Foreign Relations of the United States, The Soviet Union, 1933–1939

711.61/611

The Chargé in the Soviet Union (Henderson) to the Secretary of State

[Extracts]

No. 2042

Moscow, November 16, 1936.
[Received December 24.]

Sir: I have the honor, upon this the third anniversary of the establishment of diplomatic relations between the United States of America and the Union of Soviet Socialist Republics,³¹ to submit herewith certain comments with respect to developments which have taken place in these relations since their origin.

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Even with a maximum of good will upon both sides it is not an easy task for two countries which, like the United States and the Soviet Union, represent not only quite dissimilar systems but also conflicting philosophies with respect to the duties and obligations of members of the family of nations, to maintain mutually satisfactory relations. There can be no doubt that if a mutual desire for understanding exists, it is easier for countries with dictatorial forms of Government, even though the Government may be of a so-called fascist nature, to maintain good relations with the Soviet Union than it is for countries possessing democratic forms of Government. Practically every contact which a democratic Government like that of the United States has with the Soviet Government brings into still bolder relief the differences in structure, aims, and methods that exist between them. The Soviet Government in the conduct of international relations has shown a remarkable degree of flexibility. It has thus far, however, displayed a fixed determination not to sacrifice any of the principles upon which it is based, and in my opinion it has no intention of doing so. For purposes of convenience, however, it has found it desirable at times temporarily to bridge some of the gaps which separate it from the Western Powers. The bridging of these gaps has consisted for the most part in (a) working out formulas which can be interpreted in one manner by the Soviet Government and in another manner by the Government of the particular country concerned, or (b) making certain concessions of a minor nature in return for corresponding advantages received. A Government which, like that of the United States, must constantly face the criticism of a strong opposition press at home and must satisfy a public opinion too enlightened to be satisfied with explanations of a general or ambiguous nature, finds it difficult to agree to such formulas or to give special advantages in return for treatment to which, according to international law as customarily interpreted or to international practice, it is already entitled.

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Although, as pointed out above, certain definite advantages have accrued to both Governments as the result of recognition, the policies and attitudes of each of the two Governments have failed in a number of important respects to meet the expectations or at least the hopes of the other. Among the disappointments experienced by the American Government are the following:

1. The refusal of the Soviet Government to agree to a settlement of the debts and claims questions on what would seem to the American Government to be a reasonable basis.³²

2. The refusal of the Soviet Government to consider that its pledges relating to non-interference in American internal affairs applied to the Communist International and affiliated organizations, and the continuance of the headquarters of the Communist International and affiliated organizations to direct from Moscow the work of the branches of those organizations in the United States.³³

3. The failure of the Soviet Government to increase to the extent hoped for its purchases in the United States.^*

The following represent some of the Soviet disappointments:

1. The fact that the American Government has not come to some kind of understanding with the Soviet Union vis-à-vis Japan in the Far East and has not supported Soviet policies in Europe to the extent apparently hoped for by Soviet officials charged with the conduct of foreign affairs.

2. The refusal of the American Government to accept the Soviet thesis that the Soviet Government is in no way responsible for the activities of the Communist International and kindred organizations.

3. The refusal of the American Government to give or at least to guarantee large long term financial credits to the Soviet Government.

4. The apparent unwillingness of the American Government to enter into a general commercial treaty with the Soviet Union which would not only guarantee that Soviet merchandise would be given the treatment accorded to most-favored-nations and that Soviet citizens would be granted the treatment accorded to either American nationals or nationals of most-favored-nations but which would also take into account, and make allowances for, the special economic system existing in the Soviet Union.

It is only natural that the disappointments referred to above should cause a considerable strain in American-Soviet relations. This strain has been increased at times by a series of irritations of a more or less minor nature.

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It can be seen from an examination of the various points at issue and of friction between the two Governments that American-Soviet relations, although of a formally friendly nature, are not entirely cordial and expressive of mutual confidence. Persons interested in the conduct of American foreign relations who happen to read this despatch may obtain the impression that the points at issue and the sources of irritation do not appear to be of a really serious nature and may wonder if after all there is not a possibility, in case a sincere effort is made by both sides, to bring about mutually satisfactory relations between the two Governments without imposing upon either too great sacrifices in interests or principles. They may feel that if each of the two Governments would show a somewhat more tolerant attitude towards the other and if each would be willing to relax somewhat its demands upon the other they should be able to work together in harmony.

It is my feeling, based particularly upon almost three years of experience in Moscow, that most of the differences between the two Governments go much deeper than might first appear to the casual observer. In my opinion, the relations between the American and Soviet Governments are not likely to be what might be regarded as cordial unless at least one of them displays a willingness to make several radical shifts in its general foreign policies and to abandon certain principles to which it has thus far steadfastly adhered.

One of the major difficulties in maintaining satisfactory relations with the Soviet Union arises from the fact that the demands of that country upon other Powers as the price for such relations increase from year to year as the economic position of the country improves and as its international prestige as a Great Power grows. It seems to me that the Soviet Government in general pursues much more of a progressively aggressive foreign policy than do most Powers which are endeavoring by peaceful means to satisfy their international ambitions. In my opinion, the aggressive characteristics of Soviet foreign policy are largely due to the fact that that policy, to a greater extent than the foreign policies of most other Powers, has before it a series of definite objectives, and that the work of Soviet officials responsible for the conduct of that policy is judged by the progress which those officials are able to make in the direction of these objectives. In view of the influence which these objectives exert on Soviet foreign policy and upon the character of the demands which the Soviet Government makes upon Governments with which it maintains relations, it might be well briefly to touch upon them.

I am convinced, despite opinions to the contrary held by a number of persons who, I feel, are qualified to talk with a considerable degree of authority with respect to matters relating to the Soviet Union, that the establishment of a Union of World Soviet Socialist Republics is still the ultimate objective of Soviet foreign policy. Although this objective might be somewhat dimmer than it was a few years ago, and although the possibility persists that the Soviet leaders might eventually become so engrossed in the accomplishment of their more immediate objectives that they will lose sight of it altogether, it is my belief, nevertheless, that this objective is a real one at the present time and is a factor not to be ignored in any discussion of Soviet-American relations. A much nearer but not an immediate objective, to my mind, is the establishment of Moscow as the capital of the foremost world Power and as the director in peace or war of the activities of the world revolutionary forces^† in all countries.

The present immediate objective, as I see it, is that of warding off, without a sacrifice of basic principles, military attacks from without upon the Soviet Union until that country, as a result of its rapidly growing economic and military might, shall have become a great impregnable fortress. In order to attain this objective the foreign policy of the Kremlin expresses itself at the present time, in my opinion, along three lines. It endeavors:

(1) By setting up a system of so-called collective security, including a number of pacts of mutual military assistance, to discourage acts of armed aggression on the part of the Powers, particularly Germany and Japan, which it feels are most likely to attack the Soviet Union;

(2) To obtain and maintain the hegemony of Moscow over the international revolutionary or potentially revolutionary forces in other countries in so far as this can be done without rendering too precarious the international position of the Soviet Union; and

(3) To make use of Soviet relations with foreign countries for the purpose of obtaining the merchandise and the technical and financial assistance necessary for converting the Soviet Union into a self-sufficient world Power capable of withstanding assaults from any one Power or group of Powers.

I am inclined to believe from statements made on various occasions by Soviet officials either publicly or to members of the Embassy staff or other Americans that the Soviet Government desires the American Government to cooperate with it in carrying out the lines of foreign policy referred to in paragraphs number (1) and number (3) above and to place no obstacles in the way of the pursuance by it of the line of policy set forth in paragraph number (2), and that the course of American-Soviet relations is not likely to be smooth until the American Government complies with these desires. In fact, an examination of the sources of disappointment and irritation listed in the earlier part of this despatch will show that the most important of them are clue to the failure of the American Government to accede to these desires of the Soviet Government.

Soviet officials, for instance, have expressed deep disappointment because the American Government has not cooperated with the Soviet Government to the extent desired by the latter in the Far East and in Europe in curbing the Powers which are most likely to attack the Soviet Union.

Soviet officials usually refer to the Soviet policy of isolating the so-called aggressive Powers, such as Japan and Germany, as the “Soviet policy of peace”, and frequently express the view that all nations which, like the United States, are anxious for the preservation of world peace should assist in the furtherance of that policy. In conversations with members of the Embassy staff and with American scholars and journalists, certain Soviet officials have taken the attitude that the Government of the United States, by adopting a policy of neutrality and by refusing to become involved in the struggle which they state is going on between the “peace-loving Powers” and the “aggressive Powers” in Europe and Asia, is failing to assume its share of responsibility for the maintenance of world peace.

It appears that they desire first of all that the “peace-loving Powers” of Europe, as well as the “aggressive Powers” be given definitely to understand that the Government of the United States sympathizes with what they are accustomed to refer to as “the efforts of the Soviet Government to preserve world peace”. They seem to feel that this could be done by a series of statements and acts showing solidarity between the two Governments in matters relating to peace.

It seems quite clear, however, that such demonstrations of solidarity will not in themselves be sufficient. Some of these officials suggest that the American Government, as a next step, should give the “aggressive Powers” to understand that in case of an act of aggression the American Government would favor the injured party by furnishing financial and technical assistance and military and other supplies. It would, of course, be preferable, they point out, if the United States were to enter at once into definite treaties of mutual military assistance in case of unprovoked attack and thus greatly strengthen the whole collective security structure. They admit, however, that it would probably be necessary for a considerable amount of preparatory educational work to be done in the United States before American public opinion would tolerate the assumption of obligations of so serious a nature.

It would appear that the Soviet demands upon the American Government for cooperation in the pursuance of the Soviet “policy of peace” are of a distinctly progressive nature. It seems to me that even the partial satisfying of them would involve radical changes in American foreign policy.

Disappointments with respect to the Communist International and associated organizations result from the tendency of the American Government to take exception to the policy of the Kremlin, in so far as that policy affects the United States, of endeavoring to obtain and maintain hegemony over the international revolutionary or potentially revolutionary forces in other countries.

On numerous occasions in the past the Kremlin has shown that it prefers offending countries, the cooperation of which it stands sorely in need of, to severing the links (namely, various international organizations, including the Communist International) which connect the Soviet State with the discontented and revolutionary elements of those countries. In certain international situations the Kremlin has displayed a willingness temporarily to curtail or to make less noticeable the activities of these organizations. At the same time it seems always to have insisted that these organizations shall so conduct themselves as not to lose control over the more militant revolutionary forces abroad or to lose contact with those dissatisfied elements which look to Moscow for inspiration.

I wish to emphasize here that in my opinion the Kremlin is not demanding at the present time that the international organizations subordinate to it shall endeavor to stir up immediate revolution in all countries. The tasks which it imposes on these organizations vary with respect to particular conditions in, and the foreign policies of, the countries in which they are operating. There is one common task, however, which they are all called upon to perform, namely, to endeavor to organize the revolutionary-minded, the discontented, and even certain so-called liberals into compact well-disciplined groups willing unquestioningly to follow the lead of Moscow.

I am inclined to believe that the determination of the Kremlin to maintain control or at least influence over the revolutionary and potentially revolutionary forces of the world is due not only to the fact that it feels that the assistance of those forces is almost essential to the attainment of both immediate and less immediate objectives, but also to its fear that if it loses all guidance over those forces they are likely to develop into implacable foes of the Soviet Union and the Soviet system. That this fear is not without basis is demonstrated by the fact that revolutionary groups, such as the so-called Trotskiists, which no longer look to Moscow for inspiration, are now charging that the Soviet Union has become a nationalistic reactionary state in which the workers are being exploited for the benefit of the bureaucracy and a new bourgeoisie.

It is possible that in return for certain compensatory advantages the Kremlin might agree to keep under cover the activities in the United States of the international organization subordinate to it, but such an arrangement, in my opinion, is not likely to be of more than a temporary nature, There is even a possibility that if the international situation of the Soviet Union should become extremely precarious, the Kremlin might endeavor by establishing the ostensible headquarters of these international organizations in other countries to make less noticeable the fact that they are subordinate to Moscow. Nevertheless, I am convinced that unless the whole system of the Soviet State and the ideology of its leaders should undergo a complete change—and this does not seem likely in the foreseeable future—the Kremlin will continue to express certain of its foreign policies through the Communist International or similar organizations. It seems likely to me, therefore, that the question of interference in American internal affairs will continue to disturb American-Soviet relations as long as the Government of the United States is unwilling to close its eyes to the fact that the Kremlin is exercising control over certain revolutionary groups in the United States.

Most of the disappointments and irritations relating to debts and claims, loans and credits, and foreign trade matters arise, in my opinion, from the fact that the American Government thus far has not taken an attitude sufficiently cooperative to satisfy the Kremlin with respect to the latter’s policy of endeavoring to utilize Soviet relations with foreign countries for the purpose of obtaining merchandise and technical and financial assistance necessary for converting the Soviet Union into a great self-sufficient world Power.

The right of revolutionary governments to repudiate debts, international or internal, and to nationalize all property in the territory under their control is a basic revolutionary principle which I do not believe the Soviet Government will be willing to renounce. On various occasions in the past, however, it has announced itself to be prepared to make certain payments to foreign governments on old Russian indebtedness and on claims in return for advantages received. Usually the compensatory advantages proposed have been loans or credits. It was understood at the time of the establishment of relations that the Soviet Government would be willing to make payments on Russian debts to the United States and on American claims arising from property destruction or confiscation during and since the Revolution, provided the American Government would be willing to arrange for the granting of large credits to the Soviet Government. Subsequent to the failure of negotiations instituted for the purpose of reaching a definite agreement in regard to this matter, Soviet officials have made statements to the effect that they are now under orders not to discuss questions relating to debts and claims in connection with those relating to loans or credits.

The Soviet Government is aware that, if it so desired, it could settle with the American Government the question of debts and claims at relatively little cost to itself. It further realizes, however, that if it should do so, other countries would insist on being given no less favorable treatment. The claims of some of these countries—particularly of several countries the maintenance of good relations with which the Soviet Government considers more important at the present time than the maintenance of good relations with the United States—are considerable. In view of this situation there is, in my opinion, little likelihood that the Soviet Government will come to an understanding with the American Government providing for payments on debts and claims unless it should find itself much more in need of American assistance and support than it is at present.

With respect to the matter of American loans or credits, it may be stated that for years the Soviet Government has regarded the United States as being the reservoir from which it might best obtain the equipment and the technical assistance necessary for converting the Soviet Union into a self-sufficient highly industrialized country. It has not been able to pay for its needs in cash, however, and therefore has desired the United States to accept in lieu of cash Soviet merchandise and Soviet promises to pay. At one time, when apparently the need for American credits was greater than it is now, Soviet officials intimated that in return for such credits they were prepared to make certain concessions with respect to the debts and claims question. Soviet officials now point out that the economic and financial position of the country has improved to such an extent that not only are they no longer willing to consider debts and claims in connection with loans and credits, but they are also not willing to accept loans or credits from the United States except upon terms more favorable than those upon which credits have been accepted from other countries in previous years. They maintain that a sufficiently broad basis has already been laid for Soviet industrial development to enable the country to carry out its plans without any foreign merchandise or assistance other than that which it is able to purchase with the proceeds of exports and gold production.

I am inclined to believe that Soviet officials, despite their attempts to assume an attitude of indifference with regard to American credits, would be glad to receive such credits at the present time, provided the terms would be of a nature satisfactory to themselves. These credits would be extremely useful to them in connection with the feverish preparations which they are now making for war which, they feel, may break out at any time in Europe or Asia.

It is apparent from various statements made by Soviet officials that, for the terms of a proposed American credit to be satisfactory, such credit must be of a financial character, granted or guaranteed by the American Government, for a period of more than five years, bearing rates of interest at less than six percent.

Soviet officials have pointed out to American business men that other countries have issued credits to them on similar terms and they see no reason why the United States, with which the Soviet Union usually has a negative trade balance and which has plenty of credit at its disposal, should not be willing at least to adopt a liberal attitude with respect to the granting of credits to the Soviet Union.

In my opinion the Soviet Government will continue to be dissatisfied with the state of Soviet-American relations so long as the American Govermnent does not grant to it credits upon terms satisfactory to it. Since for the American Government to accede to the desire of the Soviet Government would mean a reversal of the general American policy, expressed in the so-called Johnson Act,³⁴ of refusing to assist in the issuance of loans or credits to Governments which have refused to come to a debt settlement with the American Government, it seems likely to me that the solution of the question of American credits for the Soviet Union must at least await the solution of the general question of European debts of the United States.

The extent to which American-Soviet foreign trade has increased since the establishment of diplomatic relations has been a source of disappointment to American business men but cannot be said to be an issue between the two Governments. Persons acquainted with Soviet foreign trade policies did not base their hope for trade increases upon the fact that political relations were being established between the two countries but upon the expectation of the settlement of the debts and claims question followed by the granting of American credits to the Soviet Union. Since recognition there has been a steady and healthy increase in the trade between the two countries and, in my opinion, unless some unforeseen developments take place, this trade should continue to develop during the next few years in a satisfactory manner. I do not believe, however, that in the absence of American credits any spectacular increases of American-Soviet trade are to be expected.

It will be seen from an examination of the various sources of disappointment and irritation already listed that the Soviet Government is dissatisfied with various aspects of American-Soviet commercial relations which are not directly connected with the volume of trade.

Although Soviet officials are reserved in discussing the matter, there can be no doubt that they have been disappointed at the unwillingness of the United States to conclude with it a commercial treaty similar to the commercial treaties which have been concluded between the Soviet Union and a number of other countries. In my opinion, they would like to enter into such a treaty not only out of considerations of prestige, but also because they desire assurance that the American Government will not place an embargo upon exports to the Soviet Union, restrict the import of Soviet merchandise, or discriminate against Soviet goods at a time when such action might seriously affect Soviet economic life.

An examination of these treaties and of the manner in which they are generally applied has shown that they usually offer considerably more advantages to the Soviet Union than to the other parties signatory to them. The American Government, therefore, may not find it desirable to change in the near future the attitude which it has in the past adopted with respect to this matter, namely, not to enter into a commercial treaty of the kind desired by the Soviet Government unless such a treaty should be an integral part of a general settlement of problems outstanding between the two countries.

It is difficult for me to comment with respect to the extent to which it might be possible to remove some of the other Soviet irritations in the field of American-Soviet commercial relations since most of these irritations appear to be due to certain regulations and practices of branches of the American Government with the work of which this Embassy is not thoroughly acquainted. I assume, however, that during the course of time the American and Soviet officials concerned will be able jointly to work out devices whereby some of the petty differences which are disturbing American-Soviet trade relations may be wholly or partially eliminated.

It will be noted that a number of irritations between the two Governments are due to causes other than the failure of the American Government to cooperate with, or at least to place no obstacles in the way of, the Soviet Government in its pursuance of various lines of the latter’s foreign policy. It will be observed, for instance, that several of them are related to matters connected with American representation in the Soviet Union. I attribute this to the fact that that representation is in a position particularly to feel the shock of the contact between the American and Soviet systems. Irritations arising from the arbitrary exchange rates established for Soviet currency, from lack of housing space, from the practice of isolating members of the Mission’s staff from the local population, from the Soviet determination to limit the size of American consular districts, and from the attitude of Soviet customs officials, can be traced for the most part to the fact that representatives of foreign governments, regardless of what might be their personal feelings towards the Soviet regime, or the extent to which they may be in the good favor of the Soviet Government, are nevertheless products of what is deemed to be a hostile system and therefore automatically subjected to suspicion and restriction. Some of these irritations, particularly those relating to currency matters and housing, will probably tend to disappear as economic conditions in the Soviet Union improve. Others are so deeply imbedded in the Soviet system that they may continue to exist for an indefinite period. The practice of isolating members of the foreign missions, for instance, was borrowed by the Soviet Government from the old Tsarist Government. It has been the custom since the days of Ivan the Terrible for foreign diplomats stationed in the Soviet Union to complain because of their inability to meet Russian officials and private citizens.

With respect to Soviet irritations relating to the performance of certain Russian visa and reporting work by the American Legation at Riga, it may be stated that if, following the improvement of the general housing situation in Moscow,³⁵ the Soviet Government should place more housing space at the disposal of the Embassy, all of that work might advantageously be transferred to Moscow.

Unless, however, Congress is willing to make certain changes in the immigration laws, I do not see how it will be possible entirely to allay Soviet irritation arising from the fact that without reference to Washington visas cannot be granted in Moscow to Soviet business men who are members of the Communist Party.

Soviet resentment at this Mission’s practice of giving advice and information relating to the Soviet Union to American citizens applying to it for assistance is largely due, in my opinion, to the feeling of Soviet officials that all diplomatic missions should be entirely isolated. They are inclined to chafe at their inability to prevent American citizens from ascertaining at the Embassy certain facts which the Soviet Government would prefer foreign visitors not to know and which they could learn elsewhere in the Soviet Union only with difficulty. It is probable that, unless Soviet officials change their attitude in this respect, this source of irritation will continue to exist, for an indefinite period since it hardly seems possible that the American Embassy in Moscow will make it a practice to withhold from American citizens advice and information which they need and which is of a kind generally furnished to American citizens by American Governmental representations in other countries.

I am furthermore inclined to believe that for many years to come American officials will find that one disagreeable feature connected with the handling of affairs relative to the Soviet Union arises from the fact that they may at any time find themselves victims of Soviet-instigated campaigns waged by their fellow citizens. This method of bringing pressure to bear upon officials of other Governments sometimes proves rather effective and I doubt if Soviet officials will abandon it.

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Respectfully yours,

Loy W. Henderson

31. See pp. 1 ff.
32. See pp. 166 ff.
33. See pp. 218 ff.
34. In this connection it should be pointed out that even though the Soviet Government has not bought American merchandise in the amount hoped for, its purchases of American goods have steadily increased since 1933. It should also not be overlooked that the American Government had not expected an astronomical increase in trade as the result of recognition. It had hoped, however, that consequent to a settlement of the debts and claims question and the granting of credits, Soviet purchases, for a time at least, would considerably increase. [Footnote in the original. For the agreements to facilitate and increase trade, see pp. 192 ff. and pp. 322 ff.]
35. When speaking of “revolutionary forces” in this despatch, I am, of course, referring to the “leftist” revolutionary forces. [Footnote in the original.]
34. Approved April 13, 1934; 48 Stat. 574.
35. Regarding the impracticability of constructing an American Embassy building in Moscow, see pp. 268 ff.