861.50 Am 3/2: Telegram

The Ambassador in Germany ( Houghton ) to the Secretary of State


148. Department’s number 102 of July 24, 4 p.m. At present Krassin is in London. When it is possible, I will arrange meeting. In the meanwhile I suggest the following:

I have had the opportunity during the past three months to discuss intimately the Russian situation with leaders of all shades of opinion. On the one extreme there are those like General Hoffmann and Rochberg who are in favor of immediate armed intervention in order to destroy the Soviet Government, considering such action necessary for the safety of the world. At the other extreme are those like Deutsch and Stinnes who look upon Soviet Russia as potentially the greatest existing system and who are in favor of immediately opening trade, which they think carries with it any necessary security per se. I have talked with the former German Military [Page 828] Attaché at Petrograd, Von Schubert, and with a number of men who in the past have done business in Russia but who are unable to get into satisfactory relations with the Soviets for various reasons. I have also talked with travelers, correspondents and the like.

I met Chicherin49 ten days ago. He considered differences between himself and the Secretary of State were largely verbal. He believes that private property is now established in Soviet Russia, at least to the extent it ever will be, and all big business will undoubtedly be owned, controlled and managed by the state in the future. He could not understand why the Secretary of State did not utilize the present opportunity to secure concessions. As regards security, Chicherin said that the Soviet Government had always lived up to its pledges and that it always would. He insisted that the Soviet Government was created by the popular will, although he admitted that by popular will he meant a majority of selected groups, not a majority of all the citizens. Chicherin talks and acts like a broken man. Opinion here, in which I share, is that he still plays an important role, but there are persistent rumors that he fears to return to Moscow owing to the failure at Genoa. His departure has been constantly postponed at any rate. In our interview I limited myself to asking questions.

I had a long conversation yesterday with Batolin, who was formerly one of the big industrialists of Russia. As he has been promised the restitution of three-fourths of his property if he will return to Russia and give his services to the economic reconstruction of the country, he is extremely cautious in his talk. He is, however, definitely outspoken on two points. He declares that the Soviet Government still is in a process of formation, the outcome of which it is not safe to predict, and that there does not exist in Russia any real security for investment. He also recommends a policy of waiting.

I therefore venture to offer my own conclusions as follows:

The Soviet Government will continue in some form to hold power indefinitely. It does not need money for existence but to make it possible to carry out its economic plans. The group now in power is willing and anxious to sell concessions for limited periods in order to gain the money needed and to carry out its economic plans.
At any time this group may be changed, e. g., by the incapacity or death of Lenin, and a new group with opposing views and slightly different personnel may come into power.
The safety of investments in Russia will depend not only upon the good will of a certain group but also upon that group continuing in power.
There is now in process a struggle for power in which apparently the conservative element is winning.
There is no sound basis for action until the internal situation in Soviet Russia becomes clear and a new and reasonably permanent government establishes itself.

Doubtless there are opportunities for exploitation in Soviet Russia. These could be more sharply defined by technical men. It is, however, impossible for such a committee to supply us with the information we need most, i.e., the exact political situation. Only time can do that.

I therefore think that the only safe policy for us is to remain inactive for perhaps a year longer. In that time we doubtless will hear much about inroads being made by Great Britain and Germany. I am, however, unable to learn whether either the British or Germans have actually invested any large amounts of real money in Russia. The danger in the plan which is proposed is not that Europe may believe that the United States is entering upon a scramble for concessions but that Russia may consider it a basis for negotiating regarding our fundamental position. In that case the possibility that the Soviets would yield further would be lost. Such action by us would, moreover, directly tend to strengthen the group which now holds power in Russia.

  1. George V. Chicherin, Soviet Commissar for Foreign Affairs.