The exchange of American ideas for Soviet cash or concessions should have been mutually beneficial. But ideological issues sharply divided the two societies. There were those in the US who flatly opposed doing any business with the Russians. They believed that under direct orders from Moscow, the US Communist Party members were secretly working to destroy the whole American way of life. They argued that if Communism were to spread to the US, it would mean taking away religious freedom, private property and access to justice. To the Communist way of thinking, America was a society built entirely on unfairness and the institutionalised mass exploitation of the working class for the benefit and enrichment of a few. The greatest success of the US had been to mobilise mass consumer demand. The American working class was not political and aspired to a life of consumption that the Soviets viewed as a shallow, material existence. Every Soviet visitor to America would comment on the extraordinary proliferation of advertising hoardings cajoling consumers to purchase the latest model of automobile, Coca-Cola or cigarettes.
The key barrier to greater trade was the US government’s implacable opposition to lending the Communists any money while Russia owed vast sums to US investors. Assets granted to American businessmen by the Tsar had after the revolution been expropriated by the Communists, who refused to pay any compensation. With the debt issue unresolved, the Soviets could not legitimately buy technology in the quantities they required. So they adopted a roundabout approach, which US manufacturers learned about the hard way: the unlicensed reproduction of foreign technology. Foreign cars, tractors, and other machinery exhibited at Soviet trade fairs were examined and copied. Henry Ford’s deputy, Charles Sorensen, on a visit spotted near-perfect copies of Fordson tractors manufactured under the name Red Putilovets.5 The Soviet design originated from technical drawings based on a dismantled American vehicle. Following the re-establishment of diplomatic relations, the first American ambassador to Moscow, William Bullitt, would be plagued by constant complaints from US firms about infringement of their patents.
It was not just mechanised harvesters and cotton pickers that Lenin imported to transform backward Russia, he adopted advanced US management techniques. The Soviet Union introduced the Taylor system of time and motion study – a technique to improve productivity – to encourage the scientific efficiency of labour in its factories. To much puzzlement, an army of officials armed with clipboards, stopwatches and tape measures appeared on factory floors. Russian workers were unimpressed and did not want to be timed, measured and subjected to flip charts. New technology from abroad, augmented with Gantt organisation charts – which broke down processes into their component stages – was supposed to lead to a rapid reduction in working hours and improvement in the quality of workers’ lives. It didn’t.
In a more successful step, the Soviets translated Henry Ford’s works into Russian as essential reading for factory managers. There was an official government campaign to ‘Do It the Ford Way’.6 By such innovative manufacturing techniques of mass production, the United States had overtaken the British Empire as the world’s number-one economy, helped in part by the Great War. Imported to the Soviet Union, these same techniques were expected to bring about the inevitable triumph of socialism. Capitalism was a smart, inventive beast. American business, as well as Marx, had much to teach those embarking on the sure road to socialism. The US had met and defeated the same challenges that confronted the newly formed Soviet Union, including how to industrialise with only untrained, unskilled workers and few managers. The US was the teacher, the model of mass production, an urbanised country boasting the highest living standards in the world. Copying US techniques and methods would turn Russia’s army of uneducated, conservatively minded peasants, tied to their traditions and land, into a progressive communist urban proletariat.
From the 1920s, hundreds of Soviet engineers were sent abroad annually on short foreign trips for hands-on training with new technology. They were instructed to gather as much helpful information as they could on their visits. It was not a difficult task in the US. One engineer described his surprise at the openness of the Americans he met. While visiting a factory, he and his comrades would be given unhindered access to a broad range of technical data. They could make sketches and take copies back to the USSR free of charge. Their host company did not disclose its patented secrets, but everything else was considered advertising for the firm. From such early trips, the Soviet leaders gained the idea that America, more than any other country, was wide open to industrial espionage.
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In October 1922, just a few weeks after the Reds’ victory in the Russian Civil War, an ex-Russian Orthodox seminary student and his close friend, a former Jesuit student, set in motion a more radical long-term reconstruction of Russia. In their frequent correspondence, they planned a transformation of their backward land, now shattered and starved by three wars and revolutions in short order.7 The lapsed Catholic, ‘Iron Felix’ Dzerzhinsky (his nickname arose on account of his ruthlessness and devotion to the Communist cause), was the founder of the Soviet security services. The former seminary pupil, Joseph Stalin, General Secretary of the Party, was on his path to become Lenin’s heir. In 1925, Dzerzhinsky became the first and only known intelligence chief to be given simultaneously a major economic post as Chairman of the Supreme Economic Council. The two friends could discuss almost anything.
In their shared desire for rapid change, Dzerzhinsky and Stalin emphasised the use of intelligence as one tool to tackle the economic crisis. Both men had a fine appreciation of the value of espionage: Dzerzhinsky was a spymaster, and his friend the most spied-upon man in history. Dzerzhinsky had a pivotal role in identifying the potential contribution of both Western technology and scientific and technological (S&T) espionage to the modernisation of the Soviet economy. He identified America, the world’s number-one technical innovator and leading industrial power, as a role model and target. Dzerzhinsky studied and grew to admire American industrial methods – most surprisingly those of the world’s first billionaire, Henry Ford, the pioneer of the industrial practices from which Dzerzhinsky believed the backward Soviet economy needed to learn. Dzerzhinsky wrote in 1925: ‘It is essential to engage in the study of Ford’s methods and their adoption in practice … Perhaps it would be worth recruiting from abroad practitioners and organisers of Fordism.’8 Dzerzhinsky’s ideas and recommendations were incorporated into the Five-Year Plans – Stalin’s centrepiece programmes to industrialise the Soviet Union at breakneck pace. Ford’s top architect, Albert Kahn, was recruited to design and build Stalin’s giant dual military/civilian-use factories along Ford lines, and was responsible for establishing automotive, tractor and tank facilities in the Soviet Union.
On assuming control after the death of Lenin, the new leadership decided enough was enough and immediately galvanised the entire efforts of the state to build up heavy industry. Amid enormous publicity, Stalin announced the first Five-Year Plan in 1928. The first and second Five-Year Plans proposed the creation of new capital-intensive aviation, automobile, tractor and chemical industries. Stalin’s plans were on a truly grand scale and required building over 1,500 modern factories between 1928 and 1933; yet he understood that the Soviet Union’s early attempts at going it alone to develop industry without adequate foreign help had failed. The most notable example was the first project at the vast Magnitogorsk metallurgical plant. The inexperienced Soviets had tried to build the plant at breakneck speed, cutting corners; as a consequence, urgent and extensive repairs to the twin blast furnaces were needed just days after first starting them. The production of steel was pushed back years. The lesson of such failures was that the design and building of large, technically complex industrial facilities was beyond Soviet capabilities without significant long-term foreign expertise. The help of the West was required and was sought once more – this time in the new form of fee-based technical assistance programmes, not long-term concessions. Stalin’s proposed commercial terms were attractive to foreign companies, as they were for a limited period and so did not require risky long-term investment. During the Great Depression of the 1930s Western companies desperately needed large orders, allowing the Soviet Union the opportunity to acquire advanced technology and technical skills quickly and cheaply.
Under the standard terms of the contract, a foreign