The Kremlin advertised its plan to pay for imports with its gold reserves and to sell Russian natural resources to the highest bidders. Western businessmen flocked to Tallinn. Many were not distinguished by their honesty, but all of them were willing to take the gamble of investing in Russia’s international trade. In fact the goods traffic to Petrograd outweighed what went in the opposite direction by a factor of ten to one. Urban Russia remained unproductive and the villages were no longer covering the country’s requirements. Flax and veneers were practically all that the People’s Commissariat of Foreign Trade could lay its hands on for sale abroad.13 According to the Estonians, a third of Russian imports consisted of agricultural machinery and equipment.14 Traditionally Russia had exported food, paper and leather to Europe, but now these items had to be bought abroad.15 The Estonians were happy to oblige. Estonia had barely started to recover from war and revolution and its ministers now judged it in the national interest to enable the Russians to acquire the products they wanted. The transit fees were too valuable to be ignored.
Soviet leaders continued to press for recognition by the Allies. At the end of 1919 Litvinov affected surprise that the Bullitt proposals of earlier months had not been acted upon. This was nonsense: Lenin on his side had never been genuinely committed to ending the Civil War except with a Red victory. Litvinov was really trying to appeal to all those lobbies in the West which might be tempted to trade with Soviet Russia. And a sequence of events appeared to confirm that the ice was beginning to crack. In mid-January 1920 Radek was released from German custody and sent back to Russia across Poland. He had by then decided that the ‘European socialist revolution’ was not going to happen very quickly, but he thought that his own liberation indicated the growing willingness of German ministers to adopt a gentler line in their Russian policy. The Soviet leadership made its own moves in the same period. On 7 March the Cheka resolved upon a mass release of seventy-four prisoners with English names from its prisons and camps.16 The purpose was easy to guess. The Bolsheviks had identified the United Kingdom as the likeliest of the great powers to come to an accommodation immediately after the war. A show of goodwill might be useful before negotiations commenced.
But even though Lloyd George was eager for commerce to be resumed, it would take time for him to clear away the political obstacles. The next move for Soviet leaders was therefore to set their caps at Sweden. The Swedes themselves wanted a share of the Russian trade and had industrial products for sale. Lev Krasin, who in 1918 had served in the Soviet mission in Berlin, joined Litvinov in Stockholm on 1 April 1920. While Litvinov handled the diplomacy, Krasin would lead any talks on trade. Krasin himself was viewed favourably in Europe — by some at least. The Manchester Guardian had picked him out as a man to be trusted, its Moscow correspondent W. T. Goode offering this warm portrait: ‘In the prime of his powers, sparkling with energy, Krassin [sic] is a well-set-up man, with black hair and full beard, a dark but bright complexion, and an engaging man. He is supremely competent, and his personality and conversation convey that impression swiftly to those with whom he speaks.’17 Having worked in Germany and Russia before 1917 as a manager in the Siemens-Schuckert company, Krasin had an intimate experience of industry. His post in 1920 was as People’s Commissar of Foreign Trade. His assignment abroad was to help start the Russian economic recovery by selling off manufacturing and mining concessions. Concentrating on the Scandinavians, Krasin now set out to drive a wedge into world ‘capitalist imperialism’ as Lenin had demanded. The plan was to use foreign capital for the benefit of communism in Russia.
For this to happen, a degree of subterfuge was required. Most countries were still reluctant to hold talks with Bolshevik Russia, so Sovnarkom sent out its envoys in the guise of leaders of the Russian co-operative movement.18 It was blatant hypocrisy. Bolsheviks in Russia treated co-ops as suspect organizations that sheltered enemies of the October Revolution. But foreigners who spoke to Krasin could now more easily shrug off criticism that they were talking to a communist state official. An atmosphere of friendliness and confidence was fostered in Scandinavia as the negotiations got under way. Swedish and Danish entrepreneurs put pressure on their government to facilitate trade agreements. The race was joined to re-enter the Russian trade. It was won by Denmark, which signed a treaty on 1 May. A copy was forwarded to the Allied embassies in Copenhagen so that political leaders might understand that any slowness in settling with Soviet Russia would lose them a lot of money.19 Krasin was pleased by how quickly Armstrong Whitworth, one of Britain’s largest metallurgical companies, sent people to Scandinavia to open talks with a view to agreeing a contract. And as a queue of Western businessmen lined up to meet him, he was kept very busy.20
The next stage of the Soviet leadership’s plan was to send a section of their trade delegation to London to negotiate a treaty with Lloyd George. There was a temporary halt in proceedings when the British refused Litvinov a visa on account of his anti-war propaganda activity two years earlier.21 The Soviet delegation reacted by cancelling all talks with British businessmen and threatened to call off any trip to the United Kingdom.22 But this was only a bluff since Krasin had never been one of Litvinov’s admirers. Having always found Litvinov pedantic and painful to work with, he was more than content to proceed to London without him.23 In any case, the priority for the Soviet leadership was to start up the talks. And when Theodore Rothstein was refused permission to enter the United Kingdom there was no reaction from Moscow.24 Moreover, the British for their part wanted to appear flexible and allowed Litvinov’s friend Nikolai Klyshko to return to the United Kingdom as Krasin’s interpreter and chief of staff. Klyshko had worked for Vickers Ltd before the war, his English was good and he had plenty of British personal contacts.25
Sovnarkom had been officially committed to its concessions policy since mid-1918, but it was only now, in peacetime, that it stood any chance of being implemented. Krasin was empowered to put up mines, forests, railways and telephone networks for auction to the highest bidders in the West. The sole stipulation in the Supreme Council of the People’s Economy was that no foreign firm should gain a monopoly. Economic necessity called for instant action and Russian industrial recovery would benefit from external assistance.26 Lenin and Trotsky promoted the initiative, inviting the world’s capitalists to make their profits again in Russia so that the communist party might rebuild Russia’s shattered economy. Before 1917 they had denounced the Nobel Oil Company as the greedy and ruthless exploiter of the petrochemical resources of the Baku fields. But oil was almost the only means of industrial employment in Azerbaijan, so Lenin now wanted the Nobel family to come back with their technical expertise and financial resources. He was also ready to welcome Krupp, a company reviled by communists as a supporter of German militarism, to southern Russia to regenerate agriculture. Having handed the landed estates to the Russian peasantry in the October Revolution, he intended to grab them back so that foreign capitalists could modernize them and make profits for themselves and for the Kremlin.27
Trotsky was equally active in this cause and knew how to appeal to foreign businesses. When he gave an interview to the American reporter Lincoln Eyre, he emphasized that Russia aimed to re-enter the world economy and buy foreign machinery.28 One of Trotsky’s protégés, the dapper Viktor Kopp, was reported as being in Berlin and Copenhagen.29 Kopp duly did the rounds of Krupp, Voss and other leading industrial companies. The overtures had a tempting logic. The Paris Peace Conference had severely restricted the size of the German armed forces for the foreseeable future. German metallurgical enterprises had expanded immensely in 1914–18 in response to the state’s military requirements, and Krupp and its rivals had yet to find a substitute purchaser of its armaments. By treating Soviet Russia as a pariah state, the Allied powers freed it to act entirely as it wished; and there was nothing in the Versailles treaty to stop German industry from signing contracts with the Russian communist leadership: Kopp had the authority to negotiate on this basis. Mo
scow had not abandoned its ultimate revolutionary goals. But until such time as the German Communist Party seized power in Berlin, Trotsky was happy to use Germany’s capitalism to enhance Soviet military security.
Lloyd George had no intention of letting the Germans overtake the British, but his ideas were opposed by Churchill, who wrote to him on 24 March 1920: ‘Since the Armistice my policy would have been “Peace with the German people, war on the Bolshevik tyranny.” Willingly or unavoidably, you have followed something very near the reverse.’30 While eschewing Churchill’s combative rhetoric, the other Western governments bridled at Lloyd George’s softness towards communist Russia. French ministers were the first to express doubts about any accommodation with Soviet commercial requests. They continued to draw attention to the losses incurred by France’s private bondholders as the result of Lenin’s unilateral annulment of Russian state debts. In America opinion was divided and the political situation was unstable. Woodrow Wilson was chronically ill and no longer handled the main diplomatic levers, and no clear policy emerged from the State Department.
The British cabinet proceeded with caution. Lloyd George wanted to keep a good bargaining position and could see that over-eagerness would be counter-productive. The Kremlin leaders were to be made to appreciate that they would get no treaty unless they complied with his demands. Lloyd George also needed to avoid unduly annoying the French government or alarming Washington — and he hoped to placate the Conservative MPs in his governing coalition. Nonetheless he remained confident that trade with Russia was in Britain’s best interests. He was being strenuously lobbied by influential business sectors as well as by the moderate political left in favour of a treaty. The Prime Minister believed that Russia’s reincorporation into the world community of nations would enhance peace, employment and prosperity in Britain and the rest of Europe. He also thought that the Russian people would drop any lingering preference for communism once there was a resumption of trade. When goods flowed into Soviet territory it would quickly become obvious that capitalism was better at producing a decent standard of living. Communism would shrivel in the Russian ground as Soviet rule collapsed. Although Lloyd George did not predict how this outcome would be achieved, he was confident that capitalism would introduce a fatal infection into Lenin’s regime. The Bolsheviks, he considered, would ultimately pay dearly for his fanaticism and the globe would be rid of the pestilence of the October Revolution.
Krasin arrived in London on 27 May 1920.31 Among the sticking points was the Soviet government’s desire to make its purchases in gold. The British government continued to contest the Bolshevik seizure of foreign assets in Russian bank vaults; the bullion stocks in Red hands were widely considered to be tainted and it was going to be tricky for Lloyd George to get round the problem without public controversy. Krasin also had to answer questions about Russia’s outstanding state loans, which had been unilaterally annulled by Sovnarkom on 3 February 1918. The New York Times characterized the emerging British policy as ‘buying off a dangerous enemy’.32 French newspapers also complained that the Soviet delegation’s decision to make for London and avoid Paris showed that Lloyd George was betraying the joint responsibilities of the Allies.33 Yet public opinion in France was no more hopeful about the Americans. The suspicion was that if the British decided to withdraw from the Russian talks, Washington might step in quickly and sign a commercial treaty with Moscow.34
It was not just politicians in Britain and abroad who had doubts about Krasin; many businessmen too were not happy to welcome him. Krasin learned this directly when he was harangued in his hotel by an entrepreneur who been arrested by the Cheka and forced to hand over his English pounds for rubles, a currency without exchange value abroad.35 A court case was also brought against Krasin for trying to sell Russian timber to a British firm. The plaintiff claimed that his own stocks of timber had been seized without compensation in 1918 and the communist authorities were making illicit profit from them. Although the case moved sluggishly through the judicial system, no one was in any doubt about the possible consequences. If judgement went against the Soviet government, a torrent of such cases might be let loose as disgruntled owners and investors sought financial redress.36 Krasin’s travails continued when the British industrialist Leslie Urquhart began to pester him. Urquhart had advocated the maintenance of business links with Russia after October 1917; but in mid-1918, on a trip to Moscow, he was threatened with imprisonment as a spy. If he had not been fluent in Russian, he might not have been able to extricate himself and repair to safety in northern Russia, from where he departed for the United Kingdom. He was less fortunate with his property because the communists had expropriated his large Russian mining and smelting company — and Urquhart did not intend to let Krasin forget this.37
Lloyd George’s life would have been easier if the influential business lobby in favour of resuming trade had been willing to come into the open. But no company chairman wanted to push the case too hard in public. Sovnarkom’s record in ripping up property rights, persecuting religion and conducting a Red terror was notorious. The men of business were using the Prime Minister as their battering ram without putting their shoulders to the charge. As for the British labour movement, its sympathies with all or some of Lenin’s and Trotsky’s policies made it less than helpful in persuading the doubters. If an Anglo-Soviet commercial treaty was going to be realized the impetus had to come from the government. Lloyd George was willing to give this a try — and Soviet leaders were hoping that he would succeed.
PART FOUR
Stalemate
25. BOLSHEVISM: FOR AND AGAINST
From November 1919 a group of leading British anti-Bolsheviks met together in the Savoy Hotel and the Café Royal for ‘Bolo Liquidation Lunches’. Bolo was the slang term for Bolshevik used by British and American officials at that time. Those seated around the table included Stephen Alley, Paul Dukes (who signed the menu in Cyrillic script), George Hill, Rex Leeper, John Picton Bagge and Sidney Reilly. All were old Russia hands and were connected with the Foreign Office or the Secret Service Bureau. As ardent foes of communism, they organized the lunches to discuss how to toughen British policy and bring down Lenin and the Soviet order.1
Paul Dukes, when his cover was blown in Russia, began to write articles for the London Times. He recounted the terrible food shortages and blamed them on Soviet economic policies rather than war or the weather.2 He ridiculed the idea that the workers and peasants were on the side of the Bolshevik party and said that the public displays of joy on May Day were an artificial confection. He pointed out that Bolsheviks treated their critics, including factory labourers, as counter-revolutionaries. He hailed the spread of peasant rebellions against communist rule and wished the Greens well in their struggle with the Reds.3 (The Greens were peasant partisans who fought the Reds and Whites with equal ferocity.) The final article in his series depicted the intimidation, fraud and lying propaganda involved in a local soviet election he had witnessed.4 He called on the Western political left to shed its illusions: ‘Bitterly as they revile the bourgeoisie, the Bolshevist leaders reserve their fiercest hatred and their last resources of invective and derision for all other Socialists — Russian, English, German, and American alike. They are never spoken of otherwise than as “social-traitors”.’5 Dukes bragged that he had visited Russia not as an accredited journalist but as a private traveller who had conversed with every section of the Russian people — he of course omitted to mention his employment by the Secret Service Bureau.6
According to Dukes, the ‘National Centre Party’ enjoyed support across the whole political spectrum, apart from monarchists and communists. The National Centre, however, was not a party but a combination of public figures of diverse political opinions. Dukes was deliberately misleading his readers to win their sympathies. He also made the unfounded claim that ‘the large majority of socialists have joined [the party]’ and were in productive contact with General Denikin.7 Although Dukes did admit that the so
-called National Centre Party aimed to install a temporary dictatorship, he declared that democracy was its ultimate aim. The peasants would be left in possession of the land. The Soviet separation of Church and state would endure and the universal educational provision introduced by the Bolsheviks would be maintained. The National Centre Party would hold elections to a National Assembly and had no desire to restore the survivors of the Romanov dynasty to power. By focusing on the National Centre Party and exaggerating its status as a rallying point for anti-Soviet opinion in Russia, Dukes downplayed the extremism of the officers in Denikin’s forces. If anything united the Whites, in fact, it was Russian nationalism and anti-Semitism. They despised all liberals and socialists; they believed that democratic institutions had been tried and found wanting between February and October 1917. The political future they wanted would have little space for politicians, and Russia’s fate would have been grim and chaotic under their rule.
Dukes reminded his readers that the leadership in the Kremlin had set up a Communist International with the purpose of subverting governments in Europe and North America.8 His pronouncements did not go unnoticed by the Bolsheviks. When he joined the Christian Counter-Bolshevist Crusade and began to speak at its meetings, supporters of Soviet Russia attended his appearances to heckle.9 Dukes responded that since he had served in the Red Army he was speaking from personal knowledge; but in February 1920 his speech at a public meeting in Westminster Hall led to an affray that the police had to quell.10 When the Soviet government’s newspaper Izvestiya accused him of subversive machinations he at last admitted to having been in charge of British intelligence operations in Russia, but he still held that he had only been gathering information.11 Dukes received a knighthood for his services in December 1920 — George V had in fact wanted to award the Victoria Cross but was overruled by the army chiefs of staff who insisted that the medal could be received only by members of the armed services.12
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