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Frank Demby

Stalin Supplies the Hitler War Machine

The First of a Series of Articles on Russia

(January 1941)

From Labor Action, Vol. 5 No. 3, 20 January 1941, p. 3.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The recent Russian-German trade agreement once again focuses attention on what has been happening within the Soviet Union. The following is the first of a series of articles by Frank Demby on developments within the USSR since the outbreak of World War II, with special emphasis on the economic situation. – Ed.


Many, indeed, were the speculations concerning the trip of Soviet Premier-Foreign Commissar Vyascheslaff M. Molotoff to Berlin last November and his conversations with Hitler and other high Nazi dignitaries.’The first visible result has been the signing of an “enlarged economic agreement” in Moscow on Jan. 10, 1941, by Molotoff tor the USSR and Ambassador Schulenburg for Germany. This treaty includes a settlement of the Russian-German boundary and an agreement on property claims in the former Baltic states. The treaty is subject to ratification in Berlin in the shortest possible time.

“The new agreement is based on the Soviet-German economic agreement of Feb. 11, 1940, and constitutes a further step in execution of the economic program outlined by the two governments in 1939. The agreement regulates the trade turnover between the USSR and Germany until Aug. 1, 1942. It provides for an amount of mutual deliveries considerably exceeding the level of the first year of operation of the agreement.

“The USSR delivers to Germany industrial raw materials, oil products and foodstuffs, especially cereals; Germany delivers to the USSR industrial equipment.

“The negotiations passed in a spirit of mutual understanding and confidence conforming to the friendly relations existing between the USSR and Germany. All economic problems, including those that arose in connection with the incorporation of new territories into the USSR, were solved in conformity with the interests of both countries.” (Quoted from the text of the agreement, released by Tass. and published in the N.Y. Times of Jan. 11, 1941 – my emphasis – FD)

Closer Relations

In an era where economic problems are steadily multiplying, it is very refreshing to see that two countries have solved “all economic problems.” The new Soviet-German accords, official bombast and vagueness aside, do, however, indicate steadily closer economic relations between Russia and Germany. How much actual material was delivered by the Soviet Union to Germany during the ppst year is impossible to determine. But there are some indications given of the size of the trade expected during the coming year.

“The Soviet Union is said to have agreed to furnish Germany with 2.500,000 tons of grain and fodder, barley and 1,500,000 tons of oil in exchange for German finished goods.” (Percival Knauth. from Berlin, in N.Y. Times of’ Jan. 11)

These figures, passed through the Berlin censor, may merely reflect German expectations. On the other hand, there is just as good a reason for believing that they give a good indication of the size of German-Russian trade relations. If the entire 2,500,000 tons of grain are considered as wheat, this would be the equivalent of about 92,000,000 American bushels. This is no insignificant sum, nor is the figure given for oil one to be ignored in estimating Russia’s current role as a supplier of the German War Machine. According to German sources, the amounts involved will “run into billions of marks.”

Acts as Broker

A further indication of Russia’s role may be seen from the fact that Russia has recently emerged as a fairly large buyer in the American market, and is reported as trying to negotiate trade treaties in many other countries, notably China, Argentina and other South American countries. During 1940, according to the U.S. Department of Commerce, Russia bought approximately $100,000,000 worth of goods here – about double the 1939 figure. This very substantial rise in American exports to Russia has virtually all occurred since the outbreak of the war, and has given rise to the suspicion that most of these imports are being shipped through Siberia to Germany, or are being used to release equivalent amounts of Russian commodities for export to Germany.

This suspicion is reinforced when one considers the particular materials that Russia is importing from the U.S. Russian foreign trade policy, ever since the institution of the first five-year plan in 1928 has been aimed at importing machinery, parts, machine tools and similar technical equipment – for the purpose of furthering the industrialization of Russia. It is very rare that raw materials are imported. On the contrary, Russia has paid for her technical imports with gold and raw materials. Hence, the imports of 139,591 bales of cotton (since Aug. 1, 1940), of 108,955.000 pounds of copper (in 1940), of more than 1,000,000 barrels of oil (which figure is steadily increasing) – all point to the conclusion that Stalin, willingly or unwillingly, has become an important part of the German war machine.

According to C. Brooks Peters, from Berlin, in the N.Y. Times of Jan. 13, “The Russians have agreed to facilitate the transit of German products to the Far East, as well as lighten the tasks of commerce between Iran and Afghanistan and the Reich.” Also, “The treaty is said to stipulate that Russia will deliver to the Reich goods whose origin is in a third country.” This undoubtedly is part of the “fresh proof,” of which Pravda speaks, “of the durability of good-neighborly relations between the two greatest European states.” Stalin has not only agreed to act as a supplier of vital materials for the German war machine, but, in addition, he is undertaking the role of German broker!

Depends on Hitler

The Germans claim “the reciprocal agreement was reached in favor of the Reich.” This claim is reinforced by the German admission that their deliveries of industrial equipment during the life of the previous treaty were behind schedule. And yet, Stalin contracts for “deliveries considerably above the level of the first year.” Why? The answer lies in two factors that are becoming increasingly important in understand the evolution of the Soviet Russian economy.

The first factor is one of geography. Or, as Gedye, writing from Turkey in the N.Y. Times of Jan. 12 puts it: “Thus the old fear of Germany’s mechanized forces still holds Soviet Russia in check – and this fear has, it is known, led her to speed up deliveries recently, deliveries that the Nazis need.” (My emphasis – FD) The other factor may prove even more important in trying to estimate the direction in which Soviet economy is now moving.

Russia’s fundamental economic weaknesses, the virtual breakdown of her system of economic planning, the introduction of peonage labor decrees, visible faults in the structure of collective farming, all force Stalin to depend more and more on German industry and German technicians. German experts “are now acquainted with the special problems involved,” and thus may be expected to play a steadily more important role in the Russian economy. Even if Stalin were separated by vast oceans from Hitler’s Germany, the fact remains that the economic weaknesses of Soviet Russia force him to depend more and more on Hitler. These economic weaknesses, and the direction in which they are leading, will be analyzed in subsequent articles of this series.

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