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Loans and Legitimacy

Loans and Legitimacy: The Evolution of Soviet-American Relations, 1919-1933

Katherine A.S. Siegel
Copyright Date: 1996
Pages: 240
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  • Book Info
    Loans and Legitimacy
    Book Description:

    In 1919 the Soviet government directed Ludwig Martens to open a trade bureau in New York. Before his deportation two years later, Martens had established contact with nearly one thousand American firms and conducted trade in the face of a stiff Allied embargo. His work planted the seeds for growing commercial ties between the U.S. and the U.S.S.R. throughout the 1920s.

    Because the United States did not recognize the Soviet Union until 1933, historians have viewed the early Soviet--American relationship as an ideological stand-off. Katherine Siegel, drawing on public, private, and corporate documents as well as newly opened Soviet archives, paints a different picture. She finds that business ties flourished between 1923 and 1930, American sales to the Soviets grew twentyfold and American firms supplied Russians with more than a fourth of their imports. American businesses were only too eager to tap into huge Soviet markets.

    Under the Soviets' New Economic Policy and first Five Year Plan, American firms invested in the U.S.S.R. and sold technical processes, provided consulting services, built factories, and trained Soviet engineers in the U.S. Most significantly, Siegel shows, this commercial relationship encouraged policy shifts at the highest levels of the U.S. government.

    Thus when Franklin D. Roosevelt opened diplomatic relations with Russia, he was building on ties that had been carefully constructed over the previous fifteen years. Siegel's study makes an important contribution to a new understanding of early Soviet-American relations.

    eISBN: 978-0-8131-6133-4
    Subjects: Political Science

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Acknowledgments
    (pp. ix-x)
  4. Introduction
    (pp. 1-5)

    In 1919 anticommunist sentiment in America was at a crest. That year saw the founding of the American Communist party and also the deportation of boatloads of suspected Bolsheviks from the United States. Attorney General A. Mitchell Palmer and his ambitious assistant, J. Edgar Hoover, laid their plans then for the large-scale raids against alleged Soviet sympathizers that were launched early in 1920. Palmer did not escape unscathed. On June 2, 1919, his house at 2132 R Street in Washington was blown up by an anarchist. Across the street, windows also shattered at the home of Assistant Secretary of the...

  5. 1 Martens and the First Soviet Mission
    (pp. 6-22)

    In 1919, as the Soviet government slowly emerged from the combined threats and destruction of world war, revolution, and civil war, its new leadership looked to the United States. “We are decidedly for an economic understanding with America,” President of the Council of Peoples’ Commissars Vladimir Ilyich Lenin told aChicago Daily Newscorrespondent in October 1919. “With all countries,” he was quick to add, “butespeciallywith America.”¹ As Tatiana N. Kargina explains, the Kremlin’s keen ambition to obtain trade and diplomatic ties with “the most powerful country of the capitalist world” was a product of the complete economic...

  6. 2 The Demise of the Soviet Bureau
    (pp. 23-38)

    After testifying before the Lusk committee in December, Martens was subpoenaed by a Senate subcommittee that had been established to investigate Bolshevik propaganda.¹ But before Martens appeared before the Senate, Attorney General A. Mitchell Palmer also wished to grab some headlines. Palmer, known to the public as the “fighting Quaker,” issued an arrest warrant for Martens on January 2, 1920. The attorney general envisioned a spectacular public arrest of Martens for the benefit of newsreel cameras, a scenario that had the approval of Palmer’s special assistant, J. Edgar Hoover. The attorney general was then in the midst of a fullscale...

  7. 3 Diplomatic, Military, and Humanitarian Initiatives, 1919–1923
    (pp. 39-61)

    The first secretary of state to deal with the Soviet regime was Robert Lansing. In 1906 Lansing had helped to found the American Society of International Law, and he later became counselor for the Department of State. His legal background was not conducive to friendly relations with the Soviets, whom he thought had done little but flout international rules. As Norman Gaworek writes, Lansing believed that “it was impossible to deal with the Bolshevik regime.”¹

    With the Allied embargo still in effect and Soviet Russia seen as a transgressor of international law, all queries that reached the State Department regarding...

  8. 4 Economic Foreign Policy under Harding
    (pp. 62-75)

    Herbert Hoover brought up his concern with Soviet unpaid obligations almost immediately after he entered the Commerce Department. He pronounced that “communism and long term credits are incompatible” because “no one would trust men who repudiated debts and agreements whenever it suited them.”¹ Nevertheless, within a few years, Hoover’s own department would be among the vanguard of Washington agencies in facilitating Soviet-American trade, both financed and unfinanced. Hoover is known for his successful practice of corporatism, first at the Commerce Department and later in the White House. During Hoover’s eight years at Commerce, as Robert H. Zieger writes, this once...

  9. 5 The Soviet Commercial Missions under Harding, Coolidge, and Hoover
    (pp. 76-88)

    When the Soviets had requested that a trade mission be accepted in America, a Russian group was already in the United States: the Special Trade Delegation of the Far Eastern Republic (FER), headed by Alexander A. Yazikov and Boris Skvirskii. This Siberian delegation had attempted to gain diplomatic recognition at the Washington Conference of 1921–1922, but failed, as the conference recognized that “the delegation … is closely allied with the present Soviet Government of Russia.” The FER was indeed linked with Soviet Russia; diplomatically and militarily, in order to counter the Japanese occupation of Siberia, as well as politically...

  10. Illustrations
    (pp. None)
  11. 6 Trade and Foreign Policy, 1923–1929
    (pp. 89-109)

    Soviet representatives have named 1923 as the year marking the “resumption of trade relations” with America. That year Russia’s grain crop was at last large enough to supply exports for hard currency. Armand Hammer’s agency, Alamerico, was in full operation, and the All-Russian Textile Syndicate opened. The year was also notable for a milestone in Soviet-American legal relations. Remaining diplomatically unrecognized by the United States, Russia’s national sovereignty was acknowledged in American courts in 1923, when the Soviet government was found not to be subject to U.S. civil laws. The case arose in a New York suit brought by furriers...

  12. 7 American Businessmen, the NEP, and the First Five-Year Plan
    (pp. 110-132)

    The great expansion in Soviet-American trade relations discussed in the previous chapter was accompanied by an equally significant growth of American investment in Russia, related to the launching of the New Economic Policy. By the end of 1920 the ideological zeal of war communism had reached its apogee. As Alec Nove suggests, by then Lenin himself had “gone right off the rails” in pursuit of peasant surpluses and supposedly wealthy “kulaks” in order to feed the soldiers and the urban workers.¹ But growing unrest among the peasants, as well as a revolt by sailors at the Kronstadt base in March...

  13. 8 Soviet–American Relations, 1929–1933
    (pp. 133-138)

    During the First Five-Year Plan, Soviet-American trade reached a peak, although the high sales were short-lived. From 1927 to 1930, spurred by the industrialization imperatives of the plan, U.S. exports to Russia increased from $65 million to $114 million. In 1931 sales dropped to $104 million, but the Soviet government’s orders still made it America’s seventh-largest customer.¹ Soviet purchases of American manufactured goods in 1931 were 22 percent higher than those in 1929, a significant increase when compared to the more than 50 percent drop in overall American exports during this very depressed period. While $104 million amounted to only...

    (pp. 139-140)

    As this study has emphasized, the commercial opportunities that Moscow offered after the revolution drew an interested response from American companies and government officials. As a result, the Soviet Union had an important influence on U.S. foreign economic policy between 1919 and 1933 despite its lack of diplomatic status in the United States. The expansion of trade, particularly during the NEP era, facilitated the extension of financing to Moscow and also served to legitimize the Soviet regime in the United States.

    From the time Ludwig Martens opened his office until Franklin D. Roosevelt opened diplomatic relations, the United States and...

  15. Abbreviations
    (pp. 141-142)
  16. Notes
    (pp. 143-186)
  17. Bibliography
    (pp. 187-196)
  18. Index
    (pp. 197-211)