letter of transmittal
Reading edition
To the Congress of the United States:
I have the honor to submit herewith the fourth semiannual report on operations under the Mutual Defense Assistance Control Act of 1951 (Battle Act), the administration of which is a part of my responsibilities.
The period covered is July through December 1953.
A large part of this report is an examination of what the Soviet Union has been doing in its trade relations with the free world. In order to put the Russian activities of the last half of 1953 in a more understandable framework we have ranged back over the last 30 years to show how foreign trade fits into their economy and serves their purposes. To study Soviet trends and tactics is obviously important to the economic defense of the free world. To make a report to the Congress and the public on these matters should also be useful. There has been much public interest in the subject.
The selection of this theme, however, does not mean that Soviet trade activities are the only important consideration to be taken into account in the formulation of U. S. economic defense policy. They are not. Many other factors enter in, as told in Chapter V.
In preparing the report my staff has drawn heavily upon the expert knowledge of the Department of State and other agencies. But of course the responsibility for the report is ours.
In my last Battle Act report I said that the strategic trade control program had been hampered by lack of public knowledge. This is still true, but to a less extent, it seems to me. There is a better understanding of the Government’s policies, a greater realization that the soundness of East-West trade policy is to be judged not primarily on the amount of trade, but more on what kind of goods move back and forth, and on what terms they move.
Harold E. Stassen, Director, Foreign Operations Administration.
May 17, 1954.
CONTENTS
INTRODUCTION:Page
Note on “Strategic” and “Nonstrategic” 1
CHAPTERS:
I. Stalin’s Lopsided Economy 3
Emphasis on Heavy Industry
How Forced Industrialization Affects Trade
How the Kremlin Controls Trade
West Has Never Barred Peaceful Exports
Stalin’s Last Gospel
II. The New Regime and the Consumer 11
Letting Off Pressure
The “New Economic Courses”
Malenkov’s Big Announcement
Khrushchev and the Livestock Lag
Mikoyan Advertises the Program
Has Stalin Been Overruled?
III. The Kremlin’s Recent Trading Activities 19
The New Trade Agreements
More Consumer Goods Ordered
A Shopping Spree for Ships
Most of All, They Want Hard Goods
Something Different in Soviet Exports
They Have Dug Up Manganese
The Emergence of Russian Oil
Gold Sales Expanded
Reaching Outside Europe
IV. What’s Behind It All 35
The Kremlin and Peace
A Mixture of Motives
Their Objectives Haven’t Changed
Their Practices Haven’t Changed
The Challenge
V. U. S. Policy on Strategic Trade Controls 43
The Background
Basic Policy Reaffirmed
The New Direction of Policy
Reviewing the Control Lists
East-West Trade: Road to Peace
Trade Within the Free World
The China Trade Falls Off
They Play by Their Own Rules
United States Policy on the China Trade
VI. The Battle Act and Economic Defense 55
Battle Act Functions
The Money and the Manpower
Meshing the Gears
Improving the Machinery
The Termination-of-Aid Provision
Miscellaneous Activities
Summary of the Report
APPENDICES
A. Trade Controls of Free World Countries 65
B. Statistical Tables 89
C. Text of Battle Act 99
CHARTS
1. Volume of Trade of OEEC Countries With European Soviet Bloc 6
2. Free World Trade With the Soviet Bloc 21
3. EDAC Structure 57