James Carter
Spring 2000
War, Empire & Revolution
Joan Hoff-Wilson, Ideology and Economics: U.S. Relations with the Soviet Union, 1918-1933. Columbia: University of Missouri, 1974. Vii-154 + appendices, biblio & index.
The Bolsheviks stunned the western world when, in late 1917, they seized power in Russia and officially brought to an end the hope of either an eventual return to Tsarist rule or a more liberal path signaled by Alexander Kerensky. From that year until the latter part of 1933, the United States refused formal recognition of the Revolutionary government. For a time, other western European nations also refused recognition. Both went so far as to launch military efforts to undermine the new government. The fact that Tsarist Russia could fall to the "radicals" forced the liberal western nations to confront that possibility on their own soil and the rest of the world in the wake of WWI. As one consequence, during the years from 1917 to 1933, anti-communism/anti-Bolshevism became thoroughly institutionalized within the American State Department, Commerce Department, and other policymaking circles. In her study of U.S./Soviet relations, Joan Hoff explores how this ideological bent and its adherents shaped foreign policy and responded to domestic pressures for commercial and diplomatic recognition.
Hoff's thesis is relatively simple: despite at times significant pressure from various business groups seeking trade with Russia over the years, the United States government proved unyielding on the issue of recognition of Russia. The policy of nonrecognition, as Hoff argues, had by the mid-twenties become "institutionalized." Initially, that is in 1917, the policy of nonrecognition was accepted by virtually every segment of American politics and business. Understandably, the Bolshevik Revolution alarmed potential investors or trading partners. "Businessmen across the country reacted with immediate and overwhelming hostility to the new Soviet government because they expected economic and ideological disaster in Russia." (3) Business leaders pointed to the fact that in the four years from 1917 to 1921, 90 percent of Russian industrial production was either disrupted or destroyed. The new government also removed Russia from the war and simply erased the burden of old Tsarist debts. These very serious impediments coupled with the firm belief on the part of many, particularly Herbert Hoover, Charles Evans Hughes and Warren Harding, "that the collapse of the Soviet 'experiment' was only a matter of time" resulted in a hands-off policy from business circles with little prompting from the government.(1)
By the late 1920s, however, this notion about the ephemeral nature of the Bolshevik government began to give way to reality. As businesses realized the permanence of the Russian government, they began to clamor for increased trade. At the same time, as the author argues, they "did not subject the original ideological assumptions supporting nonrecognition to the same pragmatic scrutiny." (8) While business leaders called for increased trade, they did not advocate diplomatic recognition.
The American business structure experienced dramatic change during the post-WWI decade. By the beginning of the Depression, a new corporatist-political coalition had come together to reshape the American political economy. This corporatist restructuring, according to Thomas Ferguson, replaced the "system of '96" with the "New Deal system." The former consisted of mostly "major industries, including steel, textiles, coal, and...shoes, whose labor-intensive production processes automatically made them deadly enemies of labor and paladins of laissez-faire social policy." This group was slowly supplanted over the course of the decade by a group consisting largely of capital-intensive industries whose primary concern was investment and whose labor costs were minimal. The former ("nationalists") relied on conservative labor policies and tariff protection while the latter ("internationalists") could be much more flexible concerning labor policy and tariff structure, and, in fact had to be in order to promote "free trade."(2) Hoff's study of U.S./U.S.S.R. relations during the 1920s reveals these developments, though in less specific or theoretical terms, in much the same way.
As mentioned, by the late 1920s, certain business interests began to question the policy of nonrecognition insofar as it meant sharply curtailed trade ties with the Soviet Union. Almost without exception, this questioning came from those "internationalists." As these groups were granted concessions in Russia, they began to realize the potential for profits. "Specialized" industries such as engineering companies, heavy equipment exporters, cotton, flour, and automobile exporters, and iron and steel exporters began to trade with Russia. And, even though this trade represented only a small fraction of overall US foreign trade, it was nevertheless vital to these sectors. While increasing their trade with the Soviet Union, however, these businesses "subscribed in theory to the ideological position of the Government. They simply were not as committed to the practical implementation of the anti-Soviet policy as were most political and financial leaders and those economic groups who feared competition from Russian products." (68-69)
As both Joan Hoff and Thomas Ferguson demonstrate, this new coalition of business/government leadership came into being by the end of the decade and transformed the American economy in significant ways. Further, at the height of the Great Depression, the administrations of Herbert Hoover and FDR bought sought a way out. Dramatically increased foreign investment by capital-intensive companies certainly would have factored into the equation. However, Hoff's argument is that "the protraders exercised no discernible impact on official policy." (108) Her effort here, as she explicitly spells out, is to challenge the myth that business groups in the United States basically forced formal recognition of the U.S.S.R. on an unwilling administration. The author maintains that these business groups, though on the rise, lacked the power of concerted action to bring that about. Additionally, they would not necessarily have advocated diplomatic recognition anyway as many held similar anti-communist credentials as their political counterparts.
Hoff goes on to explain how this myth became so powerful. This is frankly the least compelling part of the study. Basically, a couple of pollsters issued erroneous findings that seemed to conclude that a majority of the business community supported recognition before FDR made the decision.(3) These polls made the rounds in leading periodicals. At the same time, the White House had its own reports showing very clearly that support for recognition was minimal: a informal survey conducted at the behest of Secretary of State Henry L. Stimson concluded that 13 percent of 183 newspapers favored recognition, for example. Finally, Hoff unequivocally asserts, "there is almost no structural or organizational evidence that individual businessmen or specialized business groups" took steps necessary to change US policy toward Russia. (113)
As for the reason FDR eventually made that decision? The author suggests that "Roosevelt...worked behind the scenes with a few personal advisers to establish diplomatic relations for essentially political reasons." Those reasons consisted of a fear of the "aggressive postures" of both Germany and Japan. (120) The business community remained basically divided on the issue even as trade with the Soviet Union increased. The State and Commerce departments remained vehemently opposed to a change in policy. In the end, "trade was deliberately used as a ruse to ensure the acceptance of recognition that the President desired for essentially non-economic reasons." (130) Though I do not think Hoff has sufficiently proven that FDR made the decision to recognize the U.S.S.R. based on only these considerations, she does effectively demonstrate the power of the "institutionalization" of anti-communism both within US business circles as well as policymaking circles.
1. Robert Freeman Smith, "Republican Policy and the Pax Americana, 1921-1932," in From Colony to Empire: Essays in the History of American Foreign Relations, William Appleman Williams, ed. (New York: John Wiley & Sons, Inc., 1972), 253-292.
2. Thomas Ferguson, "From Normalcy to New Deal: Industrial Structure, Party Competition, and American Public Policy in the Great Depression." International Organization, 38, 1, Winter 1984, pp. 41-94. The "nationalist" and the "internationalist" groups are outlined in detail on pp.107-108, Joan Hoff, Ideology and Economics.
3. The poll conducted by Yale political scientist Jerome Davis has been the most often cited. Joan Hoff, Ideology and Economics, 114.