GERMANS, SOVIETS INK ECONOMIC DEAL

TODAY

Berlin, Germany • August 20, 1939

In the early morning hours on this date in 1939 the first of two back-to-back seismic changes to Europe’s polit­i­cal, eco­no­mic, and geo­strategic equi­lib­ria occurred with the signing of the German-Soviet Trade and Credit Agree­ment in Berlin. An out­growth of months­long econo­mic and polit­i­cal talks between German and Soviet repre­sen­ta­tives bent on improving bi­lateral rela­tions, the econo­mic deal between the two long-term ideo­logical rivals was the essen­tial pre­lude to a second agree­ment, the 10‑year German-Soviet Non­ag­gres­sion Pact with its secret proto­col for dis­mem­bering Poland, sealed days later in Moscow’s Kremlin.

The August economic agreement was crafted to give Nazi Germany access to the Soviet Union’s agri­cul­tural pro­ducts, metal ores, rubber, and oil, of which the former coun­try was an habit­ual net importer—e.g., importing 20 per­cent of its food­stuffs, 60 per­cent of its iron ore, 100 per­cent of its chrome and man­ga­nese, 80 per­cent of its rubber needs, and 66 per­cent of its oil by 1939. In return the Soviet Union, having embarked on its third Five-Year Plan in 1938, was to gain access to hard currency (a 7‑year credit line of 200 mil­lion German Reich­marks, roughly equi­va­lent to 69 mil­lion U.S. dollars), indus­trial equip­ment such as diesel engines and loco­motives, tech­no­log­i­cal know-how, man­u­fac­tured items like piston rings and spark plugs, and pre­cious mili­tary wares (war­ships, fighter and bomber air­craft, tanks, field artil­lery, gun sights, bombs, and ammu­ni­tion, for example) to strengthen its weakened defense forces as well as modernize its creaking indus­trial sector. The rap­proache­ment em­bodied by the twin pacts allowed Adolf Hitler, who now had a friendly frontier to his east, to loose his armed services on Poland, propelling Great Britain and France into World War II.

The German-Soviet Trade and Credit Agree­ment initially dis­appointed its German supporters, who had advo­cated reju­ve­nating eco­no­mic coop­er­a­tion and trade between Berlin and Moscow in the face of an anti­ci­pated British mari­time block­ade of their coun­try. Over the six months that followed its signing, both sides engaged in occa­sional bad faith as they finessed, rein­ter­preted, amended, or refused to com­pro­mise over still-out­standing details; delayed agreed-on recip­ro­cal deliv­eries of raw mate­rials and finished goods; procras­ti­nated by throwing up reams of red tape; inflated prices; and provoked occas­ional spats that required the highest levels of polit­i­cal inter­vention. Revisions in February 1940 and January 1941 elimi­nated the most criti­cal defi­cien­cies in previous treaties and upped the value of their bi­lat­eral exchange by hundreds of millions of Reichmarks (RM).

By mid-1941 the Germans had tapped into the Soviet Union’s vast stra­tegic natural resources for a year and a half, while their trading part­ner was the recip­i­ent of val­u­able manu­factured goods and services. By way of example, on the German side between Febru­ary 1940 and June 1941, that worked out to 900,000 tons of oil, 660,000 tons of metal ores (e.g., man­ga­nese, chrome, and iron), 18,000 tons of rubber, 200,000 tons of cotton, and 1.6 bil­lion RM in grains (20 per­cent of the amount of the total German har­vest). At its high point in 1940, the com­bined value of trade is esti­mated at 646 mil­lion RM (about $258 million), with the Soviets selling 404 mil­lion RM of com­mod­i­ties to Germany and Germany delivering 242 mil­lion RM worth of goods to the Soviet Union.

The short-lived age of German-Soviet détente and coop­era­tion ended in the ear-splitting sound of rolling thunder as Hitler’s legions of air­craft, tanks, artil­lery shells, and over three million battle-hardened men poured over the Soviet frontier on June 22, 1941.

Acclaimed British historian Roger Moorhouse recounts the events that not only led up the nefarious 1939 Molotov-Ribben­trop Non­aggres­sion Pact, which divided Poland and other East Euro­pean states between the Soviet Union and Nazi Germany, but took on a curious after­life in The Devils’ Alliance: Hitler’s Pact with Stalin. Though it lasted less than two years, the “pact from hell” is rich in ironies, as Moor­house’s authori­ta­tive account explains. The duplic­i­tous Hitler, after part­nering with Soviet despot Joseph Stalin in creating, then occupying their respec­tive “spheres of interest” in 1939 and 1940, changed his pre­da­tor’s spots to ambush, in cold blood, the Soviet Union in 1941. Oper­a­tion Bar­ba­rossa had the nasty mis­for­tune of dooming Hitler’s adven­turism in Central and Eastern Europe and has­tening the sorry end of his diabol­ical regime. And 50 years after their repres­sion and enslave­ment by Stalin’s Red Army, Poles, Esto­nians, Lat­vians, and Lithu­anians suc­ceeded in finally liber­ating them­selves by bringing down the Com­munist Iron Curtain and accel­erating the demise of their tor­mentor’s regime.—Norm Haskett


German-Soviet Economic and Political Cooperation, August–September 1939

Soviet foreign minister Vyacheslav Molotov, 1945September 28, 1939, signing follow-up secret protocol to Molotov–Ribbentrop Pact

Left: Soviet People’s Commissar of Foreign Affairs Vyacheslav Molotov wrote in Pravda, the offi­cial mouth­piece of the Soviet Com­munist Party, that August’s com­mer­cial agree­ment was “better than all earlier treaties” and “we have never managed to reach such a favor­able eco­no­mic agree­ment with Britain, France, or any other coun­try.” Early in the morning of August 24, Molotov and his German counter­part, Foreign Minister Joachim von Ribben­trop, signed the poli­tical and mili­tary treaty, the Molotov–Ribben­trop Non­ag­gres­sion Pact that was the com­pan­ion piece to the earlier com­mer­cial deal. (The second treaty bears the date August 23, 1939.) In effect a neu­trality agree­ment between the two countries, the Molotov–Ribben­trop treaty con­tained a secret proto­col for dividing the states of Northern and Eastern Europe into German and Soviet “spheres of influence.” Inter­estingly, Soviet dicta­tor Joseph Stalin con­sidered the trade deal at the time to be the more impor­tant of the two Nazi-Soviet pacts, for it had the poten­tial to return bi­lateral trade to levels last seen in the 1920s and early ’30s. Hitler placed his bet on the follow-up non­ag­gres­sion pact, waiting just long enough for the ink to dry before ordering his attack on Poland on September 1, 1939, and plunging all Europe into World War II.

Right: Soviet Foreign Minister Molotov signs the German-Soviet Treaty of Friend­ship, Coop­er­a­tion, and Demar­ca­tion in Moscow on Septem­ber 28, 1939, in the presence of Stalin (light tunic) and a framed portrait of Vladimir Lenin, Soviet first head of state. Standing to the right of Stalin is Molotov’s oppo­site number, German Foreign Minister von Ribbentrop, who signed for Germany. The Septem­ber treaty supple­mented the ini­tial secret proto­col in the Molotov–Ribben­trop Non­ag­gres­sion Pact signed the month before between the two coun­tries prior to their joint inva­sion and occu­pa­tion of their mutual neigh­bor Poland and the start of World War II in Europe.

Prelude to World War II in Europe: The Molotov-Ribbentrop Nonaggression Pact of August 23, 1939, Named After Its Two Signatories