Politics Cold, Economics Hot (9)
Volume 6: Great Depression Era · Chapter 87
On the way to Kiev for a secret meeting with the German delegation, Vyacheslav Molotov, the People's Commissar for Foreign Affairs, was restless. He couldn't even calm his mind while reading the dossier on Joachim von Ribbentrop. After several failed attempts to focus, Molotov gave up, slid open the window of his sleeper cabin, and lit a cigarette.
The wind blew in, nearly scattering the reports. Molotov was forced to close the window and sit on his bunk, lost in thought. What troubled him was the Soviet Union's greatest agitator, the exiled founder of the Red Army, Leon Trotsky, who was stirring up trouble again.
Trotsky had always advocated for a "global division of labor," meaning the Soviet people should sacrifice their own well-being to provide materials and money for world revolution, with revolutionaries in various countries using Soviet aid to foment unrest. This would continue until the capitalist system was overthrown and a global communist revolution was achieved.
Comrade Stalin's proposed "Socialism in One Country," on the other hand, meant using Soviet resources for the construction of the Soviet Union itself. In the struggle between the two, Trotsky lost power, and Comrade Stalin gained leadership of the Party.
Recently, following the Nazi Party's ban on the Communist Party of Germany (KPD) and the arrest of numerous KPD leaders and loyal members, Trotsky had started making noise abroad again. If Trotsky had merely cursed the German Nazi Party, the CPSU would have ignored him. But Trotsky only directed a few cursory curses at the Nazis; his main firepower was focused on attacking the Soviet Union for abandoning the KPD and the Third International. The German Nazis had not only banned the KPD but had also arrested the leaders of the Third International in Germany.
These people were the fruits of Trotsky's "international division of labor" policy. In Trotsky's design for the Third International, the communist parties of various countries formed a single organization, acting as local branches of the Comintern to jointly launch communist revolutions. Molotov could understand Trotsky's anger; the KPD had been wiped out in one fell swoop, the Third International had suffered major damage, and Trotsky's expectations had come to nothing. Naturally, Trotsky couldn't accept it.
Trotsky still held significant influence within the Soviet Union, and many within the CPSU admired this founder of the Red Army. Coupled with the losses of the KPD and the Third International, many in the Party advocated that the Soviet Union should, like China, downgrade diplomatic relations with Germany. Furthermore, in 1932, the Soviet Union suffered various natural disasters, causing grain production to drop by 20%. Many within the CPSU did not support Trotsky, but their emotions were affected by the plight of their comrades, and their attitude toward capitalist countries became fierce. With these factors combined, Comrade Stalin's proposal to increase Soviet-German trade cooperation faced opposition from a considerable number of comrades within the Party.
Although Molotov himself had not raised objections, he personally believed the German Nazis were enemies. If he used a few tricks... it was possible to create significant resistance to Soviet-German cooperation. This thought circled in Molotov's mind like a little goblin, impossible to drive away.
To fight this impulse, Molotov tried repeatedly to recall the key points Comrade Stalin had entrusted to him: "Trade cooperation with Germany is intended to provoke France. Only by making France feel pressure can we reverse France's attitude toward the Soviet Union."
Even for Molotov, it took some time to overcome his inner emotions. Once he had regained his composure, he picked up Ribbentrop's dossier.
Joachim von Ribbentrop was born into a military family in Wesel, Germany, on April 30, 1893. After receiving foreign language education in Metz and Grenoble, Ribbentrop went to Canada to do business independently for four years. He returned to Germany in 1914, volunteered for the army, and was later promoted to lieutenant. At the end of the Great War, Ribbentrop served temporarily in the German military mission in Istanbul. After the war, he ran a wine export business in Berlin, mainly targeting Britain and France.
In 1920, Ribbentrop married Annelies Henkell, the daughter of Otto Henkell, the German sparkling wine tycoon, and began to enter high society. In 1925, Ribbentrop was adopted by his aunt, who held a noble title, thereby acquiring the noble prefix "von" to his name.
On May 1, 1932, Ribbentrop joined the Nazi Party. Within a year, he became a member of the Reichstag, an SS colonel, and Hitler's foreign policy advisor.
This was all the information available on Ribbentrop. Molotov felt the representative sent by the Nazis might be a middle-aged businessman with a beer belly.
When the train arrived in Kiev and Molotov met Ribbentrop, his previous assumptions were overturned. Ribbentrop was a tall, blond, blue-eyed man who looked extremely shrewd and capable. Ribbentrop presented a gift: two bottles of wine. Molotov didn't even ask about the quality of the wine; if a wine merchant gave wine as a gift, one could at least genuinely look forward to it.
Molotov had expected Ribbentrop to explain the Nazi actions to seek Soviet understanding. Instead, he heard Ribbentrop say, "The previous German government lacked the courage to engage in comprehensive economic cooperation with the Soviet Union. Please believe, the Soviet government, that the current German government will no longer be bound by any treaties that restrict Germany's economic development."
Molotov didn't know how to answer for a moment and could only ask, "Is this the meaning of President Hindenburg, whom you represent?"
Ribbentrop shook his head. "The purpose of the German national movement is to liberate Germany from the immense suffering of reality. I obey the leader of this movement, Chancellor Hitler."
Molotov realized Ribbentrop was avoiding the heavy issues and dwelling on the light, unwilling to explain the banning of the KPD. Although he wanted to press the issue, Molotov had to admit that Ribbentrop was creating an environment where they could avoid discussing the KPD. But Molotov couldn't resist saying, "The Nazis' methods are truly surprising."
Ribbentrop became serious as well. "You can consider it a necessary price, just like the Soviet Union executing the Tsar's entire family."
Molotov was momentarily startled. Ribbentrop's reaction was surprisingly sharp, and his answer allowed one to understand his thinking while being quite confrontational.
Ribbentrop continued, "This is a movement of the German nation. I believe the CPSU can fully understand why Germany must do this. Germany has no other choice. Only by restoring order as quickly as possible can Germany return from the brink of chaos and civil war to the track of rapid economic recovery. I have been ordered to come here to negotiate the comprehensive launch of economic and trade relations with the Soviet Union. Germany and Russia have had long-standing trade relations in history. Through the Locarno Treaties, Germany has obtained stable relations with surrounding countries. Now, Germany wants to conduct comprehensive trade with the Soviet Union under such stable relations."
Mentioning the Locarno Treaties made Molotov feel some of Ribbentrop's sincerity. In the process of building "Socialism in One Country," the Soviet Union had not only faced hostility and blockade from Western European countries but also collective opposition from Eastern European countries. On October 16, 1925, representatives from seven countries—Britain, France, Germany, Italy, Belgium, Czechoslovakia, and Poland—held a conference in Locarno, Switzerland. Driven by the United States, these seven countries excluded the Soviet Union and formed the Locarno Treaties, which could barely be considered a collective security agreement. Since then, the Soviet Union had been thoroughly isolated by the Western world.
Now, the Soviet Union and Germany did not share a border. If Germany did big business with the Soviet Union, it would certainly influence the participants of the Locarno Treaties and change their attitude toward Germany.
Although he still felt the Nazis were enemies, Molotov suppressed his unhappiness and began to discuss trade issues with Ribbentrop. As the Soviet Foreign Minister, Molotov would not discuss specific details with Ribbentrop; they discussed the trade model between the two countries.
"What currency does Germany want to use for transactions?" Molotov asked.
Ribbentrop was actually a bit panicked inside. He was relying on his business experience, his brief diplomatic experience in Germany, his contacts with the upper echelons, and diplomatic knowledge he had learned from some scholars, professors, and diplomats in a short time. Having never worked in the diplomatic system, Ribbentrop lacked systematic experience.
But forced into the position, he had no other choice. Ribbentrop tried his best to look like an old hand at business negotiations, putting on an expression that everything was under control, to test the other side's bottom line. "Soviet rubles or German marks can both be used as transaction currencies."
"What if we need US dollars and British pounds?" Molotov continued to probe Germany's bottom line.
Ribbentrop's mind spun extremely fast, and he answered calmly, "Then Germany would also hope the Soviet Union pays in US dollars and British pounds."
After expressing a reciprocal attitude, Ribbentrop tried to push the negotiation further. "I think the Soviet-German trade model can be compared to the Sino-Soviet trade model."
Hearing this, Molotov asked with a stern face, "Can Germany provide the Soviet Union with the same guarantees as China?" No expression could be seen on his face, but in his heart, he felt he had already judged Ribbentrop's personal level.
On the surface, Sino-Soviet trade was a very simple "account hanging" (credit) model. Although transactions were priced in RMB or rubles, these were actually just figures on the books. China and the Soviet Union reconciled accounts once every quarter, and there was no real flow of RMB or rubles between the two countries.
When the Soviet Union needed pounds, francs, or dollars, it would make a request to China. China would export more goods to the Soviet Union based on international commodity prices, and China would provide the payment requirements to the Soviet Union. In this cooperation process, China was not just a trade partner to the Soviet Union but also provided financial services. Many of the Soviet Union's trades with other countries were conducted in the name of Chinese companies, using companies the Soviet Union had opened in China.
Although Ribbentrop had found a very good point of comparison, the Soviet Union viewed China as a cold neighbor with considerable room for cooperation. Nazi Germany, however, was currently viewed as an enemy of the Soviet Union. For Nazi Germany to want services equivalent to those provided by China... Molotov felt Germany was expecting too much.
Ribbentrop intuitively felt that Molotov opposite him must be very dissatisfied. Lacking diplomatic experience, Ribbentrop didn't know how to handle this according to diplomatic modes, so he simply abandoned the idea of using expert diplomatic means.
Adopting the style of a businessman, they wouldn't talk about "righteousness," only about attractive interests. Even if one disliked the other party intensely, the benefits before them were something no one could refuse. Ribbentrop said, "Germany possesses the most advanced civilian technology. In these fields, there is room for comprehensive cooperation between the Soviet Union and Germany."
Molotov found that this was exactly what General Secretary Stalin needed, and he truly had no reason to object. Although still reluctant, he could only temporarily agree.
Given the political relationship between the Nazis and the Soviet Union, Molotov didn't propose a toast to celebrate. Ribbentrop was much the same; he only actively reached out to shake hands with Molotov. Molotov pondered for a moment before reluctantly shaking Ribbentrop's hand briefly and then immediately letting go.
Ribbentrop was very familiar with this feeling. Before inheriting his property and title, Ribbentrop had tried his best to socialize with the powerful for business, and those powerful people had treated him with similar coldness. Even though he was unhappy, Ribbentrop bade farewell with due politeness and turned to leave in a leisurely manner.
Watching the back of this Nazi representative, Molotov felt he hadn't gained the upper hand at all and was very unwilling. But there was no help for it; this was General Secretary Stalin's arrangement. The First Five-Year Plan had started in 1928, and 1933 was the year the Second Five-Year Plan began.
During the First Five-Year Plan, the Soviet Union had built more than 1,500 large industrial enterprises with modern technical equipment. Emerging industrial sectors such as tractors, aircraft manufacturing, automobiles, heavy machinery, machine tool manufacturing, chemical synthesis industry, and precision instrument manufacturing appeared for the first time in Soviet history. The industrial output value in 1932 was 349.8% of that in 1913. Agricultural output was 187% of 1913. Such successful policies had brought General Secretary Stalin's prestige to an unprecedented peak.
If imports and exports were included, the Soviet Union's supply of light industrial products reached 820% of 1913 levels. Sino-Soviet trade had not only broken the isolation the Soviet Union faced but also met most of the Soviet Union's needs. The high cost-performance ratio of Chinese light industrial products not only satisfied the needs of the Soviet urban industrial population but also alleviated the Soviet Union's rural problems to a large extent.
On the train back, Molotov saw that Soviet farmers had already begun preparations for spring plowing. In the past, farmers would never have been willing to start work so early. When the Soviet Union was first established, the grain output calculated based on the Soviet agricultural sowing area could never be fully collected, no matter what. Cadres had to resort to tearing down houses and hanging people up for beatings to force farmers to hand over grain.
Starting a few years ago, the Soviet Union shipped light industrial products to the countryside. Farmers sold grain to buy light industrial products. Although it seemed a bit more complex, the overall efficiency was greatly improved. Those Russian farmers who lacked political consciousness, in order to buy light industrial products in state-run stores, even consciously brought out their grain to sell to the state.
In the last two years, as a large number of Chinese-produced agricultural vehicles and machinery entered the Soviet Union, the farmers' enthusiasm for production reached unprecedented heights. When farmers drove their various two-wheeled, three-wheeled, and four-wheeled vehicles to haul the remaining agricultural products after taxes to the city's farmers' markets for sale, it made the cadres and workers somewhat dissatisfied. However, the Soviet government relied on introducing technology from China and increasing imports to allow Soviet cadres and model workers to drive cars as well, which greatly alleviated this dissatisfaction.
After investigating the economies of the Soviet Union and Germany before this trip, Molotov was actually not very sure what exactly to buy from Germany. Germany did indeed have some technological products now, such as Zeiss optical instruments, whose technical level was indeed advanced globally. But the Soviet Union also had its own optical instrument factories. Even if the product quality was inferior to Zeiss products, they could fully meet the Soviet Union's needs.
Matching General Secretary Stalin's views with Ribbentrop's attitude, Molotov had to conclude that General Secretary Stalin had applied the experience of Sino-Soviet cooperation and the experience borrowed from China to the new Soviet-German relationship.
The Soviet Union was now unwilling to actively mention the policies of the Chinese government; excessive publicity of foreign countries was not a good thing for the Soviet Union. However, the Soviet Union had been studying China's economic development and attached great importance to the policies of the He Rui government. Research reports from the Soviet Party School believed that the He Rui government focused heavily on expanding scale. Through borrowing to purchase and introducing foreign capital, they went all out to solve the problem of "having or not having" in China. After solving the problem of existence, the He Rui government then began to push for scale.
Due to China's population of 650 million, the demand from the people exploded, allowing Chinese factories to recruit quickly and enabling China to rapidly cross the threshold from an agricultural country to an industrial country. This approach was also one of the lines of thought for Stalin's simultaneous Five-Year Plan. Looking at the results, the First Five-Year Plan achieved great success, and state investment allowed the Russian region, which was already one of the world's Great Powers, to rapidly complete industrialization.
Recalling the success, Molotov finally decided to stick to General Secretary Stalin's line on Germany. Due to the impact of the world economic crisis, Britain, France, and the United States were effectively trading with the Soviet Union. But this trade relationship was not stable. Once the economic crisis in Europe and America ended, these countries would immediately resume their trade blockade against the Soviet Union. And since the French economy had not been hit by the economic crisis, France was scattering money for investment in Central and Eastern Europe and maintained an unfriendly posture toward the Soviet Union.
General Secretary Stalin believed that to change France's attitude toward the Soviet Union, one could only start with Germany. If France began to feel the threat of Germany, on the current European continent, the only partner France could cooperate with would be the Soviet Union.
Deciding to support General Secretary Stalin's line made Molotov feel even more uneasy. Inside the CPSU, everyone might not dare to attack General Secretary Stalin directly, but the comrades would certainly dare to fiercely attack Molotov. For the destruction of the KPD and the Third International, Molotov would probably have to take on the role of the one getting scolded.
Molotov sighed deeply, wanting a drink very much. Suddenly, he remembered the wine Ribbentrop had given him. But Molotov didn't touch those bottles. Now that Soviet incomes and treatment had improved, the crackdown on corruption had also become severe. Many cadres who had accepted gifts or hospitality from European and American diplomats had fallen from power because of it.
To be criticized or even removed from office for two bottles of wine—Molotov felt it was completely unnecessary to do so. So Molotov called his secretary, "Go to the dining car and get me a bottle of wine!"