During Anthony Eden's visit to Moscow in March 1935, Stalin tried to give him the same impression, to frighten him with the prospect of a Soviet— German alliance in order to dissuade Britain from seeking an agreement with Germany at the expense of the USSR. He told Eden that Soviet talks with Germany for loans and credits had included the question of "certain products" that did not bear mention out loud, in other words, armaments, chemicals, and the like.
Eden (agitated): What? Surely the German government hasn't contracted to deliver arms to your Red Army?
Stalin: Yes, they have, and in the next few days we will probably sign a credits agreement.41
The stakes were high. If Stalin could persuade the British that Hitler was not to be trusted, the danger of an Anglo—German accord directed against the Soviet Union would be eliminated. Then Hitler would have no choice but to seek an agreement with the Soviet Union.
Three and a half months after Eden's trip to Moscow, in July 1935, Stalin ordered his confidant, David Kandelaki, Soviet trade representative in Berlin, to initiate talks aimed at the improvement of political relations between Germany and the USSR. Kandelaki was in charge of economic negotiations underway at the time with the president of the Reichsbank, Hjalmar Schacht, who had close ties with top industrial and financial circles. By Stalin's logic, the big industrialists were the real power behind Hitler; thus talking with Schacht meant talking directly to the boss. Kandelaki also met with Goering, whom the Soviet leaders considered to be the link between the industrialists and the German government. Schacht advised Kandelaki to pursue the matter through diplomatic rather than commercial channels. For his part, he promised to inform the German Foreign Ministry of the Soviet inquiry.42
The "Kandelaki initiative" was backed up by Surits, the Soviet ambassador in Berlin, by Bessonov, a counselor at the Berlin embassy, and by others who persistently called for improved Soviet—German relations. In a visit to the German Foreign Ministry on December 21, 1935, for example, Bessonov stated bluntly that it would be desirable to supplement the 1926 neutrality pact between the two countries with a "mutual nonaggression pact."43
Evgeny Gnedin, a prominent Soviet journalist and diplomat who served at the Berlin embassy in 1935—1936, has confirmed that a serious reappraisal of attitude toward nazism was being made in Moscow at the time. "I remember," Gnedin writes,
that we members of the Berlin embassy staff were rather taken aback when Eliava, the deputy commissar for foreign trade, who was passing through Berlin (in 1936, as I recall) and who had access to Stalin because of longstanding personal ties, gave us to understand that "at the top" Hitler was viewed "differently" than he was in the Soviet press or by the Soviet embassy staff in Berlin.44
During 1935 and 1936 Stalin continued to hope for an agreement with Hitler despite warnings from the international section of the NKVD that "all of the Soviet attempts to appease and conciliate Hitler are doomed. The main obstacle to an understanding with Moscow is Hitler himself."45 When, in May 1936, Germany did grant the Soviet Union substantial credits as a result of the talks in 1935—1936, Stalin read the action as a desire for a general political agreement. At a Politburo meeting Stalin took issue with the NKVD: "Well, now, how can Hitler make war on us when he has granted us such credits? It's impossible. The business circles in Germany are too powerful, and they are in the saddle."46
During 1936 neither the confrontation with Germany in Spain nor the signing of the "anti-Comintern pact" between Germany and Japan dissuaded Stalin from the conviction that it was possible to reach an agreement with Germany. At the end of May 1936, Kandelaki and his deputy Friedrichsohn met with Goering, who was not only very interested in an improvement in German—Soviet relations but also promised to take the matter up with Hitler.47 In July Bessonov had a meeting with Hencke, a high-ranking official in the German Foreign Ministry. Bessonov listed the concrete conditions necessary to reach a nonaggression pact. Hencke explained that, in the German government's view, nonaggression pacts were possible only between states sharing a common border, and that was not the case with the Soviet Union and Germany.48
This statement was of crucial importance for the future of Soviet—German relations. In December 1936 and February 1937 Schacht met again with Kandelaki and Friedrichsohn. He explained that trade relations could be expanded on the condition that the Soviet government renounce all further Communist agitation outside its borders. According to Schacht's notes, Kandelaki expressed "sympathy and understanding." Kandelaki revealed that he had been entrusted by Stalin and Molotov to make known their views, which he had with him in written form. He then read the statement, which said that the Soviet government had never placed obstacles in the way of political talks with Germany, that Soviet policies were not in any way directed against German interests, and that the Soviet government was ready to enter into negotiations concerning the improvement of German— Soviet relations. Schacht urged Kandelaki to have this communication presented officially by the Soviet ambassador in Berlin.49
After the conclusion of the economic agreement between the Soviet Union and Germany in May 1936, Stalin was convinced that the talks with Hitler were on the right track. "In the immediate future we shall consummate an agreement with Germany," he told Ezhov, according to Krivitsky. And in December 1936 Krivitsky himself was ordered to "throttle down" intelligence work in Germany.50
On February 11, 1937, however, the German foreign minister, von Neu- rath, informed Schacht that the Soviet proposals had been rejected because of the Franco—Soviet mutual assistance pact and the activities of the Comintern. At the same time, Neurath explained that if events inside the Soviet Union continued to evolve in the direction of an absolute despotism, more and more dependent on the army, Germany might reconsider its policy toward the USSR.51
Hitler was guided by a number of considerations in rejecting Stalin's overture at that time—not only domestic instability and the anti-German policy of collective security but also the weak response by France and England to Hitler's remilitarization of the Rhineland and unilateral denunciation of the Locarno pact (in March 1936). To Hitler this meant that an expansionist Germany need not fear any serious resistance from the Western powers. He decided that for the moment it was more advantageous to play the anti-Soviet card.
Hitler used the Soviet overtures to try to frighten Britain with the prospects of a Soviet—German rapprochement. At the beginning of 1936 British military and diplomatic circles were taking this threat very seriously. Baron Geyer, the German military attache in London, in a conversation with British Chief of Staff Dill, spoke of strong pro-Russian tendencies in the German army and suggested that a Soviet—German pact could well become a reality if Britain and Germany did not come to an agreement themselves.
In London it was believed that the policy of rapprochement between Germany and the Soviet Union enjoyed the support of the Reichswehr, Schacht, an important group of industrialists interested in business dealings with Russia, and even a section of the Nazi party. But Hitler was thought to be adamantly opposed to any improvement in relations other than on the level of trade.52 There was a mistaken assumption in British political circles that the Germans had taken the initiative in this policy.53 The Foreign Office feared that if the system of collective security collapsed, a German—Soviet rapprochement would be inevitable. Only the collective security policy could prevent a Soviet—German pact.54
In the Soviet Union the situation began to deteriorate rapidly. An unheard of reign of terror was setting in. Radek, at the Moscow trial of January 1937, playing the double role of defendant and chief witness for the prosecution, confessed to treason and spying in behalf of Germany. (These lies about himself and others did not save his life for long. He was sentenced to ten years in prison, but died in a labor camp, apparently in 1940.)