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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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domestic and imported means, or between products in military and civilian use, was excessively deterministic and led to unfortunate results. On one side the contribution of western aid to the Soviet war effort was exaggerated; the possibility that it released Soviet resources for non-war uses, while admitted in theory, was not identified in practice. On the other side, where identifiable lend-leased goods were diverted to non-war applications, this was judged illegitimate. Like some undeserving recipient of social security accused of going on holiday at the taxpayers' expense, the Russians were not supposed to have purposes of their own. Here the additive approach was very much in the spirit of the Lend-Lease Act, which intended aid commodities to be used only for the war, and to be additive to domestic resources already so committed. For the social scientist, however, it is behaviour which tests the law, not the law which tests behaviour.

In strictly converse fashion the official Soviet historiography remained dominated by a broad assumption that without Lend-Lease not much would have been different.

Western analysts were accused of spreading the myth that the Red Army had won its victories only because of western means, 10 and that only American aid had "saved Russia" ; 11 Lend-Lease was described, in relative terms, as "highly 12 insignificant".

n Istoriia Velikoi Otechestvennoi voiny Sovetskogo Soiuza 1941-1945 cm., 6 (Moscow: Voenizdat, 1965), 48.

11 Istoriia sotsialisticheskoi ekonomiki SSSR, 5 (Moscow:

Nauka, 1978), 545.

12 Istoriia Vtoroi Mirovoi voinv 1939-1945 ag., 12 (Moscow: Voenizdat, 1982), 187. Munting, "Lend-Lease", 495, concurs, describing the impact of allied deliveries as " minor", relying in part on an official Soviet figure of 4 per cent which, if accepted, would probably support such an assessment; see also Millar, "Financing the Soviet Effort", 123n. The meaning of the 4 per cent is discussed further below.




At first the British and the Americans offered aid based on loans - £10 million (16 August 1941) and $1 billion (30 October). Under the first supply protocol agreed among the three countries in Moscow (19 October), Britain and the United States took on a shared responsibility for supplying and shipping goods to the USSR. The American loan was shortly converted into a Lend-Lease credit (7 November), to which a further $1 billion was added (18 February 1942).

A few days after this (23 February 1942) the first Master Agreement governing Lend-Lease to the UK was signed by American and British representatives, and a similar master agreement was eventually concluded (11 June) with the USSR.

The spirit of the master agreements (in Roosevelt's words) was to "eliminate the silly, foolish, old dollar sign", that is, to get rid of the concept of the financial obligation of the recipient to the donor. 13 Instead of saddling her Allies with postwar debts, the United States would instead require the sharing of information, and postwar cooperation in restoring a liberalized world economic order. This would apply not only to future shipments but also, retrospectively, to shipments already received under existing protocols. Thus, Lend-Lease ceased to involve either lending or leasing, and became instead a conditional gift.

The distinction between United States Lend-Lease and mutual aid originating elsewhere became thoroughly blurred.

Under the first two protocols (October 1941-June 1942, and July 1942-June 1943), the British and the Americans organized aid to the USSR jointly, offering supplies from a common pool. For the third and fourth (1943/44 and 1944/45) they were joined by Canada, although Canadian aid to the Soviet Union remained small in quantity.

Jones, The Roads to Russia, 95. 13 -9-

The logistical difficulties facing the aid programme were awesome. The land and maritime routes through which most prewar Soviet trade had passed were in German hands; indeed, a high proportion of this trade had been with Germany.

Initially, supplies were concentrated on the north Atlantic route to Murmansk and Archangel, but eventually the dangerous northern convoys accounted for less than a quarter (23 per cent) of total tonnage supplied. A safer, but far more circuitous route was soon opened through the Persian Gulf and Iran into Soviet Central Asia, and this route too accounted for roughly a quarter (24 per cent) of total Lend-Lease tonnage. The Pacific route from American west coast ports, skirting Japanese waters to the Soviet far east and across Siberia, was eventually most heavily used, carrying nearly one half (47 per cent) in tonnage terms. 14 The fulfilment of supply obligations was always patchy.

The Allies had their own strategic plans and priorities, and aid to the USSR inevitably detracted from these. Simply solving the logistical difficulties, which ranged from running the German submarine gauntlet in the north Atlantic to pioneering truck routes through the mountains of central Asia, required substantial additional resources. From the Soviet standpoint, the Allies used plans which they had no intention of carrying out (for example, to open a "second front" in northern France, first in 1942, then in 1943) to justify the irregular arrival of incomplete consignments. 15 The conditionality of Lend-Lease presented both sides with delicate problems never resolved. In the late summer of 1941 Soviet leaders were reluctant to consider an offer of Lend-Lease and preferred to think in terms of a loan, perhaps because they feared the conditions which might be Jones, The Roads to Russia, 84. The remaining tonnage arrived via the Soviet ports of the eastern Arctic, and (in the last months of the war) across the Black Sea.

15 Istoriia sotsialisticheskoi ekonomiki, 5, 542-43.

- 10 attached to aid. This reluctance was not overcome until September, when the severity of the German threat to Leningrad and Moscow had become all too clear to both sides.

Possible conditions for American aid ranged from the regulation of Soviet behaviour in eastern Europe to the sharing of military and economic information. In the event, Roosevelt set his face against such conditions, believing that they would only get in the way of the main task, which was to enable the Russians to fight Germany. 17 Aid which was effectively unconditional would at least weaken Soviet mistrust and keep the Russians in the war. For their part the Russians, despite an initial preference for the prospect of postwar repayment over political ties, eventually made a variety of promises with regard to their future behaviour (for example, making a commitment to postwar trade liberalization under the June 1942 master agreement). By the end of the war they had become unwilling to contemplate repayment on any significant scale, even for stocks of lend-leased civilian goods valued by the Americans at $2.6 billion, which no longer had any bearing on Soviet war needs.18 The disorderly character of the transition to peace in 1945 would beset Soviet-American economic relations for decades. In 1944-45 the combined dollar value of industrial materials and products, motor vehicles and parts, and petroleum products accounted for 55 per cent ($2.8 billion) of Lend-Lease deliveries, compared with 41 per cent ($1.7 billion) of deliveries in 1941-43. 19 This implied a

–  –  –

18 Jones, The Roads to Russia, 261.

United States President, Reports to Congress on LendLease Operations, no. 14 (Washington, D.C.: U.S. Govt.

Printing Office, 1944), 31; no. 19 (1945), 15; no. 21 (1945), 8. In fact this proportion rose steadily, period by period, from 34 per cent in 1941-42 to 44 per cent (1943), significant import of investment goods which were not going to be installed in Soviet establishments until after the war was over. 20 Both sides now failed to conclude an agreement under existing provisions of Lend-Lease legislation to allow for Soviet ordering and purchase of civilian equipment for postwar use on easy credit terms. This failure is attributable both to Soviet illusions and to American reluctance. In the changed conditions of 1943-44, American resistance to the policy of unconditional aid grew; this resistance had no immediate effect on policy, but ensured that when new initiatives appeared on the agenda congressional patience was already short. The Russians, on the other hand, believing that the war would be quickly followed by a new capitalist slump, saw the Americans in a weak position and overplayed their hand. 21 Soviet representatives made three requests for a large, long-term, low-interest loan, the first (1 February 1944) for $1 billion, the second (3 January 1945) for $6 billion, the third and last (28 August) again for $1 billion; the latter request was said to have been lost in the transfer of files from the now-defunct State Department's Foreign Economic Administration, and failed to receive a reply. In the meantime, Lend-Lease to the USSR had been temporarily suspended (12 May) immediately following the German surrender, and was now terminated finally (20 September).

The Americans requested payment of $1.3 billion for unused stocks of lend-leased civilian goods still on hand; final settlement in a considerably smaller sum awaited a new era in Soviet-American relations and a Nixon-Brezhnev summit in 1972.

54 per cent (1944), 58 per cent (the first half of 1945) and 60 per cent (the third quarter of 1945).

20 E.g. Jones, The Roads to Russia, 223-24.

–  –  –

During World War II all the great powers except for the United States benefited from a significant net import of resources. Both aid and trade contributed to the Soviet economy, but aid was more important.

As far as trade is concerned, between 1941 and 1944 the total Soviet deficit on the external merchandise account reached four billion foreign-trade rubles. This was a sum equal to $765 million at the official exchange rate then current; alternatively, it represented roughly two prewar years' imports. 22 (Two years' imports may sound a lot, but by the late 1930s the Soviet economy had achieved a state of near total autarky, with trade ratios at an historic low no more than one half of one per cent of national income by 23 1937, according to one authority.) Trade was particularly important in 1941-42, because the first agreements to ship munitions to Russia were essentially financed through barter, the Americans and British agreeing to accept Soviet raw materials in exchange. 24 The trade deficit was dwarfed by the far larger volume of resources imported into the USSR without charge from the United States and Great Britain under mutual aid. Table 1 shows that US Lend-Lease to the USSR alone accounted for $10.67 billion, and British aid for a further £312 million ($1.26 billion), making nearly $12 25 billion in total (see also figures 1 and 2).

22 Calculated from Ministerstvo Vneshnei Torgovli SSSR, Vneshniaia ton:myna SSSR. Statisticheskii sbornik. 1918Moscow: Mezhdunarodnye Otnosheniia, 1967), 60, applying the official exchange rate of 5.30 rubles per $1.

For estimated peacetime trade ratios in time series see 23 Paul R. Gregory, Robert C. Stuart, Soviet Economic Structure and Performance, 4th edn (New York: Harper & Row, 1990), 325.

24 Jones, The Roads to Russia, 52.

Figures are taken or calculated from Allen, "Mutual 25

–  –  –

The timing and composition of aid are further illustrated in tables 2 and 3. According to incomplete records (table 2), the bulk of Lend-Lease shipments - some 57 per cent by dollar value - arrived in the second half of 1943 and in

1944. In the first phase, when the flow was still restricted, weapons predominated (table 3), but from 1943 onwards the greater part of lend-leased items by dollar value consisted of dual-purpose products (industrial, transport, communications, and farm equipment, metals and metal products, chemical, fuel and food products).

In terms of overall resources of the western allies these large-sounding transfers amounted to less than one might suppose at first sight. Aid to Russia was less than a quarter of the total of economic assistance rendered by the British and Americans to each other and to others, as Soviet historians unfailingly pointed out (again, see figures 1 and 2). 26 It was still smaller as a fraction of the combined war expenditures of the United Kingdom and United States, which totalled approximately $295 billion from mid-1942 through mid-1945; compared with this, aid to the USSR amounted to no 27 more than 4 per cent.

By coincidence, 4 per cent has more than one significance.

At the end of 1947 the wartime planning chief, N.A.

Voznesenskii, published an account of the Soviet wartime economic effort which included reference to the growth of Soviet imports in 1942-43, mainly from Britain and America, compared with the much lower level of 1940; "a comparison between the amount of these allied deliveries of industrial goods to the U.S.S.R. and the volume of industrial production at the Soviet Socialist enterprises in the same 26 Istoriia sotsialisticheskoi ekonomiki, 5, 586; Istoriia Vtoroi Mirovoi voinv, 12, 186.

See table 1 and, for war expenditures of the US (in 27 dollars) and UK (in sterling), Allen, "Mutual Aid", 542 (I assume that US war spending in the first half of 1942 amounted to 40 per cent of the annual total; calculations are again based on current prices and exchange rates).

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