Heading it is anthracite coal, not of course a
manufactured article but so important to Britain
that the association's investigators were moved to
include it and to note that "Russia has always been
more or less a normal supplier of certain Mediter-
ranean markets, but in recent times has displaced us
in Italy and in the last year had made a determined
attack at very low prices in the American and Ca-
nadian markets and more recently sent consignments
into France, Belgium and Germany.
manufactured article but so important to Britain
that the association's investigators were moved to
include it and to note that "Russia has always been
more or less a normal supplier of certain Mediter-
ranean markets, but in recent times has displaced us
in Italy and in the last year had made a determined
attack at very low prices in the American and Ca-
nadian markets and more recently sent consignments
into France, Belgium and Germany.
Soviet Union - 1931 - Fighting the Red Trade Menace
All transactions should be in cash.
To carry
out the intention of such a scheme to balance the
British trade with the Soviet Union it is proposed
that the Soviet trade representative should be allowed
to receive for his sales to Great Britain only as much
as the value of his purchases. Since the British indus-
trialists who now grant credit to the Soviet Union
averaging twelve months would under this scheme re-
ceive cash instead, there could be no doubt that other
things being equal they would require no legal com-
pulsion to enter under such an agreement.
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? FIGHTING THE RED TRADE MENACE 188
What the attitude would be of British consumers
and of merchants now purchasing consumption goods
from the Soviet Union is open to much more serious
doubt. Particularly is this true of British co-
operative societies who, numbering several millions
of members, serve every corner of the British Isles,
have always maintained cordial relations with the
Soviet cooperatives and are in fact the mainstay of
the Soviets in England. Their negative attitude to
such a scheme could be forecast with almost complete
certainty. But the attitude of the Soviet Union to
such a scheme is open to no doubt at all.
In this as in every case of an attempt on the part
of the capitalist world or of any single capitalist na-
tion to unite its economic forces against the united
economic forces of the Soviet Union, the Soviet re-
tort, it may without fear of contradiction be said,
would be unqualified defiance. Immediate cessation
of all Soviet orders to British firms might be antici-
pated. Yet in this case the advantage might not so
clearly be on the side of the Soviet Union and the
outcome not easy to foresee. For the fact that the
Soviet Union sends nearly one-third of its exports
to Great Britain, the fact that the rest of the world
is already nearly saturated with Soviet products, the
fact that the present juncture of affairs in the Five-
Year Plan makes any recession in the returns from
Soviet exports a grave hazard to Soviet solvency--
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? 134 FIGHTING THE RED TRADE MENACE
all these facts would insure that such a trade war
would be most bitter, most decisive, fraught with des-
tiny for the relationships not only of Britain with
the Soviet Union, but of the Soviet Union with the
non-Soviet world.
The trial of such a scheme in France would almost
certainly be futile, for the Soviet Union could af-
ford to cease entirely its almost insignificant exports
to France and feel, but not too painfully, the loss.
But the Soviet Union could not be indifferent to the
loss of the exports to Britain.
The outcome of such a Russo-British trade war
would depend in the degree to which British authori-
ties, commercial or Governmental, could unite the
nation behind the effort, would depend, on the other
hand, on the degree to which the Soviet Union would
be willing to sacrifice swift completion of the Five-
Year Plan for a very important fighting principle.
French experience with their license system on Soviet
exports has shown that for such a trial of strength it
would be essential to answer Soviet cancellation of
orders by a complete embargo on Soviet exports into
Britain. Otherwise, as in France, the consumer in-
terests would continue to buy from the Soviet Union
and the net result would be a further worsening of
the British-Russian trade balance.
With such an embargo, the British could settle
down and wait to see which could hold out longer, the
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? FIGHTING THE RED TRADE MENACE 135
Soviet Union with its desperate necessity to main-
tain its exports at the planned level, or British manu-
facturers with their desperate need to keep their fac-
tories going, flanked by British consumers with their
keen desire to buy as cheaply as possible. One could
guess what the public reaction might be in Britain
to the loss of the Soviet's $40,000,000 to $50,000,000
worth of orders. The closure perhaps of a few fac-
tories more, short time in others and the increase if
even by a few thousands of unemployed. One could
reckon the effect upon other nations' markets of the
sudden diversion to other countries of even part of
the $170,000,000 worth of goods that the Soviet
Union annually sells Great Britain, diverted in this
emergency with the imperative direction, "sell at any
price. "
After Belgium's experience one would anticipate
the brisk business that would spring up on the Conti-
nent in the transfer of Soviet cargoes of staple com-
modities into neutral bottoms to be introduced into
Britain under false certificates of origin. In short,
one could foresee that such a scheme might prove a
notable contribution to the world's attempt to redress
its economic balance.
Perhaps, of course, the outcome might be dif-
ferent. Perhaps the Soviet Government would give
in. But nobody who knows that Government believes
they would without fighting. For acceptance by the
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? 136 FIGHTING THE RED TRADE MENACE
Soviets of the British scheme would constitute a prec-
edent almost as dangerous in Soviet eyes as the
precedent that would be established should the Soviet
Union agree to pay the United States, say, the re-
pudiated deb of $230,000,000 with the Russian debt
to France of $1,347,000,000 in the background.
For the British the conjectural fight would be a
fight to overcome the enormous commercial advan-
tages possessed by the Soviet Foreign Trade Mo-
nopoly, but more than that a fight for more Soviet
orders. For the Soviets it would be a fight to retain
liberty of action in buying where the Soviet Foreign
Trade Monopoly pleases, but more than a fight to
check in its beginnings any attempt at capitalist
combination against the Soviet Union.
The prospect of such a trial of strength is fasci-
nating if not comfortable. In any case it could hardly
be attempted under the present British Government,
for though it is conceivable that the Labor Party
would look with complacency on a scheme to balance
trade with the Soviet Union it could never be induced
to use the weapon of embargo to make the Soviet
Union accept such a scheme. The Tories might and
that is why Moscow and a good many other capitals
no less are restless at the thought of MacDonald's
fall.
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? CHAPTER XIV
London:
Whatever difficulties the Soviet Union is facing,
whatever checks it has suffered in the past, is suf-
fering in the present, may suffer in the future, its
huge mercantiling trust, the Monopoly of Foreign
Trade, continues today to pour out upon the world
a quantity of goods unprecedented in the history of
the Soviet Union, steadily mounting from month to
month.
Released by spring from the ice that bound the
northern shores of Russia, the whole battery of Soviet
ports from Archangel and Murmansk to Odessa and
Vladivostock has begun to discharge a steady stream
of ships pointing for nearly every harbor of impor-
tance on the globe.
The volume of the flow is difficult to estimate.
Months pass before the customs returns of import
countries can be compiled, and even were they in-
terested in accelerating public acquaintance with the
export figures Soviet authorities could issue their
statistics only after a comparatively long lapse of
time.
Yet the outside world now is concerned in knowing
those figures today more than ever, when Russia is
137
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? 138 FIGHTING THE RED TRADE MENACE
at the forefront of discussion and merchants, bankers,
wheat farmers, lumber dealers, Governments are won-
dering what will be the export total of the Soviet
Union. The answer is: it is going up, steadily up.
There is one spot where Soviet exports can be ac-
curately measured months in advance of customs
statistics. That spot is the one that imperial Russia
coveted more than any other spot on earth, so keenly
that she fought a bloody war for it and lost and
helped precipitate the last great conflict in the hope
of its possession. The place is Istanbul, one time
Constantinople, and there, far ahead of Soviet in-
formation, can be weighed, ton for ton, the Soviet
exports that come from out the Black Sea. Istanbul
knows first the symptoms of Soviet foreign trade de-
velopment, can tell today what Europe finds out later,
will be first to note that check in Soviet exports some
observers have predicted must be the consequence of
overstraining the Russian population. But Istanbul
reports no such check today.
While the latest Soviet bulletins have just an-
nounced that the first two months of 1931 showed an
increase of 556,000 tons of Soviet exports over the
first two months of 1930, Istanbul reports already
that Black Sea ports of Soviet Russia alone poured
out in the first four months of this year 801,193 more
tons of goods than in the same period the year before.
There have still to come the heavy export months
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? FIGHTING THE RED TRADE MENACE 189
when the new crop upon which the Soviet Union
builds such hopes and wheat farmers of non-Soviet
countries build such fears will be hastened to market.
The Soviet spokesman at the London wheat con-
ference, I. E. Lubimoff, announced that in wheat
alone the Soviet Union expects a crop of 1,314,000,-
000 bushels, 252,000,000 bushels more than last
year. Such a surplus would exceed by twice the total
Soviet exports for the season year 1930-31, the year
when Russia exported more than one-tenth of all the
wheat exported in the world.
It is not necessary to presume that the Soviet
Union will export all its anticipated surplus to realize
that Soviet wheat exports in the season year 1931-32
may leap far ahead of pre-war Russian exports, may
"overtake and outstrip" those of Canada and of the
United States if the crop is as good as Lubimoff ex-
pects it to be.
Soviet wheat exported in the season year 1930--
1931 by August will amount to around 125,000,000
bushels, Lubimoff said. If the crop this year were no
bigger than last year's crop, the Soviet Union could
export at least 125,000,000 bushels again. The
Soviet Union's total wheat crop last year, according
to Lubimoff, was 1,044,000,000 bushels. He said that
consumption within the country amounted to 842,-
400,000 bushels. This would indicate that after 125,-
000,000 bushels had been exported, there still re-
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? 140 FIGHTING THE RED TRADE MENACE
mained in Russia a reserve of about 80,000,000
bushels. Granted the accuracy of these figures and
that the reserve to be held in the coming season will
not exceed that held last season, the Soviet Union will
have available for export this season 377,000,000
bushels--last year's export of 125,000,000 plus the
anticipated increase of 252,000,000 in the coming
crop.
Soviet authorities, of course, will not affirm that
they intend to export it all. But it occurs to any one
who was in the Soviet Union during the current sea-
son year to ask why not? Everybody in the Soviet
Union had all the bread he could eat. Russians eat
more rye than wheat bread, but last year the average
consumption of wheat was 300 pounds per person. If
3,500,000 persons are added to the population at
Russia's normal rate of annual increase, there should
be consumed next year 17,500,000 more than last
year, reducing the amount available for exports to a
round 360,000,000 bushels, about 60,000,000 bushels
more than Canada's average export for the years
1927-1930 and about 160,000,000 bushels more
than America's average export for these years, and
more than twice the average export of Imperial Rus-
sia in pre-war years when she was the greatest wheat
exporter in the world, the granary of Europe. In the
face of this prospect, one begins to understand why
the Soviet trade representative in Rotterdam wanted
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? FIGHTING THE RED TRADE MENACE 141
space in Europe's largest grain elevator. It is a
prospect no less interesting to wheat farmers of
America and Canada than to students of the course
of Soviet economic expansion who remember the
prophecy made not only by the outside world but by
many Communists that the Soviet's collectivization
of farms was premature and doomed to failure.
Just now it is only a prospect, yet Istanbul has
furnished some significant figures that may help to
estimate its chances of being realized. These figures
are worth recording as a possible indication of the
Soviet authorities' private opinion of the size of
their coming wheat crop.
One of the criteria of this private opinion of
Soviets is how much they dare to export of their
reserve stores of wheat from the 1930--31 crop.
Istanbul's record of ship cargoes passing through
the Dardanelles shows that in the first four months of
1931 the Soviets have exported from Black Sea
ports alone nearly 18,000,000 bushels of wheat, com-
pared with 4,000,000 in the first four months of
1930. The extent of this early Spring export is taken
by the trade as an indication that the Soviet au-
thorities are genuinely confident of the size of their
this year's crop and therefore grain merchants on
this continent are preparing for an even larger flood
of Soviet wheat exports than that which last year
was the sensation of the world market. Nature, of
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? 142 FIGHTING THE RED TRADE MENACE
course, may run a blue pencil through the Soviet's
calculations, but those whose business it is to look
ahead on world commodity markets are this time
taking Soviet announcements about their wheat
program seriously.
Wheat is a subject that has the world's attention
just now, but all other exports of the Soviet Union
recorded in Istanbul are worthy of attention. The
total exports passing through the Dardanelles
amounted in the first four months of 1931 to 3,595,-
438 tons, compared to 2,794, 245 tons in the same
period in 1930, an increase of nearly 30 per cent. In
the month of April alone total cereal exports from
Black Sea ports almost doubled, 132,000 tons, com-
pared to 740,000 last year: petroleum products went
from 389,000 to 408,000 tons, minerals from 195,-
000 to 244,000 tons and so on,--the only diminution
being registered in timber, and that a very slight de-
crease, from 15,500 to 15,110 tons.
This sort of increase of exports taking place on an
over-saturated market, an increase that as every in-
dication shows may sharply accelerate when the new
crop begins to move, appears to competitors of the
Soviets to be not merely uneconomic but maliciously
uneconomic.
It certainly is uneconomic from almost any view-
point save the highly special viewpoint of the Five-
Year Plan, but that it is malicious at the present
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? FIGHTING THE RED TRADE MENACE 143
juncture of Soviet affairs or that it is deliberately
intended to break the market is not borne out by the
latest returns on Soviet foreign trade.
These returns show even more clearly than had
previously been brought out that in order to keep
up the planned level of returns from exports, the
Soviet Union had to increase its quantity of exports
immensely above that which had been planned, and
this feature of Soviet foreign trade cannot be over-
emphasized as the duration of the world economic
crisis bids fair to make it one of the decisive elements
in the success or failure of the Five-Year Plan. To be
specific, according to figures given in "The Statist"
of London, in the year 1930-31, the quantity of
grain exported by the Soviets increased nearly
twenty-three times over that exported in 1929-30,
and the value only seven times; the quantity of
timber exported increased by 53 per cent and the
value by 30 per cent; exports of oil products in-
creased by 25 per cent and value by 17 per cent and
so on.
Nevertheless, however free from immediate politi-
cal intentions the management of the Soviet Mo-
nopoly for Foreign Trade may or may not be the
fact of exports remains and their effect upon the
exports of competing lands remains, and no matter
how one may analyze the motives of the Soviet au-
thorities, the sufferers abroad from Soviet competi-
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? 14* FIGHTING THE RED TRADE MENACE
tion continue to suffer. It must by now have become
a platitude to anyone watching the effects of Soviet
exports upon the outside world to observe that the
interest hit by cheap Soviet goods are almost never
in that land that is importing those goods, but nearly
always in other countries supplying the importing
lands. Soviet competition, in other words, seldom
strikes directly but strikes through each country's
export markets.
It may seem to be laboring an obvious point to
dwell on this, but one constantly meets persons who
exclaim, "Well, if the Soviet Union keeps on dump-
ing this way it is bound to force the world to get
together and protect itself. " It is not bound to do so
at all, for the countries unfavorably affected by
Soviet exports are affected not at home where they
could put up bars, but abroad in some other country
where for the most part the consumers are glad to
receive Soviet goods at prices beneath those of the
complaining exporters from the injured nations.
The only suggestion yet advanced for interna-
tional action against the Soviet exports that has
taken this fundamental factor into account was that
of the Argentine delegate to the Rome wheat con-
ference, who in the extremity of distress caused by
the Soviet's deep inroads into the Argentines wheat
markets, proposed that the nations of the world
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? FIGHTING THE RED TRADE MENACE 145
should agree among themselves to cancel trade
treaties with any country that accepted Soviet ex-
ports. His suggestion was ignored.
If the Soviet Union exported wheat to the Ar-
gentine and Canada, or petroleum to Venezuela or
Texas at prices undercutting local production, it
can be ventured that all the centrifugal forces of the
non-Soviet world could not have prevented unani-
mous international bars to Soviet trade. But who
for example are feeling most the pressure of Soviet
competition in England? Not the British, though
the Tory press has had partial success in convincing
some of the public that this is so. It is the Americans,
Canadians, Argentinians, Scandinavians, once again
the producers of great staples, that are hit here.
The Association of British Chambers of Com-
merce in its investigation of the effects of Soviet ex-
ports upon British economy has recognized this point
at once and in their preliminary researches have
wasted little attention on what to do about Soviet
imports into Britain that compete, not with British,
but with other foreign producers and have con-
centrated attention upon the one fear of this pre-
dominantly manufacturing country, namely that the
Soviet Union industrialized may become a serious
competitor in manufactured articles. Already mem-
bers of the association have compiled a list that at
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? 146 FIGHTING THE RED TRADE MENACE
first glance seems imposing of articles of Soviet
manufacture that have become or, threaten to be-
come, competitive with British products.
Heading it is anthracite coal, not of course a
manufactured article but so important to Britain
that the association's investigators were moved to
include it and to note that "Russia has always been
more or less a normal supplier of certain Mediter-
ranean markets, but in recent times has displaced us
in Italy and in the last year had made a determined
attack at very low prices in the American and Ca-
nadian markets and more recently sent consignments
into France, Belgium and Germany. " This state-
ment, though it does not coincide with Italian foreign
trade statistics showing Britain still supplying about
two-thirds of Italy's imports of anthracite and
Germany nearly a third, with the Soviet Union just
beginning to enter the market, is nevertheless a
striking illustration of the sensitiveness of the British
business world to any threat to her coal industry,
one of the keynotes of the British economic system.
Hackled flax, it is recorded, is sent by the Soviets
to Britain at a price about $60 per ton less than the
price at which the raw material can be obtained and
hackled here, with the result, it is alleged, that many
hackling machines here have suspended operations.
In the fur trade, it is observed, Russia exported
some lines of dressed pelts before the war, but the
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? FIGHTING THE RED TRADE MENACE 147
Soviet Union now has greatly extended this business
and is also exporting dyed furs and these, it is al-
leged, are sold at prices considerably below what the
British have to pay for the raw article. The British
glucose industry, say the association's investigators,
has been built up over a number of years against
American competition, and now that it has about
won its footing against the Americans, it has to face
the Russian imports at $15 to $25 below the normal
price of $100 per ton.
Cornstarch, note the reporters, now is coming into
Britain from the Soviet Union at prices greatly be-
low the cost of production here. The amount im-
ported has been comparatively small, but contracts
for very large amounts are said to have been ar-
ranged.
More than 3,000 tons per year of Russian glues are
being shipped into Britain, say the investigators, at
prices alleged to be about one-third the cost of pro-
duction here.
A really important Soviet manufactured export is
ready-made wooden doors, and the investigators re-
port about 600,000 will be imported this year, ap-
proximately the quantity usually imported from
Sweden and at a price alleged to be 25 to 30 per cent
below normal. Soap, it is said, is coming in from the
Soviet Union where, be it noted, it has been for
nearly two years on the deficit list. Over 500 tons of
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? 148 FIGHTING THE RED TRADE MENACE
Russian candy have been imported into Britain re-
cently at prices reported ranging around $251 a ton,
compared with British prices of $360 a ton.
A considerable quantity of malt extract recently
has been offered by the Soviet trade representative,
according to the reporters, at a price of $65 per
ton, or about one-half the British production price.
Fruit pulp, pit props, rubber goods, asbestos are
mentioned as Soviet products that are beginning to
make progress in British markets, while of Soviet
matches it is remarked that "export of these at cut
prices is greatly increasing. "
The list is long and varied, but it will at once
strike the reader that in it is contained not a single
article except anthracite coal that plays a decisive
role in British economics. The only Soviet manu-
factured articles that might conceivably have be-
come a serious competitor to a genuinely important
British industry in Britain itself were textiles. In
Britain textiles and coal lead big business, and were
textile and coal operators genuinely alarmed, their
influence might be sufficient to introduce serious
checks to Soviet trade. By this may be judged the
disappointment of the more radical in the Anti-
Soviet Party when the announcement was made that
the Soviet trade representative in Britain had
promised the Manchester Chamber of Commerce that
the Soviet Union would export no textiles either to
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? FIGHTING THE RED TRADE MENACE 149
Britain or to the Empire. With this gesture the
Soviets offered a truce to one of the most powerful
sets of business interests in England. As will be seen
later, some of these interests have even developed an
active desire to see at least one category of Soviet
exports that competes chiefly with American wares
increase.
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? ?
CHAPTER XV
Manchester:
This textile center of the British Empire that on
Sundays has a population of 700,000 and on week-
days a population of double that number, this his-
torical home of Liberalism and piety with the statue
of a bishop on its central square, is receiving a lesson
in methods of Soviet trade. It is paying careful at-
tention, for the chimneys that smoked for decades
over some of Manchester's factories are smokeless to-
day and the town's elders declare that times have
not been so moldy since memory of man runneth not
to the contrary.
Manchester's instructor is Saul G. Bron, one-time
head of Amtorg, today chief of Arcos, the British
corporation acting for the Soviet trade delegation.
Manchester likes its teacher personally but has not
yet been able fully to comprehend the course of
study. This course is not yet ended and no one is
able to forecast what its conclusion will be, but for
the rest of the world perhaps it is worth passing on
as far as it has proceeded to date.
Bron, be it said, has accomplished a job remind-
ing one that the Soviet foreign trade monopoly not
only has all the well-known advantages of a trust
150
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? FIGHTING THE RED TRADE MENACE 151
but disposes over diplomatic talent of a high order.
His task was to take over an organization "Arcos,"
that had been literally dynamited out of existence by
British authorities in the famous raid that led to the
break in diplomatic relations in 1927 and as that
organization's head to regain the confidence of the
British trading public.
Plainly, no easy assignment, but Bron, the target
today of innumerable attacks in the Conservative
press, has achieved something when a Manchester
business man says of him as he did to me, "He made
a good impression, an honest man; a capable fellow
who puts his case well. "
Just the same Manchester is puzzled and its
puzzlement mirrors in fine the uncertainty and even
the bewilderment of the trade and industrial world
of Europe in the face of this strange new phenome-
non--the Bolshevik in business. More than that,
Manchester is today a perfect example of a divided
personality, of that sort of neurosis that occurs
among Bourgeois business groups when brought in
commercial contact with the Soviet, in contact with
its lure and with its threat. For Manchester is the
home of men who make machines that make cloth,
and the Soviet Union is buying these machines and
pleasing thus their makers, while the cloth that the
Soviet Union is making and will make from these
machines is to Manchester textile manufacturers an
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? 152 FIGHTING THE RED TRADE MENACE
extremely displeasing addition to the world's over-
supply of that commodity. So Manchester is torn
between satisfaction over the present profit of its
textile machine manufacturers and dissatisfaction
over the few slight present losses and expected larger
future losses of its cloth manufacturers from Soviet
competition.
The city has been trying to make up its mind what
it thinks. To help the process, it invited Bron to
address the Chamber of Commerce shortly after his
arrival in England. He came. The hall was crowded
as seldom before. For this was the first session the
Manchester Chamber of Commerce had devoted to
Russia since before the war, when Lancashire did a
rushing business with the great Eastern empire.
Herbert W. Lee, president of the Chamber,
cordially welcomed Bron with the statement that
Manchester was now of the opinion that, "the pos-
sibilities of safe and profitable trade with Russia are
rather better than formerly," and that "if Russia
places large orders, if she keeps to the spirit as well
as the letter of her contract, what more do we need
as business men? "
Then diplomatically but in clear enough language,
Mr. Lee asked Mr. Bron to tell the Chamber two
things: first, was Russia going to buy much textile
machinery; second, was she going to sell much tex-
tiles, and, if so, where ? Mr. Bron answered to every-
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? FIGHTING THE RED TRADE MENACE 153
body's satisfaction and made one announcement that
sent the Chamber's members home in high spirits.
The Soviet Union, he said, had decided not to sell
any more textiles in England. Not only would it not
sell any more here, where a few consignments had
been shipped in a more or less experimental or
desultory way, but it would not sell any in any part
of the British Empire. This, he said, was official,
authorized by the Soviet Government, "We will," he
declared, "abstain from competition with your pro-
ducers in British colonies and British dominions. "
As to textile machinery, he sincerely hoped that
the last word had not been said in the Soviet's rela-
tions with the textile machinery industry of Lanca-
shire, and as to the Five-Year Plan, Mr. Bron ex-
plained in a few words that it was a plan for raising
as quickly as possible the standard of living of the
Russian people.
After the announcement that the Soviet Union
intended to "abstain from competition," at any rate
in Britain's own home territory, the textile makers of
the Chamber had few thoughts left for the Five-Year
Plan and indeed the news was sufficiently significant
to have a world-wide echo. At one stroke the Soviet
Union had pulled the teeth of one of England's key
industries and had stepped out of a field of competi-
tion that might have led to really serious economic
friction.
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? 154 FIGHTING THE RED TRADE MENACE
A month later the president of the Chamber, hav-
ing had time to reflect, addressed the Chamber's
semiannual meeting and among other things about
Russia remarked, "it would obviously be unreason-
able for them to expect us to supply them with ma-
chinery on long credit terms unless we had some as-
surance that this machinery would not be used under
the cheap conditions under which they are working
to take trade away from us in markets on which we
depend for keeping our own workers employed. They
state that they have decided to give an undertaking
that they will not export textiles to any part of the
Empire in competition with our manufacturers. We
are willing to believe in Mr. Bron's good faith, but
we are not yet convinced that circumstances will per-
mit him to guarantee the full safeguards we should
desire. " Reserved, the Chamber was still cautiously
friendly.
Six months later, having had much more time to
reflect, and equipped with somewhat more experience,
Mr. Lee in the annual report of the Chamber of
Commerce expressed himself as follows: "Mr. Bron
made an official statement that Russia would not at-
tempt to sell cotton goods in competition with us in
the British market and would abstain from competi-
tion with us in British colonies and British dominions.
These assurances seemed to the Chamber of con-
siderable value and calculated to encourage among
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? FIGHTING THE RED TRADE MENACE 155
Lancashire business men a more favorable attitude
toward the policy on the part of the British Govern-
ment of fostering Russian trade and assisting it by
credits.
"After the meeting, however, facts were brought
to the notice of the Chamber concerning a large con-
tract designed to run for a long period for the sale
of Russian textiles in a market within the British
Empire at prices much below those obtainable in any
other producing country, especially Lancashire.
"Mr. Bron complied with the request from the
Chamber to investigate this matter. He found that
there was such a contract. He stated that it was made
before the policy which he announced had been de-
cided upon. He explained that it was being executed
not through his office in London but through another
European center and he declared that it arose from
an unfortunate but now irretrievable error which
would not be repeated. "
Mr. Lee went on to say that the board had con-
vinced itself of the good faith of the Russian au-
thorities in promising to abstain from direct sales to
Britain and the British Empire, but it had convinced
itself likewise that it was impossible to guarantee
that no purchaser of Russian cotton goods would
seek to resell them in British markets. "Therefore,
despite all assurances," said Mr. Lee, "the board are
of the opinion that the situation is one which must
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? 156 FIGHTING THE RED TRADE MENACE
provoke considerable anxiety and they believe the
British Government should seek to promote some
stable arrangements to remove all grounds of ap-
prehension possible in concert with other powers. "
No longer even cautiously friendly, the Chamber
now was calling for international action.
Further, Mr. Lee delivered some reflections on the
Five-Year Plan: "Russia makes all trade the busi-
ness of the state and it may suit so gigantic an
amalgamation at any given moment to sell at very
low prices. Controlling production and wages as well
as distribution within its own borders, the Russian
state may theoretically feel able so to arrange mat-
ters that these prices will not necessarily involve loss
on its operations for a whole year or five years. But
Russia must realize that such action on her part,
whilst apparently of temporary advantage to her,
causes such disturbance in the economic situation
elsewhere that other countries in the long run will be
obliged to protect themselves. "
Another month later at the annual meeting of the
Chamber in February, 1931 Mr. Lee had dropped
diplomatic phraseology entirely and exclaimed: "I
want to emphasize as strongly as I can that the
granting of further credit facilities to Russia should
be made absolutely conditional upon obtaining
satisfactory assurances from Russia that the Rus-
sians will not jeopardize our trade by selling goods
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? FIGHTING THE RED TRADE MENACE 157
in competition with us at prices which bear no rela-
tion to cost of production. Some of my textile ma-
chinery friends who are anxious to get more orders
from Russia backed by the British Government's
credits may take exception to this view, but I think
they would be penny wise and pound foolish to go on
selling machinery to Russia if the goods which that
machinery was used to produce are going to be
thrown on markets in which we are interested at a
price which will completely disorganize those markets
for other supplying countries. "
All of which, as one Britisher remarked, is only
proof that Manchester wanted to have its cake and
eat it too. Sales of textile machinery to Russia con-
tinue and when Lancashire textile machinery manu-
facturers meet Lancashire Textile Manufacturers in
the Club the most frequent remark heard is, "Well
if we didn't, somebody else would. " Nobody blames
Bron, particularly since Manchester is beginning to
realize now it is a literal fact that there is no way to
guarantee enforcement of any such Soviet agreement
to abstain from competition, no matter how sincerely
the agreement may have been meant.
As a matter of fact, Soviet textile exports ac-
tually fell off in the year from October, 1929, to
September, 1930. According to Soviet returns, 14,-
924 tons of textiles were exported in the 1928-1929
period and 14,378 tons in 1929-1930. Nevertheless,
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? 158 FIGHTING THE RED TRADE MENACE
Manchester cannot understand why the Soviet Union
should export textiles at all at this stage when, as
Bron took pains to emphasize, Russian internal con-
sumption of textiles is now only sixteen meters per
person per year, that figure representing, however, a
great increase over his figure of pre-war consumption
of eleven meters per person.
Now when British salesmen in Persia write home
that it is useless to send any more samples of Lan-
cashire fabrics to that once good British market, be-
cause Persian merchants declare the Russian cotton
goods not only are too cheap to resist but are actually
of better quality than the British goods, and when
east and west Africa and numerous Far Eastern
markets report initial signs of the Soviets "muscling
in," Manchester's gloom deepens. First it was Japan,
that little country that also industrialized itself with
foreign engineers and by following foreign example,
and that also had been the object of forecasts of in-
evitable failure. But Japan industrialized herself to
such a point that she now has taken a very painful
slice from Lancashire's one-time near monopoly of
the Far Eastern market. Then it was reconstructed
Poland with her Lodz mills. Then came the Indian
boycott. And now comes Russia. British exports of
cotton piece goods fell from 7,075 million square
yards in 1913 to 2,407 million square yards in 1930.
Manchester looks at those figures with quite other
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? FIGHTING THE RED TRADE MENACE 159
feelings than those of mild astonishment they may
evoke in an outsider.
They help to explain why the bewilderment that
is shared by all Manchester is bitter bewilderment
on the part of textile manufacturers when they hear
the explanation that the Five-Year Plan does not
necessarily mean that the new textile machinery is to
be used to make textiles just now for the Russian
population, but that the new machinery will make
cloth to sell abroad to buy more machinery to make
more cloth to sell abroad and so on, until Russia has
all the textile machinery she can possibly use for
home consumption or for export. Manchester's
Chamber of Commerce president, even as late as
July, 1930 expressed the optimistic sentiment that,
"As Russia increases in prosperity, and we hope it
may do so rapidly, it ought to be able not only to
take our machinery but to have room also for con-
siderable quantities of our textiles. " Slowly but
finally Manchester is coming to realize that every
textile machine sent to Russia means just so many
less bolts of cloth that Russia will have to import.
Meanwhile, it may have occurred to some ob-
servers to wonder why the Manchester Chamber of
Commerce should feel so closely touched by competi-
tion that is as yet mostly a threat and especially after
a year when Soviet textile exports actually, if
slightly, decreased.
out the intention of such a scheme to balance the
British trade with the Soviet Union it is proposed
that the Soviet trade representative should be allowed
to receive for his sales to Great Britain only as much
as the value of his purchases. Since the British indus-
trialists who now grant credit to the Soviet Union
averaging twelve months would under this scheme re-
ceive cash instead, there could be no doubt that other
things being equal they would require no legal com-
pulsion to enter under such an agreement.
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? FIGHTING THE RED TRADE MENACE 188
What the attitude would be of British consumers
and of merchants now purchasing consumption goods
from the Soviet Union is open to much more serious
doubt. Particularly is this true of British co-
operative societies who, numbering several millions
of members, serve every corner of the British Isles,
have always maintained cordial relations with the
Soviet cooperatives and are in fact the mainstay of
the Soviets in England. Their negative attitude to
such a scheme could be forecast with almost complete
certainty. But the attitude of the Soviet Union to
such a scheme is open to no doubt at all.
In this as in every case of an attempt on the part
of the capitalist world or of any single capitalist na-
tion to unite its economic forces against the united
economic forces of the Soviet Union, the Soviet re-
tort, it may without fear of contradiction be said,
would be unqualified defiance. Immediate cessation
of all Soviet orders to British firms might be antici-
pated. Yet in this case the advantage might not so
clearly be on the side of the Soviet Union and the
outcome not easy to foresee. For the fact that the
Soviet Union sends nearly one-third of its exports
to Great Britain, the fact that the rest of the world
is already nearly saturated with Soviet products, the
fact that the present juncture of affairs in the Five-
Year Plan makes any recession in the returns from
Soviet exports a grave hazard to Soviet solvency--
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? 134 FIGHTING THE RED TRADE MENACE
all these facts would insure that such a trade war
would be most bitter, most decisive, fraught with des-
tiny for the relationships not only of Britain with
the Soviet Union, but of the Soviet Union with the
non-Soviet world.
The trial of such a scheme in France would almost
certainly be futile, for the Soviet Union could af-
ford to cease entirely its almost insignificant exports
to France and feel, but not too painfully, the loss.
But the Soviet Union could not be indifferent to the
loss of the exports to Britain.
The outcome of such a Russo-British trade war
would depend in the degree to which British authori-
ties, commercial or Governmental, could unite the
nation behind the effort, would depend, on the other
hand, on the degree to which the Soviet Union would
be willing to sacrifice swift completion of the Five-
Year Plan for a very important fighting principle.
French experience with their license system on Soviet
exports has shown that for such a trial of strength it
would be essential to answer Soviet cancellation of
orders by a complete embargo on Soviet exports into
Britain. Otherwise, as in France, the consumer in-
terests would continue to buy from the Soviet Union
and the net result would be a further worsening of
the British-Russian trade balance.
With such an embargo, the British could settle
down and wait to see which could hold out longer, the
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? FIGHTING THE RED TRADE MENACE 135
Soviet Union with its desperate necessity to main-
tain its exports at the planned level, or British manu-
facturers with their desperate need to keep their fac-
tories going, flanked by British consumers with their
keen desire to buy as cheaply as possible. One could
guess what the public reaction might be in Britain
to the loss of the Soviet's $40,000,000 to $50,000,000
worth of orders. The closure perhaps of a few fac-
tories more, short time in others and the increase if
even by a few thousands of unemployed. One could
reckon the effect upon other nations' markets of the
sudden diversion to other countries of even part of
the $170,000,000 worth of goods that the Soviet
Union annually sells Great Britain, diverted in this
emergency with the imperative direction, "sell at any
price. "
After Belgium's experience one would anticipate
the brisk business that would spring up on the Conti-
nent in the transfer of Soviet cargoes of staple com-
modities into neutral bottoms to be introduced into
Britain under false certificates of origin. In short,
one could foresee that such a scheme might prove a
notable contribution to the world's attempt to redress
its economic balance.
Perhaps, of course, the outcome might be dif-
ferent. Perhaps the Soviet Government would give
in. But nobody who knows that Government believes
they would without fighting. For acceptance by the
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? 136 FIGHTING THE RED TRADE MENACE
Soviets of the British scheme would constitute a prec-
edent almost as dangerous in Soviet eyes as the
precedent that would be established should the Soviet
Union agree to pay the United States, say, the re-
pudiated deb of $230,000,000 with the Russian debt
to France of $1,347,000,000 in the background.
For the British the conjectural fight would be a
fight to overcome the enormous commercial advan-
tages possessed by the Soviet Foreign Trade Mo-
nopoly, but more than that a fight for more Soviet
orders. For the Soviets it would be a fight to retain
liberty of action in buying where the Soviet Foreign
Trade Monopoly pleases, but more than a fight to
check in its beginnings any attempt at capitalist
combination against the Soviet Union.
The prospect of such a trial of strength is fasci-
nating if not comfortable. In any case it could hardly
be attempted under the present British Government,
for though it is conceivable that the Labor Party
would look with complacency on a scheme to balance
trade with the Soviet Union it could never be induced
to use the weapon of embargo to make the Soviet
Union accept such a scheme. The Tories might and
that is why Moscow and a good many other capitals
no less are restless at the thought of MacDonald's
fall.
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? CHAPTER XIV
London:
Whatever difficulties the Soviet Union is facing,
whatever checks it has suffered in the past, is suf-
fering in the present, may suffer in the future, its
huge mercantiling trust, the Monopoly of Foreign
Trade, continues today to pour out upon the world
a quantity of goods unprecedented in the history of
the Soviet Union, steadily mounting from month to
month.
Released by spring from the ice that bound the
northern shores of Russia, the whole battery of Soviet
ports from Archangel and Murmansk to Odessa and
Vladivostock has begun to discharge a steady stream
of ships pointing for nearly every harbor of impor-
tance on the globe.
The volume of the flow is difficult to estimate.
Months pass before the customs returns of import
countries can be compiled, and even were they in-
terested in accelerating public acquaintance with the
export figures Soviet authorities could issue their
statistics only after a comparatively long lapse of
time.
Yet the outside world now is concerned in knowing
those figures today more than ever, when Russia is
137
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? 138 FIGHTING THE RED TRADE MENACE
at the forefront of discussion and merchants, bankers,
wheat farmers, lumber dealers, Governments are won-
dering what will be the export total of the Soviet
Union. The answer is: it is going up, steadily up.
There is one spot where Soviet exports can be ac-
curately measured months in advance of customs
statistics. That spot is the one that imperial Russia
coveted more than any other spot on earth, so keenly
that she fought a bloody war for it and lost and
helped precipitate the last great conflict in the hope
of its possession. The place is Istanbul, one time
Constantinople, and there, far ahead of Soviet in-
formation, can be weighed, ton for ton, the Soviet
exports that come from out the Black Sea. Istanbul
knows first the symptoms of Soviet foreign trade de-
velopment, can tell today what Europe finds out later,
will be first to note that check in Soviet exports some
observers have predicted must be the consequence of
overstraining the Russian population. But Istanbul
reports no such check today.
While the latest Soviet bulletins have just an-
nounced that the first two months of 1931 showed an
increase of 556,000 tons of Soviet exports over the
first two months of 1930, Istanbul reports already
that Black Sea ports of Soviet Russia alone poured
out in the first four months of this year 801,193 more
tons of goods than in the same period the year before.
There have still to come the heavy export months
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? FIGHTING THE RED TRADE MENACE 189
when the new crop upon which the Soviet Union
builds such hopes and wheat farmers of non-Soviet
countries build such fears will be hastened to market.
The Soviet spokesman at the London wheat con-
ference, I. E. Lubimoff, announced that in wheat
alone the Soviet Union expects a crop of 1,314,000,-
000 bushels, 252,000,000 bushels more than last
year. Such a surplus would exceed by twice the total
Soviet exports for the season year 1930-31, the year
when Russia exported more than one-tenth of all the
wheat exported in the world.
It is not necessary to presume that the Soviet
Union will export all its anticipated surplus to realize
that Soviet wheat exports in the season year 1931-32
may leap far ahead of pre-war Russian exports, may
"overtake and outstrip" those of Canada and of the
United States if the crop is as good as Lubimoff ex-
pects it to be.
Soviet wheat exported in the season year 1930--
1931 by August will amount to around 125,000,000
bushels, Lubimoff said. If the crop this year were no
bigger than last year's crop, the Soviet Union could
export at least 125,000,000 bushels again. The
Soviet Union's total wheat crop last year, according
to Lubimoff, was 1,044,000,000 bushels. He said that
consumption within the country amounted to 842,-
400,000 bushels. This would indicate that after 125,-
000,000 bushels had been exported, there still re-
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? 140 FIGHTING THE RED TRADE MENACE
mained in Russia a reserve of about 80,000,000
bushels. Granted the accuracy of these figures and
that the reserve to be held in the coming season will
not exceed that held last season, the Soviet Union will
have available for export this season 377,000,000
bushels--last year's export of 125,000,000 plus the
anticipated increase of 252,000,000 in the coming
crop.
Soviet authorities, of course, will not affirm that
they intend to export it all. But it occurs to any one
who was in the Soviet Union during the current sea-
son year to ask why not? Everybody in the Soviet
Union had all the bread he could eat. Russians eat
more rye than wheat bread, but last year the average
consumption of wheat was 300 pounds per person. If
3,500,000 persons are added to the population at
Russia's normal rate of annual increase, there should
be consumed next year 17,500,000 more than last
year, reducing the amount available for exports to a
round 360,000,000 bushels, about 60,000,000 bushels
more than Canada's average export for the years
1927-1930 and about 160,000,000 bushels more
than America's average export for these years, and
more than twice the average export of Imperial Rus-
sia in pre-war years when she was the greatest wheat
exporter in the world, the granary of Europe. In the
face of this prospect, one begins to understand why
the Soviet trade representative in Rotterdam wanted
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? FIGHTING THE RED TRADE MENACE 141
space in Europe's largest grain elevator. It is a
prospect no less interesting to wheat farmers of
America and Canada than to students of the course
of Soviet economic expansion who remember the
prophecy made not only by the outside world but by
many Communists that the Soviet's collectivization
of farms was premature and doomed to failure.
Just now it is only a prospect, yet Istanbul has
furnished some significant figures that may help to
estimate its chances of being realized. These figures
are worth recording as a possible indication of the
Soviet authorities' private opinion of the size of
their coming wheat crop.
One of the criteria of this private opinion of
Soviets is how much they dare to export of their
reserve stores of wheat from the 1930--31 crop.
Istanbul's record of ship cargoes passing through
the Dardanelles shows that in the first four months of
1931 the Soviets have exported from Black Sea
ports alone nearly 18,000,000 bushels of wheat, com-
pared with 4,000,000 in the first four months of
1930. The extent of this early Spring export is taken
by the trade as an indication that the Soviet au-
thorities are genuinely confident of the size of their
this year's crop and therefore grain merchants on
this continent are preparing for an even larger flood
of Soviet wheat exports than that which last year
was the sensation of the world market. Nature, of
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? 142 FIGHTING THE RED TRADE MENACE
course, may run a blue pencil through the Soviet's
calculations, but those whose business it is to look
ahead on world commodity markets are this time
taking Soviet announcements about their wheat
program seriously.
Wheat is a subject that has the world's attention
just now, but all other exports of the Soviet Union
recorded in Istanbul are worthy of attention. The
total exports passing through the Dardanelles
amounted in the first four months of 1931 to 3,595,-
438 tons, compared to 2,794, 245 tons in the same
period in 1930, an increase of nearly 30 per cent. In
the month of April alone total cereal exports from
Black Sea ports almost doubled, 132,000 tons, com-
pared to 740,000 last year: petroleum products went
from 389,000 to 408,000 tons, minerals from 195,-
000 to 244,000 tons and so on,--the only diminution
being registered in timber, and that a very slight de-
crease, from 15,500 to 15,110 tons.
This sort of increase of exports taking place on an
over-saturated market, an increase that as every in-
dication shows may sharply accelerate when the new
crop begins to move, appears to competitors of the
Soviets to be not merely uneconomic but maliciously
uneconomic.
It certainly is uneconomic from almost any view-
point save the highly special viewpoint of the Five-
Year Plan, but that it is malicious at the present
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? FIGHTING THE RED TRADE MENACE 143
juncture of Soviet affairs or that it is deliberately
intended to break the market is not borne out by the
latest returns on Soviet foreign trade.
These returns show even more clearly than had
previously been brought out that in order to keep
up the planned level of returns from exports, the
Soviet Union had to increase its quantity of exports
immensely above that which had been planned, and
this feature of Soviet foreign trade cannot be over-
emphasized as the duration of the world economic
crisis bids fair to make it one of the decisive elements
in the success or failure of the Five-Year Plan. To be
specific, according to figures given in "The Statist"
of London, in the year 1930-31, the quantity of
grain exported by the Soviets increased nearly
twenty-three times over that exported in 1929-30,
and the value only seven times; the quantity of
timber exported increased by 53 per cent and the
value by 30 per cent; exports of oil products in-
creased by 25 per cent and value by 17 per cent and
so on.
Nevertheless, however free from immediate politi-
cal intentions the management of the Soviet Mo-
nopoly for Foreign Trade may or may not be the
fact of exports remains and their effect upon the
exports of competing lands remains, and no matter
how one may analyze the motives of the Soviet au-
thorities, the sufferers abroad from Soviet competi-
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? 14* FIGHTING THE RED TRADE MENACE
tion continue to suffer. It must by now have become
a platitude to anyone watching the effects of Soviet
exports upon the outside world to observe that the
interest hit by cheap Soviet goods are almost never
in that land that is importing those goods, but nearly
always in other countries supplying the importing
lands. Soviet competition, in other words, seldom
strikes directly but strikes through each country's
export markets.
It may seem to be laboring an obvious point to
dwell on this, but one constantly meets persons who
exclaim, "Well, if the Soviet Union keeps on dump-
ing this way it is bound to force the world to get
together and protect itself. " It is not bound to do so
at all, for the countries unfavorably affected by
Soviet exports are affected not at home where they
could put up bars, but abroad in some other country
where for the most part the consumers are glad to
receive Soviet goods at prices beneath those of the
complaining exporters from the injured nations.
The only suggestion yet advanced for interna-
tional action against the Soviet exports that has
taken this fundamental factor into account was that
of the Argentine delegate to the Rome wheat con-
ference, who in the extremity of distress caused by
the Soviet's deep inroads into the Argentines wheat
markets, proposed that the nations of the world
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? FIGHTING THE RED TRADE MENACE 145
should agree among themselves to cancel trade
treaties with any country that accepted Soviet ex-
ports. His suggestion was ignored.
If the Soviet Union exported wheat to the Ar-
gentine and Canada, or petroleum to Venezuela or
Texas at prices undercutting local production, it
can be ventured that all the centrifugal forces of the
non-Soviet world could not have prevented unani-
mous international bars to Soviet trade. But who
for example are feeling most the pressure of Soviet
competition in England? Not the British, though
the Tory press has had partial success in convincing
some of the public that this is so. It is the Americans,
Canadians, Argentinians, Scandinavians, once again
the producers of great staples, that are hit here.
The Association of British Chambers of Com-
merce in its investigation of the effects of Soviet ex-
ports upon British economy has recognized this point
at once and in their preliminary researches have
wasted little attention on what to do about Soviet
imports into Britain that compete, not with British,
but with other foreign producers and have con-
centrated attention upon the one fear of this pre-
dominantly manufacturing country, namely that the
Soviet Union industrialized may become a serious
competitor in manufactured articles. Already mem-
bers of the association have compiled a list that at
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? 146 FIGHTING THE RED TRADE MENACE
first glance seems imposing of articles of Soviet
manufacture that have become or, threaten to be-
come, competitive with British products.
Heading it is anthracite coal, not of course a
manufactured article but so important to Britain
that the association's investigators were moved to
include it and to note that "Russia has always been
more or less a normal supplier of certain Mediter-
ranean markets, but in recent times has displaced us
in Italy and in the last year had made a determined
attack at very low prices in the American and Ca-
nadian markets and more recently sent consignments
into France, Belgium and Germany. " This state-
ment, though it does not coincide with Italian foreign
trade statistics showing Britain still supplying about
two-thirds of Italy's imports of anthracite and
Germany nearly a third, with the Soviet Union just
beginning to enter the market, is nevertheless a
striking illustration of the sensitiveness of the British
business world to any threat to her coal industry,
one of the keynotes of the British economic system.
Hackled flax, it is recorded, is sent by the Soviets
to Britain at a price about $60 per ton less than the
price at which the raw material can be obtained and
hackled here, with the result, it is alleged, that many
hackling machines here have suspended operations.
In the fur trade, it is observed, Russia exported
some lines of dressed pelts before the war, but the
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? FIGHTING THE RED TRADE MENACE 147
Soviet Union now has greatly extended this business
and is also exporting dyed furs and these, it is al-
leged, are sold at prices considerably below what the
British have to pay for the raw article. The British
glucose industry, say the association's investigators,
has been built up over a number of years against
American competition, and now that it has about
won its footing against the Americans, it has to face
the Russian imports at $15 to $25 below the normal
price of $100 per ton.
Cornstarch, note the reporters, now is coming into
Britain from the Soviet Union at prices greatly be-
low the cost of production here. The amount im-
ported has been comparatively small, but contracts
for very large amounts are said to have been ar-
ranged.
More than 3,000 tons per year of Russian glues are
being shipped into Britain, say the investigators, at
prices alleged to be about one-third the cost of pro-
duction here.
A really important Soviet manufactured export is
ready-made wooden doors, and the investigators re-
port about 600,000 will be imported this year, ap-
proximately the quantity usually imported from
Sweden and at a price alleged to be 25 to 30 per cent
below normal. Soap, it is said, is coming in from the
Soviet Union where, be it noted, it has been for
nearly two years on the deficit list. Over 500 tons of
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? 148 FIGHTING THE RED TRADE MENACE
Russian candy have been imported into Britain re-
cently at prices reported ranging around $251 a ton,
compared with British prices of $360 a ton.
A considerable quantity of malt extract recently
has been offered by the Soviet trade representative,
according to the reporters, at a price of $65 per
ton, or about one-half the British production price.
Fruit pulp, pit props, rubber goods, asbestos are
mentioned as Soviet products that are beginning to
make progress in British markets, while of Soviet
matches it is remarked that "export of these at cut
prices is greatly increasing. "
The list is long and varied, but it will at once
strike the reader that in it is contained not a single
article except anthracite coal that plays a decisive
role in British economics. The only Soviet manu-
factured articles that might conceivably have be-
come a serious competitor to a genuinely important
British industry in Britain itself were textiles. In
Britain textiles and coal lead big business, and were
textile and coal operators genuinely alarmed, their
influence might be sufficient to introduce serious
checks to Soviet trade. By this may be judged the
disappointment of the more radical in the Anti-
Soviet Party when the announcement was made that
the Soviet trade representative in Britain had
promised the Manchester Chamber of Commerce that
the Soviet Union would export no textiles either to
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? FIGHTING THE RED TRADE MENACE 149
Britain or to the Empire. With this gesture the
Soviets offered a truce to one of the most powerful
sets of business interests in England. As will be seen
later, some of these interests have even developed an
active desire to see at least one category of Soviet
exports that competes chiefly with American wares
increase.
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? ?
CHAPTER XV
Manchester:
This textile center of the British Empire that on
Sundays has a population of 700,000 and on week-
days a population of double that number, this his-
torical home of Liberalism and piety with the statue
of a bishop on its central square, is receiving a lesson
in methods of Soviet trade. It is paying careful at-
tention, for the chimneys that smoked for decades
over some of Manchester's factories are smokeless to-
day and the town's elders declare that times have
not been so moldy since memory of man runneth not
to the contrary.
Manchester's instructor is Saul G. Bron, one-time
head of Amtorg, today chief of Arcos, the British
corporation acting for the Soviet trade delegation.
Manchester likes its teacher personally but has not
yet been able fully to comprehend the course of
study. This course is not yet ended and no one is
able to forecast what its conclusion will be, but for
the rest of the world perhaps it is worth passing on
as far as it has proceeded to date.
Bron, be it said, has accomplished a job remind-
ing one that the Soviet foreign trade monopoly not
only has all the well-known advantages of a trust
150
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? FIGHTING THE RED TRADE MENACE 151
but disposes over diplomatic talent of a high order.
His task was to take over an organization "Arcos,"
that had been literally dynamited out of existence by
British authorities in the famous raid that led to the
break in diplomatic relations in 1927 and as that
organization's head to regain the confidence of the
British trading public.
Plainly, no easy assignment, but Bron, the target
today of innumerable attacks in the Conservative
press, has achieved something when a Manchester
business man says of him as he did to me, "He made
a good impression, an honest man; a capable fellow
who puts his case well. "
Just the same Manchester is puzzled and its
puzzlement mirrors in fine the uncertainty and even
the bewilderment of the trade and industrial world
of Europe in the face of this strange new phenome-
non--the Bolshevik in business. More than that,
Manchester is today a perfect example of a divided
personality, of that sort of neurosis that occurs
among Bourgeois business groups when brought in
commercial contact with the Soviet, in contact with
its lure and with its threat. For Manchester is the
home of men who make machines that make cloth,
and the Soviet Union is buying these machines and
pleasing thus their makers, while the cloth that the
Soviet Union is making and will make from these
machines is to Manchester textile manufacturers an
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? 152 FIGHTING THE RED TRADE MENACE
extremely displeasing addition to the world's over-
supply of that commodity. So Manchester is torn
between satisfaction over the present profit of its
textile machine manufacturers and dissatisfaction
over the few slight present losses and expected larger
future losses of its cloth manufacturers from Soviet
competition.
The city has been trying to make up its mind what
it thinks. To help the process, it invited Bron to
address the Chamber of Commerce shortly after his
arrival in England. He came. The hall was crowded
as seldom before. For this was the first session the
Manchester Chamber of Commerce had devoted to
Russia since before the war, when Lancashire did a
rushing business with the great Eastern empire.
Herbert W. Lee, president of the Chamber,
cordially welcomed Bron with the statement that
Manchester was now of the opinion that, "the pos-
sibilities of safe and profitable trade with Russia are
rather better than formerly," and that "if Russia
places large orders, if she keeps to the spirit as well
as the letter of her contract, what more do we need
as business men? "
Then diplomatically but in clear enough language,
Mr. Lee asked Mr. Bron to tell the Chamber two
things: first, was Russia going to buy much textile
machinery; second, was she going to sell much tex-
tiles, and, if so, where ? Mr. Bron answered to every-
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? FIGHTING THE RED TRADE MENACE 153
body's satisfaction and made one announcement that
sent the Chamber's members home in high spirits.
The Soviet Union, he said, had decided not to sell
any more textiles in England. Not only would it not
sell any more here, where a few consignments had
been shipped in a more or less experimental or
desultory way, but it would not sell any in any part
of the British Empire. This, he said, was official,
authorized by the Soviet Government, "We will," he
declared, "abstain from competition with your pro-
ducers in British colonies and British dominions. "
As to textile machinery, he sincerely hoped that
the last word had not been said in the Soviet's rela-
tions with the textile machinery industry of Lanca-
shire, and as to the Five-Year Plan, Mr. Bron ex-
plained in a few words that it was a plan for raising
as quickly as possible the standard of living of the
Russian people.
After the announcement that the Soviet Union
intended to "abstain from competition," at any rate
in Britain's own home territory, the textile makers of
the Chamber had few thoughts left for the Five-Year
Plan and indeed the news was sufficiently significant
to have a world-wide echo. At one stroke the Soviet
Union had pulled the teeth of one of England's key
industries and had stepped out of a field of competi-
tion that might have led to really serious economic
friction.
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? 154 FIGHTING THE RED TRADE MENACE
A month later the president of the Chamber, hav-
ing had time to reflect, addressed the Chamber's
semiannual meeting and among other things about
Russia remarked, "it would obviously be unreason-
able for them to expect us to supply them with ma-
chinery on long credit terms unless we had some as-
surance that this machinery would not be used under
the cheap conditions under which they are working
to take trade away from us in markets on which we
depend for keeping our own workers employed. They
state that they have decided to give an undertaking
that they will not export textiles to any part of the
Empire in competition with our manufacturers. We
are willing to believe in Mr. Bron's good faith, but
we are not yet convinced that circumstances will per-
mit him to guarantee the full safeguards we should
desire. " Reserved, the Chamber was still cautiously
friendly.
Six months later, having had much more time to
reflect, and equipped with somewhat more experience,
Mr. Lee in the annual report of the Chamber of
Commerce expressed himself as follows: "Mr. Bron
made an official statement that Russia would not at-
tempt to sell cotton goods in competition with us in
the British market and would abstain from competi-
tion with us in British colonies and British dominions.
These assurances seemed to the Chamber of con-
siderable value and calculated to encourage among
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? FIGHTING THE RED TRADE MENACE 155
Lancashire business men a more favorable attitude
toward the policy on the part of the British Govern-
ment of fostering Russian trade and assisting it by
credits.
"After the meeting, however, facts were brought
to the notice of the Chamber concerning a large con-
tract designed to run for a long period for the sale
of Russian textiles in a market within the British
Empire at prices much below those obtainable in any
other producing country, especially Lancashire.
"Mr. Bron complied with the request from the
Chamber to investigate this matter. He found that
there was such a contract. He stated that it was made
before the policy which he announced had been de-
cided upon. He explained that it was being executed
not through his office in London but through another
European center and he declared that it arose from
an unfortunate but now irretrievable error which
would not be repeated. "
Mr. Lee went on to say that the board had con-
vinced itself of the good faith of the Russian au-
thorities in promising to abstain from direct sales to
Britain and the British Empire, but it had convinced
itself likewise that it was impossible to guarantee
that no purchaser of Russian cotton goods would
seek to resell them in British markets. "Therefore,
despite all assurances," said Mr. Lee, "the board are
of the opinion that the situation is one which must
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? 156 FIGHTING THE RED TRADE MENACE
provoke considerable anxiety and they believe the
British Government should seek to promote some
stable arrangements to remove all grounds of ap-
prehension possible in concert with other powers. "
No longer even cautiously friendly, the Chamber
now was calling for international action.
Further, Mr. Lee delivered some reflections on the
Five-Year Plan: "Russia makes all trade the busi-
ness of the state and it may suit so gigantic an
amalgamation at any given moment to sell at very
low prices. Controlling production and wages as well
as distribution within its own borders, the Russian
state may theoretically feel able so to arrange mat-
ters that these prices will not necessarily involve loss
on its operations for a whole year or five years. But
Russia must realize that such action on her part,
whilst apparently of temporary advantage to her,
causes such disturbance in the economic situation
elsewhere that other countries in the long run will be
obliged to protect themselves. "
Another month later at the annual meeting of the
Chamber in February, 1931 Mr. Lee had dropped
diplomatic phraseology entirely and exclaimed: "I
want to emphasize as strongly as I can that the
granting of further credit facilities to Russia should
be made absolutely conditional upon obtaining
satisfactory assurances from Russia that the Rus-
sians will not jeopardize our trade by selling goods
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? FIGHTING THE RED TRADE MENACE 157
in competition with us at prices which bear no rela-
tion to cost of production. Some of my textile ma-
chinery friends who are anxious to get more orders
from Russia backed by the British Government's
credits may take exception to this view, but I think
they would be penny wise and pound foolish to go on
selling machinery to Russia if the goods which that
machinery was used to produce are going to be
thrown on markets in which we are interested at a
price which will completely disorganize those markets
for other supplying countries. "
All of which, as one Britisher remarked, is only
proof that Manchester wanted to have its cake and
eat it too. Sales of textile machinery to Russia con-
tinue and when Lancashire textile machinery manu-
facturers meet Lancashire Textile Manufacturers in
the Club the most frequent remark heard is, "Well
if we didn't, somebody else would. " Nobody blames
Bron, particularly since Manchester is beginning to
realize now it is a literal fact that there is no way to
guarantee enforcement of any such Soviet agreement
to abstain from competition, no matter how sincerely
the agreement may have been meant.
As a matter of fact, Soviet textile exports ac-
tually fell off in the year from October, 1929, to
September, 1930. According to Soviet returns, 14,-
924 tons of textiles were exported in the 1928-1929
period and 14,378 tons in 1929-1930. Nevertheless,
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? 158 FIGHTING THE RED TRADE MENACE
Manchester cannot understand why the Soviet Union
should export textiles at all at this stage when, as
Bron took pains to emphasize, Russian internal con-
sumption of textiles is now only sixteen meters per
person per year, that figure representing, however, a
great increase over his figure of pre-war consumption
of eleven meters per person.
Now when British salesmen in Persia write home
that it is useless to send any more samples of Lan-
cashire fabrics to that once good British market, be-
cause Persian merchants declare the Russian cotton
goods not only are too cheap to resist but are actually
of better quality than the British goods, and when
east and west Africa and numerous Far Eastern
markets report initial signs of the Soviets "muscling
in," Manchester's gloom deepens. First it was Japan,
that little country that also industrialized itself with
foreign engineers and by following foreign example,
and that also had been the object of forecasts of in-
evitable failure. But Japan industrialized herself to
such a point that she now has taken a very painful
slice from Lancashire's one-time near monopoly of
the Far Eastern market. Then it was reconstructed
Poland with her Lodz mills. Then came the Indian
boycott. And now comes Russia. British exports of
cotton piece goods fell from 7,075 million square
yards in 1913 to 2,407 million square yards in 1930.
Manchester looks at those figures with quite other
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? FIGHTING THE RED TRADE MENACE 159
feelings than those of mild astonishment they may
evoke in an outsider.
They help to explain why the bewilderment that
is shared by all Manchester is bitter bewilderment
on the part of textile manufacturers when they hear
the explanation that the Five-Year Plan does not
necessarily mean that the new textile machinery is to
be used to make textiles just now for the Russian
population, but that the new machinery will make
cloth to sell abroad to buy more machinery to make
more cloth to sell abroad and so on, until Russia has
all the textile machinery she can possibly use for
home consumption or for export. Manchester's
Chamber of Commerce president, even as late as
July, 1930 expressed the optimistic sentiment that,
"As Russia increases in prosperity, and we hope it
may do so rapidly, it ought to be able not only to
take our machinery but to have room also for con-
siderable quantities of our textiles. " Slowly but
finally Manchester is coming to realize that every
textile machine sent to Russia means just so many
less bolts of cloth that Russia will have to import.
Meanwhile, it may have occurred to some ob-
servers to wonder why the Manchester Chamber of
Commerce should feel so closely touched by competi-
tion that is as yet mostly a threat and especially after
a year when Soviet textile exports actually, if
slightly, decreased.
