861.24/903
Mr. John N. Hazard of the Office of Lend-Lease Administration to the Acting Chief of the Division of Exports and Defense Aid (Bunn)
Dear Mr. Bunn: When Mr. Schley82 and I discussed with you the possible matters which would be desirable for inclusion in a master agreement to be negotiated with the U. S. S. R., reference was made to the Soviet Government’s purchasing policy to be anticipated after the War. The matter was suggested by the very large requests which have been received from the Soviet Government for industrial plant equipment.
Our industrial experts have estimated that these requests total the entire industrial plant equipment production of the United States for a year such as 1932. It may readily be supposed that orders of this magnitude would play an important part in post war American industrial activity, if they can be anticipated. My attention has recently been directed to the question of whether orders of this magnitude can be anticipated from the Soviet Government; after the War. Of course, I am not in a position to make any authoritative prognostication, but some factors have come to my mind, and it occurs to me that you, who are fortunate enough to have available a staff with sufficient time to consider these matters, might be interested in exploring them.
On the assumption that the United States, the Soviet Union, China and Great Britain will win the War, and that the industrial centers of Central Europe will be impoverished, but not devastated, the following interesting possibility arises: Workmen of Germany, Czechoslovakia, Austria, Poland, and to some extent, Eastern Belgium and France, and Northern Italy will be poor and discouraged. If the Soviet Government wishes to encourage these discouraged populations, it could go far, if it were to place in the factories of this area orders of the magnitude of those recently requested of the United States. To make possible the production of such large orders and to facilitate payment therefor, the Soviet Government would be in a position to supply considerable quantities of the requisite raw materials. The result, which present Soviet leaders are likely to anticipate, might be the persuasion of the workmen of Central Europe that membership within the Soviet Union is the surest way to regain economic freedom. [Page 759] No armies, no militant activities of the Comintern,83 would ever be as forceful an argument for union with the Soviet Union as the tangible evidence of plenty of work and restored purchasing power.
There are those, of course, who believe that the Soviet leaders have returned to the old pre-revolutionary principles of nationalism. There are others who believe that men, who have been trained in the rigorous principles enunciated by Marx and his subsequent interpreters, will not forget the international aspects of those principles and the ultimate goal of an economic and political union of all peoples. If one agrees with those who feel that the spirit of nationalism has not conquered the spirit of internationalism, one can see that a program of purchases in Central Europe might be interpreted as coinciding with the political theories of the present Soviet leadership.
The United States, of course, has unusual capacity for making specialized types of items. There is no reason to suppose that the Soviet Union, in its desire to obtain the best, would not continue to place orders for such items in the United States. Of recent years, however, these orders have been in the neighborhood of an average of some $40,000,000 per year, if not slightly more, but in comparison with the possible future Soviet requirements, having a value of some $4,000,000,000 or $5,000,000,000, if not more, such specialized orders would not be large nor would they aid extensively in our post war problem or restoration of peacetime industry.
The Soviet Government has welcomed in the past trade agreements which called for the placing of orders in the United States up to certain fixed figures. It may be that one of the important guarantees to be obtained from current Lend-Lease aid to the Soviet Union84 is an agreement by the Soviet Union to place orders in the United States after the War to such and such a value or for such and such a proportion of its industrial equipment requirements.
The point that has occurred to me is that the Soviet Union will probably not place orders in large quantities in the United States after the War unless there is some contractual obligation to do so. If our economic system can be expected to require large foreign orders to permit it to thrive after the War, this may be a good time to take measures to insure the satisfaction of this requirement.
Very truly yours,
Chief Liaison Officer Section for Soviet Supply
- Reeve Schley, Special Assistant to the Administrator, in charge of the Soviet Division, Office of Lend-Lease Administration.↩
- The Third (Communist) International founded by the Bolsheviks at Moscow in March 1919.↩
- For correspondence on the continuation and enlargement of wartime assistance from the United States for the Soviet Union, see pp. 684 ff.↩