BACKGROUND OF DR. ARMAND HAMMER

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 02212620
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 30
• Document Creation Date: September 12, 2023
• Document Release Date: June 30, 2023
• Case Number: F-2021-02184
• Publication Date: March 6, 1961

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NOO1flER DISSEMINATION
MEMORANDUM FOR: Director of Central Intelligence
SUBJECT : Background of Dr. Armand Hammer
1.
Lxecu..;.: Rega;try
!Mk' - -61
Armand Hamme
a thoroughly opportunistic,
unscrupulous, fraudulent, and deceitful character
�
2. Hammer, now 63, was educated at Columbia University and
obtained his M.D. at Columbia at age 24. He was described as
intellectually brilliant with a keen brain but "unfortunately given
to using his mental prowess in devious ways."
he could engineer by
prevarication dictated by avarice, greed or rapacity."
3. Although Hammer has been to the Soviet Union several times
and has engaged in commercial relations with the Soviet government,
there is no conclusive evidence
member of the Communist Party. There is, however,
that he was or is a ODX1)
(b)(3)
some rather con.
elusive evidence that his father was a card-carrying member of the
CPUSA. Hammer's father, a surgeon at the time, was arrested and
NO WfT!P mngrarrmirrnm
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a ""E
convicted of abortion in 1921 and served three years of a 15.year
sentence at Sing Sing for the crime.
4. Armand Hammer himself has served time in jail, though not
in the United States. He was incarcerated for a brief time in
Berlin in 1921 on forgery charges and allegedly in the USSR some
time between 1922 and 1927 for attempting to swindle the Soviet
government. Details of this latter case are vague and there is some
contradiction
(b)(1)
(b)(3)
5. The Hammer Galleries in New York, of which Armand Hammer
is president, buy and sell objets, d'art in which Russian, or more
generally Eastern European, fine arts are outstanding. Hammer got
into this business in 1928 by buying Russian objets from the Com�
munist government, which had confiscated them from wealthy aristom
crate after the revolution. (Hammer swindled an American backer
of $50,000 in the process of acquiring the goods.) As a business
enterprise, Hammer Galleries' financial and ethical stature is of
questionable character. According to one 1953 report, the Galleries
were used from time to time for Communist Party meetings.
6. reporting on Hammer's recent visit
(b)(1)
to Moscow identity him only as president of Occidental Petroleum (b)(3)
Company, a position which he indeed bolds among others. This com-
pany, incorporated in California in 1920, has its home office at
8255 Beverly Blvd., Los Angeles 48, California. The company acquires
oil and gas properties and engages in the production and sale of
NO FUR DISSEMINATION
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crude oil and natural gas to various companies under long-term
contracts. It has interests in producing oil and gas wells in
California, New Mexico, Colorado and Oklahoma. Occidental employs
only 54 people, had 5,000 stockholders as of April 1960, and had
net current assets of 083,002 as of 31 December 1959. At that
time there were 3,1200938 shares of stock outstanding (par value
$0.20) of which 426,032 shares were owned by Hammer and his wife.
The stock is listed on the American and Pacific exchanges and
closed at 6 7/8 on 3 March 1961. It has paid no dividends since
1934.
7.
Hammer speaks Russian.
8. Just what sort of contact Hammer had with Commerce Beare..
tary Hodges or Senator Gore of Tennessee before leaving on his
recent round-the-world trip is not clear. State's first informar.
tion that Hammer was contacting Khrushchev and Mikoyan apparently
came in cables from the Moscow embassy.
9
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There is no report available on how Hammer conducted his
business
with Khrushchev and Mikoyan.
(b)(3)
(b)(6)
Assistant Director
Current Intelligence
cc: DDCI
RET
NO TT TTOOLIUTWAMTAW
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21 March 1961
MEMORANDUM FOR: Distribution List
SUBJECT : Dr. Armand Hammer
1. Your attention is invited to the fact that the attached group of documents
bears an overall classification of CONFIDENTIAL even though certain
individual papers are unclassified.
2. It should also be noted that:
a. The "classified memoranda" regarding Dr. Hammer's meeting with
Khrushchev, as cited on p. 2 of his letter on ClaridL;e's (London)
stationery dated 19 February 1961, was earlier received and
disseminated by OR in the form of State Moscow Despatch
17 February 1961, -SeleRef4ETED DIaTRIBUr
b. The attached memoranda of conversations between Dr. Hammer and
Mikoyan (15 February 1961), and Dr. Hammer and Vinogradov
(14 February 1961), although unclassified were transmitted from
Moscow under cover of State Despatch 19 February 1961,
Attachments:
As stated above.
Distribution:
ONE - 1
OCI - 2 (1 - Security; gr -
00/C - 1 (Attn:
DD/P/SR - 1 (Attn: Mr.
CIA/LY - 1
ORR - 1
cc: LCD/OCR
Paul Garbler)
Chief, Document Division, OCR
, 2039 Que Bldg.)
(b)(3)
(b)(6)
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(b)(3)
(b)(6)
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THE SECRETARY OF COMMERCE
WASHINGTON 25
Honorable Allen W. Dulles
Director
Central Intelligence Agency
Executive Office of the President
Washington 25, D. C.
Dear Mr. Dulles:
I have been advised that Messrs. Sturbitts and
Thorn of your agency have inquired as to whether we had
reports from Dr. Armand Hammer of the Occidental
Petroleum Corporation on his trip to Russia.
We do have this report and I am enclosing a
copy for your information. I am also enclosing a copy
of my transmittal letter to Secretary Rusk with which I
furnished him a copy.
Enclosures
Sincerely,
Secretary of Commerce
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THE SECRETARY OF COMMERCE
WASHINGTON 25
z
Honorable AUen W. Dulles
Director
Central Intelligence Agency
Executive Office of the President
Washington ZS, D. C.
Ihmar Mr. Dullest
advlsd that Messrs. and
Thorn of you agency have fred as to Whether we bad
reports from Dr. Armead Harnm of the Occidental
Petroleum Corporation on his trip to s
We do have dais report and losing a
copy for your information. I am also one Wag a copy
of my transmittal letter to.. Secretary Rusk with which I
furnished him a copy.
Executbre
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March 3, 1961
Honorable Dean Rusk
_iecretary of State
Washington, D. C.
Dear N:r. Secretary:
As promised, 1 am sending you herewith
transcription of discussion we had with Dr. ArmanCi
ilanItner, who visited us last Saturday after his return
from 1.,!oscow.
The first page of this report is given over
to two other countries, and the last part to his dis-
cussion of the Soviet Union, ivir. iihrushchev 4, and
others.
e had a security check made on Dr. Hsa-nmer
which, as you probably know, was not too conclusive.
Since Ambassador Thompson was good
enough to come over to the office and talk with Ine
about our proposed visit with 1`,1enshikov, as well
as Dr. Hammer's visit, I am enclosing copy of this
letter and report which you may want to send to the
Ambassador.
As I previous17 told you, there was nothing
unusual about the visit with Ambassador Menshikov. He
was just arguing for more trade.
Very truly yours,
Luther H. Hodges
1,1-1H/mb
Enclosures
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FORM FCAMMI U.S DEPARTMEN T OF COMAE RC E
(40.3,-55) BUREAU OF FORE I Giv COMMERCE
i'
REPORT ON OFFICIAL TRAVEL, PARTICIPATION IN INTER-AGENCY MEETINGS OR DISCUSSIONS
DA TE OF REFuRT
Febrim 22 1961
(1) INTER-AGENCY MEETING OR DISCUSSION
(2) OFFICIAL TRAVEL
1. 1: DATE OF MEETING ORMOOS INA.
February 25* 1961,
MEETING OR DISCUSSION HELD AT
Department of Commerce
6. DA TE(S) OF TRAVEL
3. NAME OF COMMITTEE IF APPLICABLE
1 THAvEL ORDER NO. 8. DATE OF 7 RAVEL
ORDER
4. AGENCIES PARTICIPATING
Commerce
9. I INERARy
5. OTHER COMMERCE PARTICIPANTS Secretary Luther F. 'Hodges, Asst..10oonomanocxwommommarioccorsaut
Secretary Rowland Burnstan, Special Asst. Roy Morgan
of EFC, Loring K.Maey
and Director
11. DETAILS OF OFFICIAL TRAVEL. MEETING. OR DISCUSSION ANi; DEC!: IONS REACHED
This meeting was held to discuss with Dr. Armand hammer, President of the 0-.J3idental
Petroleum Company, his recent trip to Libya, Italy and the U.S.S.R. Dr. Hammer was
accompanied by U.S. Senator Albert Gore.
Xi=
Dr. Hamerls comments regarding his visit to Libya were brief. The poverty in Libya wai
the worst he had over seen. He felt that if the U.S. process for obtaining pure water
from sea water is perfected and can be made to operate inexpensively, Libya should be
one of the first recipients. According to DT. Hammer, about 40 percent of the expleratt
drilling operations for oil in Libya are paying off and pipe lines are being laid to
transport the oil from the fields to the port. He added that the present ruler of Libyt
who he thinks is about 70, is favorably disposed to the U.S. Dr. hammer said that U.S.
investments in Libya amount to $300 million and that another $300 million will be in-
vested there by U.S. oil companies.
itagilkt
Dr. Hammer said that Mr. George Elliman of Commer:a, now serving as our Commercial
Attache in Rome, is doing an excellent job for U.S. business there. He commentad on tilt
excellent commercial library of the Embassy and the fact that telephone books were avai:
able for important cities of the United States.
He suggested that U.S. commercial officers abroad should come back at periodic intervalt
to discuss their experience with U.S. businessmen and to give lectures before chambers
of commerce. He noted that Italy is doing quite well economioally and that the Italian
eonsumer would be interested in obtaining U.S. refrigerators--small ones, that is, rattu
than the large sizes produced for the U.S. market. He pointed out that U.S. business
should employ Italian speaking salesmen and equipment demonstrators.
He also felt that participation in trade fairs was important, to display U.S. products,
and that this activity should receive more support. The Soviet bloc countries are
actively participating in Italian trade fairs and Dr. Hammer believes that bloc trade
with Italy will grow substantially.
12. REQUIRED DISTRIBUTION:
DIRECTOR SEC (4)
(For use in Offices of 4��t. Secretary and RFC
Director)
DIRECTOR. OFFICE OF ECONOMIC AFFAIRS
DIRECTOR. OFFICE OF EXPORT SUPPLY
DIRECTOR. OFFICE OF INTELLIGENCE AND SERVICES
13. OTHER DISTRIBUTION
Mrs Patten D. Allen
14. REPORTED BY
___ Ernest RubinDI
15. TITLErn...,
VISYMIILeJ" II USSR,EE Sections, European roil
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While in the Soviet Union Dr. Hammer saw many officials, including Prime Minister N. S.
&liras:hob:my Deputy Minister Mikoyan, A. F. Dobrynin of the Ministry of Foreign Affairs,
and Y. X. Vinogradov and M. V. Gribkov of the Ministry of Foreign Trade. Dr. Hammer
speaks Russian and was able to converse with these officials without the aid of an
interpreter.
Dr. Hammer's oonvereations in the U.S.S.R. related primarily to U.S.-Soviet trade
relations and what could be dons to improve them. He said he made it a point to avoid
political discussions. The principal points developed by Dr. Hammer in his conversations
dealt with:
(1) Orabmeet: Imports into the United States of Soviet crabmeat are administratively
banned on the basis of a Treasury finding in 1951 that its production involves use of
forced labor. The U.S.S.R. contention is that this product is not made by slave or
"forced" labor. The U.S.S.R. will not permit any U.S. official group to make an
investigation because such an investigation could be interpreted as an admission that
such labor was employed. Khrushchev suggested that Dr. Hamner visit the area where
erabmeat is oanned and satisfy himself on this point. Dr. Manner declined this offer
because of prior commitments. Khrushchev indicated to Dr. Hammer that persons not
connected with the U.S. Government would be acceptable for the purpose of visiting
the crabmeat production or fishing areas.
(2) Lemd-Lemse: Dr. Hammer indioated that Khrushchev and Mikoyan want to expand
U.S.-U.S.S.R. trade relations and that they are concerned with the settlement of the
Lame-Lease debts. Mikoyan had stated that the U.S.S.R. could place $1 billion worth
of orders in the United States and that recently substantial orders for steel had
gone to Italy and Sweden. Khrushchev told Dr. Hammer that he had given orders to
settle the Lend-Lease debts but that the U.S. did not wish to treat the Soviet Union
as it had treated the British. Khrushchev said that the British had been assured of
credits following land-Lease settlement.
(3) bra: Dr. Hanger mentioned that the Russiane had objected to the U.S. ban on
seven types of furs. It was noted that the ban on the Soviet furs became effective
January 52 19522 following legislation by Congress, Section 11 of the Trade Agreements
Act of 19514
(4) Other matfett: Khrushchev told Dr. Helmer he would like to develop cattle
similar to those in the United States, i.e., cattle that yield more than the 40-50
percent moat per head presently obtained in the Soviet Union. Dr. Hammer explained
that U.S. producers get around 70 percent meat per head; Khrushchev was aware of this
from his trip to the United States. Khrushchev was interested in importing U.S. prize
bulls and agricultural specialists who would teach Soviet farmers U.S. techniques in
animal husbandry. Secretary Hodges aeked whether there is any official objection to
exporting such animals or technical assistance. Mt. Macy stated that there would be
no export license problem.
Khrushchev also told Qr. Hammer that the continuation and expansion of educational
and cultural exchanges between the U.S. and the U.S.S.R. was something he desired.
With regard to rocket, sputnik and atonic energy achievements in the U.S.S.R.,
Khrushchev said that the proper people for these jobs were brought together and
paid very well.
At the conclusion of the meeting Secretary Hodeee thanked Dr. Hamner fez' his information,
-.a
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suggestions, and interest in helping the U.S. export program. Dr. Hammer made avail-
able to the Secretary memoranda of his conversations with Khrushchev, Mikoyan and
Vinogradov.
Other Comments and Observations by Dr. Hammer
Dr. Hammer occasionally referred to his eight-year stay in the Soviet Union, 1922-1930.
In 1922 he represented the Ford Company. Subsequently he built the first pencil
factory in the Soviet Union. On mentioning to Khrushchev that he had been unable to
visit this factory, Khrushchev gave orders which permitted Dr. Hammer and his wife to
visit the plant. Some of the old employees recognized him. Many of the former hand
operations are now done by automation.
He referred to his nephew (a Soviet citizen, a child of the marriage of his brother
to a Russian woman in the 1920t5). Through the intervention of Mrs. Eleanor Roosevelt,
this nephew (now about 32 years old) was able to visit his father in the U.S. for a
2 month period. According to Dr. Hammer, the nephew has no desire to migrate from
the U.S.S.R. The nephew is satisfied with the Soviet Union, particularly so sinco
the death of Stalin.
Dr. Hammer commented on the ready availability of consumer goods in the stores of
Moscow, and was particularly impressed by a fruit store there. He said that the
contrast between the time he left the U.S.S.R. (circa 1930) and now is unbelievable.
Dr. Hammer went to London from Moscow. He said that his scheduled flight to London
had been delayed and while he and his wife were waiting for their plane at the Moscow
Airport, his wife heard an announcement that another plane was going to London. Dr.
Hammer inquired about passage on this plane but was told that it was about to take
off. The Intourist guide assigned to Dr. Hanner spoke to officials at the airport,
mentioning "Khrushchev". Dr. Hammer and his wife were transferred to this plane,
a new jet, and went to London as the sole passengers aboard.
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DR. ARMAND HAMMER
590 MAnisoN AvArms
NEW YORK 88. N. Y.
PLAZA 8-0410
February 24, 1961
The Honorable Luther H. Hodges
Secretary of Commerce
Washington, D. C .
Dear Mr. Secretary:
Further to my letter to you of February 19th, I should like
to report to you more in detail on my trip to Libya.
While this is a small country as far as population is con-
cerned (approximately 1, 500,000), it is important to us be-
cause of a large military base which we maintain there and
because it is today probably the "hottest! area for discovery
and development of oil reserves. From a country which had
no oil five years ago, it has now a potential production of
115,000 barrels a day, practically all of which has been dis-
covered in the last two years. Most of this production is in
the hands of American firms. Standard Oil of New Jersey
is now building 100 miles of pipeline which will enable them
to market as much as 100,000 barrels daily by the end of
this year.
It is estimated that American concerns will have spent in the
neighborhood of $300,000,000 in Libya by the end of this
year and that this irirestment will be doubled within the next
three to five years.
There are nineteen companies now operating in Libya and an
equal number that are eager to do so. The potential reserves
so far discovered have been estimated from a low of
1,000,000, 000 barrels to a high of 5,000,000, 000 barrels.
Since the first exploration concessions were granted five years
ago the nineteen companies have drilled 130 wells, found over
40 producers and established at least 11 oil fields making
Libya unique in the world's oil countries.
The single danger to this infant oil industry which is dominated
by American companies is the possible lack of stability of the
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government and the bureaucratic red tape and corruption.
The people are proud and as long time colonists are in-
clined to regard foreigners with, a certain amount of distrust.
They are getting a lot of advice from their Arab neighbors
including Nasser but so far this has been neutralized by the
pro-American attitude of the King. Since the King is an old
man (70), there is a real danger of a change in the pro-
American policy when he passes away.
Our Ambassador Mr. Wesley Jones is doing a good job and
has the confidence of the King. I had several meetings
with Mr. Jones and with the Economic Counsellor Mr. Duncan-
Peters. The latter is well versed in Libyan affairs and has
been of great assistance to Americans doing business in Libya.
Unfortunately, not all Americans have taken his advice and
some of the American business men have come to grief by
entering into business relationships with some Libyans of
shady reputation who have been peddling their alleged influence
with the King and his Ministers.
In view of the great importance of the potential oil reserves
for our country, I recommend that we give every assistance
to our trade representatives in Libya in developing closer
commercial ties. This should not only cover the field of
developing exports and imports but in helping them to develop
their agriculture. Libya has a very large area on which many
things could be grown. Except for a small fringe of land near
the seacoast, their principal problem is lack of water. If our
government's present program of developing equipment for
the practical conversion of sea water to fresh water is success-
ful, we should see to it that Libya is one of the first countries
to whom we extend the benefits of this work.
I understand that there will be a trade fair in Libya next Febru-
ary and that we have agreed in principle to participate and are
awaiting Congressional appropriation of funds. In view of the
great stake we have in this country, we should make every
effort to participate in this fair with every type of American
goods suitable for the Libyan market.
Sincerely yours,
AH. G Armand Hammer
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DR. ARMAND RAMMER
395 MADISON Ainoirg
NEW YORK 82, N. Y.
8 0410
February 24, 1961
The Honorable Luther H. Hodges
Secretary of Commerce
Washington, D. C.
Dear Mr. Secretary:
As stated in my letter to you of February 19, 1961,
with reference to my visit to the U.S.S.R., I was unusually
fortunate in renewing some of my former contacts with
Soviet trade officials, including the former Foreign Trade
Minister and now Deputy-Prime Minister, Anastas Mikoyan.
At the suggestion of Mr. E. Freers, the Charge
d'Affaires of the U. S. Embassy and Mr. William Morrell,
Jr., the Economic Councillor, I have dictated the enclosed
memoranda of my talks with
1. V. M. Vinogradov, Chief of the Administration
of Trade with Western Countries and M. V.
Gribkov, Chief of the American Trade Section,
on February 14, 1961.
2. Deputy Prime Minister A. I. Mikoyan on
February 15, 1961
3. Prime Minister N. S. Khrushchev and A. F.
Dobrynin, Chief of American Countries
Division, Minister of Foreign Affairs, on
February 17, 1961.
I enclose a copy of the speech delivered by Sir George
Bolton, chairman of the Bank of England, referred to by
Mikoyan in his talk with me. I obtained this from Sir George
Bolton's office while passing through London on my way to the
U. S. A.
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It It . A It Al ANli A SI F, it
51)5 l��' vENcE
NEW Yin/hi z2, N. Y.
PLAALA 8.0410
The rest of my report on my trip to the U.S.
will he given to you in person.
Sincerely yours,
AH, jr
Armand Hammer
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DR. ARMAND HAMMER
595 MADISON AVENUE
NEW YORK 22, N. Y
8-0410
eoruary L5, 1961
The Honorable Luther , Hodges
Secretary of Cornme
Washington, D. C.
Dear Mr. Secre
Further to my etter of February bi1961 in regard to my
trip to Italy, wish to report ollowing.
004
The Comme cial Atta , Mr. George T. Elliman, is doing
a splendid j tr to expand our export trade to Italy. As
you undoubte y know, the major stumbling block to our ex-
ports prior to 1960 was a virtual embargo through discrimina-
tory licensing procedure against a great many industrial and
consumer items produced in the USA. Toward the end of 1960
this was rectified to a large extent in the industrial area but
still continues regarding certain agricultural goods and the
Commercial Attache should be encouraged to continue his
efforts to have this discrimination removed.
I inspected the Commercial Information Center set up at the
Embassy and was very much impressed by the businesslike
way in which assistance is being rendered to business men,both
American and Italian. There is an excellent library with every
type of reference book one could think of and a capable secre-
tary to answer inquiries, both telephone and written, and in
person.
There should be more support given our trade officials in
Italy in participating in trade fairs. The officials have recom-
mended that an agency be set up in the Department of Commerce
or Department of State charged with responsibility for local
exhibits. However, as far as I know, there has been no action
taken on this recommendation. On the other hand, the
Communist bloc has redoubled their efforts in this area and
there has been a loss to us of commercial prestige by com-
parison.
I would suggest that the Commercial Attache be invited to
Washington to set forth his ideas of how American participation
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in these fairs can be promoted to obtain the maximum com-
mercial benefit for American products in Italy. This should
be coordinated with a campaign to interest American manu-
facturers in taking an active part in these fairs. There has
only been token participation in the past few years.
It might be advisable to set up luncheons in conjunction with
the Chamber of Commerce in various industrial and agri-
cultural centers and arrange for the Commercial Attache to
deliver a talk to American business men pointing out the
opportunities for the expansion of exports in Italy and out-
lining to them what concrete steps they could take to obtain
a share of this business.
I enclose a list of items which have current export possi-
bilities to Italy. I believe that most of these products could
be marketed on a competitive basis in particular sections of
Italy. I understand that this list was forwarded to the
Department toward the latter part of last year. It would be
advisable to follow-up on this and see what, if anything, has
been done to acquaint American business men in these fields
with the market potential. Perhaps many American business
men could be stimulated to exhibit their wares at the many
local fairs which take place in Italy and where other countries,
especially the Communist bloc countries are playing such an
active role.
In this connection, it should be pointed out to American busi-
ness men who wish to engage in selling their products to
Italy that if this business is to be obtained and expanded, they
should try to employ Italian speaking salesmen and demon-
strators in the use of their equipment. For example, as I
pointed out in my letter to you of February 5th, some of the
business people I spoke to felt there was a great need for IBM
computers but that there was a shortage of experienced
operators.
The above suggestions are not intended to be complete inas-
much as my time was very limited and I am sure that our own
Commercial Attache and representatives in Italy will have
many additional suggestions to make. It is important that
.4.4041411.
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their suggestions are sorted out and followed through if
we are to take advantage of the opportunities which await
in expanding our export trade to Italy.
Very sincerely yours,
Armand Hammer
au. g
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Items liberalized as of June 15, 19E01 and not nreviouslv sold by United
States in Italy because of the inabilitto obtain import licenses.
Meat and meat offals
Potato starch �
Sulphoricinoleates, sulpho-oleates, sulpho-iosinates, sulpho-aplithenates
and similar organic surface-active ag-nts
Film in rolls, perforated and un7Derforated
Preparations containing natural or synthetic organic insecticides,
anticrytogamic or funidal -yrc.duts
Non-modified amionplasts
Unmer,..lerized, woven cotton fabrica, unbleached, bleached, dyed, multi-
colored and prited
Woven fabrics, also felted, impregnated or coated, for industrial use,
of pure or mixed wool
Compressors
Machinery for filling, closing, sealitv, capsuling or labslling bottles
or other containers
Heat exchange unite
Automatically controlled taps, cocks and valves, pressure regulators and
pressure reducing valves
Complete telephone seta
Electrical anparatus for making, breaking or nrotecting electrical
circuits
Incandescent electric ifunrs
Record players, record changers
Sound recorders, including dictating machines
Toys (toy arms, mechanical to:s, etc.) made of metal, rubber, wood,
plastics or other materials
ItemB liberalized in June 1959 or January 1Q(0 and which United States
ernorters have not ernorted widely into Italy.
Unshelled eggs, whole
E;:y yolks
Paints cJid varnishes
Cosmetics
Interchangeable tcols for hand trdols or machine tools and power-op,!rated
hand t,)ols with working part of diamonds (or diamond apTlomerates) of
hard alloys or of other -,aterials
-4.ecinrocatin6 rotary and centrifugal pumps
Machinery for making paper and raper board
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DEPARTPIEtir OF CW*IERCE
SECRETARY'S
CORRESPONDF.NCE UNIT cLAR1DG S I NDON
120.0111/011.1
1961 FEB 23 PM -/LF,PHONE, MAYFAIR 8860
54
The Honorable Luther
Secretary of Commerce
Washington 25, D.C.
Dear Mr. Secretary,
GRAMS, CLARIDGES LONDON
Hodges,
19th February 1961.
1
Since writing you on February 4111 1961, I completed
my survey in Rome and proceeded to Libya, where I spent a
week in Tripoli. I net there with our Ambassador, Mr: Jones,
and several of the men in the Economic Section, headed, by
Mr. Duncan-Peters, who briefed me on the local situation.
I also met Mr. Steven Conner of the United States Operations
Mission to Libya, who was very helpful. I met several Libyan
business and professional men, as well as oil men, represent-
ing the Libyan Government and private American. interests,
including representatives of our own company. ,I am,convinced
that there is a great future for American oil interests in
Libya, where we now predominate, providing thepolitical situa-
tion does not deteriorate. I shall report to you fully on
this situation in person.
I then proceeded to the U.S.S.R., where I ;epoTted to
.1r. Edward Freers, the Charge d'Affairse;41bAstadOt Thompson,
as you know, being in Washington. I:Was:fill:4 briefed by
Li.. Freers, and especially by Mr. William MOre11, Jr., the
Economic and Commercial Counselor, who was of .great assistance
to me during my stay in Moscow. I was unusually fortunate
in my contacts, not only with the lesser officials of the
Department of Foreign Trade, but also with Mikoyan, with whom
I renewed an old friendship when I brought the first American
tractors to the U.S.S.R. as the representative of Mr.litnry
Pord in 1922.
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CLARIDGE'S LONDON
.11.11MMINEININFR
TELEPHONE. MAYFAIR 8860 TELEGRAMS,CLARIDGEN LONDON
- 2 - 19th February 1961.
As I was about to leave Moscow the Embassy received
word that Mr. Khruahchev would be glad to see me if I would
stay over another day. I spent over 2 hours with him in
his Kremlin office, during which we had a very friendly talk
and covered the entire subject of Soviet-American trade in
peaceful goods and what measures could be taken to expand
same. When I returned to the Embassy and reported the details
of my conversation, it was considered of sufficient importance
to be put in classified memoranda to the State Department
with copies to you. In view of the fact that there were
many,thinga stated in my interview with both-lii..ktaya004
KbrUbhcher which could be conveyed better in person, I have
decided to postpone my trip, temporarily, around the world
and to return to Washington to make a personal report to you,.
and any other interested members of our Government.
I will be leaving on Wednesday, via Air France, as this
is the first 'plane I can get out owing to the strike of
engineers on all the American lines. I will be in.New York
Wednesday afternoon and hope to be in Washington Thursday.
With kind regards,
Sincerely yours,
^Igolg-A001%.0( 017/PrIL�0464..../.
Dr. Armand Hammer. .
cc Senator Albert Gore.
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MEMORANDUM OF CONVERSATION*
SUBJECT: US-Soviet Trade Relations
PLACE: Kremlin
PARTICIPANTS: A.I. Mikoyan
Armand Hammer
February 15, 1S'61
(1 hr. 35 min.)
V.I. Kuzminski (Chief of Interpreters Section, Ministry
of Foreign Trade)
1. Although an interpreter was present my talk with Mikoyan was in
almost entirely. It wa::, extremely friendly and began with reminiscences
of our meeting 3`;', years ago at Rostov when as the agent for the Ford Motor
Company I had arranged a demonstration of the first shipment of American
tractors to arrive in the USSR since the revolution. At that time he was Secretary
of the local soviet. During part of the meeting he repeated many of the point.;
mad:- by Vinogradov the day before (see separate Memorandum of Conversation).
However, a number of additional points emerged which may be of interest:
(a) Regardiag US prohibitions against imports of Soviet crab meat Ile
stated that the USSR could not possibly give any certificate or submit to any
investigation since this could be interpreted as an admission that "slave" or
"forced" labor had been employed. In any event "forced" labor would never be
usee to handle food products as this would be "unsanitary" and "dangerous" and
Tis cloes not purport to be a precise transcript of the discussion, but is
rather my best recollection assisted by rough long-hand notes.
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as he remarked, "We have to eat this crab meat ourselves." If such labor
had been employed in fishing activities the Japanese would have observed them
since they often fish side-by-side with the Soviet fishing vessels. At one time,
he said, Mr. Dillon had agreed that this restriction should be removed. It is
clear that this is a source of irritation to the USSR. According to his inform-
ation this decision stemmed from an administrative finding and should be remov-
ed administratively.
(b) He stated that the US and the USSR should attempt immediately
to remove those obstacles to better trade relations which can be disposed of
most easily. Major problems such as a lend lease settlement, credits, and
the granting to the USSR of "most favo-red nation" treatment required legislat-
ion and will take time. Mikoyan believes that even Dulles before he died
favored the granting of credits to the USSR, settlement of lend lease, and the
expansion of trade between the two countries. If lend lease could be settled
and credits arranged the USSR could place orders in the US in the amount of
one billion dollars. In this connection Mikoyan said that these orders would
not include "military items" -- and in his words, "after all we can make these
better than you can. For example, we are ahead of you in rocket development."
(c) He was critical of former Secretary of Commerce Strauss who
only wanted to discuss the religiousissuesin the USSR and of former Secretary
Mueller for going on TV to defend his alleged prohibition of the sale of 10,000
small Soviet automobiles in the US after a contract had already been signed
between the USSR and an American importer. Neither of these Secretaries
were in his opinion interested in any way in improving trade between the US and
the USSR. He has never met Mr. Hodges but intimated he would be glad to meet
with him and hopes the new Secretary will have a more constructive approach to
this matter.
(d) He had understood earlier from Dillon that there might be some
chance for US credits but that Nixon on his visit to the USSR indicated that Dillon
could not have said this. Fortunately, according to Mikoyan, the interpreter
had his notes of the conversation which Mr. Mikoyan had given to Ambassador
Thompson. "I do not make statements which I cannot back up," he said.
(e) The USSR had a few days ago placed an order with the Swedes for
delivery of 135,000 tons of steel pipe and with the Italians for 240,000 tons. No
long credits were involved. "Orders like these could have been placed in the US
and it would help to solve the US unemployment problem at a time when the US
steel industry was operating at only 50 percent of capacity," he said.
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3
(f) He said that while credits were desirable, a substantial trade
could still be done with the US on a cash basis.
(g) He stated that Khrushchev had received a communication from
President Kennedy on the question of reciprocal direct air flights between the
US and USSR.
2. I gained the impression that the Soviets are eager to improve
relations and that they are clearly anxious to expand US-Soviet trade. However,
I pointed out to Mr. Mikoyan that it was my opinion that the USSR would have to
create a better atmosphere in the US before the new administration would have
any chance for success in getting Congress to pass the necessary legislation.
to permit the "most favored nation" treatment for the USSR and the granting of
credits. I told him that the good will among the American people which had
reached its peak following Mr. Mikoyants visit to the US in early 1959 and by
Mr. Khrushchev's visit in the fall of 1959, had considerably deteriorated. I
did not want to get into a controversy over the rights or wrongs of the USSR or
US position in regard to the U-2 incident but the fact remained that if Russian
trade is to be expanded in any considerable extent an attempt must be made to
obtain the support of American public opinion. This would have to be a slow
process and there must be evidence of good will and good faith on both sides.
I pointed out that in my opinion settlement of the lend lease debt would
go a long way toward creating the proper atmosphere for changing the "mfn"
situation and obtaining credits for Russian trade. He said that Mr. Khrushchev
had given orders to settle the lend lease debt when he was in Washington. How-
ever he said the Russians wanted the assurance that they would be treated in the
same manner as the English were in this regard, namely that parallel negotia-
tions be conducted regarding the granting of credits and a trade agreement, He
said the US and the UK understood these matters were tied together and dependent
on each other. However, in the case of the USSR the authorities in Washington
refused to negotiate on the same basis. Mr. Mikoyan said, "How can we make
our payments under a lend lease debt settlement, and pay for the orders we would
want to place if we did not receive credits and if we could not sell our goods on
the same conditions as other countries sell to the U.S?"
3. I said that improved relations could be assisted by increasing
tourist trade both ways and cultural exchanges. In this connection I made the
suggestion to Mr. Mikoyan that Russia send a representative collection of their
art treasures from their leading museums to the United States, This has been
done in the past by other countries with great success. The impact of a
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representative group of paintings from, for example, the Hermitage Museum
in Leningrad would be enormous. In order to make it strictly non-commercial
and non-political I suggested that Mrs. Eleanor Roosevelt be appointed chairman
of a committee to supervise this undertaking and that any benefits from admission
s.hould go to the Eleanor Roosevelt Cancer Foundation. I said that I believed
the first exhibition could be held at the National Art Gallery in Washington, D.C.,
and then at the larger cities in the US. such as New York, Chicago, San Francisco,
etc. Mr. Mikoyan said he thought this was a very good idea and said he would
speak to the proper authorities. I asked him to have them referred to Mr. Leslie
Brady, the Cultural Counselor of the American Embassy in Moscow, and that I
would cooperate with Mr. Brady in following through.
4. I showed Mr. Mikoyan the sales catalogue of my last cattle sale
which was the only Angus cattle sale that ever ran over a million dollars. He was
extremely interested in the development of the pure bred cattle business in the US
and wanted to know its significance with respect to meat production and commercial
cattle raising. I explained to him that thanks to the pure breeders in the US there
had been an upgrading in the quality and a reduction in the meat cost to the American
people. With the same amount of feed and care farmers can now produce much
more meat at no greater cost. This is possible because we have developed
excellent breeding stock and better methods of breeding. I offered to send him
one of my bulls as a gift which they could use for experimenting. He wanted to
know if there was available an expert in the US who could come over and teach
them how to use the methods that had been successful in the US. I told him that
I know of several such experts and that I would be glad to talk to them about this
when got back to the United States
5. As in my conversation with Vinogradov I recognised a number of
old Sov.et arguments during this conversation but I saw no purpose in refuting
them. I :e11- It much more important to elicit Mikoyants views and to search
for areas of possible agreement. I will withhold any conclusions until I have
reviewed this meeting with appropriate authorities in Washington.
Armand Hammer.
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MEMORANDUM OF CONVERSATION*
February 14, 1961
4 p.m.
SUBJECT: US-Soviet Trade Relations
PLACE: Office of V.M. Vinogradov. Ministry of Foreign Trade,
Moscow
PARTICIPANTS: V.M. VINOGRADOV - Chief of the Administration of
Trade with Western Countries
M. N. GRIBKOV - Chief of the American Trade Section
KUZMINSKI - Interpreter
Armand HAMMER
OBSERVER: W,N. Morell, Jr. - Counselor for Economic Affairs,
American Embassy, Moscow
1. I opened the meeting by describing my previous experiences in
the Soviet Union and my American business activities during the past 30 years.
While I stressed that I had undertaken this trip in the capacity of a private
citizen I went on to explain that Senator Gore and the Secretary of Commerce,
Mr. Hodges, had asked that I survey possibilities for improving US-Soviet
trade. In the course of these remarks it was emphasized that improvements
in this trade would take time but that it would be helpful to make some small
beginnings. Changes which require administrative action probably could be
effected more easily than those requiring legislation. I stated my personal
view that conceivably, for example, some change might be made relieving the
prohibition against imports of Soviet crab meat. Eventually it may be possible
to relieve prohibition against imports of certain furs even though this would
require legislation. While any change in the present difficulties over "mfn"
would be extremely difficult and would involve Congressional action, this is a
subject that could be re-examined. The main purpose in presenting my
views was to stress that in my opinion the new administration would likely
=!= This does not purport to be a precise transcript
of the discussion, but is rather my (and Mr. Morell's)
best rLcollection assist,:d by rough long-hand notes.
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seek ways of improving relations and I wished to present an optimistic view of
what might be done over time in the proper atmosphere. As a businessman
T. studiously avoided political questions and sought only to explore areas which
offered some promise for improved trade.
2. In response to my request for Soviet views on this subject
Mr. Vinogradov made the following points:
(a) Soviet trade with Western Europe is expanding whereas trade
with the US is very "weak". The US alleges that (I) the USSR
is dumping; (2) that the USSR forces its trading partners into
undesirable trading activities; and (3) that the USSR is
disrupting Western markets. The US alleges that the USSR
has nothing to sell to the US and at the same time complains
about the volume of Western European trade with the USSR.
(b) Three things might be done to improve US-Soviet trade:
(I) Soviet buyers must have some assurance that they can buy
'peaceful" goods in the US markets in the sense that
contracts negotiated by US firms and Soviet trading
organizations must be carried through without government
interference once the US firm has a government export
licence. (I indicated that this seemed like good business
to me and that. in my opinion the new administration
probably would take a similar view.) In this connection
he stressed that individual Soviet factories must be able
to plan with some certainty on export deliveries from
American manufacturers. The USSR wants to buy and US
firms want to sell. He noted particularly the desire to
buy chemical equipment as well as equipment for light
industry (e.g. paper making machinery and equipment
for manufacturing).
2) It is also important that the USSR be able to sell its
produrts in the US with a minimum of restrictions. The
lack of "mfn" treatment for Soviet products has been a
great handicap. Customs duties on Soviet manganese,
for example, are four times that on manganese imports
from other countries. I interjected that something might
be done to put vodka on a more competitive basis. Not
only should we explore problems of customs duties but
better packaging and advertising as well.
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.7.
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(3)
There should be a better psychological atmosphere among
US businessmen. Some businessmen for example have an
opportunity to trade with the Soviet Union but don't wish to
accept the business. They want to put these opportunities
aside until there are no other business prospects. In
addition the government has discouraged this trade in border-
line cases requiring licenses by deciding to deny the US
manufacturer the right to sell his product. This kind of
decision will be affected by the attitude of the new administra-
tion.
I c) Some people in the United States argue, according to Vinogradov,
that increased US-Soviet trade will bring a decline in US trade
with other countries. This will not be so because the general
level of LTS trade will continue to rise and will be able to
accommodate larger trade with the USSR.
(d) US, Vinogradov said, has not shown good business sense.
Western Europe countries have very shrewdly appeared to
support US efforts to restrain Soviet trade while they actually
have sought to expand their own trade with the Soviet Union.
(e) Vinogradov stressed that the USSR will need to gear its exports
to the US market. This will take time because of the need to
establish business contacts, advertise, etc. This will
require a big investment of fu.ids ane the USSR must have some
assurance that it can compete in the US market. In any event.
said Vinogradov, we recognize that this situation cannot be
changed overnight.
I")
In an aside Vinogradov indicated that they would like to see
Mr. More11 officially designated by Washington as a
Commercial as well as Economic Counselor. This would be a
small indication of US willingness to seriously consider
possibilities for expanded trade.
Returning to the main trend of his presentation, Vinogradov
chided the US for denying exports to the USSR which the USSR
latr was able to produce for itself. This inspired an improve-
ment in Soviet technology and only cost the USSR a small loss
of time. As a consequence US business lost the opportunity for
proul
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- 4 -
3. *ere v q a very brief discussion of the prospects for an air
etween the I..., an the USSR but this brought no significant response
from Vinogradov as this subject does not fall within his field of responsibility.
4. It was interesting that nothing was said about credits and that
Vinogradov seemed to recognize that an improvement in trade relations would
take time. I recognized a number of Soviet mis�statements . propaganda points,
and old arguments but I felt it would be inappropriate in this kind of exploratory
discussion to argue or to belabor these points. Rather, I was seeking to find
some areas of agreement which -- under appropriate political conditions --
might lead to an improvement in trade relations.
5. Before reaching any conclusions with respect to this discussion
I think it would be useful to discuss with the proper authorities in Washington
the situation regarding a number of the points raised above.
ID r. Armand Hammer
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