Foreign Relations of the United States, 1950, Central and Eastern Europe; The Soviet Union, Volume IV

861.00/3–1350: Telegram

The Chargé in the Soviet Union (Barbour) to the Secretary of State ¹

secret

Moscow, March 13, 1950—1 p. m.

826. Embtel 821 March 11.² From economic viewpoint speeches Molotov,³ and Mikoyan⁴ and Kaganovich⁵ appear relatively frank retrospective and future analyses Soviet economic problems. While not all inclusive, and word “frank” must be read in context Soviet reticence on economic questions, impression gained from speeches is that Soviet leaders are aware of economic difficulties facing them and are even sensitive to certain contradictions inherent in their system.

As would be expected, Molotov comments concerned less with Soviet economy than speeches old trade expert Mikoyan and industry spokesman Kaganovich. However, it was Molotov who revealed that new five-year plan would commence 1951. While complaining that “aggressive powers” pursuing policy “foreign trade discrimination directed against USSR and People’s Democracies… constitution brake on development foreign trade” Molotov saw “no reason conceal fact that in order carry out great prospective economic plans USSR interested in lasting peace.”

In his turn Kaganovich admitted original US proposal USSR participate Marshall Plan but noted Soviets rejected such “aid” thereby thwarting “knavish hopes and intentions US.” This remark, of course, consistent Soviet line that Marshall Plan designed by US for domestic selfish purposes and leads only to deterioration economic condition recipients.

Also on all fours with recent propaganda barrage was comparison all speakers of alleged growing industrial might USSR and decadence and contradictions capitalist system with accompanying deterioration economic well-being workers.

Mikoyan and Kaganovich indirectly suggested possible further “appreciation” value ruble in term dollar. Kaganovich indicated “Soviet ruble will become still stronger” and thus [“]victory will be assured for ruble in competition dollar” inasmuch as this “value” subject regulation by Politburo fiat, another “appreciation” ruble can, of course, take place whenever politically desirable.

Kremlin concern lest enhanced purchasing power resulting from recent price reductions might press on production revealed Mikoyan confession that “as yet it is too early to render final judgment on question shifts and changes caused by reduction prices in nature demand population and in development trade turnover. Tendencies (which have become manifest since price reductions) make demands on our industry for further increased production those goods for which there has been greatest demand since price reductions.” In other words, Soviets have not yet been able completely repeal law of supply and demand.

Detailed comments follow by despatch.⁶

Barbour

1. This telegram was passed to London, Paris, and Rome at noon on March 13.
2. Not printed.
3. Vyacheslav Mikhailovich Molotov had been Minister of Foreign Affairs of the Soviet Union until relieved on March 4, 1949. He remained a member of the Politburo of the Central Committee of the Communist Party and a First Deputy Chairman of the Council of Ministers.
4. Anastas Ivanovich Mikoyan had been Minister for Foreign Trade of the Soviet Union until relieved on March 5, 1949. He remained a member of the Politburo of the Central Committee of the Communist Party and a First Deputy Chairman of the Council of Ministers.
5. Lazar Moiseyevich Kaganovich had given up direct control of the People’s Commissariat of Heavy Industries in April 1938. He was, however, the director of many other associated commissariats and ministries afterwards. He was a member of the Politburo of the Central Committee of the Communist Party and a First Deputy Chairman of the Council of Ministers.
6. Not printed.