The Secretary of Commerce (Hoover) to the Secretary of State

Dear Mr. Secretary: I am greatly obliged for your letter of December 1st enclosing memorandum on arrangements proposed by the Department of State for encouraging Germany as an intermediary for our future trade with Russia. I regret that I cannot agree with this program as being in American interest. The policies laid down in this Department for commercial and economic relationship to Russia are of an entirely different order.

Germany’s position as an intermediary to Russia in a portion of our trade before the war was due to the hold that her distributing machinery and technology had attained at one time in Russia, and to the fact that Germany financed our exports to Russia. Both of these positions have been lost by Germany. Of more importance, however, is the fact that in the years immediately prior to the war the superior administrative technology of Americans was making vast inroad into German industrial domination of Russia. This was stimulated materially by the instinctively greater racial sympathy between Russians and Americans than between Germans and Russians. The matter was of so much practical importance that certain German establishments had, prior to the war, employed American agents to represent them and handle their business in Russia.

An examination of the entirely disinterested political relationship that location imposes upon Russia and the United States; the striking parallel of national economy of Russia and the United States; the uninterrupted friendliness of the United States and the Russian people; gives the United States certain undoubted commercial advantages. At the present moment, although other powers have recognized the present Russian government and we have refused to do so, yet Americans are infinitely more popular in Russia and our Government more deeply respected by even the Bolsheviks than any [Page 788] other. The relief measures already initiated are greatly increasing the status and kindliness of relations and their continuation will build a situation which, combined with the other factors, will enable the Americans to undertake the leadership in the reconstruction of Russia when the proper moment arrives. For us to align ourselves with the Germans today in any relationship to Russia would be a crushing disappointment to the Russians and would negative any values that have been so carefully built up in the past.

Of more tangible importance, perhaps, in the actual hard facts of commerce, is that permanent American foreign commerce can never be based upon the reshipment of goods at the hands of other nationalities. The hope of our commerce lies in the establishment of American firms abroad, distributing American goods under American direction; in the building of direct American financing and, above all, in the installation of American technology in Russian industries. We must, of necessity in the future finance our own raw materials into Russia and if our manufactured goods are distributed through German hands it simply means that when Germany has established trade of sufficient distribution to warrant her own manufacture we shall lose the market. I trust, therefore, that the policies initiated by this Department will be adhered to.

Yours faithfully,

Herbert Hoover