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The 1940 '''German-Soviet Commercial Agreement''' was an economic arrangement between the [[Soviet Union]] and [[Nazi Germany]] signed on February 11, 1940 by which the Soviet Union agreed to trade large quantities of critical raw materials to Germany in exchange for German weapons, military technology and civilian machinery. The agreement expanded upon a smaller [[German–Soviet Commercial Agreement (1939)|German–Soviet Commercial Agreement, signed on August 19, 1939]].
The 1940 '''German-Soviet Commercial Agreement''' was an economic arrangement between the [[Soviet Union]] and [[Nazi Germany]] signed on February 11, 1940 by which the Soviet Union agreed to trade large quantities of critical raw materials to Germany in exchange for German weapons, military technology and civilian machinery. The agreement expanded upon a smaller [[German–Soviet Commercial Agreement (1939)|German–Soviet Commercial Agreement, signed on August 19, 1939]].


Negotiations for the agreement immediately followed the countries' [[German–Soviet Treaty of Friendship, Cooperation and Demarcation|partition of Poland]].
Negotiations for the agreement immediately followed the countries' [[German–Soviet Treaty of Friendship, Cooperation and Demarcation|partition of Poland]] weeks after the signing of the [[Molotov–Ribbentrop Pact]] agreeing to divide Poland.


The Soviet Union received the incomplete [[Admiral Hipper class cruiser|Hipper class]] naval cruiser [[German cruiser Lützow (Hipper class)|Lützow]], the plans to the battleship [[German battleship Bismarck|Bismarck]], information on German naval testing, "complete machinery for a large destroyer", heavy naval guns other naval gear and samples of thirty of Germany's latest warplanes, including the [[Me-109]] fighters, [[Me-110]] fighters, [[Ju-88]] and [[Dornier Do 215|Do-215]] bombers.<ref name="shirer668">{{Harvnb|Shirer|1990|p=668-9}}</ref><ref name="wegner105"/><ref name="philbin46">{{Harvnb|Philbin III|1994|p=46}}</ref> The Soviets also received oil and electric equipment, locomotives, turbines, generators, diesel engines, ships, machine tools and samples of Germany artillery, tanks, explosives, chemical-warfare equipment and other items.<ref name="shirer668"/>
As a result of the agreement, the Soviet Union received the incomplete [[Admiral Hipper class cruiser|Hipper class]] naval cruiser [[German cruiser Lützow (Hipper class)|Lützow]], the plans to the battleship [[German battleship Bismarck|Bismarck]], information on German naval testing, "complete machinery for a large destroyer", heavy naval guns other naval gear and samples of thirty of Germany's latest warplanes, including the [[Me-109]] fighters, [[Me-110]] fighters, [[Ju-88]] and [[Dornier Do 215|Do-215]] bombers.<ref name="shirer668">{{Harvnb|Shirer|1990|p=668-9}}</ref><ref name="wegner105"/><ref name="philbin46">{{Harvnb|Philbin III|1994|p=46}}</ref> The Soviet Union also received oil and electric equipment, locomotives, turbines, generators, diesel engines, ships, machine tools and samples of Germany artillery, tanks, explosives, chemical-warfare equipment and other items.<ref name="shirer668"/>


The countries followed up the agreement and resolved other issues with the [[German–Soviet Border and Commercial Agreement|January 10, 1941 German–Soviet Border and Commercial Agreement]].
The countries followed up the agreement and resolved other issues with the [[German–Soviet Border and Commercial Agreement|January 10, 1941 German–Soviet Border and Commercial Agreement]].
Line 28: Line 28:
The agreements continued [[Nazi–Soviet economic relations]] and resulted in the delivery of large amounts of raw materials to Germany, including over 900,000 tons of oil, 1,600,000 tons of grain and 140,000 tons of manganese ore.
The agreements continued [[Nazi–Soviet economic relations]] and resulted in the delivery of large amounts of raw materials to Germany, including over 900,000 tons of oil, 1,600,000 tons of grain and 140,000 tons of manganese ore.


In June 1941, [[Operation Barbarossa|Germany invaded the Soviet Union]] in violation of the Molotov–Ribbentrop Pact, and all economic agreements between the two countries were ended. The German war effort against the Soviet Union was partially supported by raw materials that Germany had obtained from the Soviets through the 1940 Commercial Agreement.The Soviet Union extensively used obtained from Germany machinery and technologies in military producing till the end of war in 1945.
In June 1941, [[Operation Barbarossa|Germany invaded the Soviet Union]] in violation of the Molotov–Ribbentrop Pact ending all economic agreements between the two countries. The German war effort against the Soviet Union was supported, in part, by raw materials that Germany had obtained from the Soviet Union through the 1940 Commercial Agreement. The Soviet military extensively used machinery and technology obtained from Germany until the end of the war in 1945.


== Background ==
== Background ==

Revision as of 01:50, 19 September 2010

German-Soviet Commercial Agreement
German-Soviet Commercial Agreement
SignedFebruary 11, 1940
LocationMoscow, Union of Soviet Socialist Republics
SignatoriesSoviet Union Union of Soviet Socialist Republics
Germany Nazi Germany
LanguagesGerman, Russian
For other uses, see German–Soviet Commercial Agreement (disambiguation).

The 1940 German-Soviet Commercial Agreement was an economic arrangement between the Soviet Union and Nazi Germany signed on February 11, 1940 by which the Soviet Union agreed to trade large quantities of critical raw materials to Germany in exchange for German weapons, military technology and civilian machinery. The agreement expanded upon a smaller German–Soviet Commercial Agreement, signed on August 19, 1939.

Negotiations for the agreement immediately followed the countries' partition of Poland weeks after the signing of the Molotov–Ribbentrop Pact agreeing to divide Poland.

As a result of the agreement, the Soviet Union received the incomplete Hipper class naval cruiser Lützow, the plans to the battleship Bismarck, information on German naval testing, "complete machinery for a large destroyer", heavy naval guns other naval gear and samples of thirty of Germany's latest warplanes, including the Me-109 fighters, Me-110 fighters, Ju-88 and Do-215 bombers.[1][2][3] The Soviet Union also received oil and electric equipment, locomotives, turbines, generators, diesel engines, ships, machine tools and samples of Germany artillery, tanks, explosives, chemical-warfare equipment and other items.[1]

The countries followed up the agreement and resolved other issues with the January 10, 1941 German–Soviet Border and Commercial Agreement.

The agreements continued Nazi–Soviet economic relations and resulted in the delivery of large amounts of raw materials to Germany, including over 900,000 tons of oil, 1,600,000 tons of grain and 140,000 tons of manganese ore.

In June 1941, Germany invaded the Soviet Union in violation of the Molotov–Ribbentrop Pact ending all economic agreements between the two countries. The German war effort against the Soviet Union was supported, in part, by raw materials that Germany had obtained from the Soviet Union through the 1940 Commercial Agreement. The Soviet military extensively used machinery and technology obtained from Germany until the end of the war in 1945.

Background

German-Soviet Economic Agreements background

Further information: Nazi–Soviet economic relations and German–Soviet Commercial Agreement (1939)

The German-Soviet Economic Agreement of October 12,1925, forms the contractual basis for trade relations with the Soviet Union. In addition to the normal exchange of goods, German exports to Soviet Union were from the very beginning promoted by the fact that through various successive credit operations the Soviet Trade Mission in Berlin was granted credits for the financing of additional orders in Germany, for which the Trade Mission had to negotiate bills of exchange payable in Reichsmarks. The "Fourth Credit Operation, Special Transaction of 1935," was concluded on April 4, 1935. It placed at the disposal of the Soviets until June 30, 1937, credits in the amount of 200 million Reichsmarks, to be repaid during the period from 1940 to 1943. This credit was used to the extent of 183 million Reichsmarks. The preceding credit Operations have been liquidated except for 5 million Reichsmarks, which are to be repaid in 1938.

In addition to these agreements, after the introduction of German foreign exchange control, short-term economic agreements (clearing agreements) for the regulation of German-Soviet trade and payments were concluded. The first agreement of this kind was concluded for 1936, and was extended through 1937 in December 1936. It was then agreed, among other things, that the Soviet obligations arising from bills due in 1937 in the amount of approximately 27 million Reichsmarks were to be paid with the proceeds from the sale of raw materials especially important to Germany (manganese ore, lumber, hax, etc.).

The last such agreement was concluded on August 19, 1939 whereby Soviet Union received an acceptance credit of 200 million Reichsmark. over 7 years with an affective interest rate of 4.5 percent. The credit line was to be used during the next two years for purchase of capital goods (factory equipment, installations, machinery and machine tools, ships, vehicles, and other means of transport) in Germany and was to be paid off by means of Soviet material shipment from 1946 onwards..[4] The 1939 German–Soviet Commercial Agreement renewed declined German–Soviet economic relations . The normal trade with Soviet Union and the additional trade promoted by the first credit operations led to a brisk exchange of goods, which reached its highest point in 1931 (exports to Soviet Union 762 million Reichsmarks, imports from Soviet Union 550 million Reichsmarks). Although it has steadily decreased since that time,amounted in 1937 to 117 million Reichsmarks in exports to Soviet Union and 65 million Reichsmarks in imports from Soviet Union. In 1938 export further declined to 47.4 million Reichsmarks.

The bulk of the imports from Soviet Union always consisted of raw materials equivalent to foreign exchange, in 1937, 95 percent were raw materials.

[5]

Resource requirements

Germany lacks natural supplies of several key raw materials needed for economic and military operations and heavily relied on it import. At 1938 2/3 of Germany oil supply comes from US and Latin America, 52 per cent of German steel produced from the imported iron ore originated from Sweden [6] German import by countries (in Million of Reichsmarks)

  Soviet
Union		 Poland
&Danzig		 Finland Estonia Latvia Lithuania USA United Kingdom South America countries
1936 93.2 74.0 46.1 13.8 33.2 9.1 232.2 N/A 536.5
1937 65.1 80.7 70.1 23.7 45.7 17.2 281.9 308.6 850.3
1938 47.4 109.4 88.6 24.0 43.5 27.6 404.6 282.7 809.7

In 1938 import totaled 6050.7 Million of Reichsmark in 1939 declined to 4796.5 million of Reichsmark [7]

At same time situation with food supply was much more favorable (if compare it with WWI period)- In 1937/38 Germany own supply from domestic source constitute 89 % of grain, 90 percent of milk and dairy products 95% of meat 74 %in fish and 79 % of eggs. About half of fat imported in 1939. Germany agriculture was fully developed and later was able to maintain the per capita foodstuff before and during the WWII.. [8]

Events leading up the negotiations

Further information: German–Soviet Commercial Agreement (1939) and Molotov–Ribbentrop Pact negotiations

During the summer of 1939, the Soviet Union discussed the entry of a political and military pact with contingents representing France and Britain, while also discussing a potential deal with Germany.[9]

In early August, Germany and the Soviet Union finalized the terms for an economic agreement, but the Soviets delayed executing that agreement until the terms of the political agreement with Germany were finalized.[10] On August 19, Germany and the Soviet Union signed a trade agreement providing for the trade of certain German military and civilian equipment in exchange for Soviet raw materials.[1][11] The agreement provided that Germany would accept 200 million Reichmarks in new orders and would export 60 million Reichmarks in "current business" (trade covered by earlier agreements), 180 million Reichmarks in "new business" and another 200-300 million Reichmarks in repayment for old and new credits.[11]

Molotov signs the Pact, flanked by Ribbentrop and Stalin

Four days later, the Soviet Union and Germany signed the Molotov-Ribbentrop Pact, an agreement of mutual non-aggression between the parties.[12] The Molotov-Ribbentrop Pact contained secret protocols dividing the states of Northern and Eastern Europe into German and Soviet "spheres of influence."[12] At the time, Stalin considered the trade agreement to be more important than the non-aggression pact.[13]

After the German invasion, to administer the economic blockade of Germany, the British Ministry of Economic Warfare was established in September 3 1939 [14] By April 1940 Britain realized that blockade appeared not to be working because of "leaks" in blockade with two major "holes" at the Black Sea and Mediterranian provided by several neutrals countries, including Italy.[15]

  Soviet
Union		 Poland
&Danzig		 Finland Estonia Latvia Lithuania
1939 52.8 140.8 88.9 24.3 43.6 27.8
*German Imports in millions of Reichsmarks

On September 17, the Red Army invaded eastern Poland and occupied the Polish territory which held up to 70 per cent of Poland's pre-war oil production. [16]

In October 1939 three German trade partners - Baltic States – Estonia, Latvia, and Lithuania – were given no choice but to sign a so-called Pact of defense and mutual assistance which permitted the Soviet Union to station troops in them.[17]

Negotiations

German plans and expectations

At September 14 and 15 1939 Ribbentrop outlined program for his negotiations in Moscow :

  • 1) The Credit and Trade Treaty of August 19 of this year

is not to be tampered with from either side. However, for our benefit, we must attempt to obtain a more expeditious delivery of raw materials (180 million RM).

  • 2) My principal task in the negotiations will be to find out whether Russia,

over and above the Treaty of August 19, 1939, could and would compensate for the loss in Imports by sea, and to what extent this might be done. The military and civil agencies have handed me a schedule of requirements totaling about 70 million RM of immediate additional supplies. The requests which I shall present in Moscow will go far beyond this schedule, as the German war needs are several times as great as the proposal of the Departments for the negotiations.. But the relatively modest schedule of departmental requirements shows how low the actual capacity of Russia for supplying raw materials is estimated. The reasons are inadequacies of transportation, of organization, of production methods, etc.

  • 3) The plan to be proposed to the Russians would be as follows :

"Apart from the Treaty of August 19, 1939, the Soviet Union shall supply us X millions worth of raw materials, both such as are produced in Russia and such as Russia buys for us from other neutrals. The German compensatory deliveries for these raw materials could not follow at once, but would have to take the form of a supply and investment program, to extend over a period of about 5 years. Within this time we would be prepared, in order to meet our obligations arising from Russian deliveries of raw material, to set up plants in Russia in accordance with a large scale program to be agreed upon.

  • 4) Within the framework of purely economic negotiations, the difficulties actually existing in Russia cannot be overcome, especially as we demand of the

Russians performance in advance, A positive achievement can really only be expected, if an appropriate directive is issued by the highest Russian authorities, in the spirit of the political attitude toward us. In that respect these negotiations will be a test of whether and how far Stalin is prepared to draw practical conclusions from the new political course. The raw materials deliveries requested by us can only be carried out, in view of the unsatisfactory domestic supply situation of Russia, at the expense of their own Russian consumption.

  • 5) Depending on the result of my conversations, it will be necessary that the raw materials program be taken up again from the strictly political point of view by a qualified personage.
  • 6) In the Moscow negotiations it should furthermore be ascertained to what extent our imports heretofore made from Iran, Afghanistan, Manchukuo, and Japan can be transmitted via Russia [18]


28th of September 1939 agreement

On the 28th of September 1939 the German Reich and the Soviet Union reached an agreement that extended the scope of the German-Soviet Credit Agreement of August 19, 1939. Under such provisions the Soviet Government dispatched to Germany a procurement commission for selection of German goods which would be delivered in return for Soviet raw materials[19]

Ribbentrop tried to imply a proposal that the oil district of Drohobycz and Boryslaw be relinquished to Germany, since Russia already had rich oil resources, while Germany lacked them, Stalin replied that he could not accept this and noted: The Ukrainian people had strongly pressed their claim to this area. He was willing, however, to promise Germany as compensation deliveries of oil to the extent of the whole annual production, amounting today to 300,000 tons, but which he hoped to increase to 500,000 tons. In return for this, Germany could supply coal and steel tubing. [20]

Negotiations results were summarized in letter from Molotov to Ribbentrop:

I have the honor to confirm herewith that the Government of the USSR is willing, on the basis and in the sense of the general political understanding reached by us, to promote by all means the trade relations and the exchange of goods between Germany and the USSR. To this end an economic program will be drawn up by both parties, under which the Soviet Union will supply raw materials to Germany, for which Germany, in turn, will make compensation through deliveries of manufactured goods over

a more extended period of time Both parties shall frame this economic program in such a manner that the German- Soviet exchange of goods will again reach the highest volume attained in the past.

"Both Governments will at once issue the necessary directives for the implementation of the measures mentioned and arrange that the negotiations are begun and brought to a conclusion as soon as possible."

and confidential amendment to it:

the Government of the USSR will see to it that German transit traffic to and from Rumania by way of the “Upper Silesia~Lwow~Kolomyja” railroad line shall be facilitated

in every respect. The two Governments will, in the framework of the proposed trade negotiations, make arrangements without delay for the operation of this transit traffic. The same will apply to the German transit traffic to and from Iran, to and from Afghanistan, as well as to and from the countries of the Far East.

"Furthermore, the Government of the USSR declares that it is willing, in addition to the quantity of oil previously agreed upon or to be agreed upon hereafter, to supply a further quantity of oil commensurate with the annual production of the oil district of Drohobycz and Boryslaw, with the proviso that one half of this quantity shall be supplied to Germany from the oil fields of the aforesaid oil district and the other half from other oil districts of the USSR. As compensation for these supplies of oil, the USSR would accept German supplies of hard coal and steel piping."

Germany October demands - early negotiations

6 October 1939 German delegation ordered for Moscow receieved at Berlin a new schedule for negotiations :

  • I. We shall ask the Russians for additional raw material deliveries valued at ca. 1,300 million RM during the first year. These 1,300 million RM fall into the following categories :
    • 1. Industrial materials (iron ore, chromium ore, raw phosphate, wool, cotton, platinum, flax, hemp, raw skins and hides, industrial oils and fats, asbestos, etc.) - ca. 530 million RM
    • 2. Foods (Feed grains, vegetable oils and fats*, oil seed, oil cake, legumes, seeds, foodstuffs in moderate quantities, etc.) -ca. 330 million RM
    • 3. Lumber - 120 million RM
    • 4. Non-Russian raw materials to be bought via Russia in other countries (tin, copper, nickel, cobalt, tungsten, rubber, etc.) - 100 million RM
    • 5. Crude oil (2 million tons) (30 to 50 million RM of the total coming from Drohobycz and Boryslaw) - 200 million RM

Total 1,280 million RM

  • II. Payment and German compensatory deliveries:
    • 1. Additional immediate delivery of industrial products in the first year - 330 million RM
    • 2. Compensatory deliveries for crude oil
      • a) Hydrogenation plant, to be delivered immediately - 150 million RM
      • b) Compensation for the Galician crude oil: hard coal and tubing 50 million RM
    • 3. Liquidation of German credits to Russia before maturity 180 million RM
    • 4. Payment for non-Russian raw materials : Gold to the value of 30 million RM

High-quality armament material to the value of 50 million RM

  • c) Czech bonds to the value of 20 million RM

Total 810 million RM

The remaining balance of ca, 500 million RM would be liquidated by capital goods deliveries over a period of several years. A plan for large-scale capital goods deliveries has been drafted.

III. Joint German-Soviet economic planning. German technical assistance in raw material production and industrial expansion, agricultural conversion (soybeans), forest leases, fisheries at Murmansk, etc.

IV. Transport and transit questions.

V. Execution of the agreement of August 19, 1939.

.[21][22]

Schulenburg was also instructed to notify Molotov of the German desire for prompt agreement on an immediate program to last about 6 months.


An economic delegation headed by Ritter and Schnurre arrived in Moscow on October 7.It include 37 members, representing the Foreign Ministry, the Ministries of Transport, Food, and Economics, the Reichsbahn, the Chief of Transportation for the Wehrmacht, the Hamburg America Line, the Reichsgruppe Industrie, I. G. Farben, the Benzolverband, the Otto Wolff firm, the Reich Grain Office, the Deutsche Werft at Hamburg, the Ruhrchemie, the Gutehoffnung iron works, the Stahlunion-Export, the Flachshandel, the Theodor Thorer firm, and the Wotirag Company.

While negotiations proceeded quickly at first, 16 October Germans reported that " the negotiations are not proceeding as methodically as we are accustomed to in this kind of negotiations and as we envisaged here, too. The Soviet side always takes a stand on only some of the specific points in our list of requests, depending on the degree to which their own day by day deliberations lead to internal clarification and decisions. The general impression thus far is not unfavorable, even though the method of negotiation of the other side is rather tiresome."

Soon Soviets stated that any deal must involve massive increases of up to 1.5 billion Reichmarks in German war materials and technology. Aside from the hulls of the cruisers Seydlitz and Lützow the final order list also included the delivery of the cruiser Prinz Eugen and the plans of the battleship Bismarck.[22][23] Stunned German military officials responded that Soviet requests for military technology and hardware were too steep of a price, and would require impossible amounts of iron and steel to produce, while Germany needed such materials for its war in Western Europe.[24][22][23] At the same time, Germany accepted an offer by the Soviet Union to provide Germany a naval base, Basis Nord, at then undeveloped Zapadnaya Litsa (120 kilometers from Murmansk) from which they could stage raiding operations.[25]

The head of the Soviet commission Tevossyan and General Savchenko submitted on November 30th, 1939 the final list of the orders to be placed in Germany by the Soviet Union. It included war material as well as machinery and industrial installations.

Soviet-German tensions

Hipper Class heavy cruiser

In December, the talks reached a low point as Soviet officials continued to press demands for German military equipment and technology,[24] including the delivery of German Hipper class cruisers Lützow, Seydlitz and Prinz Eugen.[26] German officials noted that Soviet demand for some items by the end of 1940 would be impossible to meet, and would effectively have required three to four years of production.[23] Molotov conceded the difficulties given Germany's ongoing war and the prospects for agreement improved.[24] Tensions were also raised by the unsuccessful Soviet invasion of Finland[27], though the unexpected bloodbath that ensued left a Soviet general explaining at the time "[w]e have conquered just enough Finnish territory to allow us to bury our dead."[23] At the same time, that winter, Germany had become concerned about the state and future of their economy.[28]

After a joint meeting of German officials on 2 December 1939 at Hitler’s residence, the Soviet's demands were rejected, followed by the Soviet commission's resubmission. On 8 December 1939, Hiltler rejected offers to purchase the 'Seydlitz', the 'Prinz Eugen' and turrets of battleships under construction. However, at Hitler’s residence discussed the possible delivery to Soviet a technical plans used in the construction of the 'Bismark.' The German Naval Commander in Chief noted at the time that “only two ships are being built and the Russians need at least six years to copy them."

By then end of December, the talks had deteriorated to the point where they could no longer be resolved by lower level negotiations.[29] As had become typical for Stalin, he intervened into the fray late, playing the "good cop" to reach a compromise.[29] On the 28th of December 1939 in a meeting at the Kremlin with German Minister Schnurre (who headed the German procurement commission), Stalin began to speak of the Soviet wishes in regard to warships and welcomed the fact that Germany was prepared to deliver the cruiser Lützow. He also noted “If Germany declined to deliver other ships in process of construction because she wanted to complete them herself, we could not object to this stand.”

On midnight of December 31, 1939, German negotiators were called to the Kremlin to discuss further trade negotiations.[30] The negotiators primarily discussed the Soviet needs for metal production, naval armament, machine tools and aircraft.[30] Unlike with the 1939 agreement, Stalin used the term "mutual assistance" for the first time and discussed the direct provision of Soviet raw materials to Germany.[30] He stated "the Soviet Union sees this not merely as a normal treaty for the exchange of goods, rather as one of mutual assistance."[31] Stalin also stated "The Soviet Unon wants to learn from Germany, particularly in the field of armaments."[31]

In January, Germany became worried that combatting a potential major French campaign in western Europe or a Soviet failure to deliver allotted good totals would result in German oil stocks evaporating in a few months.[32] Grain reserves that had earlier appeared less tenuous now appeared more dicey, with Germany facing an estimated 1.6 million ton shortfall for 1940 even under optimal conditions.[32] A German foreign office report explained that Soviet raw material exports were "simply irreplaceable" and "the breakdown of a German-Soviet agreement must be avoided at all costs."[33] The Soviets made clear in additional discussions with Soviet Foreign Minister Molotov that they were willing to make raw materials available on an accelerated basis in exchange for extended deliveries of war materials.[34]

Soviet-German tensions related to prices, terms and schedule of delivery lasted untill February 1940. Hitler desired to delay as long as possible delivery of the “industrial goods” mentioned in the list of the orders to be placed, including the transmission of plans for the Bismarck class and the of the 'Lützow' to Russia in furtherance of his hope that Germany could avoid these altogether if the war developed favorably for it. In February 1940, negotiations neared conclusion, but Germany demanded (by Soviet assessment) unfavourably high prices for their goods. The Soviets deemed as too high the German valuation of the cruiser 'Lutzow' at 150 million RM.[35]

Talks approach finality

Further discussions took place in Moscow in early February regarding the specifics of German military equipment to be provided.[34] Both sides made concessions after a letter from Ribbentrop to Stalin convinced him that a deal must be completed.[33] Stalin was involved with the details of the discussion, with Hitler noting that he was impressed by Stalin's technical knowledge when he chaired a meeting of experts discussing the ordinance of gun turrets to be included on a cruiser the Germans would deliver to the Soviets under an agreement.[34] Germany agreed that the plans for the battleship Bismarck could be included in the war materials to be provided to the Soviet Union.[34] The final cost of the Lützow, was discounted to 104 million Reichsmarks. Joseph Stalin noted in discussion with Politburo members – “ship, which you've bought from expected enemy, is equal to two ships - one more at you and one less at enemy”.

The Agreement

On February 11, 1940, Germany and the Soviet Union entered into an intricate trade pact in which the Soviet Union would send Germany 650 million Reichsmarks in raw materials in exchange for 650 million Reichmarks in machinery, manufactured goods and technology.[33][36] The trade pact helped Germany to surmount the British blockade.[1] The main raw materials specified in the agreement were one million tons of grain, 900,000 tons of oil and more than 500,000 tons of various metal ores (mostly iron ore) in exchange for synthetic material plants, ships, turrets, machine tools and coal.[33][2] The first stipulation of the agreement provided that the Soviet Union must deliver its requisite goods within 18 months while Germany was to deliver its required goods within 27 months.[33][37] The agreement also contained a "Confidential Protocol" providing the Soviet Union would undertake purchases from third party countries of "metals and other goods" on behalf of Germany.[38]

1943 Me 109 G-6 production

Soviet goods were freighted through Brest-Litovsk[36] and occupied Polish territories where they were shifted to European gauge track for transport to Germany.[1] The Soviets also granted Germany the right to transit traffic on Soviet-controlled rail lines to and from Romania, Iran, Afghanistan and other countries in the east, while reducing by 50 per cent freight rates to Manchukuo, which was under Japanese control.[36] The agreement set out periods of operations under which the Soviet Union would send to Germany large quantities of raw materials, including food, oil and metals.[39]

The Soviets were to receive the incomplete Hipper class naval cruiser Lützow, the plans to the battleship Bismarck, information on German naval testing, "complete machinery for a large destroyer", heavy naval guns, three 38.1 cm (15 inch) twin turrets to defend ports, preliminary sketches for a 40.6 cm triple turret, working drawings for a 28 cm turret, other naval gear and samples of thirty of Germany's latest warplanes, including the Me-109 fighter, Me-110 fighter and Ju-88 bomber.[1][2][3] Stalin believed the Lutzow to be important because of its new 20.3 cm naval guns, along with their performance characteristics.[40] The Soviets would also receive oil and electric equipment, locomotives, turbines, generators, diesel engines, ships, machine tools and samples of Germany artillery, tanks, explosives, chemical-warfare equipment and other items.[1]

Trade and assistance during the Agreement's operation

While some slowdowns and negotiations occurred especially during the early negotiations of specific orders,[2] the Soviet Union met most of its requirements under the agreement.[37] It became a major supplier of vital materials to Germany, including petroleum, manganese, copper, nickel, chrome, platinum, lumber and grain.[41]

The Soviet Union also bought and shipped other materials to Germany, such as rubber[41] from India.[42] The Soviets shipped approximately 800 million deutschmarks of goods.[42] The Soviets also provided Germany with a U-boat base at Basis Nord for refueling, maintenance location and a takeoff point for raids and attacks on shipping.[42] Though the German Navy never fully utilized "Basis Nord". [43] In addition, the Soviets provided Germany with access to the Northern Sea Route for both cargo ships and raiders (though only the raider Komet used the route before June 1941), which forced Britain to protect sea lanes in both the Atlantic and the Pacific.[44]

Germany, which was provided 27 months to finish delivery of its goods, procrastinated as long as possible on deliveries.[37] On August 11, the Soviet Union had shipped 190 million Reichsmarks of raw materials against just 90 million Reichsmarks of German deliveries.[2] Germany did initially deliver some floating cranes, five aircraft, an electrode shop, several gun turrets (with fire control apparatuses and spare parts), two submarine periscopes and additional ship construction tools.[39] A few months later it delivered a sample of its harvest technology.[45]

Soviet and German invasions, annexations and alliances in central and eastern Europe 1939-1940

In the Summer of 1940, Germany grew even more dependent on Soviet imports.[46] German occupations of France, the Netherlands, and Belgium created additional demand while decreasing avenues for indirect supply.[46] Compared to 1938 figures, the expanded "Greater Germany" and its sphere of influence lacked, among other items, 500,000 tons of manganese, 3.3 million tons of raw phosphate, 200,000 tons of rubber and 9.5 million tons of oil.[46] Hitler believed that an eventual invasion of the Soviet Union increasingly looked like the only way in which Germany could solve its resource crisis.[46] The Soviet invasion of Lithuania, Estonia and Latvia[17][47] in June 1940 resulted in the Soviet occupation of states on which Germany had relied for 96.7 million Reichsmarks of imports in 1938.[48] While no concrete plans were yet made, Hitler told one of his generals in June that the victories in western Europe "finally freed his hands for his important real task: the showdown with Bolshevism",[49] though German generals told Hitler that occupying Western Russia would create "more of a drain than a relief for Germany's economic situation."[50]

In August 1940, the Soviet Union briefly suspended its deliveries after their relations were strained following disagreement over policy in the Balkans, the Soviet Union's war with Finland (from which Germany had imported 88.9 million Reichsmarks in goods in 1938[48]), Germany falling behind in its deliveries of goods under the pact and with Stalin worried that Hitler's war with the West might end quickly after France signed an armistice.[51] By the end of August, relations improved again as the countries had redrawn the Hungarian and Romanian borders, settled Bulgarian claims and Stalin was again convinced that Germany would face a long war in the west with Britain's improvement in its air battle with Germany and the execution of a an agreement between the United States and Britain regarding destroyers and bases.[52] Soviet raw material deliveries increased well over prior figures.[49]

Heavy cruiser Lützow in 1940

Germany delayed its delivery of the Hipper cruiser Lützow and the plans for the Bismarck as long as possible, hoping to avoid delivery altogether if the war developed favorably.[53] The incomplete Lützow was towed to Leningrad in mid-1940 in a less complete state than the Soviets had anticipated.[54] In response to later Soviet orders, Germany did deliver eight 38.1 cm guns and six 40 cm guns for which the Soviets had requested drawings.[53] The Lützow, which was not yet completed, was towed to Leningrad, where German engineers worked on the vessel until June 22, 1941.[36]

In October 1940, German officials estimated that their raw material supplies could only comfortably last only though the summer of 1941.[55] The situation was much more dire for rubber, the use for which in boots and tires was vital for any mobile army.[55] German stocks had fallen to only 1,500 tons.[55]

Hitler had been considering war with the Soviet Union since July 1940.[36] Regarding a potential Soviet Axis entry, Ribbentrop wrote a letter promising Stalin that "in the opinion of the Führer … it appears to be the historical mission of the Four Powers-the Soviet Union, Italy, Japan and Germany-to adopt a long range-policy and to direct the future development of their peoples into the right channels by delimitation of their interests in a worldwide scale."[53] On November 12, 1940, Hitler issued secret "Instruction No. 18", directing his forces to prepare for war in the east "irrespective of the results yielded by these discussions", while Hitler, Molotov and Ribbentrop conferenced in Berlin to discuss a potential Soviet entry as a fourth Axis Power.[36] Hitler wanted an additional economic deal to get what he could from the Soviet Union before the invasion, while other German officials wanted such a deal in the hopes that it could change the current anti-Soviet direction of German policy.[55] In November, Germany and the Soviet Union began negotiations on enlarging the 1940 German–Soviet Commercial Agreement, and discussed border disputes and other issues, culminating in the execution of the January 10, 1941 German–Soviet Border and Commercial Agreement.

Total Trade

Main article: Nazi–Soviet economic relations

During both the first period of the 1940 agreement (February 11, 1940 to February 11, 1941) and the second (February 11, 1940 until the Pact was broken), Germany received massive quantities of raw materials, including over:[39][56]

German Neubaufahrzeug production , 1940
  • 1,600,000 tons of grains
  • 900,000 tons of oil
  • 200,000 tons of cotton
  • 140,000 tons of manganese
  • 200,000 tons of phosphates
  • 20,000 tons of chrome ore
  • 18,000 tons of rubber
  • 100,000 tons of soybeans
  • 500,000 tons of iron ores
  • 300,000 tons of scrap metal and pig iron
  • 2,000 kilograms of platinum

Large amounts of crude oil were delivered, with German documents in 1940 already indicating that the Soviets had delivered crude oil at a rate of 150,000 tons a month for five months in 900 German tank cars exclusively reserved for it.[45]

The trade pact helped Germany to circumvent the British blockade.[1] By June 1940, Soviet imports comprised over 50% of Germany's total imports, and often exceed 70% of total German imports before the Hitler broke the pact in June 1940.[57]

Hitler breaks the Pact

Main article: Nazi–Soviet economic relations

On June 22, 1941, Germany began Operation Barbarossa, the invasion of the Soviet Union through the territories that the two countries had previously divided.[58] Despite fears causing the Soviet Union to enter deals with Germany in 1939, that Germany came so close to destroying the Soviet Union was due, in large part, to Soviet actions taken from 1939 to 1941.[59] Without Soviet imports, German stocks would have run out in several key products by October 1941, only three and a half months into the invasion.[60] Germany would have already run through their stocks of rubber and grain before the first day of the invasion were it not for Soviet imports:[60]

  Tot USSR
imports		 June 1941
German Stocks		 June 1941 (w/o
USSR imports)		 Oct 1941
German Stocks		 Oct 1941 (w/o
USSR imports)
Oil Products 912 1350 438 905 -7
Rubber 18.8 13.8 -4.9 12.1 -6.7
Manganese 189.5 205 15.5 170 -19.5
Grain 1637.1 1381 -256.1 761 -876.1
*German stocks in thousands of tons (with and without USSR imports-Oct 1941 aggregate)

Without Soviet deliveries of these four major items, Germany could barely have attacked the Soviet Union, let alone come close to victory, even with more intense rationing.[61] At the time of the invasion, the Lützow was still not yet complete enough for sea travel, but four 20.3 cm turrets had been installed.[62] The Soviets used her as a floating gun battery against German invaders.[62]

See also

External links

Notes

  1. ^ a b c d e f g h Shirer 1990, p. 668-9
  2. ^ a b c d e 1997, p. 105
  3. ^ a b Philbin III 1994, p. 46
  4. ^ Wegner 1997, p. 99
  5. ^ Schwendemann Heinrich Die wirtschaftliche Zusamenarbeit zwischen dem Deutschen Reich und der Sowjetunion von 1938 bis 1941. = Berlin, Wiley VCH 1993 isbn= 3050023821
  6. ^ Martin Fritz German steel and Swedish iron ore, 1939-1945 Institute of Economic History of Gothenburg University, 1974 p.44
  7. ^ Hehn|first=Paul N.|title=A Low Dishonest Decade: The Great Powers, Eastern Europe, and the Economic Origins of World War II, 1930–1941|publisher=Continuum International Publishing Group|year=2005|isbn=0826417612
  8. ^ p.68-69 Schwendemann H. Die wirtschaftliche Zusamenarbeit zwischen dem Deutschen Reich und der Sowjetunion von 1938 bis 1941. Berlin, 1993
  9. ^ Shirer 1990, p. 515-540
  10. ^ Ericson 1999, p. 56
  11. ^ a b Ericson 1999, p. 57
  12. ^ a b Text of the Nazi-Soviet Non-Aggression Pact, executed August 23, 1939
  13. ^ Philbin III 1994, p. 43
  14. ^ Imlay, Talbot C., Facing the Second World War: Strategy, Politics, and Economics in Britain and France 1938–1940, Oxford University Press, 2003, ISBN 0199261229, page 122
  15. ^ Imlay, Talbot C., Facing the Second World War: Strategy, Politics, and Economics in Britain and France 1938–1940, Oxford University Press, 2003, ISBN 0199261229p.113
  16. ^ Ericson 1999, p. 71
  17. ^ a b Wettig, Gerhard, Stalin and the Cold War in Europe, Rowman & Littlefield, Landham, Md, 2008, ISBN 0742555429, page 20–21
  18. ^ DOCUMENTS ON GERMAN FOREIGN POLICY 1918-1945 SERIES D (1937-1945) VOLUME VIII THE WAR YEARS September 4, 1939-March 18, 1940 UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON * 1954
  19. ^ DOCUMENTS ON GERMAN FOREIGN POLICY 1918-1945 SERIES D (1937-1945) VOLUME VIII THE WAR YEARS September 4, 1939-March 18, 1940 UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON * 1954
  20. ^ DOCUMENTS ON GERMAN FOREIGN POLICY 1918-1945 SERIES D (1937-1945) VOLUME VIII THE WAR YEARS September 4, 1939-March 18, 1940 UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON * 1954
  21. ^ Ericson 1999, p. 78
  22. ^ a b c 1997, p. 104
  23. ^ a b c d Ericson 1999, p. 81-90
  24. ^ a b c Philbin III 1994, p. 75-6
  25. ^ Philbin III 1994, p. 83
  26. ^ Philbin III 1994, p. 119
  27. ^ Kennedy-Pipe, Caroline, Stalin's Cold War, New York : Manchester University Press, 1995, ISBN 0719042011
  28. ^ Philbin III 1994, p. 133
  29. ^ a b Ericson 1999, p. 100
  30. ^ a b c Philbin III 1994, p. 44
  31. ^ a b Wegner 1997, p. 96
  32. ^ a b Ericson 1999, p. 101
  33. ^ a b c d e Ericson 1999, p. 103-5
  34. ^ a b c d Philbin III 1994, p. 45
  35. ^ DOCUMENTS ON GERMAN FOREIGN POLICY 1918-1945 SERIES D (1937-1945) VOLUME VIII THE WAR YEARS September 4, 1939-March 18, 1940 UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON * 1954
  36. ^ a b c d e f Weeks, Albert L., Stalin's Other War: Soviet Grand Strategy, 1939-1941, Rowman & Littlefield, 2003, ISBN 0742521923, page 74-5
  37. ^ a b c Cohen, Yohanon, Small Nations in Times of Crisis and Confrontation, SUNY Press, 1989, ISBN 0791400182, page 108
  38. ^ Ericson 1999, p. 237
  39. ^ a b c Philbin III 1994, p. 47
  40. ^ Philbin III 1994, p. 120
  41. ^ a b Moss, Walter, A History of Russia: Since 1855, Anthem Press, 2005, ISBN 1843310341, page 291
  42. ^ a b c Cohen, Yohanon, Small Nations in Times of Crisis and Confrontation, SUNY Press, 1989, ISBN 0791400182, page 110
  43. ^ James P. Duffy Hitler's Secret Pirate Fleet: The Deadliest Ships of World War II Westport, Conn. : Praeger, 2001. p.128
  44. ^ Philbin III 1994, p. 130-142
  45. ^ a b Philbin III 1994, p. 48
  46. ^ a b c d Ericson 1999, p. 127-8
  47. ^ Senn, Alfred Erich, Lithuania 1940 : revolution from above, Amsterdam, New York, Rodopi, 2007 ISBN 9789042022256
  48. ^ a b Hehn 2005, p. 212
  49. ^ a b Ericson 1999, p. 129-130
  50. ^ Ericson 1999, p. 138
  51. ^ Philbin III 1994, p. 48 & 59
  52. ^ Philbin III 1994, p. 60
  53. ^ a b c Philbin III 1994, p. 49-50
  54. ^ Philbin III 1994, p. 122
  55. ^ a b c d Ericson 1999, p. 146
  56. ^ Ericson 1999, p. 195-9
  57. ^ Ericson 1999, p. 208-9
  58. ^ Roberts 2006, p. 82
  59. ^ Ericson 1999, p. 181
  60. ^ a b Ericson 1999, p. 202-205
  61. ^ Ericson 1999, p. 182
  62. ^ a b Philbin III 1994, p. 127-8

References

  • Philbin III, Tobias R. (1994), The Lure of Neptune: German-Soviet Naval Collaboration and Ambitions, 1919 - 1941, University of South Carolina Press, ISBN 0872499928
  • Ericson, Edward E. (1999), Feeding the German Eagle: Soviet Economic Aid to Nazi Germany, 1933-1941, Greenwood Publishing Group, ISBN 0275963373
  • Hehn, Paul N. (2005), A Low Dishonest Decade: The Great Powers, Eastern Europe, and the Economic Origins of World War II, 1930-1941, Continuum International Publishing Group, ISBN 0826417612
  • Nekrich, Aleksandr Moiseevich; Ulam, Adam Bruno; Freeze, Gregory L. (1997), Pariahs, Partners, Predators: German-Soviet Relations, 1922-1941, Columbia University Press, ISBN 0231106769
  • Roberts, Geoffrey (2006), Stalin's Wars: From World War to Cold War, 1939–1953, Yale University Press, ISBN 0300112041
  • Shirer, William L. (1990), The Rise and Fall of the Third Reich: A History of Nazi Germany, Simon and Schuster, ISBN 0671728687
  • Wegner, Bernd (1997), From Peace to War: Germany, Soviet Russia, and the World, 1939-1941, Berghahn Books, ISBN 1571818820
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