First published 1950 Made and printed in Great Britain



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At this point the front of the non-Soviet countries broke. On April 14th a Soviet-German agreement providing for a credit of 300 million marks, for the purchase of German machinery, was signed in Berlin. A fortnight later a similar agreement, to the value of 350 million lire, was signed with Italy. Evidently, in conditions of universal trade slump, those manufacturing countries which had least reserves could not afford the luxury of losing a large and reliable customer. In May an agreement for the sale of one million tons of Soviet oil was signed in Madrid.

At the Committee for European Union, which the League of Nations had convened in Geneva the same month, Litvinov strove to hammer home the lessons of this experience. European Union, he underlined, ‘cannot base its work upon a campaign, or upon incitement to a campaign, against any country or group of countries, without contradicting its own declared principles and aims’. It was possible to remove unnecessary aggravation of the conflicts within the capitalist system underlying the world crisis. The Soviet Union was prepared ‘to adhere as before to the principle of the peaceful coexistence of the two systems at the present stage of history’. For this purpose he proposed (May 18th, 1931) a ‘draft Protocol of Economic Non-Aggression’. After proclaiming the principle of peaceful economic co-operation of States, irrespective of their political and economic systems, the Protocol obliged its signatories to forego any measures of discrimination against one or more of the other signatories. So deep was the impression created that a special committee of the League endorsed the general idea of the Protocol, but recorded that it did not seem likely to secure unanimous acceptance (November 5th, 1931).

The Soviet Government did not confine its offers of co-operation to the Geneva committee-rooms. Later on in May, at the International Wheat Conference held in London, it offered to join in co-ordinated limitation of exports, to prevent catastrophic falls of wheat prices; and, although this offer was rejected at first, it was accepted later. In July, after negotiations lasting over a month, the French Government agreed to simultaneous cancellation of the mutual embargoes on trade which it had been the first to introduce. In November, negotiations for a further extension of trade with Germany began, and were crowned by the signature of a trade agreement in December. By this time the United States Government had also removed its embargo on Soviet goods. The collapse of the anti-Soviet campaign in the sphere of trade was almost complete.

The one exception was in Great Britain. The formation of the second National Government after the General Election of 1931, with its triumphant Conservative majority, was swiftly followed by a reduction in the average period of credit for Soviet purchases, guaranteed by the Board of Trade, from two years to one year. This effectively excluded nearly all British manufacturers from any chance of securing Soviet orders where they had to compete with German, French, Italian, Danish, American or other suppliers.

Since the early summer, the Soviet Government had been reinforcing its demonstrations in the diplomatic field that co-operation with the U.S.S.R. as it grew stronger was more promising than a policy of hostility. Between 1925 and 1927 the Soviet Government had signed pacts of non-aggression – obligations to refrain from attacking the other party if it were attacked by some other Power – with Germany and Lithuania in the west and Turkey, Afghanistan and Persia in the east. These pacts were for five years, and in the second half of 1931 they were demonstratively prolonged, or recast in a still more binding form, for another like period; and accompanied in the case of Persia (November 27th, 1931), by a Trade and Navigation Agreement. Throughout 1932 this policy was continued. Pacts of non-aggression were signed with Finland (January 21st), Latvia (February 5th), Estonia (May 4th), Poland (July 25th) – after hesitations on the Polish Government’s part lasting six months, owing to strong outside pressure – and France itself (November 27th). By this time Japan had signified its postponement of any warlike action against the U.S.S.R. in the near future by signing an agreement over her fishery concessions in Soviet waters (August 13th). Other indications of the success of Soviet foreign policy in this phase of its history – perhaps it would be truer to say, of the success of the first Five Year Plan – were the voting of additional export credits for trade with the U.S.S.R. by the Norwegian Parliament (June 28th) and the resumption of diplomatic relations, after five years’ interruption, with China (December 12th).

Only in Great Britain did relations steadily move from bad to worse, culminating on October 7th, 1932, in the denunciation by the British Government of the Trade Agreement signed in 1930. This action, however, had less significance for Soviet economy than it had as an indication of the trend of British policy.

One other sphere of Soviet diplomatic activity in 1932 needs to be recalled. From February to July there sat at Geneva the long- awaited Disarmament Conference, promised by a special clause of the Versailles Treaty in 1919, refused at Genoa in 1922 when the Soviet delegation, as we saw earlier, pressed for it, and prepared by a special commission which had sat in Geneva for some four years. In the first round of introductory speeches at the opening of the Conference the Soviet delegation through Litvinov reminded the Conference of the proposals for universal total disarmament it had made in December, 1927, and reaffirmed its alternative scheme for partial disarmament which it had put forward when its first offer was rejected. It offered the abolition of tanks and long-range guns, of warships over 10,000 tons, of aircraft-carriers and naval guns over twelve inches calibre, of heavy bombers and all stocks of bombs, and the prohibition of chemical, bacteriological and flame warfare as well as of air bombing. Litvinov also recalled his earlier offer of a flat 50 per cent cut in all armaments.

These proposals aroused considerable sympathy among the smaller countries, on whom the cost of armaments at a period of profound economic and financial difficulties was an intolerable burden. But the sympathy was less marked among the Great Powers, each of whom had offered reductions of those armaments in respect of which it was particularly vulnerable, while insisting on the retention of those arms in which it predominated. From the private negotiations in hotel bedrooms, lasting many weeks, which then followed among the greater Powers, the Soviet Union was rigorously excluded. In June President Hoover sent a message to the Conference attempting to move it out of its state of deadlock, by borrowing an idea already advanced (as we have seen) by the Soviet Government – that of a flat, all-round cut in armaments. Whereas the Soviet offer had been for a 50 per cent cut, the American suggested a 33 1/3 per cent reduction. Many speeches were made extolling the nobility of the President’s proposal: the Soviet delegation adopted it for practical guidance. When, at the end of July, an omnibus ‘pious resolution’ was worked out by the Great Powers, full of vague generalities and promises of what some future convention might adopt, the Soviet delegation moved the Hoover proposals in the shape of an amendment. This caused consternation, particularly when the Soviet delegation pressed the matter to a vote. AH the Great Powers and their satellites voted against the amendment – including the United States delegation, which thus rejected its own proposal: and it was defeated by thirty to five, with sixteen abstentions. After this, it only remained for the Soviet delegation, when the vote was taken by roll-call on the monumental collection of platitudes worked out by the Great Powers, to answer in Litvinov’s sarcastic words: ‘For disarmament, against the resolution!’

6. RESULTS OF THE PLAN

By this time, beyond any doubt, the U.S.S.R. was able to rely on its own strength in case of need. It had become primarily an industrial country. More than 70 per cent of the total national output – itself more than doubled during the four-and-a-quarter years since October, 1928 – was accounted for by industry, as against 42 per cent in 1928. Some 1,500 new factories had been built, and another 900 reconstructed and modernized. More than three-fifths of the equipment of Soviet industry consisted of new machinery. Moreover, the output of the means of production – machinery, coal, oil, iron and steel – was far larger than in 1928. Entirely new industries had been created, and moreover on a basis of social ownership which accounted for 99 per cent of all Soviet industry. It was now clear that the aim of creating the machinery with which the entire economy of the country could be transformed, if required, had been attained.

This was far from saying that there were no shortcomings. The total output of Soviet industry, measured in fixed (1926-27) prices was 96.4 per cent of the level planned. This was because in 1931 and 1932 a number of factories had had to be switched over to defence needs, delaying fulfilment of their output programmes. Moreover costs of production were much higher, and the quality of output in many spheres much lower, than was anticipated. This was due to the immense influx of previously unskilled labour – which also accounted for the fact that output per head at the end of 1932 had increased by much less over the 1928 level than had been hoped for (41% instead of 110%). But in return the machinery of up-to-date large-scale production had been created, and millions of workers had learned the technique of industry by practical experience – a school which, although costly, had nevertheless yielded results entirely without parallel in world history in such a short time.

In agriculture, the aim of reorganizing this vast branch of the national economy had in the main been achieved. The collective farms, now grouping more than 60 per cent of all peasant families, accounted for nearly 70 per cent of all the sown area of the country and nearly 80 per cent of all the grain marketed. The State farms accounted for another 10 per cent of the sown area and a further substantial proportion of the marketed output of grain. Thus public ownership of one kind or another – either by the State or by the collective farms – dominated agriculture, for the first time in history in any country. The kulak class was almost entirely eliminated from the countryside.

The number of workers had been doubled (from over eleven millions in 1928 to nearly twenty-three millions in 1932), the seven- hour day was in general operation, unemployment had completely disappeared, and real wages had gone up by 50 per cent. Compulsory education, introduced after a long period of preparation in August, 1930, had doubled the numbers in elementary schools and trebled those in secondary schools, during the period of the Plan – ‘a decisive step in the cultural revolution’, Stalin called it. Especially striking had been the effect of the first Five Year Plan upon the nationalities rescued from colonial status by the revolution. They had made much progress during the years of reconstruction. This was particularly marked in the social and cultural spheres, such as those of public health, the spread of literacy, the emancipation of women, the abolition of barbarous treatment of children. Then had come the ‘land and water reforms’, already mentioned, accompanied in many areas by the bodily transfer of entire factories from more developed areas in Russia. From 1925 onwards, moreover, many workers from these Republics were trained for the purpose in the Moscow and Ivanovo factories. More advanced Soviet Republics, like Ukraine and Belorussia, had restored their industry as fast as the Russian Federation, and in addition had solved in the main the problem of reorganizing their public services and law-courts on the basis of their own language, the development of a vast network of schools, and the promotion of native-born workers, peasants and intellectuals to the highest position in the Government. A striking example of progress was that of the Gypsies of the U.S.S.R. Only in 1925 had they received a written alphabet and grammars of their own. By 1930 there were many published Gypsy books – poetry, plays and prose literature.

The Five Year Plan had greatly accelerated this programme, and indeed had launched many of these recently backward nationalities upon the road of rapid industrial and cultural development. Their industrial output increased over 350 per cent (against the doubling of output in European Russia). Large engineering, chemical, and textile factories made their appliance in Central Asia, with mines of all kinds; new works of every kind in Transcaucasia; sawmills, canneries, and glassworks elsewhere. Collective farming had been welcomed with enthusiasm by the overwhelming majority of the peasantry, whose colonial status in the old Russia had shown itself in most of these areas, among other respects, by the high percentage of extremely poor and landless peasantry among them. Economic development had been accompanied by a rapid increase in literacy: it had varied from 5 to 15 per cent of the adult population in these Republics in 1928, while by 1933, as a result of intensive adult education, the figures stood at from 50 to 80 per cent. Nor were these simply ‘statistical’ achievements : a tenfold increase in the daily circulation of the newspapers in non-Russian languages during the period of the first Five Year Plan – from 850,000 to nearly nine million – was evidence of that, and the numbers of children at school increased four-, eight- and even thirteen-fold in Central Asia over the four years.

Both for the internal policy of the Soviet Government and for the reinforcement of its prestige in foreign relations, the fulfilment of the Five Year Plan in four-and-a-quarter years had meant a striking success. Stalin declared that, in spite of ‘plenty of defects and mistakes’, it had been the enthusiasm and initiative of the millions of workers and collective farmers that was primarily responsible, through Socialist emulation and shock work, for defeating the many predictions of failure, abroad and at home. It was now clear, he said, that the working class was as well able to build as to destroy, and that under Communist leadership it was quite capable of building a Socialist society in one country, taken alone: for ‘the economic foundations of such a society have already been laid in the U.S.S.R.’ (speech of January 7th, 1933).

7. WAR ON THE HORIZON

But it seemed as though history had been preparing a retort to the successful fulfilment of the Five Year Plan. In January, 1933, three weeks after Stalin’s report at a joint meeting of the Central Committee and Central Control Commission of the Communist Party on that success, Hitler was placed in power in Germany. This meant that a party which had, through his lips, openly proclaimed its intention to carve out a new empire for Germany in Eastern Europe was now in control of the biggest industrial potential on the Continent. Moreover, Nazi Germany was able to secure without delay the renewal by the London banks of the ‘standstill agreement’ under which 4,000 million marks’ worth of credits, which had fallen due, were renewed for the convenience of the German financial and industrial magnates who were well known to be the prime forces supporting Hitler.

When, at the beginning of February, 1933, Litvinov submitted to the Disarmament Conference a draft convention for the definition of an aggressor – specifying the precise conditions which constituted physical aggression, and brushing aside the usual pretexts on which in the past aggression had been justified – the British delegation took the lead in opposing it. From March to June, on the initiative of Mussolini but with the warm support of the British Government, negotiations took place for the conclusion of a Four-Power Pact (Britain, Germany, France and Italy) which pledged the signatories to collaborate in all international problems and to recognize the right of Germany to equality in armaments. This Pact, signed on June 7th, 1933, reinforced the Locarno Treaties of 1925 so far as bolting the door to war in the West was concerned. But this served only to underline the unspoken permission given to Germany, by recognizing her right to rearm, to use her arms in some other direction – and what that direction ought to be, was just as well understood in 1933 as it had been in 1925.

By this time, too, the bad relations between the U.S.S.R. and Great Britain had taken a further turn for the worse, in connexion with the arrest of a group of British engineers working in the U.S.S.R. on the charge of espionage and sabotage (March 12th). Without waiting for the trial, the British Ambassador immediately suggested to London that the Soviet Government should be threatened with a rupture of trade negotiations: and three days later the British Prime Minister announced in the House of Commons that the British Government was convinced that the charges could not be justified, and had demanded that the proceedings should be stopped. This attitude was supported by a determined campaign in the British Conservative Press; and the campaign continued in spite of a warning by Litvinov (March 17th) that the British demand amounted to

a proposal for the exemption from Soviet jurisdiction of all British subjects, granting them immunity for any crime or delinquency and providing that, in the event of any Englishman being accused of a crime, the proceedings against him shall be stopped immediately, in spite of the available data and proofs, even the accused’s own depositions, as soon as his Government expresses a conviction of his innocence. It is sufficient to formulate such proposals to make it obvious to the Government of an independent country that they are unacceptable and cannot be discussed.

Undeterred, the British Ambassador attempted to impress Litvinov (March 28th) by reading to him an account of the Bill for an embargo on Anglo-Soviet trade which was to be introduced unless the trial was stopped; and the Bill was duly announced by the Prime Minister on April 3rd. Nevertheless, the trial was held (April 12th to 18th) – in public, and before a large concourse of foreign diplomats and journalists. Several Russian defendants and one of the British pleaded guilty, while another admitted that he had made written depositions confessing guilt, but withdrew them in court. All the British accused admitted that they had been well treated in prison, and that the stories to the contrary were false. Mr A. J. Cummings cabled from Moscow (April 30th, 1933):

For my part I was frankly surprised at the judicial decencies which were observed in the conduct of the trial; at the absence of crude methods of trickery; at the latitude allowed the prisoners ... The interrogators do not appear to have employed exceptionally severe methods – according to their own standards of practice – or even to have approached the third-degree methods familiar in the United States of America.

However, within a few hours of the sentence (which involved deportation from the U.S.S.R. for three of the accused, acquittal for one, and prison sentences for two) the British Government issued an embargo on Soviet goods. This naturally produced a counter-embargo on all purchases from Great Britain, all chartering of British ships and all rebates for British ships on port dues in Soviet waters.

The situation thus created continued until the beginning of July, when both embargoes were called off and the two British engineers serving prison sentences were amnestied and expelled.

This caused much relief among British firms anxious for Soviet orders, particularly as the Italian Government had seized the opportunity, as always, to sign customs and credit agreements with the U.S.S.R. promoting ‘liquid credits for the purpose of exporting Italian goods to the Soviet Union’ to the value of 200 million lire during the rest of the year. These goods were machinery, chemicals and metals of a kind which British firms well knew they themselves could supply.

In the meantime, however, the bad relations between the U.S.S.R. and Britain had encouraged a leading German delegate at the World Economic Conference in London, the Nationalist Hugenberg, to put forward (June 15th) the demand that, as a condition of economic stability in Europe, the ‘energetic race’ of his country should be granted the opportunity to secure ‘new lands in the east’. The suggestion was replied to with some severity by the Soviet delegation, and, in view of the negotiations which were already in progress for a liquidation of the embargoes on Anglo-Soviet trade, Hugenberg received no open support.

The Conference itself was a fiasco, because of the contradictions between Britain and the U.S.A. over the questions of tariffs and depreciation of currencies, which at that time seemed irreconcilable. The Soviet delegation to the Conference proposed (June 21st) a draft pact of economic non-aggression, under which all the signatories pledged ‘the peaceful co-operation of all States in the economic field irrespective of their politico-economic systems’, called off all discriminatory customs duties and similar measures, and undertook not to impose such measures for the future. At the same time, Litvinov gave an earnest of the Soviet Government’s seriousness by stating that it was prepared – at a time when every other country was doing its utmost to cut down imports and expand only exports – to increase its own import programme of non-ferrous metals, iron and steel, textiles, leather, rubber, engineering material, consumer goods, etc., to the value of 1,000 million dollars, on condition that credit terms were granted. The offer was brushed aside, although in fact the Soviet Government was increasing its imports of manufactures from those countries which were willing to grant credit terms, and notwithstanding the fact that, while the embargo was still in force, Soviet bills to the value of tens of thousands of pounds were being punctually met.

One positive achievement of the Soviet Government at the Conference showed that the coming to power of Hitler was alarming the smaller countries, even if the Great Powers still professed indifference. On July 3rd, 4th and 5th the U.S.S.R. signed pacts for the definition of an aggressor, on the lines of its February proposals, with its eastern and western neighbours (Finland adhered later), and with the States of the Little Entente (Czechoslovakia, Yugoslavia and Rumania) – whose Governments, in the case of the latter, had not even yet established diplomatic relations with the U.S.S.R. Later that month diplomatic relations were established with the Spanish Republic, and in September, on the initiative of Mussolini, a treaty of friendship and non-aggression was concluded with Italy.

But perhaps the most important event of the year in Soviet foreign policy was the establishment, on November 17th, of diplomatic relations with the U.S.A. For sixteen years the United States Government had refused to enter into normal connexions with the Soviet Union, although a considerable trade had developed between the two countries: and this element of hostility had added continuous uncertainty to the international scene, since actively anti-Soviet forces in Europe and Asia could always find encouragement in the State Department. It was on the initiative of Franklin D. Roosevelt, in face of the growing aggressiveness of Hitler’s speeches, that Litvinov came to America in October for the preliminary negotiations.

At this time relations with Nazi Germany were steadily deteriorating. The eyes of the world at this time were fixed on Leipzig, where Georgi Dimitrov was conducting his heroic attack on the Nazi regime during the trial of himself and his co-accused on the trumped-up charge of burning down the Reichstag. The Germans selected this moment for arresting and maltreating Soviet journalists on their way to report the trial. This immediately led to the expulsion of German journalists from the U.S.S.R. It was this moment that was selected also by Lord Rothermere, the then proprietor of the Daily Mail, to write in his paper (November 28th, 1933), that ‘the sturdy young Nazis of Germany are Europe’s guardians against the Communist danger’, and to urge their claims to ‘elbow-room’ in Western Russia. ‘The diversion of Germany’s reserves of energies and organizing ability into Bolshevik Russia’, wrote his lordship, ‘would help to restore the Russian people to a civilized existence, and perhaps turn the tide of world trade once more towards prosperity. By the same process Germany’s need for expansion would be satisfied, and that growing menace which at present darkens the horizon would be removed for ever.’


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