Will Ukraine Wind Up Making Territorial Concessions to Russia?
Foreign Affairs Asks the Experts
POST-REVOLUTIONARY relations between the Kremlin and Downing Street are a composite of Anglo-Russian and Anglo-Soviet relations. There is much that is old and the product of geography; there is as much that is new and the product of opposing social philosophies and economic systems. In the east and in the west, understanding between Great Britain and Russia has become less likely than under Tsarism.
The Labor cabinet headed by Ramsay MacDonald in 1924 made a sincere effort to bridge the financial and political chasm between the two states. Yet the good results were not at all proportional to the good will shown on both sides. Today, after the resumption of relations agreed upon by Arthur Henderson, the British Foreign Secretary, and Valerian Dovgalevsky, the Soviet Ambassador to France, the two nations face exactly the same problems that they faced in 1924, and although the same good will actuates both Downing Street and the Kremlin, the chances of settlement in 1930 seem to be more remote than they were six years ago.
The Protocol signed by Henderson and Dovgalevsky on October 3, 1929, calls on Russia and England to define their attitudes to the agreements signed in August 1924 by Ramsay MacDonald and Christian G. Rakovsky, the Soviet chargé d'affaires in London. Though the coming negotiations will cover exactly the same ground that was covered in 1924, and probably in much the same way, the propaganda issue has been eliminated, because in the preliminary pourparlers Henderson and Dovgalevsky accepted Article 16 of the 1924 treaty. That article pledged the contracting nations "to refrain and to restrain all persons and organizations under their direct or indirect control, including organizations in receipt of any financial assistance from them, from any act, overt or covert, liable in any way whatsoever to endanger the tranquillity or prosperity of any part of the territory of the British Empire or the Union of Soviet Socialist Republics, or intended to embitter the relations of the British Empire or the Union with their neighbors or any other country." This clause may mean very much. It will probably be interpreted as referring to the activities of the Comintern and Soviet trade unions, and as an undertaking with respect to Afghanistan and Persia. It is susceptible of considerable legal hair-splitting and may cause trouble in the future. But for the moment the question of propaganda should not clog the machinery of negotiations. Debts and property, however, remain to plague the discussions.
According to one authority,[i] Russia's public debt to Great Britain amounts to:
|Government and Railway bonds||$333,000,000|
The Bolsheviks in 1924 pressed counterclaims. They asked for reparation for damages done by British and British-supported forces in Russia during the Soviet civil war. Rakovsky, in a memorandum to the Labor Government which Ponsonby, MacDonald's Under-Secretary of State, pronounced "vague and unsatisfactory," set the sum at approximately £2,000,000,000 sterling. But regardless of the actual sum, the Bolsheviks insisted that their counterclaims for an indemnity be duly recognized. "One million three hundred fifty thousand human lives alone," Rakovsky affirmed at the May 15 session of the Anglo-Soviet conference, "were lost in the fight against intervention." Three thousand five hundred bridges were destroyed. Whole provinces were laid waste. "I repeat," Rakovsky continued, "that the question of British claims is insolubly connected with the Russian counterclaims." History supplied a precedent for this stand. The Russians invariably cited the case of the privateer Alabama which, though fitted out in England, did not belong to the British Government. Yet the Geneva Court of Arbitration, on September 14, 1872, ordered the British Government to pay the United States Government $15,500,000 for damages caused by the Alabama in helping the Confederacy against the North. Britain's action in Russia between 1918 and 1920 was more direct and more destructive.
Rakovsky stated, however, that "the Soviet delegation does not consider the Soviet counterclaims as ranking against the whole mass of British claims but principally as ranking against the British war debt. The Soviet delegation fully understands that private British claimants must receive some satisfaction." The Genoa Conference of 1922 had brought into prominence the theory that Entente war debts to Russia and Soviet counterclaims for interventionist and blockade damages cancel each other. But this involved the entire problem of Inter-Allied debts, for France and Italy would demand at least as favorable treatment from Great Britain as Soviet Russia received. Ponsonby therefore urged, on May 15, that the war debts and counterclaims "shall be reserved for discussion at a later date." Subsequently, he announced in Parliament that they had been placed in "cold storage" and it was generally agreed that the British government accepted the Soviet contention for cancellation.
There remained, however, the claims of private British bondholders and the demands of former property owners in Russia. These, and small personal losses by British subjects -- bank deposits, salaries, jewelry, furniture, etc., totalling, according to the British, £26,000,000 -- were debated throughout the conference. The members of the British delegation were Arthur Ponsonby, to whom MacDonald handed the presidency of the British delegation, Sir Victor Wellesley, J. D. Gregory, Owen O'Malley, F. Phillips, Sir Sydney J. Chapman, who had participated in the Genoa and Hague conferences, Sir William Clark, who negotiated in Moscow with the Bolsheviks in 1918, and H. Fountain. The Russians were led by Christian G. Rakovsky. Important Soviet leaders seconded his efforts, among them Tomsky, chief of the Soviet trade unions and member of the supreme Political Bureau of the Communist Party, Scheinmann, president of the Soviet State Bank, Stomonyakov, Preobrajensky, Radchenko, of the Miners' Union, Shitkov, Haidar Aliev, representing Turkestan, Kutuzov, of the trade unions, A. A. Joffe, the Russian diplomat, and Shvernik.
On the day the conference opened, April 14, a memorandum was submitted to the British Government and press above the signatures, among others, of Sir Charles Addis and E. C. Grenfell of the Bank of England, Walter Leaf of the Westminster Bank, Reginald McKenna of the Midland Bank, J. W. Beaumont Pease of Lloyds Bank and Lord Swaythling of S. Montagu and Company. Lord Revelstoke of the Baring Bros. bank, where considerable Tsarist gold was still on deposit, also played a role in connection with the memorandum. The bankers demanded 1, that the Bolsheviks recognize Russia's public and private debts; 2, that an equitable restitution of private property to foreigners be made; 3, that a proper civil code be brought into effective operation, independent courts of law created, and the sanctity of private contract again firmly established; 4, that the Soviet Government guarantee that in the future private property should in all circumstances be free from confiscation by the state; 5, that British bankers, industrialists and traders should be able to deal freely with similar private institutions in Russia; and 6, that the Bolsheviks abandon propaganda.
The second demand was one that the Bolsheviks had refused at Genoa and the Hague; the third was a demand such as might be made under a capitulary régime in China and pre-war Turkey; the fifth required the abolition of the Soviet Government monopoly of foreign trade, a most fundamental tenet of Bolshevik statecraft. The authors of the memorandum were well-known financiers and business men. They knew that no Bolshevik government could accede to their program and live. Their memorandum revealed the opposition of the British financial and business mind to a settlement with Russia. This obviously complicated MacDonald's position, for an economic agreement with the Soviets depended on the City more than on Downing Street.
The opening session of the conference consisted of an address of welcome by MacDonald and a reply by Rakovsky. The next day's meeting dealt with those Anglo-Russian treaties which required cancellation or modification. Sessions on April 16 and 24 were devoted to questions of procedure, old treaties, the organization of committees and other technical and secondary matters. Both delegations were feeling their way. At the meeting of May 15, however, the conference came to grips with the real problem of war debts and counterclaims, and finally on May 20 private expropriated property came under discussion. Rakovsky had declared on May 15 that "nationalization as a result of the revolution is legal and . . . we must refuse to pay for its consequences." Since the British would not accept this principle and since the Bolsheviks would not budge from it, the chief Soviet delegate therefore suggested that they try to reach a practical settlement. He now asked for information. What were the claims of former private property owners? Did they ask for concessions? The Bolsheviks realized that a refusal to consider the claims would make agreement impossible. For this reason, and not because they thought it right, they consented to listen to applications for compensation.
As to pre-war bonds, Rakovsky submitted this formula: "On condition of the conclusion, with the assistance of the British Government, of a long-term loan for productive purposes [i.e., not for budget purposes] the Government of the Soviet Union agrees, in accordance with the amount of the loan and its conditions, to determine by agreement with the British Government a lump sum in order to cover the pre-war debts of Russia in relation to British subjects."
The Soviet point of view had always been clear. The Bolsheviks could not and would not recognize or pay their predecessors' debts unless they received credits or loans from the country whose bondholders they were satisfying. The workers and peasants, they argued, would object to paying the bills of Tsarist wars and Tsarist bad administration. Not only the socialists and communists but even the moderate liberals in Russian pre-war political life warned foreign creditors on numerous occasions that the successors of the autocracy would not assume responsibility for its loans.
Had the Soviet régime held fast to a dogmatic, theoretical position it would have refused to pay pre-war debts or war debts. But it behaved realistically. Such a policy in respect to peace-time obligations would have made normal economic relations with foreign lands too difficult and strained. Expediency demanded some settlement, and Moscow therefore proposed the following: Great Britain would give the Soviet Union a loan of say £50,000,000 sterling, at an annual interest of say 8 percent. In Russia the interest on money was say 13 percent. Moscow would devote the difference -- or 5 percent of £50,000,000 -- to satisfying the claims of the holders of pre-war bonds. In other words, one million pounds or more, depending on the volume of borrowing, would be available each year for that purpose.
A loan was the sine qua non of debt payment. "The central question is the loan," Rakovsky said in an interview with the Izvestia on July 30.
Under the Trade Facilities Act no large British export credits could be utilized to further Russian trade. The Soviet Government, moreover, required cash in order to employ credits wisely. To use imported factory equipment, for instance, the state needed money to pay workers and to buy domestic construction materials, and although Rakovsky intimated that by far the greatest part of the proposed loan would be spent in England, it was understood that Moscow expected at least a small fraction in liquid funds. Besides, efforts made in February 1924 to extend the benefits of the Trade Facilities Acts to Russia remained ineffective.
While the Bolsheviks based their hopes for the success of the entire conference on a loan guaranteed by the British Government, the Labor cabinet opposed the giving of any such guarantee. At the session of May 20 Ponsonby stated emphatically that "the British Government can in no way guarantee such a loan." MacDonald maintained that the Bolsheviks should negotiate directly with the City. He felt that the good will of the government, not its guarantee, was required. But when Rakovsky went to the City, the quest was vain. He spoke to Reginald McKenna, Lord Inverforth, and Henry Bell of Lloyds Bank. But Inverforth said the Bolsheviks really need not borrow at all. Did they wish to build railways? That could be done directly by British bankers and industrialists. Did they wish to develop their oilfields, coal mines, gold deposits, etc.? It was only necessary to invite British capitalists to undertake the task of production in Russia.
After several such meetings Rakovsky and the Labor Government became convinced that no loan which lacked a state guarantee could be secured in the City. A struggle now commenced to win MacDonald and his ministers over to the idea of giving a guarantee. Litvinov spent a few days in London in the middle of June and left with a pessimistic impression. Labor circles were divided. Those in contact with the banks and industries opposed the guarantee. Left-wing leaders who were exposed to strong trade union pressure to solve the unemployment problem by winning the Russian market, favored the guarantee. When Rakovsky left London for a hurried aeroplane trip to Moscow on July 26, 1924, the question still hung in the balance. En route he received a message from Ponsonby stating that the guarantee would be granted.
The decision to grant the guarantee followed a bitter and prolonged struggle at a cabinet session in the last week of July. Snowden persisted in his uncompromising opposition and violently attacked the Ponsonby suggestion of a £30,000,000 loan. He found supporters in J. H. Thomas, Lord Olivier, the Secretary of State for India, and -- much to the surprise of many -- in Colonel Josiah C. Wedgwood, who fought the project bitterly. The Prime Minister and Henderson stood firmly by Ponsonby, and finally won the day. MacDonald had opposed a guarantee as long as he believed that the bankers could be persuaded to lend to Russia without it, but when this proved an illusion, and knowing that without a loan no settlement could be reached, he decided to support the guarantee. Time, moreover, was pressing. Parliament would adjourn early in August and he had to send it home with some definite achievement in the field of Anglo-Soviet relations.
Meanwhile the official conference had been at a standstill for more than two months. At its session on May 27 the prospects of agreement had seemed very dark and Ponsonby had warned the Russians that the government had no majority and could not carry through any "special or extravagant measures." The next session took place more than two months later -- on August 4, soon after the guarantee had been adopted.
In the interval, the Soviets had been negotiating directly with the British bondholders. Downing Street took the view that it would interfere in the issue between the Soviets and their creditors only if an agreement could not be reached without such mediation. And the bondholders themselves insisted on direct pourparlers with the Bolsheviks. The first meeting of Rakovsky and Scheinmann with the representatives of the bondholders was held in the British Foreign Office on June 12.[ii] Ponsonby and Gregory made non-committal introductory statements and departed. Sir George Marjoribanks, and Messrs. C. Birch Crisp, Trotter, Cooper and Cramp attended for the creditors, with Charles Edward Barnett, of Lloyds Bank, presiding. They refused to present a statement of their claims but asked Rakovsky to make his offer. It was generally agreed that the total debt would suffer reduction. But how large was the total? The second meeting, held at 17 Moorgate Street on June 23, revolved around the same issue. Rakovsky showed a report which had been handed him officially by the Board of Trade. on May 1, according to which a government registration of claims ending March 31, 1924, revealed a total of £39,023,165. This figure, Rakovsky added, approximated very closely that of the Tsarist Ministry of Finance. Chairman Barnett, however, suggested that £50,000,000 be accepted as the basis of discussion. But Rakovsky insisted on the Board of Trade sum, and then declared that the Soviets would, if they obtained a government-guaranteed loan in England, pay £6,000,000 or, roughly, 16 percent of the whole. This, Rakovsky remarked, was more than three times the present market value of all the bonds held in Great Britain.
The third and final session of the conference with the bondholders met on June 27. The bondholders refused to accept Rakovsky's offer and likewise refused to make one of their own. Rakovsky accordingly declared that unless he heard from the bondholders within a few days, the bondholders' claims would be discussed in the official Anglo-Soviet conference at which the bondholders would not, of course, be present. The private pourparlers thus ended without result. But before the close, Mr. Crisp, a prominent bondholder, passed a pencilled note to Rakovsky, which Rakovsky later showed the writer. It contained the following proposal for a settlement: "Amount outstanding to be reduced to 50 percent. Soviet will pay 2½ [percent] on ½ of balance and the bondholders will give an option to Soviet to pay off principal at 50 percent discount, i.e., 25 percent of original sum." If the option were not exercised during five years, Mr. Crisp added, payments would be spread over a period of fifty years. On this basis a settlement might easily have been reached at that time. Mr. Crisp apparently believed that he could mobilize 50 percent of the bondholders for his solution -- a belief which was reflected in the final treaty.
The bondholders' claim having been reserved for the consideration of the inter-government conference, and the guarantee having been accepted by the British cabinet, the official discussions now reached their final stage. The decisive session, which took place on August 4, lasted twenty hours and left the participants in a state of physical collapse. It ended with a sensational rupture.
When the proceedings opened, Ponsonby stated: "At the earlier meetings I repeated more than once that the government could not undertake to guarantee a loan. That decision has been reversed. . . ." MacDonald's objection to the guarantee had threatened the success of the negotiations; his acceptance of it seemed to pave the way to a final settlement. The Russians, indeed, felt that an agreement was within reach. Both sides made compromises.
The cancellation or emendation of old treaties had been provided for by the experts. The draft of an important commercial treaty presented no difficulties. A fisheries convention had been drawn up which gratified British fishing interests.[iii] Only two problems now remained outstanding: bonds and nationalized private property. Rakovsky argued that since direct negotiations with the bondholders had been fruitless, the British Government must interfere. He did not expect it to negotiate with the bondholders; that was Moscow's affair. But the British Government would represent the nation, and when an agreement had been reached with at least half the claimants, the Government would regard the settlement as legal and satisfactory. This Ponsonby accepted, and it was written into Article 6 of the draft General Treaty.
Article 7 "reserved for discussion at a later date" all claims in respect of British war loans to Russia, Russian gold deposited in England by the Tsarist Government in the course of the war or by Germany under the Brest-Litovsk treaties, Tsarist and Kerensky non-war debts, and Bolshevik counterclaims. Articles 8 and 9 provided for the settlement of petty claims of British nationals by the payment of a lump sum by Moscow to the British Government for distribution among the claimants.
Now the session, having found an acceptable formula for the solution of the bondholders issue, attacked the problem of private property. The Genoa and Hague conferences had foundered on this rock. Much of the foreign opposition to the Soviet Government found inspiration and support in industrialists whose properties were sequestrated. The MacDonald cabinet had in fact (as Ponsonby declared) acceded to the Soviet demand for a loan guarantee only on condition that the article of the draft treaty referring to nationalized private property remain essentially unchanged.
Practically all the former owners had presented their claims to Rakovsky in London. One Englishwoman wished to call on the Soviet envoy and collect rent for the three years he had lived in her house in Kharkov while Prime Minister of the Ukraine. More serious demands came from the Lena Goldfields Company, Urquhart's Russo-Asiatic Corporation, etc. Sir Henri Deterding, however, never presented any demands for compensation or a concession. He wished merely to be reinstated in the ownership of his former plants. Progress was registered in discussions with several of the companies, for the Soviet Government intended to grant a considerable number of concessions to former owners -- not because it considered nationalization wrong, illegal or outlived, but, as Rakovsky stated on August 5, "because we believe the concessionaires will be valuable workers in Russia."
The Bolsheviks, however, could not satisfy all the former owners. A controversy developed on the topic of losses vs. claims. The substitution of the word losses for claims would, Rakovsky warned, make the treaty entirely unacceptable. "We are under no obligation to pay losses," he affirmed, "but we are prepared to pay compensation" in the form of concessions or perhaps even cash. To pay reparations for losses would mean to recognize the illegality of nationalization, whereas to settle claims would merely permit the capitalists to return to Russia and be of service to the country.
Also, an important legal point was involved. In the Anglo-Russian commercial treaty of March 16, 1921, the Bolsheviks had accepted private British claims. Subsequently, in April 1922, the Rapallo Treaty had been negotiated with Germany. Accordingly Scheinmann declared that "if this idea of the settlement for losses were adopted, then such claims could be presented not only by British but by all other nationals." A precedent would be set from which the Bolsheviks might suffer in future pourparlers, notably with France and the United States.
Ponsonby thereupon explained that the British Government did not expect the Bolsheviks to pay all claims but only "valid" ones. The tired delegates now commenced to discuss the question of validity. Who would decide? Since the loan would be forthcoming only when, in the opinion of the British, sufficient progress had been made in the settlement of claims, the decision as to validity lay with Downing Street. Rakovsky suggested instead that only those claims be satisfied the justice of which had been recognized by the Soviet Government or by both governments. It was now 7:15 on the morning of August 5. Perhaps if the negotiators had had some sleep an understanding might have been arrived at. Perhaps if Gregory of the Foreign Office had not nudged Ponsonby at 4 A.M. and suggested a break, none would have occurred. Perhaps a few minutes' talk between Ponsonby and MacDonald or between MacDonald and some Labor leaders might have sufficed to heal the breach. As it was, Ponsonby arose at 7:15 to announce that the treaty, unfortunately, could not be signed and the negotiations, therefore, "fall to the ground."
A Labor government and a Workers' and Peasants' government had split on a question involving the private property of expropriated capitalists. The position of Moscow was clear: it did not want to pay more than necessary. It felt that nothing ought to be paid, but on grounds of expediency it was ready to make concessions. The British Government felt the pressure of the industrialists and the banks. To yield too much would endanger Labor's position in Parliament. MacDonald desired to have the whip hand. He asked that all the private property claims be satisfied, or at least that it rest with Britain to determine which were valid.
When Rakovsky returned home after the exhausting twenty-hour battle, he telephoned Andrew F. Rothstein, the interpreter of the Soviet delegation, to inform British Labor leaders of the split. That afternoon England was stirred. The Conservative press rejoiced. Labor realized that, apart from the intrinsic significance of its failure to agree with the Russians, the collapse of the negotiations would probably involve the fall of the cabinet. Labor leaders thereupon prevailed on MacDonald to postpone the adjournment of Parliament to permit of one more attempt to heal the breach. The same evening, Rakovsky answered a summons to report on the negotiations before a special caucus of about twenty-five Labor M.P.'s. Commander Kenworthy, then still a Liberal, likewise attended. Furthermore, Purcell, Morel, Wallhead, Lansbury, Maxton and other Left trade unionists and M.P.'s consulted with Ponsonby and probably MacDonald, and the same evening brought to the chief of the Russian Delegation the glad tidings that the negotiations would be resumed the next day, August 6. The next morning, in fact, Gregory brought a new Foreign Office formula which Rakovsky rejected. The Russian considered it worse than the previous proposal. Within several hours, the Left leaders submitted to Rakovsky a third formula, drafted by Ponsonby and submitted to MacDonald. This time, after consultation with his colleagues, he accepted.
That very day, August 6, the Anglo-Soviet conference met again. Ponsonby read the new draft of the disputed article on private property and Rakovsky immediately approved.
Article 10 elaborated the procedure for the settlement of private property claims. Article 11 provided for a second treaty which would contain: 1, conditions for the settlement of bondholders' claims; 2, the amount and method of payment of compensation for petty British losses; and 3, "an agreed settlement of property claims other than those directly settled by the Government of the Union of Soviet Socialist Republics." This was the formula on nationalized property reached after the break. Moscow would negotiate separately with the expropriated owners. But claims not satisfied by this method of private agreement would have to be settled according to the provisions contained in the second treaty. This was generally understood to mean that tribunals would be set up to adjudicate claims preferred by numerous governesses, teachers, and small property holders who had suffered through the revolution. But the larger more important claims of Urquhart and firms of the same magnitude would be settled by direct negotiations and thus pave the way to the loan. The loan would be forthcoming only after the second treaty had been signed. Only then would the British Government "recommend Parliament to enable them to guarantee the interest and sinking fund of a loan to be issued by the Government of the Union of Soviet Socialist Republics." No amount was stated, nor were the conditions and terms.
On August 10 the Anglo-Soviet General Treaty as well as the supplementary commercial treaty were signed by MacDonald and Ponsonby and by Rakovsky, Joffe, Radchenko, Scheinmann and Tomsky.
So far as the British were concerned, the treaty undoubtedly contained many shortcomings. Mr. Garvin summed up the feeling about it in the Observer of August 10 when he wrote: "It restores what can be restored, and leaves the rest for time and good will. . . . " It was a half-solution with the promise of a complete solution.
Concretely, the General Treaty settled the old treaties problem; it provided for a fisheries settlement which greatly pleased the British fishermen; and it pledged both contracting parties to refrain from propaganda and interference in internal affairs. It was supplemented by a detailed commercial agreement. Whether or not Russia received a loan, these settlements stood. Furthermore, the treaty recorded the Soviet's recognition of their responsibility to settle the claims of the bondholders, petty losers, and expropriated private owners. It also set up machinery for the settlement of those claims, and provided the method. If the machinery failed and the claims remained unsettled, the Bolsheviks got no loan.
The treaty, then, was not a final settlement, but it leveled the road to one in the future. It was obvious from the Rakovsky negotiations with the bondholders and property owners, from his declarations registered in the protocols of the official Anglo-Soviet conference, and from the declarations and tenor of the Russian press, that the Soviet Government wished to reach a final agreement. Had its intention been different, it would never have agreed to concessions which in fact exposed it to strong criticism in the Soviet Union.
But though the treaty opened the door to British participation in the reconstruction of Russian economy, many Englishmen were not disposed to contribute to the strengthening of a potential enemy of the Empire and to the buttressing of a country which, by its very existence, challenged the capitalist system. Some were not prepared to help under any condition. Others wanted a higher price than the Soviets would pay by the terms of the treaty.
Powerful opposition to the treaties soon developed. In spirit it was not unlike that of the bankers' memorandum of the opening day of the conference.
The treaties had to lie on the table for 21 days before they could be ratified by Parliament. Since Labor controlled no majority the balance was held by the Liberals. Lloyd George's eye was now on the domestic political scene. He preferred to risk an autumn election before Labor had made too long and too good a record in office. The polemic raged throughout September. October 2, the London Daily Herald, organ of Labor, carried a full-page headline: "Prepare for a General Election."
It so happened that during this period the government withdrew the proceedings against John Ross Campbell, editor of the Communist Workers' Weekly who had been charged with inciting the King's armed forces to mutiny. The Tories' and Liberals' motions of censure against the MacDonald cabinet referred to this action, but it was no secret that the Campbell case merely served as a convenient excuse for burying the government which had signed the Anglo-Soviet treaties.
It did not come as a surprise when, on October 8, the government suffered defeat in the House of Commons. National elections were scheduled for October 29. There followed the short campaign, featured by the famous "Zinoviev" letter, which brought into office -- for a five-year term -- a firmly entrenched Baldwin-Chamberlain cabinet. Its obligations and convictions were anti-Bolshevist, and after several years of unfruitful recrimination it severed relations with Moscow in May 1927.
The break continued till Ramsay MacDonald once more became Prime Minister in 1929.
Mr. MacDonald took office on June 7. His government resumed relations with Moscow on October 3, and Parliament confirmed the step on November 5 by a vote of 324 to 199, with Lloyd George supporting the Labor proposal. But the vote is not to be taken as an indication that the negotiation of a treaty is to be free from difficulties. Both in Moscow and in London the situation has altered greatly since 1924. The Left tendency among British Labor ideologists is far weaker than it was, and Labor and trade union politicians are less disposed to break a lance on behalf of good relations with the Soviet Union. Nor is there any widespread popular demand for a quick settlement with Russia. Labor wishes to remain in power, and it does not propose to endanger its tenure of office by attacking Russian questions with excessive zeal or haste. Certainly it will not sponsor a government-guaranteed Soviet loan. The Anglo-Soviet treaty of 1924 brought the first MacDonald cabinet to its fall. Labor will at all costs avoid a similar experience.
Moscow, on the other hand, is more indifferent to Great Britain than it was six years ago. British recognition at that time was the signal for most of the other European powers to establish diplomatic relations with the Bolsheviks. This advantage, once gained, cannot be repeated. Economically the Soviet Union is stronger, more confident, and more independent of British aid than in the past. There exists in Moscow a definite tendency to continue industrial expansion on Russia's own resources and on ordinary foreign business credits without assuming the burden of pre-war debt payments in order to create the possibility of floating loans in England and other European countries. If, therefore, Great Britain demands what the Soviets may consider an exorbitant price of settlement, Moscow will refuse to pay it, especially in view of the improvement of Soviet-American business and extradiplomatic relations.
[i] "The Inter-Ally Debts," by Harvey E. Fisk. Bankers Trust Co., New York-Paris, 1924, pp. 111 and 302.
[ii] The summary of the proceedings of this and subsequent meetings has been made by the writer from the unpublished protocols.
[iii] For text see British White Paper, Russia No. 4 (1924) "General Treaty between Great Britain and Northern Ireland and the Union of Soviet Socialist Republics." London, 1924 Cmd. 2260, p. 4 et sep.