Western Technology and Soviet Economic Development 1917 to 1930 By ANTONY C. SUTTON HOOVER INSTITUTION ON WAR, REVOLUTION AND PEACE STANFORD UNIVERSITY, STANFORD, CALIFORNIAThe Hoover Institution on War, Revolution and Peace, founded at Stanford University in 1919 by the late President Herbert Hoover, is a center for advanced study and research on public and international affairs in the twentieth century. - The views expressed in its publications are entirely those of the authors and do not necessarily reflect the views of the Hoover Institution. Hoover Justitution Publications [76] © 1968 by the Board of Trustees of the Leland Stanford Junior University All rights reserved Library of Congress Catalog Card Number: 68-24442 Printed in the United States of America Second Printing 1970To Mum and Dadi i Preface By far the most significant factor in the development of the Soviet economy has been its absorption of Western technology and skills. Previously this technolo- gical transfer has not been treated in detail; hence the data that comprise Part I of this study are thoroughly documented. Without such documentation, the argument of Part II would appear less than credible. The reader may, however, wish to pass on to Part IT after briefly satisfying himself with the general content of Part I, Chapter two discussing Soviet oil, and chapter eleven, on electrical equipment, are representative of the empirical treatment of key sectors in Soviet industry. ‘The primary sources for data are the U.S. State Department Decimal File and the German Foreign Ministry Archives, supplemented by journals in half a dozen languages from a dozen countries. Of these, the journals published by Soviet trade representatives abroad were of particular help. Grateful appreciation is due the Relm Foundation for funds to purchase several hundred thousand microfilmed documents. Acknowledgment is also due to California State College at Los Angeles and to the Economic Opport- unity Program for secretarial and research assistance. The National Archives, the Library of Congress, and the Hoover Institution library were unfailingly responsive and remarkably adept at interpreting requests for information. Without their sympathetic aid, this study could have been neither attempted nor completed. In addition, Dr. Stefan Possony of the Hoover Institution was very helpful in making research suggestions which, in the final analysis, turned out to be of fundamental importance. The Hoover Institution also accepted the considerable burden of preparing the manuscript for publication ; particular thanks is due London G, Green for his capable and understanding work as editor, Finally, acknowledgment is made to F. W. B. Coleman, resident United States Minister in Riga, Lativa, during the 1920s. Riga was the main American ‘listening post’ of this time, and dispatches by Coleman to Washington, D.C., iviii Preface suggest a deep understanding of events in the Soviet Union. These detailed and accurate reports were of major help in this study. It is especially important in a study which breaks substantially new ground in a controversial area to point out that any criticism concerning the inter- pretation of data must fall squarely on the shoulders of the writer, and not on his sources. Such criticism is, of course, to be welcomed. AGS. Pasadena, California April z, 1966Contents Part I. An Empirical Examination of Foreign Concessions and Technological Transfers Cuapter One: Introduction Economic Development and the International Transfer of Tech- nology se o The Soviet Union and the Transfer of Technology The Role of the Foreign Concession, 1917 to 1930 - The Place of the Concession in the Economic History of theU. 3.8. R. Methodology of the Study . + Cuapter Two: Caucasus Oil Fields—The Ko to Economic Recovery Collapse of Oil Field Drilling .. . . International Barnsdall Corporation .. Oil Field Properties Covered by the Barnsdall it Agreement. Extent of Barnsdali Drilling . Changes in Drilling Technology at Baku . Changes in Pumping Technology and Oil Field Electrification The ‘Pure’ Oil Concessions o . Oil Development in the Soviet Far East . . “ Oil Exploration Technology Pipeline Construction, 1925-8 Refinery Construction .. Acquisition of Foreign Markets for Petroleum Products Summary of Soviet Oil Development, 1917-30 Cuapter Turee: Coal and Anthracite Mining Industries Years of Crisis and Stagnation ‘ 1 Union Miniére and the Donetz Basin Coal Mines on The Kuzbas Project of the American Industrial Colony Pure Concessions in Remote Areas . Fo an 18 ar 23 23 25 27 30 31 35 40 43 45 48 50x Contents Technical Assistance from Germany . Technical Assistance Contracts with Stuart, James a and Cooke, Inc. Roberts & Schaefer and Allen & Garcia Contracts . Results of the Mechanization of Coal Mines Crarter Four: Early Development of the Soviet Metaluagicat Industry The Southern Ore Trust (Yurt) . . . Reconstruction in the Metallurgical Sector .. The Structure of Ugostal in 1929 Concession Offers in Metallurgical Construction te Pure (T'ype I) Concessions in the Metallurgical Industry “Technical-Assistance Agreements with Gipromez .. Cuarter Five: Non-ferrous Metal Mining and Smelting; The Manganese Concessions Lead-Zine Mining and Smelting Copper Mining and Smelting Industry; Silver A Non-Collusive Duopsony; The Manganese Concessions | ‘The Implications of the Harriman Failure .. o Cuapter Six: Gold Mining, Platinum, Asbestos, and Minor Mineral Concessions Gold Mining and Foreign Concessions The Lesser Gold Concessions Discovery and Development of the Alden Gold Fields Platinum Exports on Bauxite and the Aluminum Company’ of America . oe Mica Mining and the International Mica Company, | Inc. .. Asbestos Production in the Urals Asbestos Roof Shingles Manufacture Cuarrer Seven: The Industrialization of Agriculture The Krupp Agricultural Concessions Other ‘Pure’ Farming Concessions . German-Russian Seed Cultivation Company "Technical Assistance in Agriculture .. Cotton Irrigation . . Merino Wools and an Australian Embargo Replenishment of Livestock Herds Livestock and Dairy Industry Concessions; Union ColaStorae, Ltd, Foreign Agricultural Communes in Russia .. Jewish Land Settlement Programs .. 1 o "The Fate of the Agricultural Communes... oe ‘The Agricultural Equipment Manufacturing Industry st 5 54 58 59 66 67 74 80 86 92 100 104 105 106 107 108 112 114, 316 118 119 at 122 123 326 129 138 132Contents Attempts to Develop a Soviet Tractor, 1922 to 1926 International Harvester Company and Nationalization Position at Mid-Decade : Krasnyi Putilovets and the Ford Motor Company . Credits Granted by Agriculeural Machinery Pr Producers tothe Soviet Union, 1925 «+ Cuapter Eicut: Fishing, Hunting, and Canming Concessions ‘Norwegian Fishing Concessions . : Fur and Skin Concessions Siberian Fish Canneries : American Construction of Salmon Canneries in Kamchatka Cuaprer Nine: Restoration of the Russian Lumber Industry 2 192T-30 Severoles Trust and Foreign Lumber Companies : Russangloles, Ltd. Russhollandoles, Ltd. (Russian- -Dutch Timber Company) Ex-Chancellor Wirth and the Mologa Concession The Exploles Trust in the Far East Activities After the Departure of the Concessions Pulp and Paper Mills Technical Assistance in the Lumber Industry . Soviet Lumber Trade from rg21 to 1928 Cuapter TEN: ‘Sovietization’ of the Tsarist Machine-Building Tadustey The Leningrad Machine-Building Trust (Lenmashstroi) . Mosmash and German Technical Assistance Gomza and the Westinghouse Brake Works . Gomza and the German and Swedish Locomotive Program . The Baldwin Locomotive Technical-Assistance Agreement of 3929 General Electric Diesel-Electric ‘Suram’ Locomotive Technical Assistance to Gomza Refrigeration Equipment Plants os General Technical Assistance for Orgametal . SKF (Sweden) and the Manufacture of Bali Bearings Steam Boilers and Mechanical Stokers . Precision Engineering Technology and Its Acgut tion Conclusions Cuaeren ELgveN: ieetrica Equipment "Manufacturing adver and oer ‘The Formation of Trusts . os . . "The Electro-Technical Trust (GET) te . oe The Electrical Machine Trust (Blmashetoi The Low-Tension Trust . “ oe 133 135 137 139 143 145 146 148 148 150 15t 154 155 159 160 160 16r 162 164 166 167 168 173 174 175 176 177 179 180 183 185 188 19t 193