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The COMMUNIST-CAPITALIST ALLIANCE
By Dr. Harold Pease, Ph.D.
Professor of History at Palo Verde College
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Those of us who teach political science on the college and university level find ourselves seriously handicapped by the lack of textbooks and carefully prepared historical research on one of the most important phenomena of our time, namely, the amazing alliance which has been growing for more than half a century between the leaders of the world-wide Communist movement and the leaders of some of the most powerful banks and industries of Europe and America.
That such an alliance should even exist, came as an intellectual shock to this writer. It seemed irrational, an ideological contraction, a conflict of interests. Nevertheless, the more I have researched the matter, the more convinced I have become that the alliance is not only a reality, but that also herein might be found the Gordian knot which must be cut before we can solve some of the world's most critical problems.
A recent announcement calling the West's attention to the existence of this alliance came unexpectedly from the heart of the Communist world itself.
FAMED RUSSIAN REFUGEE DESCRIBES THE ALLIANCE
On June 30, 1975, Aleksandr I. Solzhenitsyn, the famed Russian author, lecturer, historian, intellectual, and recipient of a Nobel Prize, gave one of the most important addresses delivered in this country during the Twentieth Century. To a select and packed audience in the ballroom of the Washington Hilton, Solzhenitsyn advised his listeners of the existence of an amazing and mysterious alliance, "at first glance a strange one, a surprising one - but if you think about it, one which is well grounded and easy to understand. This is the alliance between our Communist leaders and your Capitalists." Solzhenitsyn explained that the alliance of which he spoke was not new. He said the great Capitalists of the United States assisted Lenin "in the first years of the Revolution," and that since then "we observe continuous and steady support by the businessmen of the West of the Soviet Communist leaders." (Congressional Record, 8, July, 1975, pp. 11951-11956).
FIRST FIVE-YEAR PLAN BUILT WITH AMERICAN TECHNOLOGY
The Russian told those assembled that the Soviet economy is so clumsy and awkward that it will never overcome its own difficulties by itself. He charged that the enslaved Russian masses could have thrown off Communism several times had not Western assistance been poured into the USSR to sustain the Communist leadership. He pointed out that "the major construction projects in the initial five-year plan were built exclusively with American technology and materials. Even Stalin recognized that two- thirds of what was needed was obtained from the West. And if today the Soviet Union has powerful military and police forces ... used to crush our movement for freedom in the Soviet Union ... we have Western capital to thank for this also." (Ibid.)
The movement for freedom behind the Iron Curtain is very real, according to this famed Russian author, because Marxism is viewed with disdain by the people; "In the Soviet Union today, Marxism has fallen so low it's simply an object of contempt. No serious person in our-country today, even students in schools, can talk about Marxism without smiling. (Ibid.)
The speech in Washington, D.C., was followed ten days later by another address in New York. Again Solzhenitsyn emphasized that the "whole existence of our slave owners from beginning to end, has depended on Western economic assistance." He emphasized the plight of the Russian people by telling those assembled:
"We are slaves there from birth. We are born slaves. I'm not young anymore, and I myself was born a slave; this is even more true for those who are younger. We are slaves, but we are striving for freedom. You, however, were born free. If so, then why do you help our slave owners?
"In my last address I only requested one thing and I make the same request now: When they bury us in the ground alive ... please do not send them shovels. Please do not send them the most modern earth-moving equipment." ("The Strangled Cry of Solzhenitsyn," National Review, 29 Aug. 1975, p. 937).
DETENTE IS TOTALLY ONE-SIDED
Solzhenitsyn explained that the Russian people are not told that the assistance comes from the West. Instead, they are continually taught a hatred for the West, Detente, then, is totally one-sided.
"Our country is taking your assistance but in the schools they are teaching and in newspapers they are writing and in the lectures they are saying, `Look at the Western world, it's beginning to rot. Look at the economy of the Western world, it's coming to an end. The great predictions of Marx, Engels, and Lenin are coming true. Capitalism is breathing its last. It's already dead. It has demonstrated once and for all the triumph of Communism.'" (Ibid., p. 938)
What about these charges? Are they found in fact? Is the West, notably the United States, responsible for building and sustaining the Communist enemy, which has now consumed nearly one-half of the world, or has the famed Russian scholar over-extended his claim? Article III, Section 3, of the United States Constitution defines treason as "giving aid and comfort to the enemy." Certainly if Solzhenitsyn's view of history is correct our leadership has a lot of explaining to do.
CONGRESSMAN JOHN M. ASHBROOK
Let us begin by examining statements made by prominent members of Congress which appear to give credibility to the Solzhenitsyn claim. On March 6, 1974, Congressman John M. Ashbrook informed his colleagues of the irony of trade with the USSR
"... U.S. technical trade with the Soviet Union and other East European countries has `gained significant momentum' since the May, 1972 Moscow summit conference and will undoubtedly continue to increase at a gradual rate. The American share of Soviet imports of plants and equipment from the West is now running about 20 percent of the total. It is ironic that while American businessmen are trading hundreds of millions of dollars for plants and equipment to the Soviet Union, the Administration is asking for an increased defense budget to meet the Soviet military threat-a threat which, in part, is being built with American technology." (Cong. Rec., March 6, 1974, p. E1176).
CONGRESSMAN STEVE SYMMS
Congressman Steve Symms, equally alarmed, minced no words in verbalizing dissatisfaction with present trade arrangements. He began:
"Few Americans fully appreciate the extent to which their tax dollars are being used to finance their own destruction. The dealings of the Export-Import Bank are a good example. U.S. `loans' to the Soviet Union through the bank now total over 760 million dollars to finance projects like constructing the world's largest truck plant on the Kama River. Only two weeks ago an additional $67.5 million of your money was provided for this project, along with a 20 million dollar loan for a Russian acetic acid plant.
"Another $180 million is now being earmarked for a chemical complex in the USSR and $49.5 million for a gas exploration project in Eastern Siberia."
The basic problem, according to Symms, is that we are arming the very enemy who intends to destroy us. Symms summarized this situation:
"... U.S. tax dollars are not only propping up a ruthless dictatorship but they are helping to arm our enemy to the teeth. While America is bust building factories and other valuable strategic facilities on Russian soil, the Kremlin is diverting proportionally more of its own resources toward sophisticated offensive weaponry. It makes one wonder whose side the Export-Import Bank officials are really on. Modern-day liberals often refer to these kinds of suicidal give-aways as `meaningful cooperation in the spirit of detente.' It used to be called treason." (American Security Council, Washington Report, 11-15 Mar. 1974).
CONGRESSMAN RICHARD H. ICHORD
Congressman Richard H. Ichord, former Chairman of the House Committee on Internal Security (abolished January 1975) and ranking member of the House Armed Services Committee, responded similarly:
"We are especially alarmed by the report that the Bank (Export-Import Bank) is on the verge of granting $49 million in credit to the Soviet Union for exploration of Eastern Siberian gas fields. We believe that American financing of Soviet gas exploration at this particular time in history, especially at an interest rate of 6% (which is in effect to be subsidised by the American taxpayer), smacks not only of poor business judgment but suggests a disregard for our national security. Every nation's defense capacity is directly related to its energy resources. The real question is why do we spend some $80 billion a year to maintain such a large military establishment.... This has enabled the Soviet Union to engage in the largest peacetime military buildup in the history of man. We cannot afford to adopt any trade or credit policies that will allow the Soviets to further expand their military machine." (American Security Council, Washington Report, Feb. 1974, pp. 1-3).
SENATOR RICHARD SCHWEIKER
Senator Richard Schweiker also viewed such trade concessions as a "$6.1 billion gas exploration project in Western Siberia and a $49.5 million oil exploration project in the Yakutsk area of Eastern Siberia" as being against the national interest. As with Ichord, Schweiker contended that "lending American capital at low (6%) interest for such projects when there is an energy crisis in the United States" is an illogical concession. (L.A. Times, March 9, 1974, part 3, p. 8). Why is the Export-Import Bank charging 6% interest when the prime rate is up to 10%? The problem of the Russian exchange is greater amplified when one realizes that "when Congress is depreciating the dollar at 5% per year, you have to charge 10% to make even five. If a buyer borrows dollars at 6% for five years, and in that period the dollar has depreciated 25%, the buyer has only paid 1% per year for his loan." We must not forget that the taxpayer pays the interest subsidy. Should the buyer default, the U.S. taxpayer once again takes the loss. (Congressional Record, Feb. 19, 1974, p. E694).
CONGRESSMAN PHILIP CRANE
Even if America could forget the rise in the cost of bread to the American consumer as a result of the recent Russian wheat deal, estimated at approximately $290 million, and the extra cost to the beef industry for feed grains which inevitably is reflected in increased beef prices, also passed to the consumer, there are other objections. Congressman Philip Crane mentioned one in particular before commenting on the dangers of increased technological trade with the enemy.
"What happened in the wheat deal, of course, was that the United States sold the Soviet Union and Communist China wheat at a low, subsidised price, with the difference being made up by American taxpayers. As a result, the Soviet Union was saved from famine, and was saved from having to reform its system of forced collectivization.... "The kind of trade the Soviets want, and which we have been willing to participate in, is not trade for consumer goods, such as refrigerators, radios, television sets, and automobiles. They want heavy-industry help, such as machine tools, ball bearings, and precision calibrators. These have military potential, and will hardly improve the living standards of the Russian people....
"To provide the Soviet Union with the sophisticated technology it needs to surpass us, while not demanding any concessions in return, and subsidizing the transaction in addition, is a one- sided policy designed solely to our own detriment." (Congressional Record, July 10, 1973, p. H5896).
CONGRESSMAN EARL F. LANDGREBE
On July 10, 1973 Representative Earl F. Landgrebe told colleagues assembled in the House of Representatives:
"... We are playing into the hands of the Communist rules when we come to their rescue with food and other products of this great free nation, when their whole problem is the fact that the people are trying to lift the Communist domination and pressure from their shoulders by refusing to produce.
"I would say that America is walking right into this situation and actually prolonging the control of the good people of Russia, and the Russian people are good people. But, as I say, they are under slavery by their Communist rulers. And when we make these deals with the Communist rulers we are perpetuating the slavery of the Russian people." (Ibid., p. H5894)
STRATEGICALLY DANGEROUS TRADE ITEMS
But what, more precisely, are these trade items that are supposed to be so dangerous to our national security? Such information is not readily accessible. The Congressional Record of February 7, 1974, gives us a chart showing some of the more strategically dangerous trade items transferred through the U.S. Export-Import Bank.
REPORT OF EXPORT-IMPORT BANK
ON APPROVED ITEMS FOR SOVIETS:
Loan in Millions U.S. Value
Submersible electric pumps. . . . . . . . . . . . 11.6 . . . . 25.9
Plant to produce tableware and dishware . . . . . 3.1 . . . . 6.8
Kama River Truck plant. . . . . . . . . . . . . . 86.4 . . . . 192.1
250 circular knitting machines. . . . . . . . . . 2.5 . . . . 5.6
Second tableware plant. . . . . . . . . . . . . . 9.8 . . . . 21.8
2 assembly lines for manufacturing pistons. . . . 6.4 . . . . 14.3
38 gas reinjection compressors. . . . . . . . . . 11.8 . . . . 26.1
Iron ore pellet plant . . . . . . . . . . . . . . 16.2 . . . . 36.0
Machining friction drums. . . . . . . . . . . . . 2.7 . . . . 6.0
Transfer line for manufacturing pistons . . . . . 7.0 . . . . 15.7
Loan in Millions U.S. Value
Projects:
Automotive component manufacturing processes. . . 20.7 . . . . 46.0
Acetic acid plant . . . . . . . . . . . . . . . . 18.0 . . . . 40.0
Canal building machinery. . . . . . . . . . . . . 2.9 . . . . 6.6
Valve making machinery. . . . . . . . . . . . . . 2.1 . . . . 4.7
International Trade Center. . . . . . . . . . . . 36.0 . . . . 80.0
Loan in Millions U.S. Value
Pending:
Chemical complex. . . . . . . . . . . . . . . . . 180.0 . . . . 400.0
Additional equipment for Kama River
truck project. . . . . . . . . . . . . . . . . . 67.5 . . . . 150.0
Minister of Geology, Vakutsk gas
exploration plant. . . . . . . . . . . . . . . . 49.5 . . . . 110.0
Oil pipeline pressure regulators. . . . . . . . . 4.5 . . . . 10.0
(Congressional Record, Feb. 7, 1974, p. S1497).
LOANING MONEY TO USSR TO BUILD WAR MACHINE
Can the problem be described in terms of capital outlay? This information is not easily obtainable from government agencies, but Congressman Steve Symms was able to give us some idea of the problem as of October 16, 1973.
"So far in 1973, credits and credit guarantees from the U.S. Export-Import Bank in the amount of $202.6 million have been made available to the Soviet Union. The credits carried an interest rate of 6 percent, and grace periods, before repayment begins, of up to 10 years. These transactions supplement the $750 million line of credit for grain purchases made available in 1972 by the Commodity Credit Corporation. In addition to these actual credits, major transactions involving the Soviets and American firms that have been announced this year envision U.S. Export-Import Bank credits of approximately $3 billion." (Quoted by the Freemen Report, Feb. 15, 1974, p.1).
If Symms' records are complete, the United States granted the soviets extended loans worth nearly one billion dollars during the months in question.
MILITARY SUPERIORITY: SOVIET GOAL
The information presented is especially disturbing in view of the comments made by Senator Henry Jackson to colleagues on the Senate floor:
"And just this past week, reliable reports have reached the West that Secretary Brezhnev has told Eastern European Communist leaders that improved relations with the West are, in fact, a tactic to permit the Soviet bloc to establish its superiority in the next 12 to 15 years. Tactical flexibility is, of course, a prime component of Leninist political doctrine. Will we find that, in 15 years, the Soviet Union has established a position of superiority which will allow it to disregard detente altogether?" (Congressional Record, Sept. 20, 1973, p. S17053).
But according to Solzhenitsyn, the free world built and maintained the Communist slave world almost from the beginning. Several of the congressmen gave substance, in part, to his claim. Perhaps the most pointed comment came from Congressman Steve Symms who said, "... History has proven that the Soviet Union's planned industry feeds on the industrial freedom of the West. It would long ago have died a natural death, had it not been for the repeated injections of lifeblood that are still being pumped into it today." (Congressional Record, Oct. 16, 1973, as quoted by the Freeman Report, 15 Feb. 1974, p. 1).
SOVIET UNION FOREMOST BENEFICIARY OF U.S. AID
Dr. Larry McDonald (Missing since he was aboard the flight of KLM 007, while Richard Nixon was ordered to get off that same flight in Nome, Alaska) has probably been the most outspoken Congressman opposing "aid and comfort to the enemy." Quoting from the report of the Committee on Appropriations (House Report 94-53, to accompany H.R. 4592, March 10, 1975) McDonald informed his colleagues that:
"... the United States has provided $1,033,400,000 in foreign aid and assistance to the Soviet Union from 1946 through 1974. Presumably this was done under authority other than the Foreign Assistance Act, which prohibits such aid.
"When you also consider the so-called lend-lease program - so- called because as things turned out it was neither lend nor lease but outright charity to the tune of $11 to $12 billion - and the passing over our post-World War II occupational currency production capability, the true figure of aid to the heartland of totalitarian communism would be somewhere between $30 to $40 billion. Most Americans are staggered upon learning that the USSR has been the No. 1 beneficiary of U.S. aid in this century....
"All of this certainly destroys the accepted view that the United States has an anti-communist foreign policy." (Congressional Record, Oct. 3, 1975, p. E5215).
HOW U.S. AID REPEATEDLY SAVED SOVIET LEADERS
McDonald, quoting from a review of the book National Suicide, by Dr. Antony Sutton (the leading authority on East-West trade), continues:
"... It was primarily U.S. technology that kept the Bolsheviks on their feet after their 1917 coup d' etat, that maintained them through the Depression, and that has kept them alive to this date....
"The major areas of technical assistance to the Soviet Union, which have been directly or indirectly used in military applications are: (1) weapons, including explosives, ammunition and guns; (2) tanks, trucks and armored cars; (3) ships; (4) airplanes; (5) space technology; (6) missiles; and (7) computers.
"In the area of weapons, aid was forthcoming from the United States even before the Bolsheviks had consolidated their hold on Russia after the coup." (Ibid.).
Solzhenitsyn could not have said it more clearly.
AMERICANS LEFT IN THE DARK
Apparently there is substance to the Solzhenitsyn claim, but how much? Obviously, trade with the enemy is another one of those obscure areas where Americans have been poorly briefed. Most find it difficult to accept our wheat give-aways, but how will they react when they are told that this trade with Communism includes much more? We may never know, since the major media - press, radio and TV - have played down or completely ignored the dark implications of this enemy-building business.
RUSSIAN INDUSTRIAL DEVELOPMENT UNDER THE TSAR
An examination of our trade history with the Communists gives strong evidence that the Solzhenitsyn claim is not in the least exaggerated. Returning to the Bolshevik revolution, the reader might be surprised to find that the Russians under the Tsar were far more advanced, prior to 1917, than we had thought. "Airplanes and automobiles of indigenous Russian design were produced in quantity before the Bolshevik revolution. Although industrialization was restricted to a few population centers, it utilized modern, efficient plants operating on scales comparable to those elsewhere in the world. Further, there were obvious signs of indigenous Russian technology in chemicals, aircraft, automobiles, turbines, and railroad equipment. "Not only did such technology exist, but it was left almost totally undisturbed by the Bolshevik revolution of 1917. What then caused the economic calamity which followed 1921? One thing is certain. It was not brought about by absence of operable productive facilities." (Antony C. Sutton, Western Technology and Soviet Economic Development, 1917-1930. Hoover Institution on War, Revolution and Peace, Stanford University, p. 344).
WHO FINANCED THE BOLSHEVIK REVOLUTION IN 1917?
Before we speak of the economic calamity brought on almost solely by the disastrous programs of the Bolsheviks, let us first trace their rise to power. Revolutions are expensive. There is considerable evidence that the Bolsheviks received enormous grants from private individuals in Germany and the United States.
"One of the chief German financiers of the Russian Revolution was M. M. Warburg, who made millions available to the Russian Communists through a bank in Sweden. In America, Jacob Schiff, a partner and brother-in-law of Warburg, contributed $20 million to the Russian Revolution." (Paper Relating to the Foreign Relations of the U.S.-Russia, 1918. House Document no. 1868, U.S. Government Printing Office. See also extensive treatment of this question in Wall Street and the Bolshevik Revolution, by Antony C. Sutton, Arlington House, New York, 1974).
COMMUNISM BROUGHT ECONOMIC CHAOS TO RUSSIA
Economic chaos followed the advent of the Communists to power. Within months fields lay untilled, and factories stood idle. Production sank to one-seventh of what it had been before the war when the Tsar was in power.
(Werner Keller, East Minus West Equals Zero, G. P. Putnam's Sons, New York, 1961, p. 195). "By August 1922 the Soviet economy was at the point of collapse." Lenin, Bogdanov, Arsky and Krassin each, according to Antony Sutton, acknowledged that their system had failed. (Western Technology and Soviet Economic Development, 1917-1930, p. 345). 1921-22 is remembered by the Russian people as the worst famine in Russian history up to that date. "The famine that struck large areas, particularly on the Volga and in the Ukraine, in 1921-1922, was caused only to a small degree by drought and other natural phenomena. In the main it was the consequence of the political developments of the preceding few years.... It was a man-made famine. By the summer of 1921 the disaster had reached such proportions, and the prospects for the future appeared so bleak, that the government was forced to deviate from the accepted methods of propaganda and admit the facts." (Facts on Communism: The Soviet Union from Lenin to Khrushchev, Committee on Un-American Activities, House of Representatives, 87th Congress, 1st Session, Dec. 1960, p. 130).
LENIN PLEADS WITH WESTERN CAPITALISTS FOR HELP
It was apparent that the people could not have with stood much more. Revolt was probable. In order to save Communism, Lenin was forced to slow down his radical socialization of Russia. Reluctantly Lenin called upon the mighty industrial powers of the West for help. They responded by sending engineers, research scientists, and technologists. According to Werner Keller, one of the leading authorities on East-West trade, Lenin hated the capitalists but found it advantageous to use them. (Keller, East Minus West Equals Zero, p. 195). The Russian leader is credited with having said:
"They will furnish credits which will serve as a means to support the Communists parties, and by supplying us with materials and techniques which are not available to us, they will rebuild our war industry which is essential to our future attacks on our own suppliers. In other words, they will be laboring to prepare their own suicide." (Ibid., p. 201).
GERMAN CAPITALISTS ASSUME LEADERSHIP
The Germans were the most responsible for rebuilding the Russian industry. Plants unmanned since the Communists seized power began to function. Much of the assistance came as a result of the German Trade Agreement of 1921, and the Papallo economic, military, and trade protocols. Germans assumed leadership in most large industrial and mining enterprises. "As late as 1928, Soviet industry was run by a partnership of German and prerevolutionary engineers independent of nominal Party control." (Sutton, Western Technology and Soviet Economic Development, 1917-1930, p. 346).
The assistance of the Germans was tremendous and without question saved Lenin and the Communist system.
"The first modern aircraft factory in Russia was built by the German Junkers concern. Thus, Soviet air power was born. Large numbers of Soviet engineers and workers were trained; many hundreds of Russian pilots were thoroughly instructed by German pilots; and the first Russian airline network was created." (Keller, East Minus West Equals Zero, p. 202).
MILLIONS IN AMERICAN RELIEF FUNDS HELP SAVE LENIN
Meanwhile, the American Relief Administration (A.R.A.) headed by Herbert Hoover, poured 700,000 tons of food and supplies worth $60 million into Russia. (Facts on communism, pp. 133-134). What America did was merciful, magnanimous, and in good faith, but it relieved Lenin and his followers from their greatest fear - a successful counter-revolution because of the famine. A much better program for the United States would have been to await the counter-revolution and assist a free Russian populace with food and supplies rather than to insure Lenin's retention of power. As it turned out, the Russian people were denied the opportunity to free themselves, and the West now fears an enemy which it helped to build. Ironically, the memory of this great and merciful American deed has been stamped out of Russian literature. Equally ironic is the fact that half of Germany is now held captive by the Soviet government which the Germans insisted upon preserving.
AMERICAN CAPITALISTS REPLACE MOST EUROPEANS BY 1929
American technical leadership began to replace German leadership in rebuilding the Soviet Union.
"Of the agreements in force in mid-1929, 27 were with German companies, 15 were with United States firms and the remaining ones were primarily with British and French firms. In the last six months of 1929, the number of technical agreements with U.S. firms jumped to more than 40." (Sutton, Western Technology and Soviet Economic Development, 1917-1930, pp. 346-347).
The new program was announced, however, only "after a sequence of construction and technical-assistance contracts with Western companies had been let. The Freyn-Gipromez technical agreement for design and construction of giant metallurgical plants is economically and technically the most important." (Ibid., p. 347).
EXTENT OF AID "ALMOST UNBELIEVABLE"
During the early thirties, the amount and type of "aid and comfort" to the Soviet Union was almost unbelievable. In 1930 the Ford Motor Company established the Russian motor car industry by constructing a factory "capable of turning out 140,000 cars a year." By the end of the decade the factory, at Gorki, was one of the largest in the world. Ford also provided training for the Russians in assembling automobiles "plus patent licenses, technical assistance, and advice," and "an inventory of spare parts." (Keller, East Minus West Equals Zero, pp. 208-209, 215-216). Americans also built, in the Soviet Union, the largest iron and steel works in the world; patterned after the city of Gary, Indiana. The huge steel complex, built at Maginitogorsk, was constructed by a Cleveland firm. (Ibid., pp. 209-210).
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