5

The Genesis of the Russian Bureau:
The Sources and Conduct of the
American Economic Assistance Program,
July–September 1918

Wilson decided to support a limited military intervention on behalf of the Czecho-Slovaks because he hoped their presence in Siberia would block German influence, strengthen Russian efforts at “self-government,” and constitute an advance force for the economic commission he was then contemplating. But, Wilson’s strategy was quickly subverted by the Western allies and Japan, who immediately seized the opportunity to launch a large-scale military intervention that would further their own interests in the Russian Empire. Wilson’s problems were compounded at home by a bureaucratic rivalry that stemmed from the Commerce Department’s efforts to organize its own commercial contacts with the Siberian cooperative societies. In its attempt to circumvent the State Department’s coordination of American assistance efforts, the Commerce Department created further complications for the administration during the difficult period when it was endeavoring to craft the various facets of Wilson’s Siberian policy into an effective program that would foster reconstruction.

The administration’s plans for the economic mission were put on hold pending Japan’s response to the American proposal for sending American and Japanese contingents of seven thousand troops.¹ This question is crucial to understanding the troubled course American assistance policy would follow in August and September 1918. The Allies would not accept the limits Wilson wanted to place on the intervention, nor would they cooperate on questions of economic assistance. Japan never agreed to limit its expeditionary force to the seven thousand men the United States believed was sufficient for the limited task of supporting the Czechs. Japan’s intervention would take on particularly menacing implications near the end of July when it announced it would be sending divisions to patrol both the Amur section of the Trans-Siberian Railroad and the Chinese Eastern Railway in northern Manchuria.

By the beginning of September, Japan took steps that would directly threaten John Stevens’s authority when it placed all Siberian railroads under military control. At the end of October, it would have approximately twelve thousand troops stationed on the mainline itself, with another twenty thousand preparing to winter at Chita, the juncture of the mainline and the Amur line. These forces would obstruct the westward movement of all freight traffic in order to discriminate in favor of Japanese commerce. Wilson’s policy had in fact become distorted; the presence of the Czecho-Slovaks in Siberia gave Japan a rationale to maintain its troops in the Russian Far East and in northern Manchuria.

Britain encouraged Japan to disregard America’s resolve to limit the number of troops that were introduced into Siberia. On July 20, British foreign secretary Arthur Balfour instructed his ambassador in Tokyo to inform the Japanese that Britain believed the American proposal was inadequate. On August 12 the British Embassy in Washington urged the State Department to request Japan to send as many troops as it thought necessary, while in private discussions a week later Foreign Secretary Balfour impressed upon Japan’s ambassador that “the amount of forces required to achieve our objects in Siberia was entirely a military question and His Majesty’s Government would approve anything which the High Command in Tokyo thought necessary.”² British collusion with Japan explains why Wilson did not want to inform the Western allies of America’s consultations with Japan over a limited military expedition until after Japan had agreed to his terms. While Wilson has been faulted for his attempt to exclude Britain and France from these discussions, his desire to avoid their participation in the intervention was well-founded. Britain and France would have considered an American request for their participation in the military expedition as an opening wedge for the eventual restoration of an eastern front.³ Indeed, the unwillingness of Britain and Japan to cooperate in a limited military intervention doomed Wilson’s hopes of utilizing the Czechs as a stabilizing force along the Trans-Siberian railway. At the time of the Armistice on November 11, Japan had sent nearly seventy thousand troops to Siberia.

Britain also complicated the efforts of the United States to formulate a commercial assistance program. On July 25 Britain moved to preempt American plans when it informed the United States it was taking steps to begin its own program of commercial assistance for Siberia. Although it was inevitable that America and Japan would provide most of the supplies needed by Siberia, Britain nevertheless maintained it was desirable to give assistance efforts as much of an inter-Allied character as possible. Consequently, Britain planned to supply goods from British stocks at Vladivostok and Khabarovsk. An interdepartmental committee had already been established in London to coordinate British efforts and a high commissioner was being appointed at Vladivostok to supervise all local arrangements and to serve as the British representative on a proposed inter-Allied commission. The British government intended to enlist private British trading firms in the Far East both to serve as its agents and to operate for a fixed commission—not for profit. Goods were to be sold at cost to avoid profit-making and to allay the population’s suspicions of Allied motives. Private firms could nevertheless lend their knowledge of local conditions to promote a more efficient rehabilitation.

The Hong Kong and Shanghai Banking Corporation was also considering the possibility of opening a branch bank at Vladivostok to improve monetary conditions, which the British government encouraged. To avoid controversy between the governments over the terms by which goods were supplied to the population, Britain believed the Allied governments should agree to pursue the same policy. Britain suggested these questions be referred to the proposed inter-Allied commission, which would determine the Allies’ commercial policy on the basis of local conditions.⁴

Britain’s economic and political objectives in Siberia during the summer of 1918 were designed to further its overall spheres of influence policy toward the Russian Empire.⁵ Its nonprofit commercial program sought to place British commerce in good standing with the large Siberian cooperative societies and thus establish an advantageous position for British commerce in Siberia’s postwar trade. Basil Miles called Vance McCormick’s attention to the likelihood that the Narodny Bank would become an agent for promoting postwar trade between Russia and Britain through its contact with British cooperative societies.⁶

Britain also took steps to enhance its political influence in Siberia. In July it named Sir Charles Eliot as its high commissioner to supervise the government-run Siberian Supply Company, and Gen. Alfred W. F. Knox was made head of Britain’s military mission in Siberia to counsel pro-Ally Russians. After the Czech’s rapid military successes of mid-September, Britain was even more encouraged by the prospects that the limited intervention could be transformed into a full-fledged effort to restore the eastern front. British military and diplomatic officials concluded that the various political factions in Siberia had to be united under a provisional military government.

A candidate had already been groomed by the British to assume absolute political control in Siberia, the conservative Russian admiral Aleksandr Kolchak. Both Eliot and Knox enjoyed friendly personal relations with Kolchak, and British officials had been in close contact with him for well over a year. Knox had strong ties with czarist elements and by the fall of 1918 he had begun to rebuild the Russian Army in Siberia from remnants of the reactionary officer corps. Strong circumstantial evidence suggests Knox and his staff were instrumental in organizing the coup of November 1918, which overthrew the Coalition Directorate government and installed Kolchak as “Supreme Leader” of the Omsk Siberian government.⁷

Kolchak’s reactionary government was a vehicle through which Britain could advance its spheres of influence policy in Eurasia. For instance, Britain never recognized Kolchak’s Omsk government as anything but a “Siberian government,” not an “All-Russian government.” Likewise, in their efforts to build lasting economic ties with Siberia, British businessmen preferred to work through the Council of Ministers, who favored a constitutional Siberian Federation.⁸

For these reasons and cognizant of Britain’s desire to feel out America’s intentions, the Wilson administration responded to Britain’s commercial proposal with reserve. On July 25 State Department counselor Frank Polk spoke with British chargé Barclay concerning the United States’s position on economic assistance. Polk endeavored to emphasize that commercial activity played a subordinate role in America’s prospective plan, an assertion that was quite misleading. After expressing the United States’s appreciation of Britain’s desire to cooperate in a program of assistance, he stated: “It is apparent, however, that the British Government has in mind a purely economic mission rather than a mission which would have for its main object the study of the situation and would endeavor to ascertain in what way the Russian could be assisted to help himself. In other words, the Red Cross and educational side of the mission would be very much more to the fore than the economic side.”⁹

Polk then evaded the question of what America did intend to do when he claimed no definite policy would be pursued until the exploratory mission had reported on conditions in Siberia. Therefore, the U.S. government was not in a position to discuss questions that involved “the class of goods which ought to be sent, the advisability of establishing branch banks, or the terms on which goods are to be sold to the Russian Government.”¹⁰ Polk revealed the wish of the administration to conceal its program when he told Wilson, “I have been very guarded in what I have said to the Allied representatives concerning our plans for an Economic Mission.”¹¹

On August 22, Assistant Secretary of State William Phillips informed Lansing that the Allies had designated high civilian officials to oversee the political questions that would arise from the introduction of Allied military forces. Britain’s high commissioner, Sir Eliot, had already arrived; France also intended to send a high commissioner, and Japan was sending an economic commission that would have diplomatic assistance. Moreover, France now proposed that an inter-Allied board be organized to coordinate civilian work in Siberia, with an American representative at its head. Phillips favored the idea, and the British were willing to support whomever the United States chose to head the Board.¹²

Lansing and Wilson were extremely wary of these developments. Lansing recognized this overture was a thinly veiled effort to gain American acquiescence for a more extensive intervention. He advised Wilson “that this is another move to impress our action in Siberia with the character of intervention rather than relief of the Czechs. The suggestion that our High Commissioner be the head of an international commission seems to be a bait to draw us into this policy which has been so insistently urged by Great Britain for the past six months.”¹³

To discourage these Allied machinations once and for all, Lansing suggested he be authorized to inform the Allied ambassadors bluntly that the United States would not appoint a high commissioner. Without American participation the commission would then be effectively undermined. Wilson concurred wholeheartedly with this assessment and instructed Lansing that “I hope you will do just what you here suggest. The other governments are going much further than we and much faster,—are, indeed, acting upon a plan which is altogether foreign from ours and inconsistent with it.”¹⁴ The French ambassador should be told the United States did “not think political action necessary or desirable in eastern Siberia because we contemplate no political action of any kind there, but only the action of friends who stand at hand and wait to see how they can help.”¹⁵ Yet, by rejecting the Allied scheme for a commission, Wilson also foreclosed this type of organization as an option for America’s commercial plans. Allied policy had further complicated Wilson’s dilemma over the operational details of a commercial assistance program.

In early September, Gordon Auchincloss, Miles, and Long emerged as the decisive figures in the American policy debate when they urged a solution on the president that was compatible with his principles. On September 8 these officials reviewed the questions of relief for the Czechs and of economic assistance for the Russian population. Their objective was to have the president appoint Vance C. McCormick of the War Trade Board as coordinator of all Russian economic work in Washington, or in Long’s words to “centralize it and direct it.”¹⁶ Auchincloss was then designated to draft a letter to Wilson “which should embody the president’s plans, some of his ideas as we interpreted them and our ideas of what should be done to get supplies to the Czechs and Siberians and Russians.”¹⁷

Auchincloss’s letter was approved by Miles and Long and sent to Wilson with Lansing’s signature on September 9. It addressed the problems associated with furnishing assistance to the Czech military forces and the civilian populations of northern Russia and Siberia. Preliminary steps had been taken in regard to the Czechs, as Wilson was ready to furnish money from his war fund and Bernard Baruch of the War Industries Board had been consulted about their requirements for clothing, shoes, arms, and ammunition. Siberia’s population did not need food from the United States, but clothing, shoes, and other specific commodities were in very short supply. Russian ships that had been chartered by the U.S. Shipping Board should now be returned to Russia’s service to transport these goods. The population of the Murmansk Coast and Archangel, however, would need food and these shipments had to go forward by October 1 to ensure their delivery before their ports were closed by ice. A revolving fund of $5 million would be adequate since the food should be sold and not given away except to prevent starvation.

Complex operational problems involving methods of barter and exchange still had to be resolved. War Trade Board chairman Vance McCormick was recommended to direct this work because he agreed with Wilson’s policies and because he was in close contact with the other departmental heads. Since the War Trade Board was composed of experts from the Treasury, Commerce, and Agricultural Departments, the Food Administration and the Shipping Board, it was particularly well suited to study the various problems that confronted the program.¹⁸

On September 11, Wilson met with his War Board heads, Baruch, McCormick, and Edward Hurley of the shipping board, and made them collectively responsible for administering commercial assistance for Siberia. This arrangement was not satisfactory to the State Department, who had McCormick discuss the matter with Wilson again on September 13. At this meeting Wilson voiced objections to placing a “separate organization” in control of the program.¹⁹ Apparently, Wilson was still not certain a single board would provide the necessary coordination between departments, because McCormick had to argue him “into agreement to close cooperation between the three named” (i.e., McCormick, Baruch, and Hurley), and representatives of each would have to meet daily at a designated location.²⁰

Long considered this compromise an adequate basis on which a definite plan for economic aid could be formulated and executed. He was confident that “McCormick will eventually be supreme in it—at least that is the plan, because we feel he has the confidence of the President to a remarkable degree and the facility of getting him to agree to things.”²¹ Indeed, McCormick was initially given the “whip hand” because Wilson authorized him to call a meeting with Baruch and Hurley at the War Trade Building on Monday, September 16. In his diary Long explained this maneuvering on grounds that, “We felt it [commercial assistance] was not properly the function of the State Department, was the proper field for activity of ‘war’ board or boards, and that Vance would be closer to and cooperate with us better than either of the others.”²²

Undoubtedly the State Department lacked the personnel to administer the program, but there is also the implication that State Department control would endow the program with political overtones, which were better avoided considering the relations with the Allies. Yet, it is clear the State Department favored McCormick precisely because he would cooperate with it on political questions and because the War Trade Board was a less conspicuous agent of American policy.

The State Department was especially determined to get the commercial assistance program into the hands of the War Trade Board in order to head off an independent Commerce Department initiative with certain Siberian cooperative associations. After the meeting between Vance McCormick and Wilson on September 13, Gordon Auchincloss, possibly the chief State Department strategist on this issue, revealed in his diary that the State Department was trying to play the War Board chiefs against Redfield. On September 14 he explained to Lansing “that we should play with McCormick, Baruch and Hurley as against Redfield and that we should let Redfield fight with McCormick and Baruch, rather than with ourselves. This he agreed to do.”²³

Since late June a rivalry had been brewing between the State and Commerce Departments for control of the economic commission. On June 29 Lansing protested to Wilson about information he had gathered concerning efforts by Commerce Department officials to organize the Russian Commission themselves and their intention to entirely exclude the State Department from the operation. Lansing was particularly incensed by an article, which appeared that same day in the Washington Post, that stated a commercial commission was being organized. This article created “considerable embarrassment” for Lansing as he had been declining to comment on the issue publicly for fear of compromising American policy. Lansing blamed the Commerce Department’s uncooperative attitude on subordinate officials and tactfully avoided direct criticism of Redfield. He reiterated that whatever agency was chosen to work in Siberia “must be guided by the political effect” and therefore a “subsidiary council” based in Washington must coordinate and regulate the commission’s work. After repeating his concern about the Commerce Department’s ambitions, Lansing revealed something of Wilson’s attitude on the subject when he reminded the president that on the previous day, June 28, he had also expressed opposition to Commerce Department control of the program.²⁴

A comment Auchincloss made to Polk on June 29 suggests that Redfield had overstepped his bounds in attempting to organize the commercial assistance program through the Commerce Department. Speaking with great contempt for the commerce secretary, Auchincloss informed Polk that

Redfield is giving everyone the impression that he is running the Russian situation and has been commissioned by the President to set up a separate Bureau to handle the matter…. I think that all the President has asked him to do is to investigate the commercial situation and to give him a report on it, like your old favorite pup he is all blown up with his own importance, and I suppose sooner or later he will give out some newspaper statement which will cause his down fall.²⁵

Lansing’s letter to Wilson on that same day was undoubtedly aimed at hastening Redfield’s “downfall.” Auchincloss’s assessment of Wilson’s intentions appears to be consistent with the president’s own statements on the issue. When Wilson began to consider seriously the question of commercial assistance in mid-May, he only directed Redfield to solicit practical recommendations from the private sector. There is no evidence Wilson ever authorized Redfield to organize a program through the Commerce Department.

In September this conflict resurfaced because the Commerce Department representative at Vladivostok completed a tentative commercial agreement with Siberian cooperative associations that bypassed the State Department. On September 14, the American consul at Vladivostok, John K. Caldwell, informed the State Department that the Commerce Department trade commissioner, Charles L. Preston, had negotiated a tentative agreement at Vladivostok to purchase five hundred thousand dollars worth of squirrel pelts from the Union of Siberian Cooperative Unions (Zakupsbyt). Some of these furs had already arrived at Vancouver, Canada, in early August. The National City Bank was apparently ready to advance 50 percent of the appraised value of the furs charging bank rates. The Commerce Department then planned to sell these goods for a 2-percent commission fee. With the proceeds from these goods the union wanted to buy agricultural machinery and implements, spare parts, dry goods, and shoes.²⁶

The Zakupsbyt had made an initial shipment of about 250 tons to North America in June on its own initiative. The Narodny Bank encouraged the endeavor as a means of accumulating dollar exchange for the cooperatives to finance Siberian imports from America. In late July, while this first shipment was en route to North America, Preston requested authorization from the Commerce Department to ship large additional quantities of the Zak-upsbyt’s wool, bristles, and pelts from Vladivostok. Adm. Austin Knight, a strong advocate of American trade with Siberia, told August Heid, International Harvester’s marketing representative in Siberia, that Preston was urging his superiors in Washington to conclude a large barter arrangement with the Siberian cooperatives. Heid learned Preston’s recommendations specified that a large percentage of the American exports to Siberia should consist of agricultural machinery and binding twine. These negotiations received a great deal of attention around Vladivostok.²⁷ For instance, this initiative was backed by the Russo-American Committee of the Far East, an organization of Russian businessmen and officials that was attempting to attract American capital with the lure of vast concessions.²⁸

This Commerce Department initiative immediately created complications for the administration. When the Zakupsbyt’s first shipment of furs arrived at Vancouver, Canada, in early August, it was denied entry into the United States because War Trade Board regulations classified them as luxuries. Isaac J. Sherman, representative of the Narodny Bank in New York, advocated the Zakupsbyt’s cause with the War Trade Board and the Bureau of Foreign and Domestic Commerce in early September. First, he denied that squirrel pelts were a luxury. In view of their cheapness, they should more accurately be considered a necessity. Unfortunately, there was not much of a market for squirrel pelts in the United States and the product was certainly a low priority in the American war effort. In light of these facts Sherman even argued that the pelts were of strategic significance for the economic embargo against Germany. Earlier in the war, the czarist government prohibited the exportation of squirrel pelts to Sweden fearing Germany might buy them for its military needs.

Sherman’s most effective argument was that important political considerations were at stake for the United States. A rigorous application of the War Trade Board’s regulations would discourage the resumption of commercial relations between Russia and America, the principal objective of the Wilson administration. Such an apparent indifference to the needs of the Russian population would jeopardize America’s reputation with the vast Siberian cooperative movement. The permission to import these furs would enhance American prestige with the cooperative movement and provide an incentive for Siberian producers. Sherman suggested that in the future the cooperatives could be persuaded to send mixed shipments, containing raw materials and agricultural products that were needed in the United States.²⁹ From Vladivostok State Department consul Caldwell voiced his support for this arrangement, which he referred to as “the Department of Commerce plan.”³⁰

Sherman’s arguments had an immediate effect on the State Department. On September 16, the State Department asked the War Trade Board to make an exception in its regulations for the Zakupsbyt’s shipment “on the ground of policy.”³¹ But this solution did not resolve the bitter jurisdictional dispute between the State and Commerce Departments. Moreover, as a question of policy these negotiations were problematic because they were creating the impression among prominent Russians, cooperative officials, and the suspicious Allies that the United States was preparing to finance the shipment of large quantities of agricultural machinery. This misrepresentation of the administration’s intentions threatened to compromise Wilson’s policy among the Siberian population.

In September, the Commerce Department continued to obstruct the administration’s policy by stubbornly resisting the State Department’s efforts to wrest from it jurisdiction over the commercial negotiations with the Zakupsbyt. Lansing’s diary entries from September 19 and 24 indicate Redfield was reluctant to surrender his department’s work to the War Trade Board.³² At this point the president interceded, settling the conflict once and for all. On September 24 an irritated Wilson told House that he would no longer tolerate Redfield’s meddling with commercial assistance and that he had definitively placed the program under War Trade Board jurisdiction. In frustration Wilson declared to House that Redfield had so “messed the matter up” that up until then it had been impossible to proceed with the assistance program. Wilson related to House that he had taken the “economic and relief policy” away from Redfield and placed it under the War Trade Board’s authority with the hope that “something would come of it.” After this conversation House candidly revealed in his diary that Wilson “did not know that Gordon [Auchincloss] had worked this out and arranged it.”³³

Gordon Auchincloss devised the arguments the State Department used with Wilson to obtain this arrangement. He recommended that the State Department exploit Wilson’s opposition to the creation of a new organization to coordinate America’s supply efforts. Auchincloss agreed that the establishment of a new agency at this time was both “unnecessary and inadvisable.” Nevertheless, he pointed out that ten different governmental agencies were involved in some aspect of the Russian policy and these efforts needed coordination. On these grounds Auchincloss was able to persuasively argue that the War Trade Board was the logical agency to undertake the task. Along the same lines as his letter to the president on September 9, he stressed that the War Trade Board was “peculiarly adapted to take on such work, because it is composed of representatives of all the Departments interested.” But above all, McCormick was the ideal individual to direct this work because “he is devoted to the President and he shares his ideals.” At the same time he “can work harmoniously with practically every man who now heads the War Organizations in Washington.”³⁴

Before his appointment as chairman of the War Trade Board in late 1917, McCormick had built an impressive record as a progressive reformer and administrator in his hometown of Harrisburg, Pennsylvania, during the early years of the century. By 1912, McCormick’s influence in the Pennsylvania Democratic party enabled him to play a prominent role in bringing about Woodrow Wilson’s nomination for president. McCormick’s reputation as a progressive gained national attention during his unsuccessful bid for the Pennsylvania governorship in 1914, when Theodore Roosevelt personally campaigned in the state on his behalf.³⁵

By late September Auchincloss’s arguments ultimately persuaded Wilson because it had become imperative that some agency must coordinate and set priorities among the various supply efforts to which administration policy was committed in Siberia. As late as September 23 no such authority existed. On this date Henry B. Van Sinderen of the War Trade Board succinctly addressed this problem in a memorandum that stressed that America would soon be involved in five separate supply operations in Siberia. In the first place, the administration would have to furnish John Stevens additional railroad equipment and supplies for his personnel if it wanted him to maintain operational control over the Siberian railway system. Next, the forty-thousand-man Czecho-Slovak Corps needed both military and nonmilitary supplies. A central organization in the United States would have to determine priorities between these two categories of supplies. Funds would be needed to supply all three of these supply operations.

These prior commitments to Stevens and to the Czecho-Slovaks dictated that similar provision be made for the civilian population of Siberia. Van Sinderen emphasized that if America intended to transport supplies for the Czecho-Slovaks across 4,800 miles of the Trans-Siberian Railroad, it must also make scarce supplies available to the civilian population or else risk stirring resentment among the Siberians. Van Sinderen implied that since almost $4 million in nonmilitary supplies was being furnished to the Czecho-Slovaks, the U.S. government itself should be prepared to finance the shipment of a comparable sum of supplies to the Siberian population. It appears that up until this time War Trade Board planners had assumed these emergency shipments would have to be supplied by private trade even though this would complicate these critical transactions. Finally, to successfully revive trade in Siberia, it would be necessary to have a central organization “backed by the Government,” in order to expedite the shipment of supplies and to control their distribution in Siberia, “in view of the large number of people and large territory to be reached.” Van Sinderen also suggested that this coordinating organization might establish a stable currency, a question that would be integral to the United States’s assistance program.

In conclusion, Van Sinderen raised additional points that demonstrated the need for coordination. It would be important to develop a distributing organization in Siberia that could “make recommendations to Washington regarding the urgency of the requirements of the five groups mentioned above.” In Washington there should be an organization to arrange for the procurement and appropriate allocation of freight space, to centralize the purchase of supplies to avoid market disturbances at home, and to handle details connected with the provision of credits.³⁶

The implications of Van Sinderen’s assessment were twofold. First, unless these five functions were centrally coordinated, the United States’s supply efforts would likely work at cross-purposes, or become disorganized, leaving American policy in chaos and discredited among the Siberians and Czecho-Slovaks. Second, to ensure the equitable distribution of American supplies and to facilitate the restoration of normal market conditions in Siberia, the government would have to furnish some emergency supplies itself.

Following the resolution of the organizational question in late September, the War Trade Board began to plan its supply operation in detail. These preparations reveal a great deal about the liberal worldview that motivated American policy. In the early stages of its operations the War Trade Board tried to evaluate specific types of potential exports in terms of the moral effect they would produce among the recipients. These considerations figured prominently in discussions between the liberal officials from the Russian embassy and the War Trade Board. Russian ambassador Boris Bakhmetev and the embassy’s financial expert, Serge Ughet, urged that economic assistance must be adapted to Russian conditions, particularly that it should foster independence and self-sufficiency among its recipients. In a memorandum on the subject written in September, Bakhmetev emphasized that economic assistance should promote “national reconstruction.” Economic assistance had to be directed toward reestablishing a “material basis” upon which social stability could be sustained. This process of restoring social stability necessarily “has to be performed by the population itself” with the Allies providing essential supplies. Like his counterparts in the Wilson administration, Bakhmetev believed the American program had to facilitate an organic process of reconstruction. Accordingly, the American program had to have the flexibility to “conform itself … to the development of events changing and assuming new forms with the progress of national consolidation.”³⁷

In a conversation with Henry Van Sinderen of the War Trade Board, Ughet listed the goods that should be sent to Siberia by their order of importance. He believed that priority should be given to categories of supplies in the following order: foodstuffs and railway material, clothing, shoes, crosscut saws, seeds, and agricultural implements. Ughet placed “especial stress on the necessity of distributing products in such a way as to avoid attitude of relief.” It was his “desire to have the Russian people understand that they can procure the necessities of life if they work for them.”³⁸ Thus, from the standpoint of the Russian embassy officials, the reconstruction of Russian society would be contingent on cultivating the basic liberal qualities of independence and self-sufficiency in the population.

The War Trade Board followed these guidelines as it prepared its estimates of the goods the Siberian population would need through December 1918. In early October its research bureau produced a detailed preliminary report on the supplies that should be immediately sent to Siberia. Eugene Kayden, the research bureau’s chief economist, stated that “only the ordinary, fundamental needs of the people were to be taken into consideration, the commodities absolutely necessary to the life of the country and its economic rehabilitation.” Kayden emphasized this point since, “the leading principle is to extend the kind of economic assistance which would enable the people to help themselves.” He placed priority on sending liberal quantities of tools and hardware supplies to alleviate the severe shortage of basic implements. With regard to clothing and boots Kayden specified that it was the needs of the “common people—peasants, lumbermen, trappers etc.” that should be considered and not the “standards of the town people.”

The research bureau’s report estimated the basic needs for a population of a thousand persons in Siberia. This fascinating report was a preliminary effort on the part of the American policymaking apparatus to investigate and evaluate social and economic conditions in the Siberian society. As an examination of the basic consumption needs of the Siberian population the report demonstrated the Wilson administration’s desire to cultivate a harmony of interests between America and this developing frontier society. Moreover, Kayden’s notes made further assessments of the social and economic merits of sending certain types of goods in preference to others. The report consisted of the following categories of articles: foodstuffs, agricultural implements, trappers’ implements, lumbering implements, carpenters’ tools, blacksmiths’ and machinists’ tools, fishing implements, hardware and building supplies, household utensils, and miscellaneous items that included soap, and kerosene.

The report’s recommendations and Kayden’s notes illustrate the social characteristics America wanted to cultivate in Siberia’s population. For example, the report advised that cobbler shops be organized in the towns to facilitate the efficient repair of footwear supplied by America. To instill efficient repair practices into these operations the report suggested the shops be modeled on the “existing American military standard.” However, Kayden opposed the shipment of dairy and agricultural machinery, such as separators, churns, and pails to the Siberian cooperatives. He objected that the “Natives fully organized for [the] task. Give them only what they can’t get; they will do the rest provided transportation facilities permit.” In the pressing matter of agricultural machinery Kayden was emphatic that America “send no machinery now. That would be required for spring sowing and harvest; not now. It is imp[ortant] to send soft iron, sheet iron, and tool steel and let the peasants make their own plows etc. during the winter months. They know best. They can make tools and hardware goods and suit their own needs. Send soft iron, etc.”³⁹

These preliminary discussions were the basis upon which the United States established the Russian Bureau of the War Trade Board. On October 10 detailed instructions were cabled to August Heid, who became the Russian Bureau’s field manager at Vladivostok. As International Harvester’s marketing representative in Siberia, Heid was particularly qualified for the task.⁴⁰ The board indicated to Heid that this program merely constituted a “provisional plan” in which the U.S. government would permit the licensing of exports required by the Siberian population and their distribution under War Trade Board supervision.

In accordance with Wilson’s stipulations, the State Department and War Trade Board designed the program to promote private commerce with Siberia, supplemented by a modest $5 million revolving fund furnished by the government. A large quantity of goods existed in the United States that had been manufactured for export to Russia, as the American-Russian Chamber of Commerce petitions had been indicating since early summer. To determine the character and quantity of goods available in the private sector, the War Trade Board would now publicly announce its intention to consider export licenses. The War Trade Board believed this announcement would encourage exporters to file a large number of applications and thereby supply the data needed to evaluate the availability of goods in the private sector. Information from the American-Russian Chamber suggested a large number of applications would be forthcoming when the War Trade Board announced it was again considering licenses. The chamber was anxious to cooperate with the program, and indeed the War Trade Board depended on the organization for much of the data it required.⁴¹

The $5 million governmental subscription was to be used only for the purchase of goods the private sector was unwilling to export in view of the risks involved, or because the War Trade Board’s regulations were considered too stringent. Shipping space to handle approximately fifteen thousand tons was to be made available in the beginning of the program, which, hopefully, would be increased over time. In the meantime much of this tonnage would be required for the transportation of military supplies to the Czech forces and for railroad materials ordered by John Stevens. A loan of $7 million was made by the United States to the Czecho-Slovak government, which was now officially recognized by the Wilson administration.

As the program developed, the War Trade Board planned to distribute goods only on the recommendations of its representatives in Siberia. Licenses would be granted on conditions that gave these representatives “effective control of the manner, place, and terms of sale,” as well as the type and quantity of goods.⁴² Heid was instructed to consider certain factors in the exercise of his regulatory control. First, he had to ensure that goods were sold on equitable terms that still allowed the exporter to make a reasonable profit, with due regard for risk. Profiteering had to be prevented so that the American program could not be discredited with the charge of exploitation. The War Trade Board suggested that exploitation could be avoided if goods were sold through the reputable Siberian cooperative societies.

Moreover, the military situation had to be followed closely by the War Trade Board representatives to make sure the civilian population received supplies wherever Allied forces operated. This would help foster friendly relations with the population and enhance Allied prestige. In particular, supplies had to be available for the people who lived in areas where the Czechs operated, or who lived along the routes by which supplies for the Czechs were transported. Wilson agreed to furnish the $5 million supplemental fund to meet this contingency, since under American assumptions, the whole program hinged on the Czechs’ popularity.

When barter was employed to facilitate exchanges, goods should be acquired that would otherwise be available for Germany or that were needed in the United States. But since Russian organizations would also have to establish credits to pay for American goods, the War Trade Board was ready to grant import licenses for products of the cooperative societies or other private interests. Still, priority should be given those Russian goods that were actually needed in the United States.⁴³

Finally, Heid was authorized to select American agents and to assign them to the important population centers along the Trans-Siberian Railroad. Their duties would be to investigate and report on local needs and the reliability of local purchasing bodies. These agents would also collect information on local products that could be used in other parts of the country by either the civilian population, or Allied military forces, or that could be exported.⁴⁴

Important stakes were involved in the controversy between the State Department and the War Trade Board on the one hand and the Commerce Department on the other. The Commerce Department’s arrangement with the Zakupsbyt threatened to compromise America’s policy objectives in Siberia. While it was the Commerce Department’s function to promote American commerce abroad, its initiative toward the Siberian cooperative societies did not take into consideration the numerous hazards that could undermine a program of commercial assistance under highly unstable conditions. The complex diplomatic and economic challenges that confronted American assistance policy in Siberia required careful control over exports to ensure that the distribution of American supplies furthered the administration’s overall policy objectives.

It was for this reason that the State Department and War Trade Board gave priority to supplies for Stevens and the Czecho-Slovaks, who would necessarily lay the groundwork for an effective program of commercial assistance. In early October 1918, before the Russian Bureau program had even been announced, Ambassador Roland Morris informed the State Department that the United States should not attempt to undertake extensive commercial operations for the winter months. Because of the disruption of commercial activity along the Trans-Siberian railway, he recommended that railroad operations had to be reorganized first.⁴⁵

Above all, as the fall progressed, American policymakers were increasingly preoccupied by the contest with Japan for control of the Trans-Siberian railway system, a question that had to be resolved before any significant supply efforts could be undertaken inland. A satisfactory agreement with Japan over this issue became the most critical question as winter approached since Japan’s stranglehold over the Chinese Eastern Railway even prevented the transportation west from Vladivostok of the supplies Stevens had ordered for the line.⁴⁶

In contrast, as late as the end of August 1918, the State Department’s main antagonist in the controversy, Stanley Cutler, chief of the Bureau of Foreign and Domestic Commerce, remained unreconciled to Wilson’s subordination of economic assistance to support for the Czecho-Slovak troops. At this time Secretary Redfield actually reminded Cutler that he did not feel he could take any steps toward furnishing assistance to Siberia without the president’s approval, because only “he understands the situation fully.”⁴⁷

The conflict that pitted the State Department and the War Trade Board against the Commerce Department boiled down to the question of establishing priorities in the shipment of goods to Siberia. While the Commerce Department and War Trade Board were considering the same types of goods for shipment to Siberia, the War Trade Board was specifically preparing a priority list to ensure that the most beneficial goods were allocated for the limited shipping space it would receive in November and December of 1918. A memorandum that summarized the policy behind the War Trade Board’s initial commercial arrangements with the Zakups-byt emphasized that the War Trade Board would specify the character of goods shipped to Siberia on the basis of negotiations between its representatives at Vladivostok and those of the Zakupsbyt in order “to insure—so far as possible—the purchase of those supplies to which the War Trade Board will be able to give shipping priority.”⁴⁸ In the first months of the program much of this tonnage had to be reserved for the railroad and for the Czecho-Slovaks, and these requirements were still being determined. For instance, it was not until the end of October that the War Trade Board received Stevens’s recommendation that it immediately ship 10,000 gallons of valve oil, 700,000 gallons of car oil, and 250 tons of cotton waste packing for use on the railroads.⁴⁹

Throughout October, Stanley Cutler, who continued to brood over the War Trade Board’s incursion on his initiative, criticized the board for the slowness with which he felt it was moving on announcing the materials it would license for export to Siberia. In late October Vance McCormick explained to Cutler that the board was preparing a licensing system that would involve a priority rating of various commodities.⁵⁰ In fact, the War Trade Board’s decision to assemble a priority list was consistent with the advice of Ambassador Morris and August Heid, the Russian Bureau’s field manager, that only limited supplies could be furnished to Siberia during the coming winter.

Closely linked with the question of priorities, the War Trade Board was preoccupied with maintaining tight supervision over the whole process of distributing American goods in order to prevent the exploitation of the Siberian population. But during the summer the Commerce Department’s efforts to circumvent the supervision of the State Department and War Trade Board threatened to expose the administration’s assistance policy to a host of abuses. It was unlikely that a Commerce-run program would adequately control the distribution of supplies, and it would probably have to depend on Russian intermediaries. Without strict regulation over distribution the United States could not protect Siberian consumers from speculators, or, in general, from the decline of ethical business norms that inevitably take place under crisis situations.

There had even been some question in the mind of Stanley Cutler over whether trade commissioner Preston was making adequate provision for the supervision of American supplies. In late July he cabled Preston with the inquiry, “what distribution have you planned and what guarantee against enemy advantage. We cannot put our goods into hands of private traders without strict supervision.”⁵¹

But the War Trade Board was concerned that American assistance could also inadvertently become exposed to abuse for political or financial gain if it gave preferential treatment to specific cooperative organizations out of failure to carefully scrutinize the recipients or the terms of contracts. As a case in point, the War Trade Board delayed its initial contract with the Zakupsbyt and its agent, the Narodny Bank, for this reason. Although the board approved in principle the importation into the United States of five hundred thousand dollars worth of furs, which the Zakupsbyt consigned to the Moscow Narodny Bank, as late as October 22 it had not granted import licenses or announced the proposal. The board had put the arrangement on hold “pending study of other applications to import furs, as Board in this particular transaction does not desire its action in respect to Narodny Bank to be preferential in character, and it is possible that within certain limits as to amounts, importers generally will be allowed to bring in furs, if they will submit to same terms proposed by Narodny Bank.”⁵²

By establishing priorities on the basis of the most badly needed supplies, the Wilson administration also hoped to restrain unrealistic expectations among the Siberian population, as well as speculative practices. For instance, American interests would not be served if the Commerce Department promised the Siberian cooperatives large quantities of expensive agricultural machinery, which it was then unable to deliver, regardless of the reason.

It is clear that from the middle of the summer American officials, especially Commerce Department trade commissioner Preston, had been building up expectations among the cooperatives that a large percentage of the exports would consist of agricultural machinery and twine. As late as the middle of September, Rueben R. MacDermid, a reputable American merchant at Vladivostok, indicated that the cooperatives were still clinging to this false impression when he reported to consul John Caldwell that the cooperative societies “will probably not be able, so far as my investigations at home showed, to get all the agricultural machinery they want, as that amount is tremendous, nor as quickly as they want it, since the steel and iron supply is limited for such manufacturers, but the foundations for business of 1919 and onward can be laid now.”⁵³

Finally, in view of the United States’s problematic relations with Britain and Japan, a program run by the Commerce Department would fuel the already-intense economic rivalry that existed with the Allies, at a time when Wilson was attempting to cultivate the Allies’ cooperation over the program of intervention. Japan, whose occupation of the Trans-Siberian Railroad enabled it to dictate the success of any assistance efforts, was particularly sensitive about American economic influence in Siberia. Indeed, a principal goal of Foreign Minister Gotō’s Siberian policy was to check American economic penetration in the region. Since the spring of 1918 Japan had been very concerned about rumors over the likelihood that the U.S. government would finance ambitious economic ventures in the Russian Far East. In May Ambassador Kikujirō Ishii reported rumors from Washington of an American plan to spend billions of dollars to provide agricultural machinery to Siberia.⁵⁴ In view of these suspicions, Japanese officials would have been alarmed if they received any inkling of the Commerce Department’s proposals from late June for a government-financed commercial assistance program of $100 million.

So deep was Japan’s mistrust of American motives that its worst fears seemed confirmed when Wilson announced his intention to create an economic commission in his July 17 aide-mémoire. Many officials in Japan’s foreign ministry viewed this declaration as the beginning of a bitter struggle for economic supremacy in Siberia. On July 26, in a meeting between government ministers and bankers, the Japanese government sponsored the formation of a syndicate of industrialists who would attempt to obtain concessions in Siberia with the support of financial subsidies from the government to the extent of 20 million to 30 million yen.⁵⁵

The conflict between the State and Commerce Departments for control of the commercial assistance program was therefore rooted in important policy considerations. The State Department’s successful struggle to place the assistance program under War Trade Board jurisdiction is itself crucial to understanding Wilsonian conceptions of the reconstruction process in Siberia. By providing the Siberian population with an infusion of basic manufactured goods that were in particularly short supply during the winter months, the War Trade Board hoped to reduce speculative pressure on prices caused by severe shortages of these necessities. This, in turn, would help stabilize the currency and restore a basis upon which more extensive commercial operations with the cooperatives could be undertaken in 1919. Meanwhile, in the critical early stages of reconstruction, this plan was purposely designed to limit the possibility that the U.S. government would be promoting American commercial interests at the expense of supplying the Siberian population’s immediate needs. Finally, by fostering a more stable commercial environment, the administration hoped to bolster in the population the quality of industriousness and a capacity for self-government. Therefore, the Russian Bureau program demonstrates how the Wilsonians attempted to harmonize American interests and values with a practical appraisal of existing conditions in Siberia. The preoccupation of the State Department and the War Trade Board with the potential complications associated with an assistance program proved to be well warranted, for during its brief and troubled existence the Russian Bureau’s operations were handicapped by the disruptive forces afflicting Siberia.