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German–Soviet economic relations (1934–1941)

May 09, 2024

After the Nazis rose to power in Germany in 1933, relations between Nazi Germany and the Soviet Union began to deteriorate rapidly. Trade between the two sides decreased. Following several years of high tension and rivalry, the two governments began to improve relations in 1939. In August of that year, the countries expanded their economic relationship by entering into a Trade and Credit agreement whereby the Soviet Union sent critical raw materials to Germany in exchange for weapons, military technology and civilian machinery. That deal accompanied the Molotov–Ribbentrop Pact, which contained secret protocols dividing central Europe between them, after which both Nazi forces and Soviet forces invaded territories listed within their "spheres of influence".

Territories of the Soviet Union and Nazi Germany until 1937

The countries later further expanded their economic relationship with a larger commercial agreement in February 1940. Thereafter, Germany received significant amounts of critical raw materials necessary for its future war efforts, such as petroleum, grain, rubber and manganese, while sending weapons, technology and manufacturing machinery to the Soviet Union. After unresolved negotiations regarding a potential Soviet entry into the Axis Pact, the two governments settled several disputes and further expanded their economic dealings with the January 1941 German–Soviet Border and Commercial Agreement.

Economic relations between the two countries were abruptly terminated when Germany invaded the Soviet Union in June 1941, in violation of the Molotov–Ribbentrop Pact.

Background edit

Traditional commerce, World War I and Russian Revolution edit

 
American businessmen (W. Averell Harriman in centre) in Berlin in 1925 to work with Germany to broker a deal for Soviet manganese ore

Germany did not lack natural resources, including the key raw materials needed for economic and military operations.[1][2]

[3] Before World War I, Germany had annually imported 1.5 billion Reichsmarks of raw materials and other goods from Russia.[3] However, the economies of the two countries differed greatly before World War I.[4] Germany had grown into the second-largest trading economy in the world, with a highly skilled workforce largely dominated by the private sector.[4] While Imperial Russia had rapidly modernized by tenfold in the fifty years before the war, its economy still relied heavily upon state orders and its industry was closely regulated by the Tsarist state.[5]

 
Soviet economic delegation in Berlin in 1927

Russian exports to Germany fell sharply after World War I.[6] In addition, after the Russian Revolution of 1917, the young communist state assumed ownership of all heavy industry, banking and railways, while the 1921 New Economic Policy left almost all small-scale production and farming in the private sector.[5] The war-ravaged German economy struggled to return to pre-war levels, with inflation also taking its toll in 1923.[4]

In the Soviet Union, only by 1927 had industrial output achieved approximately the 1913 levels under the Tsarist regime,[5] but Soviet exports to Germany increased to 433 million Reichsmarks annually by 1927 after trade agreements were signed between the two countries in the mid-1920s.[6]

Economist Nikolai Kondratiev was asked to study the Soviet economy, and he advocated slow prudent growth that kept the residual market economy of the New Economic Policy.[7] In the late 1920s, Joseph Stalin took the economy in the opposite direction, beginning a successful period of full-scale socialist industrialization in his first five-year plan for a Soviet economy that was still over 80% composed by the private sector, with plans to shed all vestiges of the free market.[8] Kondratiev was accused of espousing a "counter-revolutionary" equilibrium theory, after which he was fired and jailed for being a "kulak-professor." Overy 2004, p. 406 Towards the end of his 8 year sentence he was put on trial again and executed at the Kommunarka shooting ground by firing squad on the same day his death sentence was issued.

Early 1930s edit

In the early 1930s, Soviet imports decreased as the Communist model achieved greater self sufficiency. The Soviet economic planning body, improved greatly in spite of hostile foreign powers.[9] What followed was a system which included the most adequate review of national accounts and economic measurements.[9][10] The subsequent changes to Gosplan improved its operation.[11]

Though Soviet industrial output had significantly increased over its prior levels,[5] Soviet exports to Germany fell to 223 million Reichsmarks in 1934 due to the Soviets distrust of the German regime.[12] Although the Soviet Union possessed almost double the population of Germany, its industrial output still lagged behind because of the backward nature of the former Tsarist regime and invasions of the Soviet Union by the Western powers and others that followed it inception. Its steel production almost caught up with Germany's in 1933 during the German economic collapse in the Great Depression.[13] Following are German imports from Imperial Russia and the Soviet Union from 1912 to 1933:[14]

Year Imports from
Russia/USSR*		 Year Imports from
Russia/USSR*
1912 1,528 1928 379
1913 1,425 1929 426
1923 147 1930 436
1924 141 1931 304
1925 230 1932 271
1926 323 1933 194
1927 433
*millions of Reichsmarks

While Soviet exports into Germany were a small percentage of Germany's imports due to the large amount of trade the Nazi regime carried out with the USA and the UK.[15] At the time, the Soviets had little of interest to foreign buyers in general.[15]

Nazi era and relations deterioration edit

Nazis rise to power edit

 
March at Reichsparteitag 1935.

The rise to power of the Nazi Party increased tensions between Germany and the Soviet Union, with Nazi racial ideology casting the Soviet Union as populated by ethnic Slav "untermenschen" ruled by their "Jewish Bolshevik" masters.[16][17] In 1934, Hitler spoke of an inescapable battle against "pan-Slav ideals", the victory in which would lead to "permanent mastery of the world", though he stated that they would "walk part of the road with the Russians, if that will help us."[18] The sentiment roughly echoed Hitler's 1925 Mein Kampf writings, in which he stated that Germany's destiny was to turn "to the East" as it did "six hundred years ago" and "the end of the Jewish domination in Russia will also be the end of Russia as a State."[19]

According to Joseph Stalin’s interpreter, Valentin Berezhkov, Stalin spoke highly of the Night of the Long Knives in 1934 and viewed Hitler as a “great man!” who had demonstrated “the way to deal with your political opponents”. Berezhkov also suggested parallels between Hitler’s inner party purge and Stalin's mass repressions of Old Bolsheviks, military commanders and intellectuals.[20]

Nazi ideology focused on a racial struggle, rather than the class struggle at the center of Marxist ideology.[21] While Nazi ideology opposed both the communism of the Soviet Union and capitalism, associating Jews with both systems,[22][23] Nazi criticism of capitalism shared similarities with that of Marxists in that they both focused upon excessive financial concentration, declining exports, shrinking markets and overproduction.[21] Hitler later boasted that the best means to beat inflation "was to be sought for in our concentration camps."[24] While Marxists saw revolution as the solution, Hitler saw the only solution as conquest—expropriating the resources, such as Lebensraum, through war that could not be won through failing capitalist systems.[21] However, survival of the private sector was not incompatible with extensive Nazi state economic planning.[25]

Both the Soviet and German economies had grown coming out of dire economic slumps in the late 1920s following World War I and the Russian Revolution.[13] The German economy experienced real growth of over 70% between 1933 and 1938, while the Soviet economy experienced roughly the same growth between 1928 and 1938.[13] However, with heavy state intervention, both economies also became more isolated and expanded under conditions of exceptional autarky.[13] Outside trade and outside capital investment declined considerably for both economies during the 1930s.[13]

In the mid-1930s, the Soviet Union made repeated efforts to reestablish closer contacts with Germany.[26] The Soviets chiefly sought to repay debts from earlier trade with raw materials, while Germany sought to rearm, and the countries signed a credit agreement in 1935.[27] In 1936, the Soviets attempted to seek closer political ties to Germany along with an additional credit agreement, which were rebuffed by Hitler, who wished to steer clear of such political ties.[27] In response to Stalin's hopes to complete an economic deal with Hitler, the foreign section of the NKVD warned him that "all Soviet attempts to appease and conciliate Hitler are doomed. The main obstacle to an understanding with Moscow is Hitler himself."[28] Stalin did not agree, responding to the NKVD "Well, now, how can Hitler make war on us when he has granted such loans? It's impossible. The business circles in Germany are too powerful, and they are in the saddle."[28]

Mid-1930s deterioration of relations edit

In 1936, Germany and Fascist Italy supported the Spanish Nationalists in the Spanish Civil War, while the Soviets supported the partially socialist-led Spanish Republic opposition.[29] That same year, Germany and Japan entered the Anti-Comintern Pact,[30] and were joined a year later by Italy.[31]

That year, Germany also faced a large food and raw material crisis that had developed out of the increasing difficulties state bodies experienced attempting to control prices and commodity supplies in the face of resistant market forces.[32] Much like Soviet economist Nikolai Kondratiev, lead German economist Hjalmar Schacht was fired and castigated.[33] The crisis resulted in Hitler writing one of the few documents of any length that he drafted in his 12 years as Reich leader—a six-page memorandum that focused upon building a military larger than all possible enemy combinations and forcing upon the economy its racial duty of eschewing all inessential tasks in favor of large-scale war making.[34] From this came Hitler's Four Year Plan for rearmament "without regard to costs", transforming the economy into a Wehrwirtschaft (defense-based economy).[25][35] His advisers had suggested a Five Year Plan, but Hitler declined in favor of the less Marxist sounding Four Year Plan.[34]

 
Soviet oil refinery, 1934

Soviet industrialization of the early 1930s required massive debt expansions.[36] To attempt to decrease this debt, grain was sold in large quantities in world markets.[36] German debt also soared with increased state spending.[37] Both countries turned more to economic isolation and autarky.[37] Germany brazenly refused to pay interest on its bonds, and then secretly directed third parties working for it to buy back those subsequently devalued bonds at rock bottom prices.[38] As a result, only 15% of German debt was held by foreign sources in the late 1930s.[38]

Soviet great purges in 1937 and 1938 made striking an agreement with Germany even less likely by disrupting the already confused Soviet administrative structure necessary for negotiations. In the portion of the purges involving the military in 1936 and 1937, over 34,000 officers were purged in a campaign against a "fascist-Trotskyite conspiracy", including 45% of the most senior officers.[39] While many officers were later reinstated, those that were convicted were shot[39] and political officers, 73 per cent of which had no military experience, were introduced into the Red Army.[40] The purges led Hitler to believe that the Soviets were militarily weak.[41] Castigated former lead economist Kondratiev was one of those executed in the purges.[7] His harangued German economist counterpart, Schacht, would face similar treatment many years later, winding up in a Nazi concentration camp after being accused of being part of the July 20 Plot to assassinate Hitler.[33]

Economic reconciliation was hampered even further by political tension after the Anschluss in mid-1938 and Hitler's increasing hesitance to deal with the Soviet Union.[42] Soviet exports to Germany fell to 47.4 million Reichsmarks in 1937 (approximately one fifth of the 1934 total) and 52.8 million Reichsmarks in 1938.[12] In short, the important trading relationship between the countries that existed in the 1920s essentially collapsed with Hitler's rise to power.[43] German northeastern European imports from 1934 to 1939 were as follows:[12]

  Soviet
Union		 Poland
and Danzig		 Finland Estonia Latvia Lithuania
1934 223.0 78.1 42.3 8.2 21.1 15.1
1935 201.7 75.5 41.4 13.0 31.1 2.0
1936 93.2 74.0 46.1 13.8 33.2 9.1
1937 63.1 80.7 70.1 23.7 45.7 17.2
1938 47.4 109.4 88.6 24.0 43.5 27.6
1939 52.8 140.8 88.9 24.3 43.6 27.8
*German Imports in millions of Reichsmarks

Even with vastly decreased trade between the countries, Germany was still among the top three importer nations for the Soviet Union and supplied between one third and two thirds of Soviet machine tool imports vital for industrialization.[44] Trade continued on the basis of short term clearing agreements.[44] Germany had supplied 54% of Soviet imports of machine tools from 1929 to 1933, and 53% of such imports even when relations became more tense from 1933 to 1937.[45]

Four and Five Year Plans edit

Both the German Four Year Plan and Soviet Second and Third Five Year Plans emphasized the construction of military installations, factories, canals, roads and cities that produced accumulating crises' of over-investment and supply failures in other non-emphasized economic areas.[46] Monopsony compromised both systems, with the Soviet state the principal purchaser for all goods in its economy, while the German state was the largest purchaser in its economy.[46] German cost-plus contracts and Soviet fraud and mismanagement caused inefficient contracting, resulting in the building of massive contract-monitoring bureaucratic structures that produced additional costs in both economies.[46]

In March 1939, the Soviet Union announced the new directives of the Third Five Year Plan, named "Five Year Plan of Special Steels and Chemicals."[47] The defense sector received the highest priority under the plan.[47] The pressure to fulfill Soviet Second and Third Five Year Plan goals was more keen where managers faced the risk that every failure might be interpreted as an act of economic sabotage.[46] In 1936, the head of the Soviet Gosbank was shot after he suggested a relaxation of economic controls.[48] To cope with state controls of supply systems, blat (informal black market) agreements were often made, which could not easily be tracked by Gosplan.[49][50]

Hitler's Four Year Plan called for a modernized expanded agricultural sector to free Germany from the fear of a blockade, a network of motorways, remodeled cities, a massive program of import-substitution to supply synthetic strategic material and military industries capable of out-producing the largest enemy economy.[51] The plan required a rigid structure of six main economic divisions: raw materials production, raw materials distribution, labor agriculture, price control and foreign exchange.[33] It made heavy demands on resources already in short supply because of high military spending, resulting in the delay or postponement of most programs while scrambling for raw materials, building workers and engineering equipment.[46] Pseudo markets were created to attempt to make the system work more efficiently.[48] In response to blat-like commerce arising, Germany passed laws labeling such unsanctioned commerce as "economic sabotage" punishable by death.[52] German regulation of private property and capital movement hardened, and property could be seized from political enemies such as ethnic Jews or communists.[53]

Huge German and Soviet military demand growth edit

 
German staff at Tomka chemical weapons facility, Soviet Union, 1928
 
Production of German Ju 90 airliners developed for and used by Deutsche Lufthansa, 1938
 
German Neubaufahrzeug production, 1940

German and Soviet demand for military supplies, already the subject of massive growth under their Four and Five Year Plans, increased even further after the Munich Agreement.[42] While both Stalin and Hitler had long spoken of an over-riding necessity to prepare for war, Hitler's outlook was for an offensive war, comporting with Nazi ideology, by a new community of Germans carving an empire across Europe, slaying the "Jewish Bolshevik" dragon and addressing punitive Treaty of Versailles provisions.[54]

The Treaty of Versailles restrictions had resulted in a very weak German military as late as the early 1930s,[55] though planning efforts had been underway since the late 1920s for military growth in preparation for the next European war.[56] German military spending remained restrained during this period:[a]

  German Defense
(Bil. RM)		 Soviet Defence
(Bil. Rbls)		 German Defense
Inflation Adj*		 Soviet Defense
Inflation Adj*
1928 0.75 0.88 NA NA
1929 0.69 1.05 0.69 1.05
1930 0.67 1.20 0.73 1.12
1931 0.61 1.79 0.75 1.43
1932 0.69 1.05 0.98 0.70
*Inflation adj. uses Wholesale Price Indices (1929 base) - Note: German deflation

To get around Versailles restrictions, Germany and the Soviet Union collaborated to allow Germany to establish experimental centers in the Soviet Union for tank, chemical weapons and aviation research, while Soviet officers traveled to Germany for military instruction.[56] However, this secret collaboration ended with Hitler's rise to the Chancellery in 1933.[56] Immediately thereafter, Hitler ordered a tripling of German military size in one year.[57] Germany instituted covert military increases, including ship production in excess of Versailles limits, while refusing to ever refer to its "General Staff" (which was prohibited by Versailles) and ceasing publication of its officer list.[57] On March 16, 1935, Hitler surprised world powers by passing a law openly requiring universal military service and further increasing military size to half a million men.[58] Countries including France and Britain protested, but did not act, effectively ending the pretense of military restrictions under Versailles.[58]

By 1939, three years into the Four Year Plan, over 20% of all German industrial workers worked for the armed forces, while nearly 33% of those in the manufacturing and building sectors worked there.[59] By comparison, in 1938, Britain and the United States produced just 13% of the quantity of weapons that Germany produced that year. German armament spending went from under 2% of gross national product in 1933 to over 23% in 1939.[60] German armament expenses under the Nazi regime increased rapidly, especially under the Four Year plan:[2][a]

 
Ju 88 assembly line
  German Defense
(Bil. RM)		 Soviet Defence
(Bil. Rbls)		 German Defense
Inflation Adj*		 Soviet Defense
Inflation Adj*
1933 0.62 4.03 0.91 2.46
1934 4.09 5.40 5.7 2.82
1935 5.49 8.20 7.40 3.39
1936 10.27 14.80 13.53 5.05
1937 10.96 17.48 14.19 5.54
1938 17.25 22.37 27.04 7.66
1939 38.00 40.88 38.6 10.25
*Inflation adj. uses Wholesale Price Indices (1929 base) - Note: German deflation

Stalin viewed a coming war as occurring between imperialist powers, and in the late 1920s, had even predicted a massive war between the United States and Britain.[54] The Soviet military experienced almost proportionately identical massive increases nominally as that of Germany for military equipment and weapon designs to strengthen a Red Army and Red Navy weakened by purges.[61] While in the face of massive Soviet inflation in the 1930s, military spending increases were still enormous, the differences grow considerably when adjusted for inflation (Germany actually experienced deflation). From 1931 to 1934, the Soviet had purposefully published figures for military spending below actual levels.[62] Because of League of Nations publications requirements, the Soviets began more accurate defense spending publications by 1936.[62]

The Soviet Third Five Year Plan required massive new infusions of technology and industrial equipment.[63] After Stalin's shock at the poor performance of Soviet aircraft in the Spanish Civil War and the "backwardness" of the Soviet Air Force in 1938, emphasis was put on military production, including that of large naval ships.[47] By 1937, 17% of Soviet gross national product was spent on defense, while over 20% of industrial investment went to defense industries.[64] At the same time, military personnel increased from 562,000 in 1931 to just over 1.5 million in 1938.[65] Meanwhile, the Soviet transportation network was woefully underdeveloped, with roads approaching non-existence and rail lines already stretched to their limits.[61]

The ambitious objectives of the Third Five Year Plan hinged upon the Soviet economy's importing large amounts of technology from the United States, which then supplied over 60% of Soviet machines and equipment.[66]

Late 1930s German raw materials crunch edit

By the late 1930s, foreign trade became difficult because Germany lacked the gold or foreign exchange needed to finance any balance of payment deficit.[67] Further damaging foreign trade, Germany had already heavily regulated exports and imports, requiring licenses and approval for all trades so that it could favor the raw materials imports that it desperately need.[67] Additional trading difficulties were caused by a boycott of German goods following Kristallnacht in November 1938.[68]

Because an autarkic economic approach or an alliance with Britain were impossible, Germany needed to arrange closer relations with the Soviet Union, if not just for economic reasons alone.[1] Despite work on coal hydrogenisation,[69] Germany lacked oil and could only supply 25% of its own needs.[1] Since its main supplier, the United States, would be potentially cut off during a war, Germany had to look to Soviet Union and Romania.[1] Germany suffered from the same supply problems for metal ores such as chrome, tungsten, nickel, molybdenum, and manganese, all of which were needed for hardened steel used in tanks, ships and other war equipment.[1] For example, Germany was almost 100% reliant on imports for chrome, and the loss of South African and Turkish imports alone were a blockade to arise would eliminate 80% of imports.[70] Even for manganese, of which Germany supplied 40% of its needs, the expected British blockade would cut its link to its main outside supplier, South Africa.[1] Germany was 35% self-sufficient for iron ore, but would lose 36% of its previous imported supply on the outbreak of war.[70] Furthermore, Stalin's permission was needed to transit tungsten and molybdenum from China, which required Soviet-controlled rail lines.[1] Meanwhile, the Soviet Union was the world's largest source of manganese, the second largest for chrome and platinum and the third largest supplier of crude oil, iron ore and nickel.[70]

Rubber was particularly troublesome, with Germany requiring 80% of its rubber from imports.[69] Hitler required Soviet help to procure rubber from the Far East, the shortage of which had caused Germany problems in World War I.[1] Rubber production in Malaya and the East Indies was dominated by the British and the Dutch.[1] Cutting off these sources would leave Germany with stockpiles for only two months.[1] Although German synthetic materials plants could produce 50% of German rubber needs, Germany still required large amounts of natural rubber as raw material.[1] And just to achieve that synthetic production, Germany had invested a massive 1.9 billion Reichsmarks over three years—almost half of all investment in its capital goods industry.[71]

While Germany had decreased its dependence on imported food from 35% in 1927 to 13% in 1939,[72] 40% of its fat and oil food requirements had to be met by imports.[61][69][73] Moreover, Germany's food requirements would grow further if it conquered nations that were also net food importers.[61] Soviet imports of Ukrainian grains or Soviet trans-shipments of Manchurian soybeans could make up the shortfall.[61]

In 1936, Hermann Göring told several German industrialists that "obtaining raw materials from Soviet Union is so important that he shall raise this issue with Hitler himself—however much the latter might be ill-disposed to accept this."[74] By 1937, the vast gulf between raw material needs and supplies had taken over Hitler's thinking for conquest. German military industry desperately needed certain raw materials, such as manganese ore and petroleum, and these could be purchased on a regular basis only from the Soviet Union.[74] Goering had stated that Germany desired business ties with the Soviets "at any cost."[74]

After hearing the dire reports of German planners, in a November 5, 1937, Hitler told his generals that he would have to take over a neighbouring country to ensure the supply of agricultural land and raw materials, now equating this massive economic need with Lebensraum.[75] The German Anschluss and German occupation of Czechoslovakia were driven by economic as much as racial motives, with heavy industry in those locations being gobbled up by the Reichswehr rather than private industry.[75] The day German forces entered the Czech Sudetenland, Hermann Göring pored over figures with generals covering every item of Sudeten economic resources, from lignite to margarine, so that it could be allocated to the Four Year Plan.[75] In January 1939, the huge Four Year Plan goals combined with a shortage of foreign hard currencies needed to pay for raw materials forced Hitler to order major defense cuts, including a reduction by the Wehrmacht of its allocations by 30% of steel, 47% of aluminum, 25% of cement, 14% of rubber and 20% of copper.[76] On January 30, 1939, Hitler made his "Export or die" speech calling for a German economic offensive ("export battle", to use Hitler's term), to increase German foreign exchange holdings to pay for raw materials such as high-grade iron needed for military materials.[76]

1938–1939 deal discussions edit

Early discussions edit

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

Germany and the Soviet Union discussed entering into an economic deal throughout early 1939.[77] During spring and summer 1939, the Soviets negotiated a political and military pact with France and Britain, while at the same time talking with German officials about a potential political Soviet–German agreement.[78] Through economic discussion in April and May, Germany and the Soviet Union hinted of discussing a political agreement.[79][80][81][63][82][83][84][85][86][87]

Ensuing political discussions between the countries were channeled through the economic negotiation, because the economic needs of the two sides were substantial and because close military and diplomatic connections had been severed in the mid-1930s after the creation of the Anti-Comintern Pact and the Spanish Civil War, leaving these talks as the only means of communication.[88] German planners in April and May 1939 feared massive oil, food, rubber and metal ore shortages without Soviet help in the event of a war.[73][89]

Addressing past hostilities and finalizing the deals edit

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

In late July and early August, the Soviet Union and Germany were very close to finalizing the terms of a proposed economic deal and began to more concretely discuss the possibility of a political deal, which the Soviets insisted could only follow after an economic deal was reached.[90][91] They discussed prior hostilities between the countries in the 1930s and addressed their common ground of anti-capitalism, stating "there is one common element in the ideology of Germany, Italy and the Soviet Union: opposition to the capitalist democracies,"[92][93] "neither we nor Italy have anything in common with the capitalist west" and "it seems to us rather unnatural that a socialist state would stand on the side of the western democracies."[94] The Germans explained that their prior hostility toward Soviet Bolshevism had subsided with the changes in the Comintern and the Soviet renunciation of a world revolution.[94] The Soviet official at the meeting characterized the conversation as "extremely important."[94]

As Germany scheduled its invasion of Poland for August 25 and prepared for war with France, German war planners in August estimated that, because of massive oil, food and rubber shortfalls, in the face of an expected British blockade, the Soviet Union would become the only supplier for many items.[90] Every internal German military and economic study had argued that Germany was doomed to defeat without at least Soviet neutrality.[95] By August 10, the countries worked out the last minor technical details, but the Soviets delayed signing the economic agreement for almost ten days until they were sure that they had also reached a political agreement.[95]

1939 economic and political deals edit

 
Ribbentrop and Stalin at the signing of the Pact
Further information: German–Soviet Commercial Agreement (1939) and Molotov–Ribbentrop Pact

Germany and the Soviet Union signed a commercial agreement, dated August 19, providing for the trade of certain German military and civilian equipment in exchange for Soviet raw materials.[96][97] The agreement provided for roughly 200 million in Soviet imports of raw materials (for which they would receive a seven-year line of credit), German exports of weapons, military technology and civilian machinery. "current" business, which entailed Soviet obligations to deliver 180 million Reichsmarks in raw materials and German commitment to provide the Soviets with 120 million Reichsmarks of German industrial goods.[97][98][99][100] German Foreign Ministry official Karl Schnurre noted at the time that "[t]he movement of goods envisaged by the agreement might therefore reach a total of more than 1 billion Reichsmarks for the next few years."[101] Schnurre also wrote "[a]part from the economic import of the treaty, its significance lies in the fact that the negotiations also served to renew political contacts with Russia and that the credit agreement was considered by both sides as the first decisive step in the reshaping of political relations."[101] Pravda published an article on August 21 declaring that the August 19 commercial agreement "may appear as a serious step in the cause of improving not only economic, but also political relations between the USSR and Germany."[102] Soviet foreign minister Vyacheslav Molotov wrote in Pravda that day that the deal was "better than all earlier treaties" and "we have never managed to reach such a favorable economic agreement with Britain, France or any other country."[98]

Early in the morning of August 24, the Soviet Union and Germany signed the political and military deal that accompanied the trade agreement, the Molotov–Ribbentrop Pact. The pact was an agreement of mutual non-aggression between the countries.[103] It contained secret protocols dividing the states of Northern and Eastern Europe into German and Soviet "spheres of influence."[103] At the time, Stalin considered the trade agreement to be more important than the non-aggression pact.[104]

At the signing, Ribbentrop and Stalin enjoyed warm conversations, exchanged toasts and further addressed the prior hostilities between the countries in the 1930s.[105] They characterized Britain as always attempting to disrupt Soviet-German relations, stated that the Anti-Comintern pact was not aimed at the Soviet Union, but actually aimed at Western democracies and "frightened principally the City of London [i.e., the British financiers] and the English shopkeepers."[106]

Division of Central Europe edit

 
Planned and actual territorial changes in Central Europe 1939–1940
Further information: Invasion of Poland, Soviet invasion of Poland, and Molotov–Ribbentrop Pact

One week after the Molotov–Ribbentrop Pact, the partition of Poland commenced with the German invasion of western Poland.[107] The British Ministry of Economic Warfare immediately began an economic blockade of Germany.[108] At the outset, Britain realized that this blockade would be less effective than their blockade of Germany in World War I because of current German allies Italy and the Soviet Union.[108]

On September 17, the Red Army invaded eastern Poland and occupied the Polish territory assigned to it by the Molotov–Ribbentrop Pact, followed by co-ordination with German forces in Poland.[43] Three Baltic States described by the Molotov–Ribbentrop Pact, 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.[109]

Talks to expand the economic pact edit

German raw materials crisis and Soviet needs after Poland edit

 
Soviet and German soldiers meet in Lublin, Poland (September 1939)
Main article: German–Soviet Commercial Agreement (1940)

Hitler's pressing for a German invasion of Poland in 1939 placed tremendous strain on the German war machine, which had been gradually gearing up after the Treaty of Versailles restrictions for "total war" ("totaler Krieg") in 1942 or 1943.[110] The German navy was also critically short of maritime and military assets and did not achieve full mobilization until 1942.[111] While the Soviet alliance provided a huge military benefit to Germany, which thereafter had to station only four regular and nine territorial divisions on its eastern border,[112] even the quick Germany victory in Poland strained its 1939 military resources, leaving it with only six weeks of munitions supplies and no considerable manpower reserve.[113] In the face of a British blockade, the only remaining state capable of supplying Germany with the oil, rubber, manganese, grains, fats and platinum it needed was the Soviet Union.[110]

In addition, Germany had imported 140.8 million Reichsmarks in Polish goods in 1938, and half of that territory was now held by the Soviet Union.[12] The Soviets now occupied fields amounting to seventy per cent of Poland's oil production.[114] Germany needed more of an economic alliance with the Soviet Union for raw materials than the economic partnership that the August 19, 1939, agreement provided.[115] At the same time, the Soviets' demands for manufactured goods, such as German machines, were increasing while its ability to import those goods from outside decreased when many countries ceased trading relations after the Soviet entry into the Molotov–Ribbentrop Pact.[116] The Soviet Union could offer precious little technology, while Germany possessed the technology the Soviet Union needed to build a blue-water fleet.[117] Accordingly, for the next six weeks, especially after the Soviet and German invasions of Poland, Germany pressed hard for an additional agreement.[115][118]

At the same time, the United States, supplied over 60% of Soviet machines and equipment, stopped armament shipments to the Soviet Union after the Molotov–Ribbentrop Pact.[66] It imposed a full embargo after the Soviets 1939 invasion of Finland.[66] Soviet quality controllers were expelled from the United States aircraft industry and already paid-for orders were suspended.[66] With similar trade with France and Britain ceased, Germany was the only alternative for many goods.[66]

Negotiations edit

Main article: German–Soviet Commercial Agreement (1940)

After the division of Poland, the parties signed a September 28 German–Soviet Boundary and Friendship Treaty ceding Lithuania to the Soviets, the preamble of which stated the countries' intention "to develop economic relations and trade between Germany and the Soviet Union by all possible means."[66] It continued "for this purpose an economic programme is to be set up by both parties, according to which the Soviet Union is to deliver raw materials to Germany, who will balance these out by means of long-term industrial shipments."[66] The result of this would be that mutual trade would "once again reach the high level achieved in the past."[119] Thereafter, oil, foodstuffs and cattle produced in the Soviet-occupied area of Poland was sent to Germany in accordance with the economic cooperation clause of the September 28 treaty.[120] One week later, Ribbentrop gave the green light for a new round of talks.[119]

In early October, German officials proposed a deal that would have increased Soviet raw material exports (oil, iron ore, rubber, tin, etc.) to Germany by over 400%,[121] while the Soviets requested massive quantities of German weapons and technology,[122] including the delivery of German naval cruisers Lützow, Seydlitz and Prinz Eugen.[123] 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.[124]

Stalin personally stepped in to intervene on deteriorating talks.[125] Further discussions took place in Moscow in early February regarding the specifics of German military equipment to be provided.[84] Germany agreed that the plans for the battleship Bismarck could be included in the war materials to be provided to the Soviet Union.[126]

1940 commercial agreement edit

 
Admiral Hipper-class heavy cruiser
Main article: German–Soviet Commercial Agreement (1940)

On February 11, 1940, Germany and the Soviet Union entered into the German-Soviet Commercial Agreement, an intricate trade pact in which the Soviet Union would send Germany 650 million Reichsmark in raw materials in exchange for 650 million Reichsmark in machinery, manufactured goods and technology.[127][128] The trade pact helped Germany to surmount the British blockade of Germany.[96] 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.[127] 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.[129]

The Soviets were to receive the incomplete Admiral Hipper-class heavy 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 (15.0 in) 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 Bf 109 fighter, Bf 110 fighter and Ju 88 bomber.[130][131] Stalin believed the Lutzow to be important because of its new 20.3 cm naval guns, along with their performance characteristics.[132] The Soviets would also receive oil and electric equipment, locomotives, turbines, generators, diesel engines, ships, machine tools and samples of German artillery, tanks, explosives, chemical-warfare equipment and other items.[96]

Expanded economic relationship edit

Soviet provision of raw materials and other help edit

Further information: German–Soviet Commercial Agreement (1940)

Under the aegis of the economic agreements, Soviet-German exports and imports increased tenfold.[43] While some slowdowns and negotiations occurred, the Soviet Union met all of its requirements under the agreement.[133] It became a major supplier of vital materials to Germany, including petroleum, manganese, copper, nickel, chrome, platinum, lumber and grain.[134] During the first period of the agreement (February 11, 1940, to February 11, 1941), Germany received:[135][136]

  • 139,500 tons of cotton
  • 500,000 tons of iron ores
  • 300,000 tons of scrap metal and pig iron

Soviet goods were freighted to Brest-Litovsk,[128] through occupied Polish territories and then shifted to European gauge track to Germany to circumvent the British naval blockade.[96] The Soviets also granted Germany the right to transit for German traffic 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.[128] Soviet exports to Germany, using German figures, which do not count products still in transit during Operation Barbarossa (which came in after June 1941), include:[137][b]

 
German Me 210 factory, 30 August 1944
  1939 1940 1941
(1st 6 mos.)		 Soviet figures
(September 1939 – 1941)
Oil Products 5.1 617.0 254.2 941.7
Grains 0.2 820.8 547.1 1611.1
Manganese ore 6.2 64.8 75.2 165.2
Phosphates 32.3 131.5 56.3 202.2
Technical oils & fats 4.4 11.0 8.9 NA
Chromium 0.0 26.3 0.0 23.4
Copper 0..0 7.1 7.2 NA
Nickel 0.0 1.5 0.7 NA
Legumes 10.9 47.2 34.8 NA
Tin 0.0 0.8 0.0 NA
Platinum 0.0 1.5 1.3 NA
Chemicals:Finished 0.9 2.9 0.2 NA
Chemicals:Unfinished 0.9 2.6 1.0 NA
Raw Textiles 9.0 99.1 41.1 171.4
Wood Products 171.9 846.7 393.7 1227.6
Oil Cake 0.0 29.0 8.6 41.8
*thousands of tons

The Soviet figures only include imports after September 1939 and differ, in part, because they include products that were in transit during Operation Barbarossa were not yet counted in the German figures, which count only the first six months of 1941.[137]

 
Freight train in German-occupied Poland, October 1939
 
Potato train arrives in Berlin in January 1940

The Soviet Union also bought and shipped other materials to Germany, such as rubber[134] from India.[138] The Soviets shipped approximately 800 million reichsmarks worth of goods.[138] Materials Germany imported from other countries using the Soviet Trans-Siberian Railway and from Afghanistan and Iran via the Soviet Union as an intermediary, including:[139]

  1939 1940 1941
(1st 5 mos.)
Rubber NA 4.5 14.3
Copper NA 2.0 2.8
Soybeans NA 58.5 109.4
Whale & Fish oil NA 56.7 46.2
Nuts NA 9.3 12.1
Tinned Foods NA 5.0 3.8
Textiles 0.0 19.0 17.0
Legumes 0 7.0 2.0
Dried fruit 8.0 42.0 8.0
*thousands of tons

The trade pact helped Germany to surmount the British blockade of Germany.[96] By June 1940, Soviet imports comprised over 50% of Germany's total overseas imports, and often exceed 70% of total German overseas imports.[140]

 
Imports from the USSR As A Percentage Of Total German Overseas Imports: February 1940 - June 1941

The Soviet Union further helped Germany to avoid the British blockade by providing a U-boat base at Basis Nord.[138] 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 the German invasion of the USSR) [141]

There had never been such intensive trade between Germany and the Soviet Union as that which took place during the eighteen months of 1940 to June 1941.[142] Soviet imports of chrome, manganese and platinum, for which Germany relied entirely on imports, made up 70% of Germany's total imports of those materials.[143] While the Soviet Union provided 100% of German imports of rye, barley and oats, this was 20% of the amount of the total German harvest.[143] Three quarters of Soviet oil and grain exports, two thirds of Soviet cotton exports and over 90% of Soviet wood exports were to the Reich alone.[143] Germany supplied the Soviet Union with 31% of its imports, which was on par with United States imports into the Soviet Union.[143] Germany supplied 46% of Soviet machine tool imports, and was its largest such supplier.[143]

Particularly important were grain, manganese and chrome—vital ingredients of the German war economy that now faced the British naval blockade.[144] In terms of imports and exports, the total balanced out at 500 million reichsmarks in either direction, but the strategic gain to Hitler was far greater than that to Stalin.[144]

German summer worries and procrastination edit

 
 
Burning French oil stocks in the port of Calais after British bombing in May 1940
Main article: German–Soviet Commercial Agreement (1940)

In the summer of 1940, Germany grew even more dependent on Soviet imports.[145] While German acquisitions of France, the Netherlands, and Belgium meant the capture of fuel and iron supplies,[146] the additional territories created additional demand while decreasing avenues for indirect supply.[145]

Soviet oil continued to flow to Germany, mostly by rail from Varna, Bulgaria directly to Wilhelmshaven.[147] German officials noted that 150,000 tons of oil had been shipped monthly for five months, using about 900 German tank cars exclusively dedicated for that traffic.[147] Hitler characterized the German need for that oil as "most pressing."[147] He however noted that "This will not become critical as long as Romania and Russia continue their supplies and hydrogenation plants can be adequately protected against air attacks."[147] After the forced Soviet occupation of the Romanian territories of Bessarabia and Northern Bucovina,[148] Germany wanted the 100,000 tons of grain for which they had previously contracted with Bessarabia, guarantees of German property safety in Romania and reassurance that the train tracks carrying Romanian oil would be left alone.[149] However, Germany had captured Norway's molybdenum mines, agreed to an oil-for arms pact with Romania in May and gained rail access to Spain with the capture of France.[146]

The Soviet invasion of Lithuania, Estonia and Latvia[109][150][page needed] in June 1940 resulted in the Soviet occupation of states on which Germany had relied for 96.7 million Reichsmarks of imports in 1938 at blackmailed favorable economic terms,[12] but from which they now had to pay Soviet rates for goods.[149] Compared to 1938 figures, 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.[145] An eventual invasion of the Soviet Union increasingly looked like the only way in which Hitler believed that Germany could solve that resource crisis.[145] While no concrete plans were yet made, Hitler told one of his generals in June that the victories in Europe "finally freed his hands for his important real task: the showdown with Bolshevism",[151] though German generals told Hitler that occupying Western Russia would create "more of a drain than a relief for Germany's economic situation."[152] This included Kriegsmarine leader Erich Raeder, who consistently had opposed any war with the Soviet Union.[153] Nevertheless, military planners were instructed to continued preparing for the eventual war in the east, in an operation that was then codenamed "Fritz".[154]

Germany, which was provided 27 months to finish delivery of its goods, procrastinated as long as possible.[133] 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.[155] A few months later it delivered a sample of its harvest technology.[147] Labor shortages caused by German rearmament pushes also slowed Germany's ability to export material.[156] By the end of June, Germany had only delivered 82 million Reichsmarks in goods (including 25 million for the Lutzow) of the 600 million Reichsmarks in Soviet orders place by that time.[157]

Delivery suspension edit

Main article: German–Soviet Commercial Agreement (1940)

By August 1940, Germany was 73 million Reichsmarks behind on deliveries due under the 1940 commercial agreement.[147] The Soviet Union had provided over 300 million Reichsmarks worth of raw materials, while the Germans provided less than half of that in finished products for compensation.[147]

That month, 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[12]), the German commercial delivery failures and with Stalin worried that Hitler's war with the West might end quickly after France signed an armistice.[158] At that time, the Soviet also canceled all long range projects under the 1940 commercial agreement.[147]

The suspension created significant resource problems for Germany.[158] Ribbentrop wrote a letter promising Stalin that "in the opinion of the Fuhrer ... 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."[159] 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 an agreement between the United States and Britain regarding destroyers and bases.[160] Soviet raw material deliveries increased well over prior figures.[151]

Germany delayed its delivery of the cruiser Lützow and the plans for the Bismarck as long as possible, hoping to avoid delivery altogether if the war developed favorably,[159] and it was later delivered in very incomplete state.[161]

Possible Soviet Axis membership and further economic talks edit

 
Joachim von Ribbentrop welcoming Vyacheslav Molotov in Berlin, November 1940
Main article: German–Soviet Axis talks

Hitler had been considering war with the Soviet Union since July 1940.[128] However, after Germany entered the Axis Pact with Japan and Italy, in October 1940, the Soviet Union explored a possible entry into the Axis themselves.[162] Stalin sent Molotov to Berlin to negotiate, where he negotiated with Ribbentrop and Hitler personally, who spoke at length about a division of the world after the destruction of Britain that would be like "a gigantic world estate in bankruptcy".[163][164][165] After long discussions and proposals, Germany presented the Soviets with a draft written Axis pact agreement defining the world spheres of influence of the four proposed Axis powers (Japan, Germany, Soviet Union, Italy).[166][167][168] Eleven days later,[169] the Soviets presented a Stalin-drafted written counter-proposal where they would accept the four-power pact, but it included Soviet rights to Bulgaria and a world sphere of influence focus on the area around modern Iraq and Iran.[170] The Soviets concurrently promised, by May 11, 1941, the delivery of 2.5 million tons of grain—1 million tons above its current obligations.[170] They also promised full compensation for the Volksdeutsche property claims.[170] Germany never responded to the counter-proposal.[171][172] Shortly thereafter, Hitler issued a secret directive on the eventual attempts to invade the Soviet Union.[169][173]

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.[6][174] Knowing they were preparing for an invasion of the Soviet Union, German negotiators pushed to delay the delivery of German goods beyond the summer of 1941.[175] Suspicious of German delays, in December, the Soviets demanded that all questions pending between the countries be resolved before an agreement could be made.[175] Tensions had already built after Germany had ignored Stalin's letter regarding Axis membership, with negotiators almost coming to blows at one point.[175] At the same time, German war planners were aware of the potential fragility of Soviet oil, agreeing with Allied military assessments that they had captured in France saying that "a few incendiary bombs would have sufficed to shut down Baku for years."[176]

At the same time, Britain was forecasting continued German oil problems.[177] The British Chiefs of Staff produced a report in September 1940 predicting a possible exhaustion of German oil stocks by June 1941.[177] They believed that Germany could only improve its position by defeating Britain or by driving the Royal Navy from the Eastern Mediterranean so that Germany could import Soviet and Romanian oil supplies by sea.[177] An American spy then viewed a December German report detailing the need for an invasion of the Soviet Union because of projected mid-1941 shortages of heavy metals and other supplies.[178]

1941 border and commercial agreement edit

Main article: German–Soviet Border and Commercial Agreement

On January 10, 1941, Germany and the Soviet Union signed agreements in Moscow to settle all of the open disputes that the Soviets had demanded.[175] The agreements extended trade regulation of the 1940 German-Soviet Commercial Agreement until August 1, 1942, and increased deliveries above the levels of year one of that agreement to 620 to 640 million Reichsmark.[179][180] It also settled several border, trading rights, property compensation and immigration disputes.[175] It further covered the migration to Germany within two and a half months of ethnic Germans and German citizens in Soviet-held Baltic territories, and the migration to the Soviet Union of Baltic and "White Russian" "nationals" in German-held territories.[179] Secret protocols in the new agreement stated that Germany would renounce its claims to a strip of territory in Lithuania it had received in the "Secret Additional Protocols" of the German–Soviet Boundary and Friendship Treaty, in exchange for 7.5 million dollars (31.5 million Reichsmark).[175] Because of currency fluctuation issues, the parties used American dollar demarcations for compensation totals.[175]

Because of a stronger German negotiation position, Karl Schnurre concluded that, in economic terms, the agreement was "the greatest Germany ever concluded, going well beyond the previous year's February agreement."[146] The agreement included Soviet commitments to 2.5 million tons of grain shipments and 1 million tons of oil shipments, as well as large amounts of nonferrous and precious metals.[146] German Special Ambassador Karl Ritter, in a state of near-euphoria over Germany's achievement, wrote a directive to all German embassies that "While Britain and the United States have up to now been unsuccessful in their efforts to come to an agreement with the Soviet Union in any field, the Soviet Union has concluded with Germany, the largest contract ever between two states."[181]

On January 17, 1941, Molotov asked German officials whether the parties could then work out an agreement for entry into the Axis pact.[182] Molotov expressed astonishment at the absence of any answer to the Soviets' November 25 offer to join the Pact.[182] They never received an answer.[182] Germany was already planning its invasion of the Soviet Union. On December 18, 1940, Hitler had signed War Directive No. 21 to the German high command for an operation now codenamed Operation Barbarossa stating: "The German Wehrmacht must be prepared to crush Soviet Russia in a quick campaign."[183] Hitler directed Raeder that Germany would have to take Polyarny and Murmansk at that time to cut off access to aid that would come to the Soviet Union.[153]

Late Soviet attempts to improve relations edit

Even though Stalin was preparing for a likely war, he still believed that he could at least avoid a short-term clash.[184] In an effort to demonstrate peaceful intentions toward Germany, on April 13, 1941, the Soviets signed a neutrality pact with Axis power Japan.[185] During that signing ceremony, Stalin embraced the German ambassador and exclaimed "we must remain friends and you must do everything to that end!"[186] While Stalin had little faith in Japan's commitment to neutrality, he felt that the pact was important for its political symbolism, to reinforce a public affection for Germany.[187] Stalin felt that there was a growing split in German circles about whether Germany should initiate a war with the Soviet Union.[187]

Stalin did not know that Hitler had been secretly discussing an invasion of the Soviet Union since summer 1940,[151] and that Hitler had ordered his military in late 1940 to prepare for war in the East regardless of the parties talks of a potential Soviet entry as a fourth Axis power.[128] He had ignored German economic naysayers, and told Hermann Göring "that everyone on all sides was always raising economic misgivings against a threatening war with Russia. From now onwards he wasn't going to listen to any more of that kind of talk and from now on he was going to stop up his ears in order to get his peace of mind."[188] This was passed on to General Georg Thomas, who had been preparing reports on the negative economic consequences of a Soviet invasion—that it would be a net economic drain unless it was captured intact.[188] Given Hitler's latest demands regarding negative advice, Thomas revised his report.[188] Reich Finance Minister Schwerin-Krosigk also opposed an invasion, arguing that Germany would lose grain because of Soviet scorched-earth policies, lack of effective Soviet transport and the loss of production labor with a German attack in the East.[189] Schnurre agreed with the economic loss assessment.[189]

German generals and others delayed several orders, such that they were never delivered, such as the delivery of German combat aircraft.[184] German officials also procrastinated on the next round of trade balance talks.[184]

Soviet willingness to deliver increased in April, with Hitler telling German officials attempting to dissuade him of attack that concessions would be even greater if 150 German divisions were on their borders.[190] Stalin greeted Schnurre at the Moscow railroad station with the phrase "We will remain friends with you – in any event."[189] The Soviets also deferred to German demands regarding Finland, Romania and border settlements.[189] In an April 28 meeting with Hitler, German ambassador to Moscow Friedrich Werner von der Schulenburg stated that Stalin was prepared to make even further concessions, including up to 5 million tons of grain in the next year alone, with Acting Military Attache Krebs adding that the Soviets "will do anything to avoid war and yielded on every issue short of making territorial concessions."[189]

Stalin also attempted a further cautious economic appeasement of Germany, shipping items in May and June for which German firms had not even placed orders.[184] German officials concluded in May that "we could make economic demands on Moscow which would even go beyond the scope of the treaty of January 10, 1941."[184] That same month, German naval officials stated that "the Russian government is endeavoring to do everything to prevent a conflict with Germany."[184] By June 18, four days before the German invasion, the Soviet had even promised the Japanese that they could ship much greater totals along the Trans-Siberian Railway.[184]

Soviet rubber shipments greatly increased in later months, filling up German warehouses and the Soviet transports systems.[191] 76% of the total of 18,800 tons of vital rubber sent to Germany was shipped in May and June 1941.[192] 2,100 tons of it crossed the border only hours before the German invasion began.[191]

Hitler breaks the Pact edit

 
German advances from June 22, 1941, to December 5, 1941
 
Germans refueling with train tank cars one week into Operation Barbarossa
 
Germans refueling with train tank cars one week into Operation Barbarossa

Initial invasion edit

Further information: Operation Barbarossa

On June 22, 1941, Germany began Operation Barbarossa, the invasion of the Soviet Union through the territories that the two countries had previously divided.[107] Because it had planned to attack the Soviet Union since late 1940, Germany managed to avoid delivery of about 750 million Reichsmarks of goods it was to have delivered under the economic agreements.[191] This, however, cost Germany about 520 million Reichsmarks in counter-deliveries that the Soviets may have made before the invasion.[191] Shortly before the June 22 attack, German ships began leaving Soviet harbors, some without being unloaded.[184] That night after the invasion, Germans ferried out their remaining workers on the Lützow project, and Soviet naval workers let them go.[184]

After the launch of the invasion, within six months, the Soviet military had suffered 4.3 million casualties[193] and Germany had captured three million Soviet prisoners, two million of which would die in German captivity by February 1942.[194] German forces had advanced 1,050 miles (1,690 km), and maintained a linearly measured front of 1,900 miles (3,100 km).[195]

Soviet neutrality between 1939 and 1941 helped Germany to avoid a two front war. In 1941 Germany concentrated most of the Wehrmacht eastward in 1941, while continuing Soviet imports to Germany would prove vital to the German invasion of the Soviet Union.[196] Ironically, 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 largely to Soviet actions taken from 1939 to 1941.[196] Soviet raw materials supplies had helped convince German generals, who previously had refused to even discuss a Soviet invasion, to go along with Hitler's plans.[196] Soviet imports into Germany, especially oil, proved essential for the Wehrmacht's conduct of the coming invasion.[197] Without Soviet imports, German stocks would have run out in several key products by October 1941, within three and a half months.[192] 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:[192]

  Tot USSR
imports		 June 1941
German Stocks		 June 1941 (w/o
USSR imports)		 October 1941
German Stocks		 October 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-October 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.[198] Estimates of any Soviet gains from the German weapons and technology are difficult, though they were certainly less vital for the Soviets than the Soviet raw material imports were for Germany.[198] The Lützow was never completed, and the Soviets used it as an immobile gun battery until its sinking on September 17, though it was later refloated.[198] however, Soviet aviation experts were satisfied with their modest aircraft purchases.[198] Although many of the machine tools and other equipment exported to the Soviet Union was destroyed or captured in the Nazi invasion, the remainder likely still played an important role in reequipping the Red Army.[198] German coal deliveries exceeded what the Soviets could have received from other sources.[198]

In total, Germany had shipped only 500 million Reichsmarks of products to the Soviet Union.[198] This paled in comparison, for example, to the over 5 billion Reichsmarks of goods the Allies sent the Russians in 1942 alone, and over 13 billion Reichsmarks of total goods during the course of the war.[198]

After Operation Barbarossa edit

 
German oil refineries in Ploiești, Romania bombed by the United States in 1943

While, by December 1941, Hitler's troops had advanced to within 20 miles of the Kremlin in Moscow,[199] the Soviets launched a counteroffensive, pushing German troops back 40–50 miles from Moscow, the Wehrmacht's first significant defeat of the war.[199] More importantly, between July and December 1941, the Soviets had moved 2,593 enterprises—most of them iron, steel and engineering plants—and 50,000 small workshops and factories to the Ural Mountains in the Volga region, to Kazakhstan and to Eastern Siberia, away from the Nazi forces who had already occupied vast quantities of European Russia.[200] One and a half million wagon-loads were carried eastward over the Soviet rail networks, including 16 million Soviet citizens to man the factories.[201] Almost half of Soviet industrial investment was devoted to restarting the transported factories and building new ones in the eastern territories.[200] By 1942, these safe eastern zones supplied three quarters of all Soviet weapons and almost all iron and steel.[201]

Worried by the possibility of American support after their entry into the war following the Attack on Pearl Harbor, and a potential Anglo-American invasion on the Western Front in 1942 (which would not actually happen until 1944), Hitler shifted his primary goal from an immediate victory in the East, to the more long-term goal of securing the southern Soviet Union to protect oil fields vital to a long-term German war effort.[202] The German southern campaign began with a push to capture the Crimea which ended in disaster for the Red Army, and caused Stalin to issue a broad scolding of his generals' leadership.[203] In their southern campaigns, the Germans took 625,000 Red Army prisoners in July and August 1942 alone.[204] Feeling the Soviets were all but defeated, the Germans then began another southern operation in the fall of 1942, the Battle of Stalingrad, which would end up marking the beginning of a turning point in the war for the Soviet Union.[204] Although the Soviets suffered in excess of 1.1 million casualties at Stalingrad,[205] the victory over German forces, including the encirclement of 290,000 Axis troops, marked a turning point in the war.[206] The Soviets repulsed the German strategic southern campaign and, although 2.5 million Soviet casualties were suffered in that effort, it permitted the Soviets to take the offensive for most of the rest of the war on the Eastern Front.[207]

Without Soviet goods, from 1942 to the end of the war, German war efforts were severely hampered with Germany barely managing to scrape together enough reserves for a few more major offensives.[144][191] In terms of supplies, oil was the main obstacle, with shortages in some places by the end of 1941 and forcing Germany to turn south to attempt to invade the oil-rich Caucasus in 1942.[208] The Reich was forced to exist on a hand-to-mouth basis for oil, and the almost non-existent oil stocks completely disappeared by mid-1944 with Allied bombers concentrating on German synthetic fuel plants.[208] For example, most German war aircraft sat idle, and air training for new pilots was cut to a mere one hour per week.[208]

Food supplies also dwindled.[208] The envisioned 5 million tons per year that was supposed to come from occupied lands after Barbarossa never materialized.[208] In fact, Germany managed to ship only 1.5 million tons of grain from the region in the remaining four years of the war.[208] Germany was forced to ration its use of manganese and other materials.[208] However, it was later able to address the severe rubber shortages it faced with large amounts of synthetic production that began with plants coming on line starting in 1942, and it used blockade breakers to get the 10-15% of natural rubber the plants needed for the expensive synthetic rubber process.[208]

In total, as Hitler's generals had warned him, few raw materials were gained from the Soviet invasion.[191] Over the entire four years of the war after Barbarossa, Germany managed to squeeze out only 4.5 billion Reichsmark of Soviet goods in total from occupied Soviet territories, a fraction of what Hitler thought it could gain.[191]

Stalin was confident of victory even as Hitler's troops pressed the outskirts of Moscow in the fall and winter of 1941. In September 1941, Stalin told British diplomats that he wanted two agreements: (1) a mutual assistance/aid pact and (2) a recognition that, after the war, the Soviet Union would gain the territories in countries that it had taken pursuant to its division of Eastern Europe with Hitler in the Molotov–Ribbentrop Pact.[209] The British agreed to assistance but refused to agree upon the territorial gains, which Stalin accepted months later as the military situation deteriorated somewhat in mid-1942.[209] In November 1941, Stalin rallied his generals in a speech given underground in Moscow, telling them that the German blitzkrieg would fail because of weaknesses on the German rear in Nazi-occupied Europe and the underestimation of the strength of the Red Army, such that Germany's war effort would crumble against the British-American-Soviet "war engine".[210]

Fending off the German invasion and pressing to victory in the East required a tremendous sacrifice by the Soviet Union. Soviet military casualties totaled approximately 35 million (official figures 28.2 million) with approximately 14.7 million killed, missing or captured (official figures 11.285 million).[211] Although figures vary, the Soviet civilian death toll probably reached 20 million.[211] Millions of Soviet soldiers and civilians disappeared into German detention camps and slave labor factories, while millions more suffered permanent physical and mental damage.[211] Economic losses, including losses in resources and manufacturing capacity in western Russia and Ukraine, were also catastrophic.[211] The war resulted in the destruction of approximately 70,000 Soviet cities, towns and villages.[212] Destroyed in that process were 6 million houses, 98,000 farms, 32,000 factories, 82,000 schools, 43,000 libraries, 6,000 hospitals and thousands of miles of roads and railway track.[212]

Production during the Pact edit

While Germany's population of 68.6 million people was the second largest in Europe, that was dwarfed by the 167 million in the Soviet Union.[213] However, Germany over doubled the Soviet Union's real per capita Gross Domestic Product.[213] During the Pact period, it generally outspent the Soviet Union over 2-to-1 in military spending as measured in 1990 dollars:[213][214]

  Germany GDP
(1990 $Bil.)		 USSR GDP
(1990 $Bil.)		 German GDP
Per Capita		 USSR GDP
Per Capita		 German Defense
Spending
% of Nat'l Income		 USSR Defense
Spending
% of Nat'l Income
1939 $384 $366 $5,598 $2,192 23.0% 12.6%
1940 $387 $417 $5,641 $2,497 40.0% 17.0%
1941 $412 $359 $6,006 $2,150 52.0% 28.0%
*Dollar denominations are in billions of 1990 dollars.

See also edit

Notes edit

  1. ^ a b Nominal defense spending figures are from Overy (2004, p. 453), who notes that "Soviet budget figure do not reflect the high level of inflation. Calculated in price of 1937 the figure for 192.8 is 1.7 billion, that for 1937 17.0 billion and in 1940 45.2. billion. There was price deflation in Germany between 192.9 and 1936, so the expenditure figure in those years are higher in real terms." German inflation-deflation indices were from Child (1978). Soviet price inflation indices were from Lewis (2003).
  2. ^ Roberts (2006, p. 42) lists slightly different figures, with 2 million tons of petroleum products, 140,000 tons of manganese, 1.5 million tons of timber, 1.5 million tons of timber and 100,000 tons of cotton.

References edit

  1. ^ a b c d e f g h i j k Ericson 1999, pp. 1–2.
  2. ^ a b Hehn 2005, p. 15.
  3. ^ a b Ericson 1999, pp. 11–12.
  4. ^ a b c Overy 2004, p. 396.
  5. ^ a b c d Overy 2004, p. 397.
  6. ^ a b c Ericson 1999, pp. 14–15.
  7. ^ a b Overy 2004, p. 406.
  8. ^ Overy 2004, p. 400.
  9. ^ a b Overy 2004, p. 408.
  10. ^ Overy 2004, p. 410.
  11. ^ Overy 2004, p. 409.
  12. ^ a b c d e f Hehn 2005, p. 212.
  13. ^ a b c d e Overy 2004, p. 398.
  14. ^ Ericson 1999, p. 187
  15. ^ a b Wegner 1997, p. 19.
  16. ^ Bendersky 2000, p. 177.
  17. ^ Müller & Ueberschär 2002, p. 244.
  18. ^ Rauschning 2006, pp. 136–137.
  19. ^ Shirer 1990, p. 716.
  20. ^ Berezhkov, V. M. (Valentin Mikhaĭlovich); Mikheyev, Sergei M. (1994). At Stalin's side : his interpreter's memoirs from the October Revolution to the fall of the dictator's empire. Secaucus, NJ : Carol Pub. Group. p. 10. ISBN 978-1-55972-212-4.
  21. ^ a b c Overy 2004, p. 402.
  22. ^ Lee & Shuter 1996, p. 33.
  23. ^ Bendersky 2000, p. 159.
  24. ^ Overy 2004, p. 405.
  25. ^ a b Overy 2004, p. 403.
  26. ^ Ericson 1999, pp. 17–18
  27. ^ a b Ericson 1999, pp. 23–24
  28. ^ a b Nekrich, Ulam & Freeze 1997, p. 95
  29. ^ Jurado & Bujeiro 2006, pp. 5–6.
  30. ^ Weinberg 1970, p. 346.
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  205. ^ Сталинградская битва
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External links edit

  • February 26, 1940 "MEMORANDUM ON THE GERMAN–SOVIET COMMERCIAL AGREEMENT" by Dr. Karl Schnurre, Head of the "Eastern European and Baltic Section" of the Commercial Policy Dlvision of the German Foreign Office

May 09, 2024
german, soviet, economic, relations, 1934, 1941, after, nazis, rose, power, germany, 1933, relations, between, nazi, germany, soviet, union, began, deteriorate, rapidly, trade, between, sides, decreased, following, several, years, high, tension, rivalry, gover. After the Nazis rose to power in Germany in 1933 relations between Nazi Germany and the Soviet Union began to deteriorate rapidly Trade between the two sides decreased Following several years of high tension and rivalry the two governments began to improve relations in 1939 In August of that year the countries expanded their economic relationship by entering into a Trade and Credit agreement whereby the Soviet Union sent critical raw materials to Germany in exchange for weapons military technology and civilian machinery That deal accompanied the Molotov Ribbentrop Pact which contained secret protocols dividing central Europe between them after which both Nazi forces and Soviet forces invaded territories listed within their spheres of influence Territories of the Soviet Union and Nazi Germany until 1937 The countries later further expanded their economic relationship with a larger commercial agreement in February 1940 Thereafter Germany received significant amounts of critical raw materials necessary for its future war efforts such as petroleum grain rubber and manganese while sending weapons technology and manufacturing machinery to the Soviet Union After unresolved negotiations regarding a potential Soviet entry into the Axis Pact the two governments settled several disputes and further expanded their economic dealings with the January 1941 German Soviet Border and Commercial Agreement Economic relations between the two countries were abruptly terminated when Germany invaded the Soviet Union in June 1941 in violation of the Molotov Ribbentrop Pact Contents 1 Background 1 1 Traditional commerce World War I and Russian Revolution 1 2 Early 1930s 2 Nazi era and relations deterioration 2 1 Nazis rise to power 2 2 Mid 1930s deterioration of relations 2 3 Four and Five Year Plans 2 4 Huge German and Soviet military demand growth 2 5 Late 1930s German raw materials crunch 3 1938 1939 deal discussions 3 1 Early discussions 3 2 Addressing past hostilities and finalizing the deals 4 1939 economic and political deals 5 Division of Central Europe 6 Talks to expand the economic pact 6 1 German raw materials crisis and Soviet needs after Poland 6 2 Negotiations 7 1940 commercial agreement 8 Expanded economic relationship 8 1 Soviet provision of raw materials and other help 8 2 German summer worries and procrastination 8 3 Delivery suspension 9 Possible Soviet Axis membership and further economic talks 10 1941 border and commercial agreement 11 Late Soviet attempts to improve relations 12 Hitler breaks the Pact 12 1 Initial invasion 12 2 After Operation Barbarossa 13 Production during the Pact 14 See also 15 Notes 16 References 17 Bibliography 18 External linksBackground editTraditional commerce World War I and Russian Revolution edit nbsp American businessmen W Averell Harriman in centre in Berlin in 1925 to work with Germany to broker a deal for Soviet manganese ore Germany did not lack natural resources including the key raw materials needed for economic and military operations 1 2 3 Before World War I Germany had annually imported 1 5 billion Reichsmarks of raw materials and other goods from Russia 3 However the economies of the two countries differed greatly before World War I 4 Germany had grown into the second largest trading economy in the world with a highly skilled workforce largely dominated by the private sector 4 While Imperial Russia had rapidly modernized by tenfold in the fifty years before the war its economy still relied heavily upon state orders and its industry was closely regulated by the Tsarist state 5 nbsp Soviet economic delegation in Berlin in 1927 Russian exports to Germany fell sharply after World War I 6 In addition after the Russian Revolution of 1917 the young communist state assumed ownership of all heavy industry banking and railways while the 1921 New Economic Policy left almost all small scale production and farming in the private sector 5 The war ravaged German economy struggled to return to pre war levels with inflation also taking its toll in 1923 4 In the Soviet Union only by 1927 had industrial output achieved approximately the 1913 levels under the Tsarist regime 5 but Soviet exports to Germany increased to 433 million Reichsmarks annually by 1927 after trade agreements were signed between the two countries in the mid 1920s 6 Economist Nikolai Kondratiev was asked to study the Soviet economy and he advocated slow prudent growth that kept the residual market economy of the New Economic Policy 7 In the late 1920s Joseph Stalin took the economy in the opposite direction beginning a successful period of full scale socialist industrialization in his first five year plan for a Soviet economy that was still over 80 composed by the private sector with plans to shed all vestiges of the free market 8 Kondratiev was accused of espousing a counter revolutionary equilibrium theory after which he was fired and jailed for being a kulak professor Overy 2004 p 406 Towards the end of his 8 year sentence he was put on trial again and executed at the Kommunarka shooting ground by firing squad on the same day his death sentence was issued Early 1930s edit In the early 1930s Soviet imports decreased as the Communist model achieved greater self sufficiency The Soviet economic planning body improved greatly in spite of hostile foreign powers 9 What followed was a system which included the most adequate review of national accounts and economic measurements 9 10 The subsequent changes to Gosplan improved its operation 11 Though Soviet industrial output had significantly increased over its prior levels 5 Soviet exports to Germany fell to 223 million Reichsmarks in 1934 due to the Soviets distrust of the German regime 12 Although the Soviet Union possessed almost double the population of Germany its industrial output still lagged behind because of the backward nature of the former Tsarist regime and invasions of the Soviet Union by the Western powers and others that followed it inception Its steel production almost caught up with Germany s in 1933 during the German economic collapse in the Great Depression 13 Following are German imports from Imperial Russia and the Soviet Union from 1912 to 1933 14 Year Imports fromRussia USSR Year Imports fromRussia USSR 1912 1 528 1928 379 1913 1 425 1929 426 1923 147 1930 436 1924 141 1931 304 1925 230 1932 271 1926 323 1933 194 1927 433 millions of Reichsmarks While Soviet exports into Germany were a small percentage of Germany s imports due to the large amount of trade the Nazi regime carried out with the USA and the UK 15 At the time the Soviets had little of interest to foreign buyers in general 15 Nazi era and relations deterioration editNazis rise to power edit nbsp March at Reichsparteitag 1935 The rise to power of the Nazi Party increased tensions between Germany and the Soviet Union with Nazi racial ideology casting the Soviet Union as populated by ethnic Slav untermenschen ruled by their Jewish Bolshevik masters 16 17 In 1934 Hitler spoke of an inescapable battle against pan Slav ideals the victory in which would lead to permanent mastery of the world though he stated that they would walk part of the road with the Russians if that will help us 18 The sentiment roughly echoed Hitler s 1925 Mein Kampf writings in which he stated that Germany s destiny was to turn to the East as it did six hundred years ago and the end of the Jewish domination in Russia will also be the end of Russia as a State 19 According to Joseph Stalin s interpreter Valentin Berezhkov Stalin spoke highly of the Night of the Long Knives in 1934 and viewed Hitler as a great man who had demonstrated the way to deal with your political opponents Berezhkov also suggested parallels between Hitler s inner party purge and Stalin s mass repressions of Old Bolsheviks military commanders and intellectuals 20 Nazi ideology focused on a racial struggle rather than the class struggle at the center of Marxist ideology 21 While Nazi ideology opposed both the communism of the Soviet Union and capitalism associating Jews with both systems 22 23 Nazi criticism of capitalism shared similarities with that of Marxists in that they both focused upon excessive financial concentration declining exports shrinking markets and overproduction 21 Hitler later boasted that the best means to beat inflation was to be sought for in our concentration camps 24 While Marxists saw revolution as the solution Hitler saw the only solution as conquest expropriating the resources such as Lebensraum through war that could not be won through failing capitalist systems 21 However survival of the private sector was not incompatible with extensive Nazi state economic planning 25 Both the Soviet and German economies had grown coming out of dire economic slumps in the late 1920s following World War I and the Russian Revolution 13 The German economy experienced real growth of over 70 between 1933 and 1938 while the Soviet economy experienced roughly the same growth between 1928 and 1938 13 However with heavy state intervention both economies also became more isolated and expanded under conditions of exceptional autarky 13 Outside trade and outside capital investment declined considerably for both economies during the 1930s 13 In the mid 1930s the Soviet Union made repeated efforts to reestablish closer contacts with Germany 26 The Soviets chiefly sought to repay debts from earlier trade with raw materials while Germany sought to rearm and the countries signed a credit agreement in 1935 27 In 1936 the Soviets attempted to seek closer political ties to Germany along with an additional credit agreement which were rebuffed by Hitler who wished to steer clear of such political ties 27 In response to Stalin s hopes to complete an economic deal with Hitler the foreign section of the NKVD warned him that all Soviet attempts to appease and conciliate Hitler are doomed The main obstacle to an understanding with Moscow is Hitler himself 28 Stalin did not agree responding to the NKVD Well now how can Hitler make war on us when he has granted such loans It s impossible The business circles in Germany are too powerful and they are in the saddle 28 Mid 1930s deterioration of relations edit In 1936 Germany and Fascist Italy supported the Spanish Nationalists in the Spanish Civil War while the Soviets supported the partially socialist led Spanish Republic opposition 29 That same year Germany and Japan entered the Anti Comintern Pact 30 and were joined a year later by Italy 31 That year Germany also faced a large food and raw material crisis that had developed out of the increasing difficulties state bodies experienced attempting to control prices and commodity supplies in the face of resistant market forces 32 Much like Soviet economist Nikolai Kondratiev lead German economist Hjalmar Schacht was fired and castigated 33 The crisis resulted in Hitler writing one of the few documents of any length that he drafted in his 12 years as Reich leader a six page memorandum that focused upon building a military larger than all possible enemy combinations and forcing upon the economy its racial duty of eschewing all inessential tasks in favor of large scale war making 34 From this came Hitler s Four Year Plan for rearmament without regard to costs transforming the economy into a Wehrwirtschaft defense based economy 25 35 His advisers had suggested a Five Year Plan but Hitler declined in favor of the less Marxist sounding Four Year Plan 34 nbsp Soviet oil refinery 1934 Soviet industrialization of the early 1930s required massive debt expansions 36 To attempt to decrease this debt grain was sold in large quantities in world markets 36 German debt also soared with increased state spending 37 Both countries turned more to economic isolation and autarky 37 Germany brazenly refused to pay interest on its bonds and then secretly directed third parties working for it to buy back those subsequently devalued bonds at rock bottom prices 38 As a result only 15 of German debt was held by foreign sources in the late 1930s 38 Soviet great purges in 1937 and 1938 made striking an agreement with Germany even less likely by disrupting the already confused Soviet administrative structure necessary for negotiations In the portion of the purges involving the military in 1936 and 1937 over 34 000 officers were purged in a campaign against a fascist Trotskyite conspiracy including 45 of the most senior officers 39 While many officers were later reinstated those that were convicted were shot 39 and political officers 73 per cent of which had no military experience were introduced into the Red Army 40 The purges led Hitler to believe that the Soviets were militarily weak 41 Castigated former lead economist Kondratiev was one of those executed in the purges 7 His harangued German economist counterpart Schacht would face similar treatment many years later winding up in a Nazi concentration camp after being accused of being part of the July 20 Plot to assassinate Hitler 33 Economic reconciliation was hampered even further by political tension after the Anschluss in mid 1938 and Hitler s increasing hesitance to deal with the Soviet Union 42 Soviet exports to Germany fell to 47 4 million Reichsmarks in 1937 approximately one fifth of the 1934 total and 52 8 million Reichsmarks in 1938 12 In short the important trading relationship between the countries that existed in the 1920s essentially collapsed with Hitler s rise to power 43 German northeastern European imports from 1934 to 1939 were as follows 12 SovietUnion Polandand Danzig Finland Estonia Latvia Lithuania 1934 223 0 78 1 42 3 8 2 21 1 15 1 1935 201 7 75 5 41 4 13 0 31 1 2 0 1936 93 2 74 0 46 1 13 8 33 2 9 1 1937 63 1 80 7 70 1 23 7 45 7 17 2 1938 47 4 109 4 88 6 24 0 43 5 27 6 1939 52 8 140 8 88 9 24 3 43 6 27 8 German Imports in millions of Reichsmarks Even with vastly decreased trade between the countries Germany was still among the top three importer nations for the Soviet Union and supplied between one third and two thirds of Soviet machine tool imports vital for industrialization 44 Trade continued on the basis of short term clearing agreements 44 Germany had supplied 54 of Soviet imports of machine tools from 1929 to 1933 and 53 of such imports even when relations became more tense from 1933 to 1937 45 Four and Five Year Plans edit Both the German Four Year Plan and Soviet Second and Third Five Year Plans emphasized the construction of military installations factories canals roads and cities that produced accumulating crises of over investment and supply failures in other non emphasized economic areas 46 Monopsony compromised both systems with the Soviet state the principal purchaser for all goods in its economy while the German state was the largest purchaser in its economy 46 German cost plus contracts and Soviet fraud and mismanagement caused inefficient contracting resulting in the building of massive contract monitoring bureaucratic structures that produced additional costs in both economies 46 In March 1939 the Soviet Union announced the new directives of the Third Five Year Plan named Five Year Plan of Special Steels and Chemicals 47 The defense sector received the highest priority under the plan 47 The pressure to fulfill Soviet Second and Third Five Year Plan goals was more keen where managers faced the risk that every failure might be interpreted as an act of economic sabotage 46 In 1936 the head of the Soviet Gosbank was shot after he suggested a relaxation of economic controls 48 To cope with state controls of supply systems blat informal black market agreements were often made which could not easily be tracked by Gosplan 49 50 Hitler s Four Year Plan called for a modernized expanded agricultural sector to free Germany from the fear of a blockade a network of motorways remodeled cities a massive program of import substitution to supply synthetic strategic material and military industries capable of out producing the largest enemy economy 51 The plan required a rigid structure of six main economic divisions raw materials production raw materials distribution labor agriculture price control and foreign exchange 33 It made heavy demands on resources already in short supply because of high military spending resulting in the delay or postponement of most programs while scrambling for raw materials building workers and engineering equipment 46 Pseudo markets were created to attempt to make the system work more efficiently 48 In response to blat like commerce arising Germany passed laws labeling such unsanctioned commerce as economic sabotage punishable by death 52 German regulation of private property and capital movement hardened and property could be seized from political enemies such as ethnic Jews or communists 53 Huge German and Soviet military demand growth edit nbsp German staff at Tomka chemical weapons facility Soviet Union 1928 nbsp Production of German Ju 90 airliners developed for and used by Deutsche Lufthansa 1938 nbsp German Neubaufahrzeug production 1940 German and Soviet demand for military supplies already the subject of massive growth under their Four and Five Year Plans increased even further after the Munich Agreement 42 While both Stalin and Hitler had long spoken of an over riding necessity to prepare for war Hitler s outlook was for an offensive war comporting with Nazi ideology by a new community of Germans carving an empire across Europe slaying the Jewish Bolshevik dragon and addressing punitive Treaty of Versailles provisions 54 The Treaty of Versailles restrictions had resulted in a very weak German military as late as the early 1930s 55 though planning efforts had been underway since the late 1920s for military growth in preparation for the next European war 56 German military spending remained restrained during this period a German Defense Bil RM Soviet Defence Bil Rbls German DefenseInflation Adj Soviet DefenseInflation Adj 1928 0 75 0 88 NA NA 1929 0 69 1 05 0 69 1 05 1930 0 67 1 20 0 73 1 12 1931 0 61 1 79 0 75 1 43 1932 0 69 1 05 0 98 0 70 Inflation adj uses Wholesale Price Indices 1929 base Note German deflation To get around Versailles restrictions Germany and the Soviet Union collaborated to allow Germany to establish experimental centers in the Soviet Union for tank chemical weapons and aviation research while Soviet officers traveled to Germany for military instruction 56 However this secret collaboration ended with Hitler s rise to the Chancellery in 1933 56 Immediately thereafter Hitler ordered a tripling of German military size in one year 57 Germany instituted covert military increases including ship production in excess of Versailles limits while refusing to ever refer to its General Staff which was prohibited by Versailles and ceasing publication of its officer list 57 On March 16 1935 Hitler surprised world powers by passing a law openly requiring universal military service and further increasing military size to half a million men 58 Countries including France and Britain protested but did not act effectively ending the pretense of military restrictions under Versailles 58 By 1939 three years into the Four Year Plan over 20 of all German industrial workers worked for the armed forces while nearly 33 of those in the manufacturing and building sectors worked there 59 By comparison in 1938 Britain and the United States produced just 13 of the quantity of weapons that Germany produced that year German armament spending went from under 2 of gross national product in 1933 to over 23 in 1939 60 German armament expenses under the Nazi regime increased rapidly especially under the Four Year plan 2 a nbsp Ju 88 assembly line German Defense Bil RM Soviet Defence Bil Rbls German DefenseInflation Adj Soviet DefenseInflation Adj 1933 0 62 4 03 0 91 2 46 1934 4 09 5 40 5 7 2 82 1935 5 49 8 20 7 40 3 39 1936 10 27 14 80 13 53 5 05 1937 10 96 17 48 14 19 5 54 1938 17 25 22 37 27 04 7 66 1939 38 00 40 88 38 6 10 25 Inflation adj uses Wholesale Price Indices 1929 base Note German deflation Stalin viewed a coming war as occurring between imperialist powers and in the late 1920s had even predicted a massive war between the United States and Britain 54 The Soviet military experienced almost proportionately identical massive increases nominally as that of Germany for military equipment and weapon designs to strengthen a Red Army and Red Navy weakened by purges 61 While in the face of massive Soviet inflation in the 1930s military spending increases were still enormous the differences grow considerably when adjusted for inflation Germany actually experienced deflation From 1931 to 1934 the Soviet had purposefully published figures for military spending below actual levels 62 Because of League of Nations publications requirements the Soviets began more accurate defense spending publications by 1936 62 The Soviet Third Five Year Plan required massive new infusions of technology and industrial equipment 63 After Stalin s shock at the poor performance of Soviet aircraft in the Spanish Civil War and the backwardness of the Soviet Air Force in 1938 emphasis was put on military production including that of large naval ships 47 By 1937 17 of Soviet gross national product was spent on defense while over 20 of industrial investment went to defense industries 64 At the same time military personnel increased from 562 000 in 1931 to just over 1 5 million in 1938 65 Meanwhile the Soviet transportation network was woefully underdeveloped with roads approaching non existence and rail lines already stretched to their limits 61 The ambitious objectives of the Third Five Year Plan hinged upon the Soviet economy s importing large amounts of technology from the United States which then supplied over 60 of Soviet machines and equipment 66 Late 1930s German raw materials crunch edit By the late 1930s foreign trade became difficult because Germany lacked the gold or foreign exchange needed to finance any balance of payment deficit 67 Further damaging foreign trade Germany had already heavily regulated exports and imports requiring licenses and approval for all trades so that it could favor the raw materials imports that it desperately need 67 Additional trading difficulties were caused by a boycott of German goods following Kristallnacht in November 1938 68 Because an autarkic economic approach or an alliance with Britain were impossible Germany needed to arrange closer relations with the Soviet Union if not just for economic reasons alone 1 Despite work on coal hydrogenisation 69 Germany lacked oil and could only supply 25 of its own needs 1 Since its main supplier the United States would be potentially cut off during a war Germany had to look to Soviet Union and Romania 1 Germany suffered from the same supply problems for metal ores such as chrome tungsten nickel molybdenum and manganese all of which were needed for hardened steel used in tanks ships and other war equipment 1 For example Germany was almost 100 reliant on imports for chrome and the loss of South African and Turkish imports alone were a blockade to arise would eliminate 80 of imports 70 Even for manganese of which Germany supplied 40 of its needs the expected British blockade would cut its link to its main outside supplier South Africa 1 Germany was 35 self sufficient for iron ore but would lose 36 of its previous imported supply on the outbreak of war 70 Furthermore Stalin s permission was needed to transit tungsten and molybdenum from China which required Soviet controlled rail lines 1 Meanwhile the Soviet Union was the world s largest source of manganese the second largest for chrome and platinum and the third largest supplier of crude oil iron ore and nickel 70 Rubber was particularly troublesome with Germany requiring 80 of its rubber from imports 69 Hitler required Soviet help to procure rubber from the Far East the shortage of which had caused Germany problems in World War I 1 Rubber production in Malaya and the East Indies was dominated by the British and the Dutch 1 Cutting off these sources would leave Germany with stockpiles for only two months 1 Although German synthetic materials plants could produce 50 of German rubber needs Germany still required large amounts of natural rubber as raw material 1 And just to achieve that synthetic production Germany had invested a massive 1 9 billion Reichsmarks over three years almost half of all investment in its capital goods industry 71 While Germany had decreased its dependence on imported food from 35 in 1927 to 13 in 1939 72 40 of its fat and oil food requirements had to be met by imports 61 69 73 Moreover Germany s food requirements would grow further if it conquered nations that were also net food importers 61 Soviet imports of Ukrainian grains or Soviet trans shipments of Manchurian soybeans could make up the shortfall 61 In 1936 Hermann Goring told several German industrialists that obtaining raw materials from Soviet Union is so important that he shall raise this issue with Hitler himself however much the latter might be ill disposed to accept this 74 By 1937 the vast gulf between raw material needs and supplies had taken over Hitler s thinking for conquest German military industry desperately needed certain raw materials such as manganese ore and petroleum and these could be purchased on a regular basis only from the Soviet Union 74 Goering had stated that Germany desired business ties with the Soviets at any cost 74 After hearing the dire reports of German planners in a November 5 1937 Hitler told his generals that he would have to take over a neighbouring country to ensure the supply of agricultural land and raw materials now equating this massive economic need with Lebensraum 75 The German Anschluss and German occupation of Czechoslovakia were driven by economic as much as racial motives with heavy industry in those locations being gobbled up by the Reichswehr rather than private industry 75 The day German forces entered the Czech Sudetenland Hermann Goring pored over figures with generals covering every item of Sudeten economic resources from lignite to margarine so that it could be allocated to the Four Year Plan 75 In January 1939 the huge Four Year Plan goals combined with a shortage of foreign hard currencies needed to pay for raw materials forced Hitler to order major defense cuts including a reduction by the Wehrmacht of its allocations by 30 of steel 47 of aluminum 25 of cement 14 of rubber and 20 of copper 76 On January 30 1939 Hitler made his Export or die speech calling for a German economic offensive export battle to use Hitler s term to increase German foreign exchange holdings to pay for raw materials such as high grade iron needed for military materials 76 1938 1939 deal discussions editEarly discussions edit Further information German Soviet Commercial Agreement 1939 and Molotov Ribbentrop Pact negotiations Germany and the Soviet Union discussed entering into an economic deal throughout early 1939 77 During spring and summer 1939 the Soviets negotiated a political and military pact with France and Britain while at the same time talking with German officials about a potential political Soviet German agreement 78 Through economic discussion in April and May Germany and the Soviet Union hinted of discussing a political agreement 79 80 81 63 82 83 84 85 86 87 Ensuing political discussions between the countries were channeled through the economic negotiation because the economic needs of the two sides were substantial and because close military and diplomatic connections had been severed in the mid 1930s after the creation of the Anti Comintern Pact and the Spanish Civil War leaving these talks as the only means of communication 88 German planners in April and May 1939 feared massive oil food rubber and metal ore shortages without Soviet help in the event of a war 73 89 Addressing past hostilities and finalizing the deals edit Further information German Soviet Commercial Agreement 1939 and Molotov Ribbentrop Pact negotiations In late July and early August the Soviet Union and Germany were very close to finalizing the terms of a proposed economic deal and began to more concretely discuss the possibility of a political deal which the Soviets insisted could only follow after an economic deal was reached 90 91 They discussed prior hostilities between the countries in the 1930s and addressed their common ground of anti capitalism stating there is one common element in the ideology of Germany Italy and the Soviet Union opposition to the capitalist democracies 92 93 neither we nor Italy have anything in common with the capitalist west and it seems to us rather unnatural that a socialist state would stand on the side of the western democracies 94 The Germans explained that their prior hostility toward Soviet Bolshevism had subsided with the changes in the Comintern and the Soviet renunciation of a world revolution 94 The Soviet official at the meeting characterized the conversation as extremely important 94 As Germany scheduled its invasion of Poland for August 25 and prepared for war with France German war planners in August estimated that because of massive oil food and rubber shortfalls in the face of an expected British blockade the Soviet Union would become the only supplier for many items 90 Every internal German military and economic study had argued that Germany was doomed to defeat without at least Soviet neutrality 95 By August 10 the countries worked out the last minor technical details but the Soviets delayed signing the economic agreement for almost ten days until they were sure that they had also reached a political agreement 95 1939 economic and political deals edit nbsp Ribbentrop and Stalin at the signing of the Pact Further information German Soviet Commercial Agreement 1939 and Molotov Ribbentrop Pact Germany and the Soviet Union signed a commercial agreement dated August 19 providing for the trade of certain German military and civilian equipment in exchange for Soviet raw materials 96 97 The agreement provided for roughly 200 million in Soviet imports of raw materials for which they would receive a seven year line of credit German exports of weapons military technology and civilian machinery current business which entailed Soviet obligations to deliver 180 million Reichsmarks in raw materials and German commitment to provide the Soviets with 120 million Reichsmarks of German industrial goods 97 98 99 100 German Foreign Ministry official Karl Schnurre noted at the time that t he movement of goods envisaged by the agreement might therefore reach a total of more than 1 billion Reichsmarks for the next few years 101 Schnurre also wrote a part from the economic import of the treaty its significance lies in the fact that the negotiations also served to renew political contacts with Russia and that the credit agreement was considered by both sides as the first decisive step in the reshaping of political relations 101 Pravda published an article on August 21 declaring that the August 19 commercial agreement may appear as a serious step in the cause of improving not only economic but also political relations between the USSR and Germany 102 Soviet foreign minister Vyacheslav Molotov wrote in Pravda that day that the deal was better than all earlier treaties and we have never managed to reach such a favorable economic agreement with Britain France or any other country 98 Early in the morning of August 24 the Soviet Union and Germany signed the political and military deal that accompanied the trade agreement the Molotov Ribbentrop Pact The pact was an agreement of mutual non aggression between the countries 103 It contained secret protocols dividing the states of Northern and Eastern Europe into German and Soviet spheres of influence 103 At the time Stalin considered the trade agreement to be more important than the non aggression pact 104 At the signing Ribbentrop and Stalin enjoyed warm conversations exchanged toasts and further addressed the prior hostilities between the countries in the 1930s 105 They characterized Britain as always attempting to disrupt Soviet German relations stated that the Anti Comintern pact was not aimed at the Soviet Union but actually aimed at Western democracies and frightened principally the City of London i e the British financiers and the English shopkeepers 106 Division of Central Europe edit nbsp Planned and actual territorial changes in Central Europe 1939 1940 Further information Invasion of Poland Soviet invasion of Poland and Molotov Ribbentrop Pact One week after the Molotov Ribbentrop Pact the partition of Poland commenced with the German invasion of western Poland 107 The British Ministry of Economic Warfare immediately began an economic blockade of Germany 108 At the outset Britain realized that this blockade would be less effective than their blockade of Germany in World War I because of current German allies Italy and the Soviet Union 108 On September 17 the Red Army invaded eastern Poland and occupied the Polish territory assigned to it by the Molotov Ribbentrop Pact followed by co ordination with German forces in Poland 43 Three Baltic States described by the Molotov Ribbentrop Pact 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 109 Talks to expand the economic pact editGerman raw materials crisis and Soviet needs after Poland edit nbsp Soviet and German soldiers meet in Lublin Poland September 1939 Main article German Soviet Commercial Agreement 1940 Hitler s pressing for a German invasion of Poland in 1939 placed tremendous strain on the German war machine which had been gradually gearing up after the Treaty of Versailles restrictions for total war totaler Krieg in 1942 or 1943 110 The German navy was also critically short of maritime and military assets and did not achieve full mobilization until 1942 111 While the Soviet alliance provided a huge military benefit to Germany which thereafter had to station only four regular and nine territorial divisions on its eastern border 112 even the quick Germany victory in Poland strained its 1939 military resources leaving it with only six weeks of munitions supplies and no considerable manpower reserve 113 In the face of a British blockade the only remaining state capable of supplying Germany with the oil rubber manganese grains fats and platinum it needed was the Soviet Union 110 In addition Germany had imported 140 8 million Reichsmarks in Polish goods in 1938 and half of that territory was now held by the Soviet Union 12 The Soviets now occupied fields amounting to seventy per cent of Poland s oil production 114 Germany needed more of an economic alliance with the Soviet Union for raw materials than the economic partnership that the August 19 1939 agreement provided 115 At the same time the Soviets demands for manufactured goods such as German machines were increasing while its ability to import those goods from outside decreased when many countries ceased trading relations after the Soviet entry into the Molotov Ribbentrop Pact 116 The Soviet Union could offer precious little technology while Germany possessed the technology the Soviet Union needed to build a blue water fleet 117 Accordingly for the next six weeks especially after the Soviet and German invasions of Poland Germany pressed hard for an additional agreement 115 118 At the same time the United States supplied over 60 of Soviet machines and equipment stopped armament shipments to the Soviet Union after the Molotov Ribbentrop Pact 66 It imposed a full embargo after the Soviets 1939 invasion of Finland 66 Soviet quality controllers were expelled from the United States aircraft industry and already paid for orders were suspended 66 With similar trade with France and Britain ceased Germany was the only alternative for many goods 66 Negotiations edit Main article German Soviet Commercial Agreement 1940 After the division of Poland the parties signed a September 28 German Soviet Boundary and Friendship Treaty ceding Lithuania to the Soviets the preamble of which stated the countries intention to develop economic relations and trade between Germany and the Soviet Union by all possible means 66 It continued for this purpose an economic programme is to be set up by both parties according to which the Soviet Union is to deliver raw materials to Germany who will balance these out by means of long term industrial shipments 66 The result of this would be that mutual trade would once again reach the high level achieved in the past 119 Thereafter oil foodstuffs and cattle produced in the Soviet occupied area of Poland was sent to Germany in accordance with the economic cooperation clause of the September 28 treaty 120 One week later Ribbentrop gave the green light for a new round of talks 119 In early October German officials proposed a deal that would have increased Soviet raw material exports oil iron ore rubber tin etc to Germany by over 400 121 while the Soviets requested massive quantities of German weapons and technology 122 including the delivery of German naval cruisers Lutzow Seydlitz and Prinz Eugen 123 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 124 Stalin personally stepped in to intervene on deteriorating talks 125 Further discussions took place in Moscow in early February regarding the specifics of German military equipment to be provided 84 Germany agreed that the plans for the battleship Bismarck could be included in the war materials to be provided to the Soviet Union 126 1940 commercial agreement edit nbsp Admiral Hipper class heavy cruiser Main article German Soviet Commercial Agreement 1940 On February 11 1940 Germany and the Soviet Union entered into the German Soviet Commercial Agreement an intricate trade pact in which the Soviet Union would send Germany 650 million Reichsmark in raw materials in exchange for 650 million Reichsmark in machinery manufactured goods and technology 127 128 The trade pact helped Germany to surmount the British blockade of Germany 96 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 127 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 129 The Soviets were to receive the incomplete Admiral Hipper class heavy cruiser Lutzow 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 0 in 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 Bf 109 fighter Bf 110 fighter and Ju 88 bomber 130 131 Stalin believed the Lutzow to be important because of its new 20 3 cm naval guns along with their performance characteristics 132 The Soviets would also receive oil and electric equipment locomotives turbines generators diesel engines ships machine tools and samples of German artillery tanks explosives chemical warfare equipment and other items 96 Expanded economic relationship editSoviet provision of raw materials and other help edit Further information German Soviet Commercial Agreement 1940 Under the aegis of the economic agreements Soviet German exports and imports increased tenfold 43 While some slowdowns and negotiations occurred the Soviet Union met all of its requirements under the agreement 133 It became a major supplier of vital materials to Germany including petroleum manganese copper nickel chrome platinum lumber and grain 134 During the first period of the agreement February 11 1940 to February 11 1941 Germany received 135 136 139 500 tons of cotton 500 000 tons of iron ores 300 000 tons of scrap metal and pig iron Soviet goods were freighted to Brest Litovsk 128 through occupied Polish territories and then shifted to European gauge track to Germany to circumvent the British naval blockade 96 The Soviets also granted Germany the right to transit for German traffic 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 128 Soviet exports to Germany using German figures which do not count products still in transit during Operation Barbarossa which came in after June 1941 include 137 b nbsp German Me 210 factory 30 August 1944 1939 1940 1941 1st 6 mos Soviet figures September 1939 1941 Oil Products 5 1 617 0 254 2 941 7 Grains 0 2 820 8 547 1 1611 1 Manganese ore 6 2 64 8 75 2 165 2 Phosphates 32 3 131 5 56 3 202 2 Technical oils amp fats 4 4 11 0 8 9 NA Chromium 0 0 26 3 0 0 23 4 Copper 0 0 7 1 7 2 NA Nickel 0 0 1 5 0 7 NA Legumes 10 9 47 2 34 8 NA Tin 0 0 0 8 0 0 NA Platinum 0 0 1 5 1 3 NA Chemicals Finished 0 9 2 9 0 2 NA Chemicals Unfinished 0 9 2 6 1 0 NA Raw Textiles 9 0 99 1 41 1 171 4 Wood Products 171 9 846 7 393 7 1227 6 Oil Cake 0 0 29 0 8 6 41 8 thousands of tons The Soviet figures only include imports after September 1939 and differ in part because they include products that were in transit during Operation Barbarossa were not yet counted in the German figures which count only the first six months of 1941 137 nbsp Freight train in German occupied Poland October 1939 nbsp Potato train arrives in Berlin in January 1940 The Soviet Union also bought and shipped other materials to Germany such as rubber 134 from India 138 The Soviets shipped approximately 800 million reichsmarks worth of goods 138 Materials Germany imported from other countries using the Soviet Trans Siberian Railway and from Afghanistan and Iran via the Soviet Union as an intermediary including 139 1939 1940 1941 1st 5 mos Rubber NA 4 5 14 3 Copper NA 2 0 2 8 Soybeans NA 58 5 109 4 Whale amp Fish oil NA 56 7 46 2 Nuts NA 9 3 12 1 Tinned Foods NA 5 0 3 8 Textiles 0 0 19 0 17 0 Legumes 0 7 0 2 0 Dried fruit 8 0 42 0 8 0 thousands of tons The trade pact helped Germany to surmount the British blockade of Germany 96 By June 1940 Soviet imports comprised over 50 of Germany s total overseas imports and often exceed 70 of total German overseas imports 140 nbsp Imports from the USSR As A Percentage Of Total German Overseas Imports February 1940 June 1941 The Soviet Union further helped Germany to avoid the British blockade by providing a U boat base at Basis Nord 138 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 the German invasion of the USSR 141 There had never been such intensive trade between Germany and the Soviet Union as that which took place during the eighteen months of 1940 to June 1941 142 Soviet imports of chrome manganese and platinum for which Germany relied entirely on imports made up 70 of Germany s total imports of those materials 143 While the Soviet Union provided 100 of German imports of rye barley and oats this was 20 of the amount of the total German harvest 143 Three quarters of Soviet oil and grain exports two thirds of Soviet cotton exports and over 90 of Soviet wood exports were to the Reich alone 143 Germany supplied the Soviet Union with 31 of its imports which was on par with United States imports into the Soviet Union 143 Germany supplied 46 of Soviet machine tool imports and was its largest such supplier 143 Particularly important were grain manganese and chrome vital ingredients of the German war economy that now faced the British naval blockade 144 In terms of imports and exports the total balanced out at 500 million reichsmarks in either direction but the strategic gain to Hitler was far greater than that to Stalin 144 German summer worries and procrastination edit nbsp nbsp Burning French oil stocks in the port of Calais after British bombing in May 1940 Main article German Soviet Commercial Agreement 1940 In the summer of 1940 Germany grew even more dependent on Soviet imports 145 While German acquisitions of France the Netherlands and Belgium meant the capture of fuel and iron supplies 146 the additional territories created additional demand while decreasing avenues for indirect supply 145 Soviet oil continued to flow to Germany mostly by rail from Varna Bulgaria directly to Wilhelmshaven 147 German officials noted that 150 000 tons of oil had been shipped monthly for five months using about 900 German tank cars exclusively dedicated for that traffic 147 Hitler characterized the German need for that oil as most pressing 147 He however noted that This will not become critical as long as Romania and Russia continue their supplies and hydrogenation plants can be adequately protected against air attacks 147 After the forced Soviet occupation of the Romanian territories of Bessarabia and Northern Bucovina 148 Germany wanted the 100 000 tons of grain for which they had previously contracted with Bessarabia guarantees of German property safety in Romania and reassurance that the train tracks carrying Romanian oil would be left alone 149 However Germany had captured Norway s molybdenum mines agreed to an oil for arms pact with Romania in May and gained rail access to Spain with the capture of France 146 The Soviet invasion of Lithuania Estonia and Latvia 109 150 page needed in June 1940 resulted in the Soviet occupation of states on which Germany had relied for 96 7 million Reichsmarks of imports in 1938 at blackmailed favorable economic terms 12 but from which they now had to pay Soviet rates for goods 149 Compared to 1938 figures 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 145 An eventual invasion of the Soviet Union increasingly looked like the only way in which Hitler believed that Germany could solve that resource crisis 145 While no concrete plans were yet made Hitler told one of his generals in June that the victories in Europe finally freed his hands for his important real task the showdown with Bolshevism 151 though German generals told Hitler that occupying Western Russia would create more of a drain than a relief for Germany s economic situation 152 This included Kriegsmarine leader Erich Raeder who consistently had opposed any war with the Soviet Union 153 Nevertheless military planners were instructed to continued preparing for the eventual war in the east in an operation that was then codenamed Fritz 154 Germany which was provided 27 months to finish delivery of its goods procrastinated as long as possible 133 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 155 A few months later it delivered a sample of its harvest technology 147 Labor shortages caused by German rearmament pushes also slowed Germany s ability to export material 156 By the end of June Germany had only delivered 82 million Reichsmarks in goods including 25 million for the Lutzow of the 600 million Reichsmarks in Soviet orders place by that time 157 Delivery suspension edit Main article German Soviet Commercial Agreement 1940 By August 1940 Germany was 73 million Reichsmarks behind on deliveries due under the 1940 commercial agreement 147 The Soviet Union had provided over 300 million Reichsmarks worth of raw materials while the Germans provided less than half of that in finished products for compensation 147 That month 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 12 the German commercial delivery failures and with Stalin worried that Hitler s war with the West might end quickly after France signed an armistice 158 At that time the Soviet also canceled all long range projects under the 1940 commercial agreement 147 The suspension created significant resource problems for Germany 158 Ribbentrop wrote a letter promising Stalin that in the opinion of the Fuhrer 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 159 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 an agreement between the United States and Britain regarding destroyers and bases 160 Soviet raw material deliveries increased well over prior figures 151 Germany delayed its delivery of the cruiser Lutzow and the plans for the Bismarck as long as possible hoping to avoid delivery altogether if the war developed favorably 159 and it was later delivered in very incomplete state 161 Possible Soviet Axis membership and further economic talks edit nbsp Joachim von Ribbentrop welcoming Vyacheslav Molotov in Berlin November 1940 Main article German Soviet Axis talks Hitler had been considering war with the Soviet Union since July 1940 128 However after Germany entered the Axis Pact with Japan and Italy in October 1940 the Soviet Union explored a possible entry into the Axis themselves 162 Stalin sent Molotov to Berlin to negotiate where he negotiated with Ribbentrop and Hitler personally who spoke at length about a division of the world after the destruction of Britain that would be like a gigantic world estate in bankruptcy 163 164 165 After long discussions and proposals Germany presented the Soviets with a draft written Axis pact agreement defining the world spheres of influence of the four proposed Axis powers Japan Germany Soviet Union Italy 166 167 168 Eleven days later 169 the Soviets presented a Stalin drafted written counter proposal where they would accept the four power pact but it included Soviet rights to Bulgaria and a world sphere of influence focus on the area around modern Iraq and Iran 170 The Soviets concurrently promised by May 11 1941 the delivery of 2 5 million tons of grain 1 million tons above its current obligations 170 They also promised full compensation for the Volksdeutsche property claims 170 Germany never responded to the counter proposal 171 172 Shortly thereafter Hitler issued a secret directive on the eventual attempts to invade the Soviet Union 169 173 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 6 174 Knowing they were preparing for an invasion of the Soviet Union German negotiators pushed to delay the delivery of German goods beyond the summer of 1941 175 Suspicious of German delays in December the Soviets demanded that all questions pending between the countries be resolved before an agreement could be made 175 Tensions had already built after Germany had ignored Stalin s letter regarding Axis membership with negotiators almost coming to blows at one point 175 At the same time German war planners were aware of the potential fragility of Soviet oil agreeing with Allied military assessments that they had captured in France saying that a few incendiary bombs would have sufficed to shut down Baku for years 176 At the same time Britain was forecasting continued German oil problems 177 The British Chiefs of Staff produced a report in September 1940 predicting a possible exhaustion of German oil stocks by June 1941 177 They believed that Germany could only improve its position by defeating Britain or by driving the Royal Navy from the Eastern Mediterranean so that Germany could import Soviet and Romanian oil supplies by sea 177 An American spy then viewed a December German report detailing the need for an invasion of the Soviet Union because of projected mid 1941 shortages of heavy metals and other supplies 178 1941 border and commercial agreement editMain article German Soviet Border and Commercial Agreement On January 10 1941 Germany and the Soviet Union signed agreements in Moscow to settle all of the open disputes that the Soviets had demanded 175 The agreements extended trade regulation of the 1940 German Soviet Commercial Agreement until August 1 1942 and increased deliveries above the levels of year one of that agreement to 620 to 640 million Reichsmark 179 180 It also settled several border trading rights property compensation and immigration disputes 175 It further covered the migration to Germany within two and a half months of ethnic Germans and German citizens in Soviet held Baltic territories and the migration to the Soviet Union of Baltic and White Russian nationals in German held territories 179 Secret protocols in the new agreement stated that Germany would renounce its claims to a strip of territory in Lithuania it had received in the Secret Additional Protocols of the German Soviet Boundary and Friendship Treaty in exchange for 7 5 million dollars 31 5 million Reichsmark 175 Because of currency fluctuation issues the parties used American dollar demarcations for compensation totals 175 Because of a stronger German negotiation position Karl Schnurre concluded that in economic terms the agreement was the greatest Germany ever concluded going well beyond the previous year s February agreement 146 The agreement included Soviet commitments to 2 5 million tons of grain shipments and 1 million tons of oil shipments as well as large amounts of nonferrous and precious metals 146 German Special Ambassador Karl Ritter in a state of near euphoria over Germany s achievement wrote a directive to all German embassies that While Britain and the United States have up to now been unsuccessful in their efforts to come to an agreement with the Soviet Union in any field the Soviet Union has concluded with Germany the largest contract ever between two states 181 On January 17 1941 Molotov asked German officials whether the parties could then work out an agreement for entry into the Axis pact 182 Molotov expressed astonishment at the absence of any answer to the Soviets November 25 offer to join the Pact 182 They never received an answer 182 Germany was already planning its invasion of the Soviet Union On December 18 1940 Hitler had signed War Directive No 21 to the German high command for an operation now codenamed Operation Barbarossa stating The German Wehrmacht must be prepared to crush Soviet Russia in a quick campaign 183 Hitler directed Raeder that Germany would have to take Polyarny and Murmansk at that time to cut off access to aid that would come to the Soviet Union 153 Late Soviet attempts to improve relations editEven though Stalin was preparing for a likely war he still believed that he could at least avoid a short term clash 184 In an effort to demonstrate peaceful intentions toward Germany on April 13 1941 the Soviets signed a neutrality pact with Axis power Japan 185 During that signing ceremony Stalin embraced the German ambassador and exclaimed we must remain friends and you must do everything to that end 186 While Stalin had little faith in Japan s commitment to neutrality he felt that the pact was important for its political symbolism to reinforce a public affection for Germany 187 Stalin felt that there was a growing split in German circles about whether Germany should initiate a war with the Soviet Union 187 Stalin did not know that Hitler had been secretly discussing an invasion of the Soviet Union since summer 1940 151 and that Hitler had ordered his military in late 1940 to prepare for war in the East regardless of the parties talks of a potential Soviet entry as a fourth Axis power 128 He had ignored German economic naysayers and told Hermann Goring that everyone on all sides was always raising economic misgivings against a threatening war with Russia From now onwards he wasn t going to listen to any more of that kind of talk and from now on he was going to stop up his ears in order to get his peace of mind 188 This was passed on to General Georg Thomas who had been preparing reports on the negative economic consequences of a Soviet invasion that it would be a net economic drain unless it was captured intact 188 Given Hitler s latest demands regarding negative advice Thomas revised his report 188 Reich Finance Minister Schwerin Krosigk also opposed an invasion arguing that Germany would lose grain because of Soviet scorched earth policies lack of effective Soviet transport and the loss of production labor with a German attack in the East 189 Schnurre agreed with the economic loss assessment 189 German generals and others delayed several orders such that they were never delivered such as the delivery of German combat aircraft 184 German officials also procrastinated on the next round of trade balance talks 184 Soviet willingness to deliver increased in April with Hitler telling German officials attempting to dissuade him of attack that concessions would be even greater if 150 German divisions were on their borders 190 Stalin greeted Schnurre at the Moscow railroad station with the phrase We will remain friends with you in any event 189 The Soviets also deferred to German demands regarding Finland Romania and border settlements 189 In an April 28 meeting with Hitler German ambassador to Moscow Friedrich Werner von der Schulenburg stated that Stalin was prepared to make even further concessions including up to 5 million tons of grain in the next year alone with Acting Military Attache Krebs adding that the Soviets will do anything to avoid war and yielded on every issue short of making territorial concessions 189 Stalin also attempted a further cautious economic appeasement of Germany shipping items in May and June for which German firms had not even placed orders 184 German officials concluded in May that we could make economic demands on Moscow which would even go beyond the scope of the treaty of January 10 1941 184 That same month German naval officials stated that the Russian government is endeavoring to do everything to prevent a conflict with Germany 184 By June 18 four days before the German invasion the Soviet had even promised the Japanese that they could ship much greater totals along the Trans Siberian Railway 184 Soviet rubber shipments greatly increased in later months filling up German warehouses and the Soviet transports systems 191 76 of the total of 18 800 tons of vital rubber sent to Germany was shipped in May and June 1941 192 2 100 tons of it crossed the border only hours before the German invasion began 191 Hitler breaks the Pact edit nbsp German advances from June 22 1941 to December 5 1941 nbsp Germans refueling with train tank cars one week into Operation Barbarossa nbsp Germans refueling with train tank cars one week into Operation Barbarossa Initial invasion edit Further information Operation Barbarossa On June 22 1941 Germany began Operation Barbarossa the invasion of the Soviet Union through the territories that the two countries had previously divided 107 Because it had planned to attack the Soviet Union since late 1940 Germany managed to avoid delivery of about 750 million Reichsmarks of goods it was to have delivered under the economic agreements 191 This however cost Germany about 520 million Reichsmarks in counter deliveries that the Soviets may have made before the invasion 191 Shortly before the June 22 attack German ships began leaving Soviet harbors some without being unloaded 184 That night after the invasion Germans ferried out their remaining workers on the Lutzow project and Soviet naval workers let them go 184 After the launch of the invasion within six months the Soviet military had suffered 4 3 million casualties 193 and Germany had captured three million Soviet prisoners two million of which would die in German captivity by February 1942 194 German forces had advanced 1 050 miles 1 690 km and maintained a linearly measured front of 1 900 miles 3 100 km 195 Soviet neutrality between 1939 and 1941 helped Germany to avoid a two front war In 1941 Germany concentrated most of the Wehrmacht eastward in 1941 while continuing Soviet imports to Germany would prove vital to the German invasion of the Soviet Union 196 Ironically 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 largely to Soviet actions taken from 1939 to 1941 196 Soviet raw materials supplies had helped convince German generals who previously had refused to even discuss a Soviet invasion to go along with Hitler s plans 196 Soviet imports into Germany especially oil proved essential for the Wehrmacht s conduct of the coming invasion 197 Without Soviet imports German stocks would have run out in several key products by October 1941 within three and a half months 192 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 192 Tot USSRimports June 1941German Stocks June 1941 w oUSSR imports October 1941German Stocks October 1941 w oUSSR 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 October 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 198 Estimates of any Soviet gains from the German weapons and technology are difficult though they were certainly less vital for the Soviets than the Soviet raw material imports were for Germany 198 The Lutzow was never completed and the Soviets used it as an immobile gun battery until its sinking on September 17 though it was later refloated 198 however Soviet aviation experts were satisfied with their modest aircraft purchases 198 Although many of the machine tools and other equipment exported to the Soviet Union was destroyed or captured in the Nazi invasion the remainder likely still played an important role in reequipping the Red Army 198 German coal deliveries exceeded what the Soviets could have received from other sources 198 In total Germany had shipped only 500 million Reichsmarks of products to the Soviet Union 198 This paled in comparison for example to the over 5 billion Reichsmarks of goods the Allies sent the Russians in 1942 alone and over 13 billion Reichsmarks of total goods during the course of the war 198 After Operation Barbarossa edit nbsp German oil refineries in Ploiești Romania bombed by the United States in 1943 While by December 1941 Hitler s troops had advanced to within 20 miles of the Kremlin in Moscow 199 the Soviets launched a counteroffensive pushing German troops back 40 50 miles from Moscow the Wehrmacht s first significant defeat of the war 199 More importantly between July and December 1941 the Soviets had moved 2 593 enterprises most of them iron steel and engineering plants and 50 000 small workshops and factories to the Ural Mountains in the Volga region to Kazakhstan and to Eastern Siberia away from the Nazi forces who had already occupied vast quantities of European Russia 200 One and a half million wagon loads were carried eastward over the Soviet rail networks including 16 million Soviet citizens to man the factories 201 Almost half of Soviet industrial investment was devoted to restarting the transported factories and building new ones in the eastern territories 200 By 1942 these safe eastern zones supplied three quarters of all Soviet weapons and almost all iron and steel 201 Worried by the possibility of American support after their entry into the war following the Attack on Pearl Harbor and a potential Anglo American invasion on the Western Front in 1942 which would not actually happen until 1944 Hitler shifted his primary goal from an immediate victory in the East to the more long term goal of securing the southern Soviet Union to protect oil fields vital to a long term German war effort 202 The German southern campaign began with a push to capture the Crimea which ended in disaster for the Red Army and caused Stalin to issue a broad scolding of his generals leadership 203 In their southern campaigns the Germans took 625 000 Red Army prisoners in July and August 1942 alone 204 Feeling the Soviets were all but defeated the Germans then began another southern operation in the fall of 1942 the Battle of Stalingrad which would end up marking the beginning of a turning point in the war for the Soviet Union 204 Although the Soviets suffered in excess of 1 1 million casualties at Stalingrad 205 the victory over German forces including the encirclement of 290 000 Axis troops marked a turning point in the war 206 The Soviets repulsed the German strategic southern campaign and although 2 5 million Soviet casualties were suffered in that effort it permitted the Soviets to take the offensive for most of the rest of the war on the Eastern Front 207 Without Soviet goods from 1942 to the end of the war German war efforts were severely hampered with Germany barely managing to scrape together enough reserves for a few more major offensives 144 191 In terms of supplies oil was the main obstacle with shortages in some places by the end of 1941 and forcing Germany to turn south to attempt to invade the oil rich Caucasus in 1942 208 The Reich was forced to exist on a hand to mouth basis for oil and the almost non existent oil stocks completely disappeared by mid 1944 with Allied bombers concentrating on German synthetic fuel plants 208 For example most German war aircraft sat idle and air training for new pilots was cut to a mere one hour per week 208 Food supplies also dwindled 208 The envisioned 5 million tons per year that was supposed to come from occupied lands after Barbarossa never materialized 208 In fact Germany managed to ship only 1 5 million tons of grain from the region in the remaining four years of the war 208 Germany was forced to ration its use of manganese and other materials 208 However it was later able to address the severe rubber shortages it faced with large amounts of synthetic production that began with plants coming on line starting in 1942 and it used blockade breakers to get the 10 15 of natural rubber the plants needed for the expensive synthetic rubber process 208 In total as Hitler s generals had warned him few raw materials were gained from the Soviet invasion 191 Over the entire four years of the war after Barbarossa Germany managed to squeeze out only 4 5 billion Reichsmark of Soviet goods in total from occupied Soviet territories a fraction of what Hitler thought it could gain 191 Stalin was confident of victory even as Hitler s troops pressed the outskirts of Moscow in the fall and winter of 1941 In September 1941 Stalin told British diplomats that he wanted two agreements 1 a mutual assistance aid pact and 2 a recognition that after the war the Soviet Union would gain the territories in countries that it had taken pursuant to its division of Eastern Europe with Hitler in the Molotov Ribbentrop Pact 209 The British agreed to assistance but refused to agree upon the territorial gains which Stalin accepted months later as the military situation deteriorated somewhat in mid 1942 209 In November 1941 Stalin rallied his generals in a speech given underground in Moscow telling them that the German blitzkrieg would fail because of weaknesses on the German rear in Nazi occupied Europe and the underestimation of the strength of the Red Army such that Germany s war effort would crumble against the British American Soviet war engine 210 Fending off the German invasion and pressing to victory in the East required a tremendous sacrifice by the Soviet Union Soviet military casualties totaled approximately 35 million official figures 28 2 million with approximately 14 7 million killed missing or captured official figures 11 285 million 211 Although figures vary the Soviet civilian death toll probably reached 20 million 211 Millions of Soviet soldiers and civilians disappeared into German detention camps and slave labor factories while millions more suffered permanent physical and mental damage 211 Economic losses including losses in resources and manufacturing capacity in western Russia and Ukraine were also catastrophic 211 The war resulted in the destruction of approximately 70 000 Soviet cities towns and villages 212 Destroyed in that process were 6 million houses 98 000 farms 32 000 factories 82 000 schools 43 000 libraries 6 000 hospitals and thousands of miles of roads and railway track 212 Production during the Pact editWhile Germany s population of 68 6 million people was the second largest in Europe that was dwarfed by the 167 million in the Soviet Union 213 However Germany over doubled the Soviet Union s real per capita Gross Domestic Product 213 During the Pact period it generally outspent the Soviet Union over 2 to 1 in military spending as measured in 1990 dollars 213 214 Germany GDP 1990 Bil USSR GDP 1990 Bil German GDPPer Capita USSR GDPPer Capita German DefenseSpending of Nat l Income USSR DefenseSpending of Nat l Income 1939 384 366 5 598 2 192 23 0 12 6 1940 387 417 5 641 2 497 40 0 17 0 1941 412 359 6 006 2 150 52 0 28 0 Dollar denominations are in billions of 1990 dollars See also editGerman Soviet Border and Commercial Agreement German Soviet Commercial Agreement 1939 German aid to Soviet civilians in World War II Molotov Ribbentrop Pact Molotov Ribbentrop Pact negotiations Invasion of Poland Soviet invasion of Poland German Soviet Commercial Agreement 1940 Basis Nord Soviet German relations before 1941 Operation BarbarossaNotes edit a b Nominal defense spending figures are from Overy 2004 p 453 who notes that Soviet budget figure do not reflect the high level of inflation Calculated in price of 1937 the figure for 192 8 is 1 7 billion that for 1937 17 0 billion and in 1940 45 2 billion There was price deflation in Germany between 192 9 and 1936 so the expenditure figure in those years are higher in real terms German inflation deflation indices were from Child 1978 Soviet price inflation indices were from Lewis 2003 Roberts 2006 p 42 lists slightly different figures with 2 million tons of petroleum products 140 000 tons of manganese 1 5 million tons of timber 1 5 million tons of timber and 100 000 tons of cotton References edit a b c d e f g h i j k Ericson 1999 pp 1 2 a b Hehn 2005 p 15 a b Ericson 1999 pp 11 12 a b c Overy 2004 p 396 a b c d Overy 2004 p 397 a b c Ericson 1999 pp 14 15 a b Overy 2004 p 406 Overy 2004 p 400 a b Overy 2004 p 408 Overy 2004 p 410 Overy 2004 p 409 a b c d e f Hehn 2005 p 212 a b c d e Overy 2004 p 398 Ericson 1999 p 187 a b Wegner 1997 p 19 Bendersky 2000 p 177 Muller amp Ueberschar 2002 p 244 Rauschning 2006 pp 136 137 Shirer 1990 p 716 Berezhkov V M Valentin Mikhaĭlovich Mikheyev Sergei M 1994 At Stalin s side his interpreter s memoirs from the October Revolution to the fall of the dictator s empire Secaucus NJ Carol Pub Group p 10 ISBN 978 1 55972 212 4 a b c Overy 2004 p 402 Lee amp Shuter 1996 p 33 Bendersky 2000 p 159 Overy 2004 p 405 a b Overy 2004 p 403 Ericson 1999 pp 17 18 a b Ericson 1999 pp 23 24 a b Nekrich Ulam amp Freeze 1997 p 95 Jurado amp Bujeiro 2006 pp 5 6 Weinberg 1970 p 346 Spector 2004 p 257 Overy 2004 p 413 a b c Overy 2004 p 416 a b Overy 2004 p 414 Hehn 2005 p 37 a b Overy 2004 p 417 a b Overy 2004 p 418 a b Overy 2004 p 419 a b Overy 2004 p 477 Overy 2004 p 481 Ericson 1999 pp 27 28 a b Ericson 1999 pp 29 30 a b c Roberts 2006 p 43 a b Wegner 1997 p 97 Nekrich Ulam amp Freeze 1997 p 87 a b c d e Overy 2004 p 432 a b c Wegner 1997 p 102 a b Overy 2004 p 434 Overy 2004 p 433 Figes 2007 p 172 Overy 2004 p 415 Overy 2004 p 435 Overy 2004 pp 438 9 a b Overy 2004 p 443 Overy 2004 pp 445 6 a b c Overy 2004 pp 448 9 a b Shirer 1990 pp 281 2 a b Shirer 1990 p 284 Overy 2004 p 422 Hehn 2005 p 34 amp 178 a b c d e Ericson 1999 pp 3 4 a b Harrison 1997 p 396 a b Ericson 1999 p 42 Overy 2004 p 423 Harrison 1997 p 418 a b c d e f g Wegner 1997 p 103 a b Overy 2004 p 420 Hehn 2005 pp 270 271 a b c Wegner 1997 p 100 a b c Wegner 1997 p 101 Overy 2004 p 424 Hehn 2005 p 35 a b Hehn 2005 pp 215 216 a b c Nekrich Ulam amp Freeze 1997 p 94 a b c Overy 2004 p 425 a b Murray 1984 p 268 Ericson 1999 pp 23 35 Shirer 1990 pp 515 540 Nekrich Ulam amp Freeze 1997 pp 108 109 Roberts 1992 pp 921 926 Weizsacker 1939 Ericson 1999 p 43 Biskupski amp Wandycz 2003 pp 171 172 a b Ericson 1999 p 45 Nekrich Ulam amp Freeze 1997 p 111 Erickson 2001 p 516 Ulam 1989 p 508 Ericson 1999 pp 46 47 Ericson 1999 p 44 a b Ericson 1999 pp 54 55 Nekrich Ulam amp Freeze 1997 p 116 Fest 2002 p 589 Subrenat 2004 p 131 a b c Nekrich Ulam amp Freeze 1997 p 115 a b Ericson 1999 p 56 a b c d e Shirer 1990 p 668 a b Ericson 1999 p 57 a b Wegner 1997 p 99 Grenville amp Wasserstein 2001 p 227 Ericson 1999 pp 61 amp 227 231 a b Grenville amp Wasserstein 2001 p 228 Nekrich Ulam amp Freeze 1997 p 118 a b Sourcebook Philbin III 1994 p 43 Shirer 1990 p 539 Shirer 1990 p 540 a b Roberts 2006 p 82 a b Imlay 2003 p 122 a b Wettig 2008 pp 20 21 a b Ericson 1999 pp 63 4 Philbin III 1994 p 130 Ericson 1999 p 116 Ericson 1999 p 67 Ericson 1999 pp 71 2 a b Ericson 1999 p 61 Ericson 1999 p 66 Philbin III 1994 p 82 Philbin III 1994 pp 75 6 a b Wegner 1997 p 104 Wegner 1997 p 71 Ericson 1999 p 78 Ericson 1999 pp 81 90 Philbin III 1994 p 119 Philbin III 1994 p 83 Ericson 1999 p 101 Philbin III 1994 p 45 a b Ericson 1999 pp 103 4 a b c d e Weeks 2003 pp 74 75 Ericson 1999 p 237 Shirer 1990 pp 668 9 Philbin III 1994 p 46 Philbin III 1994 p 120 a b Cohen 1989 p 108 109 a b Moss 2005 p 265 Shirer 1990 p 600 Ericson 1999 pp 219 22 a b Ericson 1999 pp 195 9 a b c Cohen 1989 p 110 Ericson 1999 p 209 Ericson 1999 p 208 Philbin III 1994 pp 130 142 Wegner 1997 p 111 a b c d e Wegner 1997 p 110 a b c Roberts 2006 p 42 a b c d Ericson 1999 pp 127 8 a b c d Wegner 1997 p 108 a b c d e f g h Philbin III 1994 p 48 Overy 2004 p 485 a b Ericson 1999 p 134 Senn 2007 a b c Ericson 1999 pp 129 130 Ericson 1999 p 138 a b Philbin III 1994 p 51 Overy 2004 p 489 Philbin III 1994 pp 47 8 Ericson 1999 p 136 Nekrich Ulam amp Freeze 1997 p 184 a b Philbin III 1994 pp 48 amp 59 a b Philbin III 1994 pp 49 50 Philbin III 1994 p 60 Philbin III 1994 p 122 Roberts 2006 p 58 Nekrich Ulam amp Freeze 1997 p 199 Shirer 1990 p 725 Brackman 2001 p 341 Nekrich Ulam amp Freeze 1997 p 201 Roberts 2006 p 45 Brackman 2001 p 343 a b Nekrich Ulam amp Freeze 1997 pp 202 205 a b c Nekrich Ulam amp Freeze 1997 p 203 Donaldson amp Nogee 2005 pp 65 66 Churchill 1953 pp 520 521 Roberts 2006 p 59 Ericson 1999 pp 146 47 a b c d e f g Ericson 1999 pp 150 151 Wegner 1997 p 179 a b c Peden 2007 p 207 Dippel 1992 p 46 a b Johari 2000 pp 134 137 Ericson 1999 p 238 Wegner 1997 p 109 a b c Weinberg 1995 p 202 Brackman 2001 p 344 a b c d e f g h i Ericson 1999 p 172 Roberts 2006 p 63 Murray amp Millett 2001 p 112 a b Roberts 2006 p 66 a b c Ericson 1999 p 162 a b c d e Ericson 1999 p 170 Ericson 1999 p 164 a b c d e f g Ericson 1999 p 173 a b c Ericson 1999 pp 202 205 Roberts 2006 pp 116 117 Roberts 2006 pp 85 6 Glantz 2001 p 7 a b c Ericson 1999 p 181 Murray amp Millett 2001 p 111 a b c d e f g h Ericson 1999 p 182 a b Roberts 2006 p 88 a b Overy 2004 p 500 a b Overy 1997 pp 181 183 Roberts 2006 pp 117 118 Roberts 2006 p 122 a b Roberts 2006 p 126 Stalingradskaya bitva Roberts 2006 p 154 Roberts 2006 p 155 a b c d e f g h Ericson 1999 p 174 a b Roberts 2006 pp 114 115 Roberts 2006 p 110 a b c d Glantz 2001 p 13 a b Roberts 2006 pp 4 5 a b c Harrison 2000 pp 7 10 Harrison 2000 pp 21 158 275 287 Bibliography editAlexander Bevin 2000 How Hitler Could Have Won World War II Three Rivers Press ISBN 978 0 609 80844 3 Bendersky Joseph W 2000 A History of Nazi Germany 1919 1945 Rowman amp Littlefield ISBN 0 8304 1567 X Biskupski Mieczyslaw B Wandycz Piotr Stefan 2003 Ideology Politics and Diplomacy in East Central Europe Boydell amp Brewer ISBN 1 58046 137 9 Brackman Roman 2001 The Secret File of Joseph Stalin A Hidden Life Frank Cass Publishers ISBN 978 0 7146 5050 0 Child Frank C 1978 The Theory and Practice of Exchange Control in Germany Ayer Publishing ISBN 0 405 11209 2 Churchill Winston 1953 The Second World War Houghton Mifflin Harcourt ISBN 0 395 41056 8 Cohen Yohanon 1989 Small Nations in Times of Crisis and Confrontation SUNY Press ISBN 0 7914 0018 2 Dippel John Van Houten 1992 Two Against Hitler Stealing the Nazis Best Kept Secrets Greenwood Publishing Group ISBN 0 275 93745 3 Donaldson Robert H Nogee Joseph L 2005 The Foreign Policy of Russia Changing Systems Enduring Interests M E Sharpe ISBN 0 7656 1568 1 Erickson John 2001 The Soviet High Command A Military political History 1918 1941 Routledge ISBN 978 0 7146 5178 1 Ericson Edward E 1999 Feeding the German Eagle Soviet Economic Aid to Nazi Germany 1933 1941 Greenwood Publishing Group ISBN 978 0 275 96337 8 Fest Joachim C 2002 Hitler Houghton Mifflin Harcourt ISBN 978 0 15 602754 0 Figes Orlando 2007 The Whisperers Private Life in Stalin s Russia Macmillan ISBN 978 0 8050 7461 1 Glantz David October 11 2001 The Soviet German War 1941 45 Myths and Realities A Survey Essay Clemson South Carolina Strom Thurmond Institute of Government and Public Affairs Clemson University Grenville John Ashley Soames Wasserstein Bernard 2001 The Major International Treaties of the Twentieth Century A History and Guide with Texts Taylor amp Francis ISBN 978 0 415 23798 7 Harrison Mark 2000 The Economics of World War II Six Great Powers in International Comparison Cambridge University Press ISBN 978 0 521 78503 7 Harrison Mark 1997 The Sovietmilitary economic effort during the second five year plan 1933 1937 PDF Europe Asia Studies 49 3 369 406 doi 10 1080 09668139708412447 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 978 0 8264 1761 9 Imlay Talbot C 2003 Facing the Second World War Strategy Politics and Economics in Britain and France 1938 1940 Oxford University Press ISBN 0 19 926122 9 Johari J C 2000 Soviet Diplomacy 1925 41 1925 27 Anmol Publications PVT LTD ISBN 81 7488 491 2 Jurado Carlos Caballero Bujeiro Ramiro 2006 The Condor Legion German Troops in the Spanish Civil War Osprey Publishing ISBN 1 84176 899 5 Kulikov Victor March 2000 Des occasions en or pour Staline ou les avions allemands en URSS Golden Opportunities for Stalin or German Aircraft in the USSR Avions Toute l Aeronautique et son histoire in French 84 16 23 ISSN 1243 8650 Kulikov Victor April 2000 Des occasions en or pour Staline ou les avions allemands en URSS Avions Toute l Aeronautique et son histoire in French 85 44 49 ISSN 1243 8650 Lee Stephen J Shuter Paul 1996 Weimar and Nazi Germany Heinemann ISBN 0 435 30920 X Lewis Arthur W 2003 Economic Survey 1919 1939 Routledge ISBN 0 415 31359 7 Moss Walter 2005 A History of Russia Since 1855 Anthem Press ISBN 1 84331 034 1 Murray Williamson 1984 The Change in the European Balance of Power Princeton Princeton University Press Murray Williamson Millett Allan 2001 A War to be Won Fighting the Second World War Harvard University Press ISBN 978 0 674 00680 5 Muller Rolf Dieter Ueberschar Gerd R 2002 Hitler s War in the East 1941 1945 A Critical Assessment Berghahn Books ISBN 1 57181 293 8 Nekrich Aleksandr Moiseevich Ulam Adam Bruno Freeze Gregory L 1997 Pariahs Partners Predators German Soviet Relations 1922 1941 Columbia University Press ISBN 978 0 231 10676 4 Overy R J 2004 The Dictators Hitler s Germany and Stalin s Russia W W Norton amp Company ISBN 978 0 393 02030 4 Overy Richard 1997 Why the Allies Won W W Norton amp Company ISBN 978 0 393 31619 3 Peden G C 2007 Arms Economics and British Strategy From Dreadnoughts to Hydrogen Bombs Cambridge University Press ISBN 978 0 521 86748 1 Philbin III Tobias R 1994 The Lure of Neptune German Soviet Naval Collaboration and Ambitions 1919 1941 University of South Carolina Press ISBN 978 0 87249 992 8 Rauschning Hermann 2006 Hitler Speaks A Series of Political Conversations With Adolf Hitler on His Real Aims Kessinger Publishing ISBN 1 4286 0034 5 Roberts Geoffrey 1992 Infamous Encounter The Merekalov Weizsacker Meeting of 17 April 1939 The Historical Journal 35 4 921 926 doi 10 1017 S0018246X00026224 JSTOR 2639445 S2CID 154228049 Roberts Geoffrey 2006 Stalin s Wars From World War to Cold War 1939 1953 Yale University Press ISBN 978 0 300 11204 7 Senn Alfred Erich 2007 Lithuania 1940 revolution from above Amsterdam New York Rodopi ISBN 978 90 420 2225 6 Shirer William L 1990 The Rise and Fall of the Third Reich A History of Nazi Germany Simon and Schuster ISBN 978 0 671 72868 7 Spector Robert Melvin 2004 World Without Civilization Mass Murder and the Holocaust History and Analysis UPA ISBN 978 0761829638 Subrenat Jean Jacques ed 2004 Estonia Identity and Independence Translated by Cousins David Dickens Eric Harding Alexander Waterhouse Richard C Rodopi ISBN 90 420 0890 3 Ulam Adam Bruno 1989 Stalin The Man and His Era Beacon Press ISBN 0 8070 7005 X Weeks Albert L 2003 Stalin s Other War Soviet Grand Strategy 1939 1941 Rowman amp Littlefield ISBN 0 7425 2192 3 Wegner Bernd 1997 From Peace to War Germany Soviet Russia and the World 1939 1941 Berghahn Books ISBN 978 1 57181 882 9 Weinberg Gerhard 1970 The Foreign Policy of Hitler s Germany Diplomatic Revolution in Europe 1933 36 Chicago University of Chicago Press Weinberg Gerhard L 1995 A World at Arms A Global History of World War II Cambridge University Press ISBN 978 0 521 55879 2 Weizsacker Ernst von April 17 1939 Memorandum by the State Secretary in the German Foreign Office Weizsacker The Avalon Project Yale Law School Retrieved 7 January 2021 Wettig Gerhard 2008 Stalin and the Cold War in Europe Landham Md Rowman amp Littlefield ISBN 978 0 7425 5542 6 Modern History Sourcebook The Molotov Ribbentrop Pact 1939 Internet History Sourcebooks Project Fordham University Retrieved 7 January 2021 External links editFebruary 26 1940 MEMORANDUM ON THE GERMAN SOVIET COMMERCIAL AGREEMENT by Dr Karl Schnurre Head of the Eastern European and Baltic Section of the Commercial Policy Dlvision of the German Foreign Office Retrieved from https en wikipedia org w index php title German Soviet economic relations 1934 1941 amp oldid 1222124957, wikipedia, wiki, book, books, library,

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