German–Soviet Trade Agreement

The German-Soviet Trade Agreement (also referred to as the Nazi–Soviet Trade Agreement, see the external reference below) was an economic arrangement between the Soviet Union and Nazi Germany signed on August 19 1939. It was negotiated during talks between Soviet foreign minister Vyacheslav Molotov and German foreign minister Joachim von Ribbentrop leading to the Molotov–Ribbentrop Pact.

German money

Germany granted the Soviet Union a merchandise credit of 200 million Reichsmarks to be financed by the German Golddiskontbank. This loan would be 100% guaranteed by the German government and entail an interest rate of 5%; extremely favorable terms at the time.

The credit was to be used to finance Soviet orders in Germany to include machinery, manufactured goods, war materials and hard currency.

Soviet goods

The credit was to be repaid by Soviet raw materials with delivery to start immediately upon signature. Such materials would include items vital to the German military, notably phosphate, platinum, petroleum, cotton and feed grain. The most important raw materials are the following:

**1,000,000 tons of grain for cattle, and of legumes, in the amount of 120 million Reichsmarks
**900,000 tons of mineral oil in the amount of approximately 115 million Reichsmarks
**100,000 tons of cotton in the amount of approximately 90 million Reichsmarks
**500,000 tons of phosphates
**100,000 tons of chrome ores
**500,000 tons of iron ore
**300,000 tons of scrap iron and pig iron
**2,400 kg of platinum Manganese ore, metals, lumber, and numerous other raw materials.

The Soviet Union also agreed to act as an intermediary in order to procure war material Germany needed but that the Soviets could not indigenously produce.

Impact

Basically, this agreement paved the way to World War II. Germany credited the trade pact with significantly weakening the British naval blockade that had been established after Germany's invasion of Poland. In World War I, the blockade had caused famine and shortages in Germany, leading to the loss.

External links

* A description of the agreement by Dr. Karl Schnurre, Head of the Eastern European and Baltic Section of the Commercial Policy Division of the German Foreign Office (according to http://www.yale.edu/lawweb/avalon/nazsov/persons.htm), written 10 days after the signing of the agreement: http://www.yale.edu/lawweb/avalon/nazsov/ns059.htm .
* [http://www.yale.edu/lawweb/avalon/nazsov/ns120.htm MEMORANDUM ON THE GERMAN–SOVIET COMMERCIAL AGREEMENT]