After two years of exploratory visits and friendly negotiations, Ford Motor Company signs a landmark agreement to produce cars in the Soviet Union on this day in 1929.
The Soviet Union, which in 1928 had only 20,000 cars and a single truck factory, was eager to join the ranks of automotive production, and Ford, with its focus on engineering and manufacturing methods, was a natural choice to help. The always independent-minded Henry Ford was strongly in favor of his free-market company doing business with Communist countries. An article published in May 1929 in The New York Times quoted Ford as saying that “No matter where industry prospers, whether in India or China, or Russia, all the world is bound to catch some good from it.”
Signed in Dearborn, Michigan, on May 31, 1929, the contract stipulated that Ford would oversee construction of a production plant at Nizhni Novgorod, located on the banks of the Volga River, to manufacture Model A cars. An assembly plant would also start operating immediately within Moscow city limits. In return, the USSR agreed to buy 72,000 unassembled Ford cars and trucks and all spare parts to be required over the following nine years, a total of some $30 million worth of Ford products. Valery U. Meshlauk, vice chairman of the Supreme Council of National Economy, signed the Dearborn agreement on behalf of the Soviets. To comply with its side of the deal, Ford sent engineers and executives to the Soviet Union.
At the time the U.S. government did not formally recognize the USSR in diplomatic negotiations, so the Ford agreement was groundbreaking. (A week after the deal was announced the Soviet Union would announce deals with 15 other foreign companies, including E.I. Du Pont de Nemours and RCA.) As Douglas Brinkley writes in “Wheels for the World,” his book on Henry Ford and Ford Motor, the automaker was firm in his belief that introducing capitalism was the best way to undermine communism. In any case, Ford’s assistance in establishing motor vehicle production facilities in the USSR would greatly impact the course of world events, as the ability to produce these vehicles helped the Soviets defeat Germany on the Eastern Front during World War II. In 1944, according to Brinkley, Stalin wrote to the U.S. Chamber of Commerce, calling Henry Ford “one of the world’s greatest industrialists” and expressing the hope that “may God preserve him.”