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Yanks for Stalin
Interview Transcript

Stephen Kotkin    (cont)

 This can be achieved only one way, by the borrowing, or, the purchase of technology and know how from the Capitalists. So, why would the Capitalist sell all their best stuff to something which they are in part afraid and which is an admitted dictatorship, because the Bolsheviks never claimed to be anything but a dictatorship.  The reason is because in 1929 the stock market experienced difficulties, bank problems, and there weren't very many people in the advanced countries who were buying, or building, new steel plants, or chemical plants or aviation factories and large firms like General Electric exist not because they support one political system or another, but because they need to satisfy their shareholders and they have a bottom line, which they watch.  So, here was one very big customer at a time when the rest of the world was under pressure.  They were so willing to sell whatever they had, that they were tripping over themselves to get into Moscow and to talk with the Bolsheviks. People who they may claim to be godless, Communist, to be feared, to be hated, but also potentially paying in gold rubals, that is to say convertible rubals, before technology.  The list of Capitalist firms which built Stalin's industrialized Soviet Union is a who's who of the most famous and advanced Capitalist firms of the 20th Century.  It includes not only American ones, but Italians and Germans, etceteras.  Later on they would be embarrassed by this collaboration and remove this episode from their company histories, which were produced in the Cold War period after 1945.  But, at the time, they were competing with each other for a stake of  Stalin's industrialization of  Soviet industrial program.  Now, could the Soviets had done it without this?  Well, they would have been able to industrialize more slowly.  They would have been able to industrialize with perhaps less advanced technology.  They would have, perhaps, not have had the same kinds of tank factories, submarines, turbines and oil refineries, all the other technology which they purchased.  They would have been able to do something, but not at the same level, or speed, as a result of the collaboration of the Capitalists.  Now, what did the Capitalist get out of this?  Did it work for them?  Were they able to sell their technology, make a profit, etceteras?  The answer is a mixed picture because the firms would sell, for example, a steel plant, or the technology for blast furnaces, cold world steel mills and finished product steel making, for example to make railroad....to make rails.  So, they (break)

Q.        Tell me about it.....

A. How did the Capitalist do in this deal, in their business dealings with the Soviet government?  The answer is a very mixed picture.  If they would sell , for example, an entire steel plant from the blast furnaces all the way through to the finished rolled steel and the rails that were produced, it was often the case that the Soviets would pay only for one plant.  Then, they would take the drawings and the technology, which was for that one plant, and reproduce it somewhere else, having paid only for one.  So, they would get three or four or five steel plants for the price of one.  This was, of course, a violation of their contracts, but the firms weren't selling to anybody else.  Moreover, the American firm was afraid the German firm would get the contract and the Soviets were playing off one Capitalist firm against another.  So, they had to look the other way when there was this kind of violation of the contract of reproducing the drawings for factories in other places that hadn't been properly paid for.  This was true of all the industry.  Many of the companies, moreover, weren't paid in full.  The Soviets would agree to a certain amount to pay and then they would pay only a partial amount of that and there would be negotiations that would drag on for quite a while, when they were going to pay the rest.  In many cases, they didn't pay in full.  Contracts were abrogated unilaterally in some cases by the Soviet side, but, nonetheless, the Capitalist firms didn't have anywhere else to go, and , moreover, it was profitable for them because many of the ones who had their contracts violated, who weren't paid in full, who had their technology reproduced elsewhere without it being paid for, continued to seek contracts with the Soviet government right through the 1930's.  So, the answer is, it was a mutually beneficial collaboration even though they spoke different languages and they didn't really understand business in the same way.  The technology was transferred, the Soviets definitely benefited, the Capitalists firmed evidently benefited otherwise they would not have been in the business in the first place because they were there only for profit motives.  The picture that emerges is one that seems to be a successful economic model.  Here you have a peasant country which is approximately 80% peasant, which has a little bit of industry only in a few places, mostly in Moscow and in St. Petersburg, the two main capitals, which is heavily reliant on foreign capital for industrialization before the revolution and which cannot produce all the strategic goods for its main industries, especially for it's navy and its army. From that picture, further technology transfer with the Capitalists firms, you get a virtually self-sufficient, heavily industrialized economy , admittedly it is extremely wasteful, admittedly the consumption of  raw materials and energy, the amount of workers employed is much greater than any Capitalist firm would tolerate.  On the other hand, ten years, fifteen years prior, they didn't have any of this technology.  They were reliant on the Capitalist not only for not only capital, but the technology.  Now, they have it of their own and, moreover, they could take it and refine it, reproduce it and use it for purposes other than what they paid for and so the technology transfer cannot be over estimated in its importance for the Soviet Union.  But, I must emphasize that the Capitalists went in there voluntarily and they stayed in there even when they were mistreated.

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