Can You Do Business With the Communists?

It must make fascinating reading for Nikita Khrushchev and his colleagues, and it surely graces many a samovar table around the Kremlin. But how did the annual report of Litton Industries, California's electronics giant, get distributed in Moscow--and in Russian?

The answer illustrates an important change in attitude among U.S. businessmen. When Litton executives started working on the company's glossy 1963 report, they decided to print 2,500 copies in Russian, sent 1,850 of them to the highest comrades in the U.S.S.R., from Khrushchev on down. They obviously feel that there is potential for profit in dealing with the Soviet Union--and more and more U.S. businessmen agree.

Last week this widespread and growing belief got its most dramatic play to date in an unprecedented resolution adopted by the annual meeting of the U.S. Chamber of Commerce in Washington. With only a handful of the 3,800 delegates muttering disapproval, that normally conservative body urged the Government to pull down its barriers against the export of nonstrategic goods to the Soviet Union and its European satellites. Such controls, said the Chamber, "are not necessary for the security of the U.S. and result in discrimination harmful to its competitive position."

Shifting. Many months of politicking went into the resolution. Last September Washington Lawyer Joel Barlow, the Chamber director who earlier had engineered the organization's approval of the tax cut bill, proposed that the Chamber speak up for bigger U.S. business with the East. With the enthusiastic support of outgoing President Edwin P. Neilan, he organized a team of backers, including Caterpillar Tractor President William Blackie, Anderson Clayton Vice President Norman Ness and Christian Science Monitor Editor Erwin Canham, a former Chamber president.

When rightwing organizations mounted a counter campaign and 1,000 protesting letters rolled in from smalltown businessmen, the sponsors nervously softened their proposal by writing into it their disapproval of granting long-term credits to the Communists. As it turned out, they overestimated the opposition. Only one Chamber chapter (from White Plains, N.Y.) voted against the proposal, and a group of leaders--including Edwin Neilan--wanted to go even farther by specifically endorsing trade with Red China.

Many businessmen explain their shift away from opposition to Red trade by stressing their belief that trade could somehow become a cold war plus for the West. Says Burroughs Corp. President Ray Eppert: "All-out trade in non-strategic goods could be the West's secret weapon for exposing Communism's weakness as a system for providing a better life for its people." But beneath such philosophy is usually a more pragmatic conviction that the U.S. is simply losing a lot of good export business because the Communists can get almost anything they want from the U.S.'s trade-with-anybody allies in Europe. Western sales to the Soviet bloc are growing by 10% a year, but the U.S. wrote up less than 2%, or $166 million, of last year's $4.2 billion total. Since its allies have not honored the U.S. embargo, says General James Gavin, president of Boston's Arthur D. Little Inc., "it is high time for the U.S. to protect its own economic interests."

Softening. The Johnson Administration, which would like to soften its enforcement of the embargo, expects the Chamber's resolution to help it get some amendments to the 15-year-old Export Control Act. But there is strong support for the embargo in Congress, and what promises to be a noisy brawl over amendments to the act will begin as soon as the civil rights fight is settled.

Even if the longest embargo in modern times is softened, how much can the U.S. expect to increase its sales to the Communists? Under czars and commissars alike, Russia has never been a major U.S. customer because it had neither enough hard money nor desirable goods to offer in return. Before the one-shot U.S. wheat deal, the largest recent U.S. sale to Russia was $4,000,000 worth of inedible tallow. Now Khrushchev says that he wants to buy billions of dollars' worth of industrial plants and equipment to make chemicals, fertilizer and other products. For that, he probably will need heavy loans. Considering that U.S. law has prohibited long-term credits to the Soviets ever since they defaulted on Russia's World War I debts--and that any early change in that policy is unlikely--Khrushchev will probably have to do most of his shopping in Western Europe.

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