German–Soviet Credit Agreement (1939)

The German–Soviet Credit Agreement was an economic deal made in 1939 between Nazi Germany and the Soviet Union.

Through this agreement, the Soviet Union got a credit of 200 million ℛ︁ℳ︁[/w/1]. They could use this to buy goods like factory equipment, machines, ships, and vehicles from Germany. The Soviet Union planned to pay back this credit with resources like grain and oil starting in 1946.

This agreement helped improve relations between the Soviet Union and Germany. It happened just before some big events, including a military campaign by the Soviet Union against Japan and the signing of the Nazi-Soviet Pact. Later agreements in 1940 and 1941 expanded these economic ties.

However, when Germany invaded the Soviet Union in June 1941, all these agreements ended. Before the invasion, the Soviet Union had been sending many important resources to Germany.

Background

Main article: German–Soviet economic relations (1934–1941)

Traditional commerce and pre-Nazi trade

Germany did not have many natural resources, like important raw materials, that it needed for its economy and military. In the past, it got these from Russia. Before World War I, Germany bought a lot of things from Russia every year. But after the war, this trade dropped a lot. In the 1930s, trade between the two countries went down even more because of changes in how the Soviet Union was ruled and because Germany was not following some rules anymore.

Deteriorating relations

When the Nazi Party took control in Germany, relations between Germany and the Soviet Union got worse. The Nazis had ideas that made them see people from the Soviet Union in a bad way. Even so, in the middle of the 1930s, the Soviet Union tried to talk more with Germany, but Hitler did not want to make any political ties with them.

Things got even worse in 1936 when Germany helped a group in Spain fight against another group that the Soviet Union supported. The same year, Germany and Japan made an agreement against a group called the Comintern. Also, changes in how the Soviet Union was run made it harder for them to talk to other countries.

Late 1930s economic needs

By the late 1930s, Germany really needed to get closer to the Soviet Union because it did not have enough of things like oil, food, metal, and rubber. Germany depended on the Soviet Union or other places to get these. The Soviet Union, on the other hand, needed military equipment and weapon designs to make its army and navy stronger. The Soviet Union's roads and railways were not very good, which made moving things hard.

After Germany took over a place called Austria in 1938, it was hard to fix economic problems because of political problems and Hitler not wanting to deal with the Soviet Union much. But both countries still needed each other for supplies and military stuff, especially after an agreement in 1938 called the Munich Agreement.

Negotiations

Further information: Molotov–Ribbentrop Pact negotiations

Preliminary discussions

In October 1938, Germany wanted better trade with the Soviet Union. They talked about it in December 1938, but Stalin was not ready to agree. In early 1939, they talked again in Moscow. But Germany stopped the talks in mid-March after occupying Czechoslovakia and taking the Klaipėda Region.

Germany and the Soviet Union kept talking about trade all through early 1939. At the same time, the Soviets also talked with France and Britain about a different agreement. On April 7, a Soviet diplomat told Germany that the two countries could make a deal. Ten days later, another Soviet diplomat asked Germany to speed up old contracts with Czechoslovakia before Germany took it over.

With war looking more likely, both countries made more weapons. The Soviets needed new machines for their Third Five Year Plan. Germany spent more on weapons, and worried about losing important supplies.

Mixed signals

After that, the Soviets sent confusing messages. On May 31, a speech by Molotov seemed hopeful. But on June 2, a Soviet official told Germany they were no longer interested because Germany had been slow. On June 15, the Soviet ambassador talked to the Bulgarian ambassador in Berlin, who helped pass messages. The Soviet ambassador said a deal with Germany would be better for the Soviets than one with Britain and France. The Bulgarian ambassador told Germany about this. The Soviets agreed that a high German official would come to Moscow, and talks began in Berlin on July 22.

In July, Britain offered to help Germany’s economy if Germany stopped making weapons, but Germany turned down the offer.

Addressing past hostilities and finalizing the deals

On July 25, Germany and the Soviet Union were close to agreeing on trade. On July 26, they agreed to start with a trade deal and then talk about political issues. On August 1, the Soviets said they needed a new trade treaty and an end to mean words from Germany’s media before talking politics. Germany agreed right away. Two days later, German Foreign Minister Joachim von Ribbentrop suggested the two countries not get in each other’s way.

Germany talked about old problems from the 1930s. They said both countries did not like capitalist democracies. They said it did not make sense for a socialist state to stand with western democracies. Germany said they were less opposed to Soviet ideas now. A Soviet diplomat said the talk was “extremely important.”

As Germany got ready to invade Poland, they worried about running out of supplies if there was a war. The Soviet Union became very important for Germany to get things it needed.

On August 5, Soviet officials said finishing the trade deal was important for talking about politics. Hitler called to push for an agreement. By August 10, they agreed on most things, but the Soviets waited to sign until they were sure they had also made a political agreement. The Soviets had talked with Britain but said they did not want to, and could not just stop those talks. Every German study said Germany needed the Soviet Union’s help to be safe.

German–Soviet deal

Economic deal

Germany and the Soviet Union signed an important trade agreement on August 19, 1939. This deal let them trade German machines and tools for Soviet raw materials like oil and grain. Germany also gave the Soviet Union a loan of 200 million Reichsmarks over seven years to buy more goods from Germany. The Soviet Union would start paying back this loan with raw materials in 1946.

Political deal and secret protocol

Main article: Molotov–Ribbentrop Pact

This trade agreement helped improve political ties between Germany and the Soviet Union. Just a few days later, on August 24, 1939, the two countries signed the Molotov–Ribbentrop Pact, a promise not to fight each other. This pact also had secret parts that divided some European countries into areas where Germany or the Soviet Union could make decisions. Both leaders saw this agreement as a big step toward better relations between their nations.

Later events and total trade

Further information: Molotov–Ribbentrop Pact, Invasion of Poland, Nazi–Soviet economic relations (1934–1941), German–Soviet Commercial Agreement (1940), and Operation Barbarossa

After the German invasion of Poland, Britain tried to stop Germany from getting supplies. But this did not work well because some goods still reached Germany through neutral countries.

The Red Army also moved into eastern Poland and took control of areas that made a lot of Poland's oil.

Germany and the Soviet Union kept talking about trade during the rest of 1939. This led to a bigger trade deal being signed on February 11, 1940. After this, the Soviet Union sent Germany many important materials such as oil, metals, and food.

The trade between the two countries stopped when Germany invaded the Soviet Union on June 22, 1941.