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«Mark Harrison Department of Economics University of Warwick Coventry, England CV4 7AL Tel +44 203 523030 Fax +44 203 523032 Note This is a ...»

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THE SOVIET ECONOMY AND RELATIONS WITH

THE UNITED STATES AND BRITAIN,

1941-1945

Mark Harrison

Department of Economics

University of Warwick

Coventry, England CV4 7AL

Tel +44 203 523030

Fax +44 203 523032

Note

This is a preliminary draft of a paper to the

Foreign and Commonwealth Office-University of East

Anglia Joint Colloquium, "The Rise and Fall of the

Grand Alliance", 17-19 September 1993. Please do not cite without permission.

Acknowledgements I am more than ordinarily grateful to Stephen Broadberry for helpful advice, Edwin Bacon, Hugh Rockoff, and Nikolai Simonov for invaluable assistance, Seth Axelrod and Alec Nove for comments on a previous draft, and the Leverhulme Trust for financial support.

Draft 25 August, 1993

THE SOVIET ECONOMY AND RELATIONS WITH

THE UNITED STATES AND BRITAIN,

1941-1945 Mark Harrison

INTRODUCTION

There is a long history of studies of Allied economic relations with the USSR during World War II. Most of these were written from the viewpoint of diplomacy and strategy, and they were commonly influenced by a desire to search retrospectively for historical roots of the Cold War which followed.' Until quite recently, economic studies of wartime inter-Ally relations were much fewer, and little special reference was made to aid to the USSR. 2 This is surprising ' Raymond H. Dawson, The Decision to Aid Russia, 1941:

Foreign Policy and Domestic Politics (Chapel Hill, N.C.:

University of North Carolina Press, 1959); Robert Huhn Jones, The Roads to Russia: United States Lend-Lease to the Soviet Union (Norman, Okla.: University of Oklahoma Press, 1969); George C.

Herring, Aid to Russia, 1941-1946:

Strategy, Diplomacy, the Origins of the Cold War (New York:

Columbia University Press, 1973); Leon Martel, Lend-Lease,

Loans, and the Coming of the Cold War (Boulder, Colo.:

Westview Press, 1979); Joan Beaumont, Comrades in Arms:

British Aid to Russia, 1941-1945 (London: Davis-Poynter, 1980); Peter J. Titley, "Royal Air Force Assistance to the Soviet Union, June 1941 to June 1942", unpub. MA thesis, University of Kent (1991).

Thus R.G.D. Allen, "Mutual Aid Between the US and the 2 British Empire, 1941-1945", Appendix 3 of R.S. Sayers, Financial Policy, 1939-1945, (London: HMSO, 1956), 518-556, made incidental reference to aid to the USSR in a broader study of transatlantic transfers. For brief evaluations of the importance of Lend-Lease within studies of other topics in Soviet economic analysis, see Abram Bergson, The Real National Income of Soviet Russia Since 1928 (Cambridge, Mass.: Harvard University Press, 1961), 99-100n; G. Warren

-2- since Lend-Lease was nothing if not a resource transfer, and it was the economic significance ofthe transfer to the USSR which fuelled controversy for so many years. Without independent economic analysis the controversy was unlikely ever to be resolved; it could never rise above the claim of the recipient that the scale of the transfer in cash and percentage terms was small, and of the donors that such overall totals were immaterial since it was the physical form of Allied aid which represented the critical ingredient in Soviet victory.

Why is a distinctively economic analysis of inter-Ally aid and trade necessary? The core of the problem is to understand what would have happened without these transfers of resources. Our ability to recast historical alternatives by the use of "counterfactual hypotheses" is limited, and many historians rightly flinch from overt speculation.

However, it is important to understand that, even after a certain amount of Cold War inflation of the American contribution in the late 1940s and early 1950s had been overcome, the western literature in this field remained Nutter, The Growth of Industrial Production in the Soviet Union (Princeton, N.J.: Princeton University Press, 1962), 214; Susan J. Linz, "Economic Origins of the Cold War? An Examination of the Carryover Costs of World War II to the Soviet People", unpub. PhD thesis, University of Illinois at Urbana-Champaign (1980), 25-33; James R. Millar, "Financing the Soviet Effort in World War II", Soviet Studies, 32 (1980), 116; Mark Harrison, Soviet Planning in Peace and War, 1938-1945 (Cambridge: Cambridge University Press, 1985), 149-50; Susan J. Linz, "World War II and Soviet Economic Growth, 1940-1953", in Susan J. Linz, ed., The

Impact of World War II on the Soviet Union (Totowa, N.J.:

Rowman & Allanheld, 1985), 25-27; William Moskoff, The Bread of Affliction: the Food Supply in the USSR During World War II (Cambridge: Cambridge University Press, 1990), 119-22;

John Barber, Mark Harrison, The Soviet Home Front, 1941A Social and Economic History of the USSR in World War II, (London: Longman, 1991), 33-34, 189-90. For special attention devoted to this neglected field see only Robert Munting, "Lend-Lease and the Soviet War Effort", Journal of Contemporary History, 19 (1984), 495-510; Robert Munting, "Soviet Food Supply and Allied Aid in the War, 1941-1945", Soviet Studies, 36 (1984), 582-93; Hubert P. van Tuyll, Feeding the Russian Bear: American Aid to the Soviet Union, 1941-1945 (Westport, Conn.: Greenwood Press, 1989).





dominated by very strong, usually unspoken assumptions about economic alternatives which economists would often prefer to question or qualify.

A feature common to most western studies of aid to Russia has been an additive, "building-block" approach. At its simplest, the Soviet war effort as comprised of a number of building-blocks of military personnel and materiel, each of which was complementary to the effort as a whole at the given stage of the war; take away any one of these blocks, and the whole war effort was disabled. Some of these blocks were labelled as domestically sourced, some as originating in Great Britain and the United States. The main blocks of Red Army firepower and personnel, which sufficed to stave off defeat in 1941-42, were made at home. Added to these in 1943-45 were imported blocks of more technically sophisticated means of communication and mobility which made possible the great strategic offensives. This approach is additive in the further sense that it sees the allocation of domestic blocks to the war effort as predetermined independently of the availability of imported blocks, which were therefore simply added on to the war effort; if taken away, they could not have been replaced from domestic sources.

The timing and composition of aid are both seen as important to this analysis. The time factor was as follows.

The inflow, slow at first, began the period of its peak rate in the second half of 1943. By then the Germans had already suffered three huge defeats on the eastern front, at Moscow, Stalingrad, and Kursk-Orel. The strategic offensive capacity of the Wehrmacht had in practice been eliminated. With the turn in the war's tide, a new phase was under way which determined the character of Allied victory and German defeat. But German troops were still deep inside Russia, and in the west Allied forces had only just won their first toehold on the continent of Europe in Sicily. The Battle of the Atlantic was still intense. The German war economy was intact, despite Allied bombing, and German war production

-4was accelerating. Without a further rapid unravelling of the German position in the east it was easy to suppose that many years of fighting lay ahead. At the same time, the military feats of the Red Army had been purchased at huge cost in human life and equipment, while living and working conditions in the Russian interior were very poor and food supplies were even deteriorating.

The composition of Allied aid to Russia has been seen in this context as having made a disproportionate contribution.

The Soviet Union produced its own firepower in World War II, but relied extensively on imported means of mobility. The particular material form which aid took reinforces this view. Imported firepower (mainly aircraft and tanks) was prominent in the first trickle of aid in 1941-42, but from 1943 onwards it was motor vehicles, high-grade fuels, communications equipment, industrial machinery, naval vessels, and concentrated and processed foodstuffs which predominated, all essential to the manoeuvrability and logistical supply of modern armies.

Thus, the Red Army's destruction of Germany's offensive power in 1941-42 was accomplished largely on the basis of Soviet domestic supply; but its technical ability to pursue the retreating Wehrmacht, to project Soviet military power into the heart of Europe, to meet up with the Allied ground forces advancing from the west, and end the war in Europe in 3 May 1945, was based significantly upon western resources.

Why did the Soviet Union need this western aid? The explanation implicit in this approach stressed critical gaps and shortfalls in the technological and organization assets available to Soviet industry, usually in high-technology processes or the capacity to finish products where qualitative attributes were crucial. On the whole, in this view, the technical form of each block was its defining characteristic; there was little or no substitutability

Munting, "Lend-Lease", 495; Barber, Harrison, The 3

Soviet Home Front, 190.

between high-grade and low-grade building blocks, and similarly between blocks of domestic and foreign resources.

A lack of high-technology, high-quality equipment could not be counterbalanced by increasing the availability of low-grade goods and human services; since Soviet industry could not match the quality of flow products of American electrical and mechanical engineering and petrochemicals, foreign resources could not be replaced by domestic 4 resources.

While reporting dollar and ruble totals of the aid inflow, and calculating them in varying percentages of Soviet industrial production or national income at the time, western studies tended to attach little importance to such figures; in more than one expert view, "United States aid to Russia played a much more vital war role than it would 5 appear from the cold statistics." What did the cash value or percentage ratio matter, if the simple truth was that without Lend-Lease it could not have been done? The literature emphasized the "disproportionate effects" attributable to Lend-Lease supplies, 6 which filled "critical gaps", made good "painful shortages", 7 and permitted "real This hypothesis is supported by the suggestion that the 4 wide range of goods requested by the Soviet authorities for import under Lend-Lease arrangements reflected a Soviet intention to copy across a wide range of western technology (van Tuyll, Feeding the Russian Bear, 26).

Jones, The Roads to Russia, 238.

5 Herring, Aid to Russia, 286: "In some cases, raw 6 materials or machinery helped to expand Russian productivity" (emphasis added here and below). Van Tuyll, Feeding the Russian Bear, 72-73: "American shipments of specialized chemicals, metals, and industrial machinery may have had a disproportionate effect on Soviet production".

Herring, Aid to Russia, 286: "Arms, industrial 7 equipment, raw materials, and food filled critical caps in Russian output and allowed Soviet industry to concentrate on production of items for which it was best suited. Railroad and automotive equipment facilitated the delivery of all types of supplies to the battle fronts." Jones, The Roads to Russia, 224: "The total tonnage of oil products lend-leased to Russia represented only a fraction of her total petroleum 8 additions" to the available assortment of supply. Western resources were simply indispensable to the Soviet war effort. In this spirit Khrushchev's reminiscences are often cited: "Without Spam we wouldn't have been able to feed our army"; of American trucks, "Just imagine how we would have advanced from Stalingrad to Berlin without them!" 9 The additive, building-block approach, with its stress on the qualitative differences between Soviet and western products, captured an important aspect of reality especially the way in which the military effectiveness of Soviet-produced defence assets was augmented as a result.

However, the idea that there was no substitutability between consumption, but again this is a misleading fact. Although north-route convoys suffered severe attacks and frequent suspensions, a substantial amount of petroleum arrived in Murmansk, which was close to the northern front, thus relieving painful shortages caused by the interruption of Soviet rail communications with the Caucasus region. Also a little additive goes a long way, and many Russian aircraft flew on gasoline that was power-boosted in this manner; the hundreds of thousands of American-built trucks also consumed Soviet gasoline to which blending agents had been added.

Once again, comparison between Lend-Lease shipments and Russian production serves no useful purpose." Listing vehicles, railway and communications equipment, industrial machinery, and concentrated foods, Beaumont, Comrades in Arms, 212-13, found that "certain categories of western supplies were vital to the Soviet war effort.... Other western supplies were not provided in such spectacular quantity but they were nonetheless significant in the Soviet war effort. Either they were highly sophisticated and technically specialized or they filled important gaps in Russian production.... Other critical shortages in the Soviet economy were filled by aluminium and copper...."

Van Tuyll, Feeding the Russian Bear, 72-73: "Using 8 gross percentage figures to evaluate Lend-Lease does not allow a clear view of whether Lend-Lease merely provided additional increments to materiel the soviets were already manufacturing, or which aid items were shipped which they could or did not make. Thus American shipments of specialized chemicals, metals, and industrial machinery may have had a disproportionate effect on Soviet production."

Moskoff, The Bread of Affliction, 122, on food products imported under Lend-Lease: "the meats and oils were a real addition to the diets of those who received them."

N.S. Khrushchev, Khrushchev Remembers (London: Andre 9

Deutsch, 1971), 199. -7-



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