East-West Trade Trends MUTUAL DEFENSE ASSISTANCE CONTROL ACT OF 1951 (the Battle Act) * * * FOURTH REPORT TO CONGRESS Second Half of 1953 LETTER OF TRANSMITTAL _To the Congress of the United States_: I have the honor to submit herewith the fourth semiannual report on operations under the Mutual Defense Assistance Control Act of 1951 (Battle Act), the administration of which is a part of my responsibilities. The period covered is July through December 1953. A large part of this report is an examination of what the Soviet Union has been doing in its trade relations with the free world. In order to put the Russian activities of the last half of 1953 in a more understandable framework we have ranged back over the last 30 years to show how foreign trade fits into their economy and serves their purposes. To study Soviet trends and tactics is obviously important to the economic defense of the free world. To make a report to the Congress and the public on these matters should also be useful. There has been much public interest in the subject. The selection of this theme, however, does not mean that Soviet trade activities are the only important consideration to be taken into account in the formulation of U. S. economic defense policy. They are not. Many other factors enter in, as told in Chapter V. In preparing the report my staff has drawn heavily upon the expert knowledge of the Department of State and other agencies. But of course the responsibility for the report is ours. In my last Battle Act report I said that the strategic trade control program had been hampered by lack of public knowledge. This is still true, but to a less extent, it seems to me. There is a better understanding of the Government's policies, a greater realization that the soundness of East-West trade policy is to be judged not primarily on the amount of trade, but more on what kind of goods move back and forth, and on what terms they move. <signed> HAROLD E. STASSEN, _Director, Foreign Operations Administration_. MAY 17, 1954. CONTENTS INTRODUCTION: Page NOTE ON "STRATEGIC" AND "NONSTRATEGIC" 1 CHAPTERS: I. STALIN'S LOPSIDED ECONOMY 3 Emphasis on Heavy Industry How Forced Industrialization Affects Trade How the Kremlin Controls Trade West Has Never Barred Peaceful Exports Stalin's Last Gospel II. THE NEW REGIME AND THE CONSUMER 11 Letting Off Pressure The "New Economic Courses" Malenkov's Big Announcement Khrushchev and the Livestock Lag Mikoyan Advertises the Program Has Stalin Been Overruled?