Anglo-Soviet Trade Relations on the Eve of the Severance of Diplomatic Relations in 1927

Abstract

During the 1920s, the USSR tried to establish both trade and diplomatic relations with England. In the conditions of the growing economic crisis of 1925, representatives of British business circles were interested in creating favorable conditions for the development of mutually beneficial trade and economic ties with Soviet Russia. The foreign trade turnover between the two countries was actively developing. At the same time, the trade balance was in favor of the UK. Meanwhile, the Conservative cabinet was clearly moving towards a break with the USSR. Soviet financial assistance to striking miners in 1926, as well as material support for the national revolutionary movement in China, contributed to the deterioration of Soviet-British relations. Representatives of some of the British commercial and industrial circles were extremely interested in trade with Russia. They rightly believed that England would suffer more damage from the rupture than the Soviets. One of the steps towards easing tensions and creating favorable conditions for the development of trade and economic relations was the conclusion in May 1927 of an agreement between the delegation of the USSR and the board of Midland Bank on crediting Soviet orders of British goods. However, the subsequent police raid on the premises of the joint stock company “Arkos Limited” led to the termination of diplomatic relations with the USSR. As a result of the breakdown of relations, English firms suffered heavy losses. Orders were lost for the amount of the loan, on the provision of which an agreement was reached with Midland Bank. The termination of relations with the USSR had negative consequences for the British economy. The volume of Soviet-British trade has significantly decreased. The gradual improvement of Soviet-British relations led to the restoration of lost trade and economic relations. However, the issue of granting large loans, including from Midland Bank, remained unresolved.