Russia & Recognition

Trade outruns diplomacy. Last week while the State Department was talking about Soviet Russia in the language of 1923, U. S. businessmen were talking about it in terms of 1930. The Treasury's "half-cocked" embargo on Soviet pulpwood fortnight ago had served to point up the whole question of U. S.-U. S. S. R. relations, economic and diplomatic, in a new light (TIME, Aug. 11, et ante). Speakers at the Institute of Politics at Williamstown, Mass., had frankly advocated U. S. recognition of the Soviet Government. Last week Albert Ottinger, one-time New York State Attorney General, onetime Republican gubernatorial nominee, friend of many a tycoon, broadcast a speech in which he urged an immediate conference to negotiate a settlement of the issues now holding the two governments apart.

Big U. S. traders with Russia--Standard Oil, General Electric, Austin Co., General Motors, International Harvester, Caterpillar Tractor, Radio Corp., et al--gave silent assent to any diplomatic move which would simplify and improve their business relations with Moscow. The newsorgan Isvestia, speaking for the Soviet Government, suggested that the U. S. "think it over . . . and understand that the only way successfully to develop trade with the Soviet Union is to establish for it a normal [i. e. diplomatic] foundation."

Such cumulative talk produced reports last week that the U. S. was about to reopen the matter of Soviet recognition. This the State Department flatly denied. Assistant Secretary of State Castle declared that the U. S. policy toward Russia remained just as it was when Secretary of State, now Chief Justice, Hughes formulated it in 1923 and that diplomatically nothing had occurred since then to change the situation.

While diplomatists were standing still, traders were forging forward in great leaps. In 1923 Russia exported to the U. S. only $1,481,600 worth of goods. Last year its exports had grown $30,749,044. In 1923 Russian purchases in the U. S. totaled $7,308,389. In six years they rose to $107,651,000.

The State department sees four obstacles to the recognition of Russia: 1) $75,000,000 in private pre-War loans to the Tsarist government, repudiated by the Soviet; 2) $86,000,000 in U. S. Treasury War loans to the Tsarist government, also repudiated; 3) $187,000,000 in U. S. Treasury loans to the Kerensky government; 4) Communist propaganda in the U. S. by the Third International, the Soviet Government's Siamese twin.

In 1923 when Russian trade was negligible President Coolidge, in his first message to Congress, took a high moral stand against Russia because of its refusal "to recognize the sanctity of international obligations." Said he: "I do not propose to make merchandise of any American principle. . . ." He implied that the U. S. would consider recognition of Russia when the Soviet Government compensated U. S. property owners, refunded the Kerensky debt and desisted from Communist propaganda. He was ready to cancel the Tsarist War loan.

Heartened by such a program of negotiation, Soviet Foreign Minister Chicherin cabled to President Coolidge a fortnight later his government's "readiness to discuss all the questions in your message." This cablegram cracked the door toward resumption of diplomatic relations. There was, however, at that time no pressure from Big Business for better trade relations to open the door further.

Secretary of State Hughes curtly retorted to the Soviet through the Press: "There would seem to be at this time no reason for negotiations. ... If the Soviet authorities are ready to restore confiscated property of American citizens or make effective compensation they can do so. If they are ready to repeal their decree repudiating obligations to this country . . . they can do so. It requires no conference or negotiations to accomplish these results which can and should be achieved at Moscow as evidence of good faith. . . . Most serious is the continued propaganda to overthrow the institutions of this country. This Government can enter into no negotiations until these efforts are abandoned."

One factor neither President Coolidge nor Secretary Hughes mentioned: the Soviet's determination to meet U. S. claims with counterclaims based on the use of U. S. troops against the Reds in North Russia (TIME, Dec. 9) and Siberia. Comrade Josef Stalin has declared that these Russian claims are five times the size of the U. S. claims. The Soviet Government likewise contends that any payment it makes on the debts must not be accepted as such but as a sort of "super-interest" on industrial credits it expects to receive in return.

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