The Chargé in the Soviet Union (Thurston) to the Secretary of State 45

No. 1491

Sir: I have the honor to submit on the following pages a brief review of certain economic developments in the Soviet Union since the outbreak of the Soviet-German hostilities. As the greater portion of the files of the Embassy, including its economic files, were destroyed prior to its evacuation from Moscow in October 1941 and as the circumstances under which it has been operating since the commencement of the German attack on the Soviet Union last June have precluded the maintenance of as complete or continuous a record of economic events as would normally be the case, the present report is inevitably less specific and less supported by statistical data than could be wished. So far as statistical data are concerned, very little of more than the most general character have appeared in the Soviet press. Since the advance of Soviet economy during the entire year 1941 has been completely overshadowed and conditioned by the progress of the war, main emphasis is laid in this review upon the impact and influence of the war on Soviet agriculture, industry, labor and transport.

In the preparation of the report the Department’s instruction No. 538 of September 16, 1941,46 with its enclosure concerning reports desired by the Department of Commerce, has been borne in mind.


The dominant theme of Soviet internal propaganda and exhortation for years past has been the urgency with which the country must prepare for enemy attack and strengthen itself in order that it might be ready to withstand that attack when it should come. To an ever increasing degree the entire economy of the nation has been concentrated upon this main aim and no hardship which its realization might impose upon the population has been permitted to stand in the way of its accomplishment. Many observers have in the past believed that the resultant emphasis upon the development of heavy industry at the expense of light industry has constituted a fundamental weakness of Soviet economic development. From the point of view of a peace time economy it may be presumed that these observers [Page 422] were correct in their surmise. Certainly no one can deny that in an unswerving adherence to the determination to strengthen the country defensively as rapidly and as completely as possible the Soviet leaders have laid a heavy burden upon the people, but one which their unsurpassed capacity for endurance has enabled them to bear without breaking.

The test of the Soviet policy began on June 22, 1941, when the German army moved across the Russian frontiers, and its issue is thus far undetermined. When the attack came it was with few exceptions the general belief of foreign observers that the Germans would be able to take what they wanted within a few months, that the Red Army would probably collapse after a brief sharp struggle, that very likely the régime would fall, and that a condition of chaos might well ensue behind the lines. This opinion prevailed throughout the summer months and into the opening of winter. The German advance was rapid and sure. The Ukraine was lost, with its agriculture and industry. Leningrad was seriously threatened. The enemy was battering at the gates of Moscow, which was partially evacuated.

Then, when the supreme trial came, with Moscow practically surrounded, the Russians held, threw the Germans back, and launched their own counter-offensive. The régime, partly due to the psychological effect of Stalin’s having remained in Moscow throughout the campaign, is stronger than before, and the outlook, though highly dubious is better than could have been expected some months ago.

Severe winter weather conditions have undoubtedly aided the Russians, but these have, too, been nearly as hard for them as for their attackers. The great size of their country and their numerical superiority have also placed them on a more nearly equal footing with the Germans than has been enjoyed by other countries overrun by the German army. Soviet army morale appears to have been magnificent; love of the Russian soil and hatred of the attacker seem to have transcended all other considerations. The Russians’ endurance has been spoken of, their mechanical ability is demonstrably outstanding, and their courage must be accepted as axiomatic. Soviet economic policy was pointed on war, the war was brought to the Soviet Union, and the results up to date can only be said to have justified the policy.

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At the time of the furthest point of the German advance into Soviet territory, in the late autumn of last year, it was estimated by the Embassy (despatch No. 1468, January 16 [15], 1942,47 “The Effect of the War on Soviet Agriculture and on the Food Situation in the Soviet Union”) that approximately 45,000,000 hectares out of 130,000,000 [Page 423] hectares of cultivated land, or about 34 percent of the entire cultivated area of the country, had been lost to the Germans. This figure was also estimated to include 16,000,000 out of 62,000,000 hectares sown to bread grains (wheat and rye). It is thought likely that a considerable share of the winter crops in the invaded areas had been harvested and a part shipped eastward in the spring of 1941. Most of the spring grain must, however, have been lost. In the unoccupied districts grain crop forecasts were generally excellent or good. As has been reported, on the other hand, harvest losses were abnormally heavy on account of a shortage of labor, tractors and tractor parts, and draft animals. This delayed harvesting and was accompanied by early snowfall in certain areas. In general it is believed that notwithstanding these factors the barn yield was fairly satisfactory in the parts of the country not affected by military operations.

It was also calculated in the Embassy’s despatch referred to that the present population of the unoccupied areas (not taking into consideration those districts reoccupied by the Soviet forces in the course of the counter-offensive which began early in December) amounts to approximately 130,000,000 people, including some 20,000,000 refugees from occupied territory. To feed this population, which includes, of course, the army, it was estimated that approximately 35,500,000 tons of bread grains would be required annually, and that, figuring on a high harvesting loss of 30 percent, for the reasons cited, the available area could produce about 32,200,000 tons. With requisite seed reserves of some 5,000,000 tons this leaves a bread cereal deficit of more than 8,000,000 tons.

The food outlook is aggravated by the loss of much of the area producing supplementary food crops, estimated at nearly 50 percent in the case of potatoes, and more than 60 percent for other vegetables, including over 40 percent for cabbage. More than 80 percent of the area heretofore under sugar beets has also been lost.

As regards a probable early shortage in the case of bread grains, a good deal obviously depends upon the amounts which may have been stored by the government in recent past years to meet just such an emergency, in line with the preparedness program. No reliable estimate of these quantities has ever been provided (a figure of 10,000,000 tons was at one time mentioned) and it is equally not known to what degree they have been dissipated by deliveries to Germany under the Soviet-German economic agreement concluded in 1939.48 It is possible, if not probable, on the other hand, that appreciable stores may remain, for it will be recalled that it was persistently reported prior to the outbreak of the war that stores of essential foods were being built up [Page 424] far to the rear in the Ural districts. Private sources have stated also, for example, that grain reserves near Moscow are adequate to support the city’s population for one year and that at least some of the rationing now in force is designed to conserve for the future rather than to combat a present emergency.

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The urgency with which the government regards the need to make good the losses which it has sustained in respect of agricultural land and to obtain supplies to aid in tiding it over the intervening period was indicated in part by the fact that at the Moscow conference in September49 it sought to obtain from abroad not less than 200,000 tons of grain and 70,000 tons of sugar a month for the six succeeding months. The press of recent months has carried repeated mention of the need for and the plan to increase the cultivated areas in the eastern, unoccupied districts, to combine the use of draft animals with that of tractors, to intensify the cultivation of individual vegetable gardens, and to train new farm personnel (including women) to take the places of those called to arms.…

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It is improbable that areas reoccupied by the Soviet forces will furnish additional food supplies before the autumn harvest for obvious reasons. Such areas will, of course, require seed from the districts which were not occupied, and the population remaining in reoccupied territory will have to be fed, mainly from other districts for the time being. When it is further recalled that much of the occupied territory represented Russia’s best agricultural land and produced surpluses for “export”, that many of the unoccupied districts have been regarded as deficit areas in food production, and that the accretion of large numbers of refugees to these latter areas can only aggravate the deficit position, the food outlook, for the coming spring and summer months at least, appears critical. It is to be noted in this connection that the Soviet authorities have recently indicated their need and wish for large quantities of American fats and meats for army consumption.


Of vital import to Soviet national economy and from the more immediate point of view to the progress of the Soviet war effort is the degree to which Soviet industry has been dislocated or destroyed by the advance of the German armed forces into Soviet territory during the summer and autumn of 1941, and linked with an examination [Page 425] of this factor is an attempt to estimate the success achieved in the valiant efforts which have certainly been made to evacuate eastward and put into renewed production as much industrial plant and equipment as could be moved before the arrival of the invaders. Prior to the opening of the Soviet counter-offensive early in December of 1941 it was estimated by the Embassy (see its telegram No. 2003 of December 1, 194150) that scarcely less than 40 percent of all its industry must then be presumed to have been lost to the Soviet Union as a result of the German attack. This figure was reached on the assumption, based on Soviet published sources, that slightly more than 18 percent of all Soviet industry was located in the Ukraine, approximately 2 percent in White Russia, 14 percent in the Leningrad district (presumed practically all lost or so badly dislocated by the German attack on that city as to be nearly unusable), and about 5 percent in the other occupied territories. The estimate of 40 percent loss did not take into account such dislocations as may have occurred in the Moscow, Yaroslavl, Gorki, Tula, Ryazan and Ivanovo oblasts51 which alone are considered to have contained 30 percent of all Soviet industrial plant. It is believed that in the event it is incorrect to assume that the Leningrad area had been for practical purposes lost as a source of industrial output, the dislocations in the districts mentioned would more than offset any such error and bring the total loss well up to 40 percent. With respect to the Ukraine, it will not be amiss to recapitulate the estimate submitted with respect to industrial losses in that area. Published data indicate that the Ukraine has yielded over 60 percent of the total coal and coke production of the Soviet Union and that almost 77 percent of all the coking coal produced comes from the Don Basin. Furthermore, more than 60 percent of the total aluminum output came from the Ukraine in 1939. In that year, also, the Ukraine accounted for 66 percent of the total production of pig iron, 52 percent of the steel output, and 37.5 percent of the output of rolled steel. As is well known, the Ukraine is in addition an important center for the production of the agricultural machinery, machine building, electrical machinery, and chemical industries. Out of the total manganese ore production, it may be added, approximately 35 percent has been supplied by the Ukraine.

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Direct, first-hand information with respect to the degree of success achieved by the Soviet authorities in transferring industrial plant, equipment and personnel eastward is evidently impossible to adduce under existing circumstances, except in isolated instances. Losses due to lack of organization, careless handling and long exposure of [Page 426] evacuated machinery are believed, however, to have been considerable. The members of the Embassy staff who spent the summer in Kazan, for example, saw a good deal of machinery, as has been reported, lying unprotected along the roadsides near the railway yards, exposed for a protracted period to deteriorating weather conditions and believed almost undoubtedly ruined. It was also learned in Kazan that certain factories had been allotted premises near that city, but that these had been found unsuitable or inadequate when the transferred machinery arrived and efforts to set it up were made, so that it had to be reshipped to another location. Stories of this sort have been heard from other districts, from refugees or foreign travelers. The press has also referred to the power problem which has arisen in connection with the setting up of evacuated plants in the rear.

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While much has been written in the press of the completeness with which the policy of destruction of industrial plant was carried out by the Soviet forces prior to and during their retreat in the face of German pressure last year, items which have appeared since the launching of the Soviet counter-offensive in December indicate that this process may have been less thoroughly completed than might have been supposed. There has been frequent mention in recent weeks, for example of the destruction which the Germans in their turn have been found to have caused prior to their own retreat from areas which they had occupied and of the havoc discovered to have been wrought by them in towns reoccupied by the Soviet armies. Damage to industrial plant has been specifically referred to and exhortations have been frequent with regard to the need to put plant back into operation as rapidly as possible in such districts. The American chemist above quoted52 also reported that in various cases the Germans had made good use of equipment wrecked but left behind by the Soviets at the time of their retreat, breaking up such machinery into scrap and shipping it back to Germany. These reports indicate that the Soviets will not have an easy time in endeavoring to repair or reinstall equipment in places which they reoccupy. The press has urged special industry and diligence in the performance of such work, and it has also lately reported the resumption of operation of, for instance, a number of mines and electric power stations in districts which have been retaken.

The immediate problem confronting the Soviet Union, of course, is the degree to which, having lost so large a proportion of its industrial capacity to the invader, it can continue its war effort during the months of testing which appear inevitably to lie before it. It is [Page 427] manifestly impossible to evaluate the possibilities in this regard in the absence of complete, or in fact of more than the most fragmentary, reliable data. The information published in the press is inescapably, and also intentionally, richly tinged with propaganda and in addition to the fact that no outsider is permitted to travel in the Soviet Union except within the most prescribed limits, the Soviet authorities have proved themselves exceedingly reluctant to provide even those associated with them in the struggle against Hitler with information respecting their own production. There is evidence that certain vital industries which have been more or less unaffected by the invasion, such as the oil industry and part of the non-ferrous metallurgy group, generally fulfilled or exceeded their production plants in 1941. There is evidence that Soviet production had attained a position prior to the outbreak of the war which had enabled it to build up and maintain, largely unaided throughout the major portion of the balance of the year, a production which, plus reserves already in hand, provided enough of the material sinews of war to check the advance of the invader and to turn him back, at least temporarily. The size of the losses in industry which have been sustained, however, and which no glossing over can effectively reduce, cause it to seem highly problematical whether the Soviets can keep their effort at the necessary level with the plant at their present disposition to withstand an onslaught in the spring of 1942 comparable in intensity and scope to that launched against them in 1941. As was pointed out in a recent telegram (No. 16, January 5, 194253) the losses in coal and steel capacity in the Ukraine represent a very large share in the normal output of the country of these basic commodities. The same is true of manganese, for further example. The movement of plants eastward, the development of new mines, the intensification of concentration on the making of war materials to the exclusion of all other but the most indispensable items, will certainly aid. On the other hand, it appears evident that a great deal depends upon the speed and volume of the material assistance which is extended to the Soviet Union by the United States and Great Britain. Perhaps it is too much to say that this factor will prove decisive in determining the outcome of the struggle, but it may well prove so—assuming that the next German drive is unabated in vigor in comparison with that of the past season. The loss of the Far Eastern supplies of rubber and tin as a result of the Japanese offensive is already causing concern inasmuch as the Soviet Union is far from self-supporting in these commodities. It will have been observed that the Soviet authorities have been increasing their requests for supplies from the United States and Britain since the articles and quantities listed in the secret protocol to the Moscow Conference were laid down.

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The urgent and compelling demands of the military effort on Soviet manpower has, of course, created an immediate and serious labor problem in both agriculture and industry. Current estimates, which must necessarily be regarded with due reserve in the absence of any official confirmation, place the total of the Soviet armed forces when the war began at 5,000,000 men. They further give the present total as 10,000,000 and calculate losses (killed, wounded, missing and taken prisoner) at a figure in the neighborhood of 3,500,000. This means that not less than 8,000,000 men of military age have been withdrawn from agriculture and industry since the commencement of hostilities. (The efforts of the authorities ever since the war began to facilitate the evacuation of the population from threatened areas is more likely to have been motivated by a realization of the danger of a labor shortage than by humanitarian considerations.)

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The Soviet Union in these times is fortunate in its women. Physically tough and accustomed to hardship they are equal to the men of weaker nations in their capacity to work and endure. They have long been used to the carrying out of duties usually assigned to men elsewhere. They can till the soil, they can operate complex machinery, they can dig trenches and build fortifications in front of Moscow.

The shortage of labor remains, however, a matter of real concern and drastic measures have been taken in order to endeavor to ensure the maintenance of an adequate and regular supply of workers. Penalties for failure to come to work have been rigorous and numerous examples of these have been cited in the press, by way of warning. Slackness has been frequently and bitterly inveighed against. A ukase was published on December 28, 1941,54 establishing severer penalties than those laid down in an earlier ukase for voluntary departure from work by workers and employees in war industry. This ukase indicates that its predecessor had failed to put a stop to “drifting” and its preamble suggests that the more difficult conditions of work encountered by workers in evacuated enterprises had caused some of them to quit their jobs arbitrarily.

As reported by the Embassy at the time (Embassy’s telegram No. 156, February 21, 194255), an important ukase of the Presidium of the Supreme Soviet of the U. S. S. R. was published on February 14, 1942, which provides that of the country’s urban population all men from 16 to 55 years of age and all women from 16 to 45 years of age, who are capable of work and who are not already employed in state [Page 429] institutions or enterprises, shall be mobilized for the duration of the war for industrial and construction work, and primarily for work in the defense industries. All persons so mobilized are to work in the city of their residence and exemptions include certain categories of students and women with babies or small children and no nurses to look after them. On February 17 announcement was made of the formation of a committee to implement this ukase and it was indicated that the mobilization includes not only the population of cities but also of factory workers’ settlements.

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The relative inadequacy of the railway system and the shortage of rolling stock have been regarded as a traditional weak spot in Russian economic development under both the Czarist and the Soviet regimes. At the beginning of the Soviet-German war it was feared that rail transport, already felt to be no more than barely supporting the normal demands of peace would be completely unable to measure up to the requirements of war and might therefore, by breaking down under the strain, make a major contribution to the failure of the Soviet war effort. These fears have also not been realized. Passenger and ordinary freight schedules have been thrown out of gear, through having been subordinated to the needs of the war, but troops and supplies have got through and it must be said on the whole that during the months of conflict the Soviet railway system has continued to function nearly as well as before and certainly better than had been anticipated.

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Notwithstanding the fact that the railways have operated more satisfactorily than might have been expected during recent months, the strain upon them has been manifestly terrific and it is recognized that they constitute a weak link in the chain of supply, and one which requires constant care and unremitting attention. Thousands of women have been assigned to duty on the railways since the war began, as station workers, locomotive engineers, telegraph operators, track repair workers, dispatchers, mechanics, et cetera. The press has carried repeated notices, particularly recently, of heavy sentences meted out to railway employees through whose negligence or inattention train schedules have been dislocated or delayed. The problem is obviously crucial for upon the steady flow of trains to the front depends the furnishing to the armed forces of the supplies without which they cannot continue the struggle. It can only be regarded as remarkable that the rail system has continued to work as well as it has up to the present time, the more so in consideration of the rigor of the winter which is now nearing its end.

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The loss or threatened loss of certain important railway lines through enemy military action has necessarily caused attention to become more intensively focussed on the country’s inland waterways.

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The long and rigorous Russian winter is now drawing to its close and with the advent of spring a renewal of the German offensive against the Soviet Union is confidently expected here. What direction that offensive will take, whether it will be undertaken along the entire front or be directed chiefly toward the Caucasus, and whether it will be accompanied by a simultaneous Japanese attack in the East are questions which it is not within the province of the present report to attempt to analyze. It goes without saying that the Russian campaign has developed rapidly into an “all out” struggle on both sides. The Germans failed to attain their major objectives last season, but they appear to have only just failed and it cannot be denied that climatic conditions have played their part in enabling the Russians to resist as well as they have thus far. When the spring attack comes its ferocity may well be unparalleled and no one can say whether it will succeed or not. Certainly if it fails and if the Russians pull through unbroken it may safely be predicted that they will have done so by the narrowest of margins. Food, matériel and their transport are the keys to the situation, always granting that Soviet manpower is equal to the strain in numbers and in morale—and while few will now question the latter occasional doubts have been expressed with respect to the former. Peasant morale behind the lines is also a factor which is of the greatest importance, as suggested earlier in this report. The difficulties which presently confront Soviet agricultural and industrial production have been made sufficiently clear and the urgency with which the Soviets may therefore require British and American aid if they are to continue their war effort unabated needs no further emphasis. The perils which threaten Russia’s supply lanes, north to Archangel and Murmansk, and south to the Persian Gulf, to say nothing of the implications of the cutting of the Burma Road, are apparent, but the Soviet leaders are consummate realists; they are not impressed by promises or threats, but only by results. If, as is evident, it is to the immediate interest of the Allies that Russia should go on fighting the aggressor, then it is the essential task of the Allies to confine their activities in relation to the Soviet Union to the furnishing of aid in whatever form the Soviets desire, as quickly as possible, at the points indicated by the Soviets, and in the largest volume possible within the terms of their own war effort. Advice on how to win their war is not regarded by the Soviets as a commodity of which they are in need, nor [Page 431] do they consider that they require very much instruction in the use of the matériel which may be furnished to them, although they have in the past appeared to welcome, within their own terms, the advantages which accrue from foreign technical assistance in matters of industrial production.

Respectfully yours,

For the Chargé d’Affaires ad interim:
Charles E. Dickerson, Jr.,

First Secretary of Embassy
  1. In its acknowledgment of June 16, 1942, the Department replied that “this report is timely and helpful and is particularly appreciated” and that “further reports of this scope and character … would be of value to the Department and the agencies of the Government.”
  2. Not printed.
  3. Not printed.
  4. Signed at Moscow on August 19, 1939. For text, see Documents on German Foreign Policy, 1918–1945, series D, vol. vii, p. 142.
  5. W. Averell Harriman, Special Representative of President Roosevelt, and Chairman of the Special Mission to the Soviet Union, with a British counterpart led by Lord Beaverbrook, held conferences in Moscow, September 29–October 1, 1941. For correspondence concerning the Harriman–Beaverbrook Mission, see Foreign Relations, 1941, vol. i, pp. 825851, passim.
  6. Not printed.
  7. A large political area, region.
  8. This passage has been omitted.
  9. Not printed.
  10. See telegram No. 2109, December 29, 1941, from the Chargé in the Soviet Union, Foreign Relations, 1941, vol. i, p. 666.
  11. Not printed.