Victor stated Stalin's trade commissar Anastas Mikoyan provided Faberge hallmarking tools to help sell fakes. A 1938 New York sale Victor ran with Armand grossed several million dollars and, according to Victor, included both authentic and inauthentic pieces - with commissions going to Mikoyan.

• 4. Occidental Petroleum

  ›

  Occidental Petroleum was a failing California oil company when Hammer obtained control of it in 1956. Over the next 33 years as chief executive officer and chairman, he built it into one of the largest companies in the United States.

  His most consequential deal came through Libya. Through Occidental's stakes there, Hammer was pivotal in breaking the tight grip that major U.S. domestic producers held on oil pricing and instead gave OPEC control over prices. National Geographic described Occidental's chairman as "a pioneer in the synfuels boom." In 1973, Libya nationalized 51% of Oxy's holdings there. The following year, Hammer announced a 35-year oil exploration agreement with Libya - the first such agreement signed after Muammar Gaddafi came to power in September 1969. Under that deal, 81% of the oil Occidental extracted went to the Libyan government; Occidental retained only 19%. Libya was the company's only major source of crude at the time.

  Hammer also engineered one of the largest trade deals of the Cold War era. During detente in July 1972, he negotiated a twenty-year agreement with Leonid Brezhnev, signed in April 1973, by which Occidental Petroleum and Tower International would export phosphate mined in northern Florida to the Soviet Union. In return, the Soviet Union would export natural gas from Odessa through Hammer's firms to be converted into ammonia, potash, and urea. The deal was valued at $20 billion over 20 years and was set to run until Hammer's 100th birthday in 1998. The fertilizer trade began functioning on the 27th of July 1978, with the opening of the Port of Pivdenny - then known as the Port of Yuzhne - near Odessa.

  In 1988, while Hammer was still leading Occidental, the company's oil rig Piper Alpha exploded, killing 167 men. The Cullen Report highlighted failings across the platform.

• 5. Nixon, Watergate, and the Law

  ›

  Hammer was nominally a Democrat but, according to the memoir of his lawyer Louis Nizer, was one of "many executives who contribute to both political parties" who "preferred no publicity about his dual gifts."

  In 1972, under pressure from various sources, Hammer gave $46,000 in cash to Maurice Stans, the finance chairman of Nixon's campaign fund, six weeks before Nixon's departure for Moscow. The money came from a numbered Swiss bank account Hammer used as a slush fund. In September 1972, he made three additional illegal contributions totaling $54,000 to Nixon's Watergate fund, routed through friends of former Montana Governor Tim Babcock, who was Hammer's vice president at Occidental. A law banning anonymous political contributions had taken effect on the 7th of April 1972 - Hammer's cash had arrived before and after that deadline.

  Both Hammer and Babcock pleaded guilty. Hammer received probation and a $3,000 fine. In August 1989, President George H. W. Bush pardoned Hammer for the illegal contributions.

  For all this, Hammer's influence on the Nixon-era U.S.-Soviet relationship was genuine. After Nixon's Moscow summit ended on the 1st of June 1972, Hammer traveled to Moscow arriving on the 14th of July. With Sargent Shriver as his legal advisor, he negotiated the first trade agreement between the United States and the Soviet Union following Nixon's summit. He then returned through London and arranged a meeting with Nixon through chief of staff H. R. Haldeman to brief the President on the deal - a meeting that took place on the 20th of July 1972.

• 6. Philanthropy and Legacy

  ›

  Hammer was appointed by President Ronald Reagan in 1981 to serve on the three-member President's Cancer Panel. He later served as chairman from 1984 to 1989, announcing a campaign to raise $1 billion a year to fight cancer. He even made a guest appearance on a 1988 episode of The Cosby Show as the grandfather of a cancer patient, saying on screen that a cure was imminent.

  He purchased Knoedler, the oldest art gallery in America, in 1971. He hired art historian John Richardson as director; Richardson later wrote an unflattering portrait of Hammer, calling him "a veteran con man." His personal art donation forms the core of the permanent collection of the UCLA Hammer Museum in Los Angeles.

  In 1981, with the support of the then-Prince of Wales, Hammer helped found the Armand Hammer United World College of the American West - now called UWC-USA. He was reportedly so close to Charles that the prince intended to make Hammer Prince William's godfather; Princess Diana reportedly disliked the idea and the plans were abandoned. In the 1980s, Hammer gave Charles's projects financial support of nearly 40 million pounds and free use of his Boeing 727.