"
"How's business ?
"How's business ?
Soviet Union - 1931 - Fighting the Red Trade Menace
For Finland this market is much more
important than for Sweden. Of Finland's total ex-
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? FIGHTING THE RED TRADE MENACE 223
ports 85 per cent are wood or things that come from
wood.
The progress of the timber war between the Soviet
"Exportles" on the one hand and the Swedish Wood
Exporters' Association and the Finnish Sawmill
Owner's Association on the other hand, has been told
from Stockholm.
There it appeared that an armistice was in sight
and that an agreement to divide the market with the
' Russians might eventually come. That still appears
a possibility even a probability in Helsingfors, but
not so probable as in Stockholm. For the Finns have
lived for the last hundred years on the principle that
the only way to get along with the Russians is to
fight them. And fighting a price war is the method
recommended by Risto Ryti, governor of the Bank
of Finland, in an address that has had sufficient res-
onance in the timber world to have evoked already
complaints from London that not the Russians, but
the Finns, were upsetting the market by offering
their timber at dumping prices.
Mr. Ryti's speech was a most refreshing docu-
ment after two months' experience of listening to the
plaints and pleas of business men in other parts of
Europe for government protection and international
protection, but above all for protection by somebody
else against Russian dumping. Mr. Ryti's advice
was: "Protect yourselves. Undersell the Russians. "
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? 224 FIGHTING THE RED TRADE MENACE
It was typical of Finland that while European
nations twenty times the size of this tiny land have
quivered before the "Red Trade Menace," it re-
mained for a Finnish banker to launch the slogan,
"Fight," and to get an immediate response. Mr. Ryti
by this speech became a financial Paavo Nurmi. For
without employing the word, Mr. Ryti called, in
substance, for the Finns to use "seesoo," and it is
with "seesoo," that Nurmi wins his races and makes
his records.
This strange word rendered here phonetically was
the object of much curiosity at the Amsterdam
Olympic games, where Nurmi proved again his title
as the greatest runner of all time. Nurmi, it was said,
used "seesoo. " He went into a trance before each
race, contemplated his navel and gained superhuman
strength therefrom. "Seesoo" was conceived to be a
Finnish form of Yogi. "Seesoo," however, it was
explained to me by a Finnish scholar, is simply Fin-
nish for that quality which the English call "intesti-
nal fortitude" and Americans call "guts. " In the
Finnish scholar's terms it is "the unconscious capital
of a man after he has exhausted his conscious re-
sources. " This capital is what Mr. Ryti told the
Finnish saw-mill owners to draw upon.
After analyzing the various reasons why it ap-
peared improbable that the Five-Year Plan could
succeed Mr. Ryti proceeded to make some remarks
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? FIGHTING THE RED TRADE MENACE 225
that undoubtedly should be interesting to other than
Finnish competitors with Soviet exports.
"If we were to assume, however, that the Five-Year
Plan succeeds it would theoretically only be to the
advantage of world economy, for the greater the
production the more complete the satisfaction of
demand for commodities," he said, "and even though
Russia were to continue to export at low prices, world
economy would still theoretically be the gainer. For
why does Russia export? Naturally in order to be
able to import goods and pay for them. "
"So that," continued Mr. Ryti, "if they sell cheaply
and buy dear the result is that Russia must slave
for the benefit of the rest of the world. In practice,
however, the drawback to this system is that those
who export the same commodities as Russia, lose, and
if their economy is brought into disorder, others lose
indirectly by it. We, and in particular our saw-mill
industry, belong to those fated to lose. "
The banker went on to admit that Finland had
greatly increased her timber export by reason of Rus-
sia's decade of absence from the market and said
that the Soviet Union had now attained Russia's
1913 average export and that Finland's had cor-
respondingly declined also to her 1913 average, and
that this was tolerable, but that any more losses would
be intolerable.
"We cannot withdraw from the market. We must
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? 226 FIGHTING THE RED TRADE MENACE
fight for it. But people say that we cannot compete
with Russia owing to the economic methods employed
by that country. We must, however, do so, and we
can do so with hopes of success. Our forests are better
situated, our waterways are better and shorter, our
men and horses are better provisioned, and the skill
and efficiency of our workers are higher than those
of the conscripted workers of Russia.
"Our organization is more elastic and has a greater
sense of responsibility, our saw-mills are more ef-
ficient, our shipping conditions are better and our
freights are lower. We can offer specifications more
satisfactory to buyers and guarantee prompter and
more regular shipments than can Russia.
"Even Russia does not get her timber for noth-
ing, and the deeper they cut the further they must
go for their timber, and even if Russia cared noth-
ing for making profit the fall in the price of timber
comes at a very inconvenient time for her. Its effect
on the success or non-success of the Five-Year Plan
can be great.
"Every fall in timber prices," the banker finished,
"will affect Russia's trade balance and hinder the
realization of the Five-Year Plan. In our case com-
petition for the markets will demand great efforts--
close cooperation between shippers, and temporary
contentment with low forest prices. It demands also,
regrettably enough, the maintenance of wages at
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? FIGHTING THE RED TRADE MENACE 227
levels lower than before. All this, however, is essential
if we are to retain our markets, for if we lose them
we will have to fight hard to get them back. We must
fight to keep them now. "
Mr. Ryti's recommendations were delivered against
a background that made the possibility of their being
carried successfully into operation appear good. After
all one had heard of the terrific slice Russia had taken
out of Finland's export trade it was natural to expect
to see something like destitution in Helsingfors, to
see mobs of unemployed, to observe, in short, a coun-
try flat on its back.
Nothing of the sort. Helsingfors, like all Northern
cities, has an air of asceticism but in a short sojourn
here, I could discover no signs of real poverty, and
I was credibly informed that there are none who
hunger. The so-called "sum" sections consist of houses
much better than those in Berlin's famous model tene-
ment district. And in Helsingfors I saw more new
apartment houses than I have ever seen since Baku,
where the Soviet oil trust covered several square miles
with homes for workers.
The American Legation, commercial attache and
consular officers are housed in a new office building
that "towers" seven stories and justifies its name of
skyscraper by possessing all the finish and equip-
ment of the most up-to-date structures of that type
in America. Its lower floors are occupied by a de-
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? 228 FIGHTING THE RED TRADE MENACE
partment store that would do credit to an American
city three times the size of Helsingfors. One depart-
ment especially is a real cause for civic pride. It is
a book store "The Academic," said to be the third
largest in the world, and with an English section
larger than many good-sized New York book stores.
It has twelve miles of shelf space, stocks volumes
enough to fill a National Library, and is only one
of thousands of book stores in this land of 1 per cent
illiteracy.
Most of the astonishing number of new houses in
Helsingfors were built since the Finns' war of libera-
tion in 1918, and a good many of them were built
on surplus profits earned when Finland was able to
sell timber to the customers Russia used to have and
has now regained. In part these buildings, too, were
erected on some eighty to ninety millions of dollars
in foreign loans, chiefly from American banks that,
to judge by their long term confidence in Finland, do
not take "the Red Menace" here as seriously as do the
Finns.
The Finns belabored the British market with the
argument that if the Britons bought Russian timber
tens of thousands of Finnish lumbermen would join
the jobless. But the Ministry of Social Affairs re-
ports that in April 11,584 unemployed registered
at the labor exchanges, or about one in 300 popula-
tion, and the highest figures quoted of all jobless,
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? FIGHTING THE RED TRADE MENACE 229
registered and unregistered is 60,000, or one in every
fifty of the population.
Soviet competition, however, explain the Finnish
saw-mill owners, resulted in more part-time employ-
ment than in actual dismissals.
The Lappo League, that super-Fascist organiza-
tion named for the first battleground of the war of
independence, virtually has eliminated strikes as it
also eliminated the Communist Party, and now would
like to eliminate trade with Russia. The Govern-
ment was willing to suppress the Communist Party,
but not trade, and another surprise of this investiga-
tion not lacking in surprises was to find that Finland,
bitterest of all the anti-Soviet front, furnishes govern-
mental guarantees for sales to the Soviet Union with
75 per cent insurance in a general scheme of export
credits similar to England's and Germany's.
Finland has an active trade balance with the Soviet
Union and last year sold $6,000,000 worth to her
best disliked neighbor and bought $3,000,000 worth
from her. And Finland, who claimed that Great
Britain was betraying her principles by buying
timber from the Soviet Union, herself bought nearly
$2,000,000 worth last year, and in the first quarter
of this year, $50,000 worth. This, it was explained
to me, was nearly all bought by one man, who has
been severely criticized for doing so.
To most Finns, though, the Russian menace is not
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? 230 FIGHTING THE RED TRADE MENACE
commercial. It is military. Finland has 32,000 regular
troops under arms, one-third as many as the United
States, with a population forty times as large. Be-
sides these, Finland has a Civic Guard of 100,000
men and 30,000 volunteer women for service of sup-
ply nurses and sanitary corps.
"Mussolini," said one of these women volunteers,
"is no good. He trades with Russia. He is a Red. "
Out on the street a regiment marched past. I asked
her who they were.
"White Guards," was the reply.
"And will they suffice to defend Finland? "
"They and Finnish 'seesoo! ' "
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? CHAPTER XXI
Riga :
Out of the loft of the blue Baltic sky the Helsing-
fors express plane wings down over the roofs of Riga
and follows the winding Dvina. Along its banks one
gazes down on lumber yards, their stacked planks
like innumerable decks of cards ready to be played
in the international game of commerce. Over the fields
beyond the city the plots of green and dark brown
earth alternate beneath one's eyes like patterns on
Scotch tartan. Smoke from a score of factories streak
the landscape and tells of industry in this tiny chip
off the massive block of Russia.
So unpretentious is this little land that the out-
side world has often forgotten that Riga is the capi-
tal of an independent state and letters come addressed
to "Riga, Russia. " Latvia, though, has not forgotten
that she used to be a Russian province. She has not
forgotten that her whole economic existence is de-
pendent upon commercial contact with the vast hinter-
land that now is Soviet, and in this country may be
found a most perfect microcosm of the non-Soviet
world's relations with the strange new state to the east.
How Latvia suffers and how she profits from Soviet
trade is interesting enough, and her flax warehouses,
231
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? 232 FIGHTING THE RED TRADE MENACE
lumber yards, her rubber factories, car barns and
paper mills are rich sources for an investigator of the
influence of the Five-Year Plan on European trade.
But all these places have not a fraction of the interest
and significance of No. 20 Elizabeth Street.
No. 20 Elizabeth Street has a wide show window.
In that show window stands a tractor. Heaped
around it and back of it are a dozen other varieties
of agricultural implements. Surely, not a very excit-
ing sight.
Nevertheless, to anyone who has asked himself
the question whether the Soviet Union under the Five-
Year Plan or after the Five-Year Plan can produce
manufactured articles for competition with the non-
Soviet world would hardly have been able to restrain
an exclamation of surprise upon entering the agri-
cultural implement store at No. 20 Elizabeth Street.
I paused long enough outside to read on the radiator
of a tractor in Russian "Fordson, Krasnaya Puti-
lovetz Leningrad. "
Inside, before I could ask about the tractor, a sign
on the side of a trim, red threshing machine caught
my eye. "Made in U. S. S. R. " The same sign was
on a broad horse rake in another corner, on a reaping
machine, on a row of milk separators, on a bundle of
pitchforks and of scythes, on two kinds of flax
breakers, on disc harrows and tooth harrows, on a
-?
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? FIGHTING THE RED TRADE MENACE 233
grain sorter, on ten varieties of plows all neatly
ranged in rows, on several kinds of pumps and churns,
on a series of implements whose use I did not know,
and, finally on a twelve-horsepower fuel oil engine.
Back in the dim recesses of the store, handles stuck
out of wrappings on indiscernible machines and light
glinted from rows of metal receptacles.
"You only sell Soviet products here? " I queried
the salesman.
"Oh, yes," he replied, "they make a pretty com-
plete line.
"
"How's business ? " I asked.
"Fair and getting better," was the answer.
When I told the salesman that I had been in the
Soviet Union and seen a good many of the factories
whence came the implements he was selling, the man
became cordial. "But I must admit," I said, "that I
didn't expect to find them exporting agricultural im-
plements abroad. Are you really selling them? How
do your prices compare? "
"Really selling them! Of course we are. We've been
selling them now for a couple of years, though this
year is the first that we've done real business. See that
big horse-drawn rake there? We've sold 1,000 of them
already. And the prices? Well, nobody can touch
us there. "
We began with the tractor, an exact model of
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? 234 FIGHTING THE RED TRADE MENACE
Ford's ten to twenty horse-power wheel tractor,
turned out by his Cork plant for the European
market.
"This tractor," said the salesman, who was a Lett,
"is really good. I think it is better than the original.
It stands up better. It is built out of stronger ma-
terials. "
"That's probably a matter of speculation, isn't it ? "
I said, iChut how much do you want for it? "
The price he said, was $900. "But we only ask 20
per cent down and give the buyer thirty months in
which to pay the balance. The original Fordson costs
$1,000 and you only get eighteen months' credit. "
We went from one machine to another. The price
differential on all other implements was much greater.
The thresher, bearing the mark of the Elizavetgrad
factory, formerly Ellworthy works, a British concern,
was priced $300, against the price for a similar
thresher by the International Harvester Company
of $700. A flaxbreaking machine from the Pskov
factory, "Metallist," was priced $40, against $90
for a similar machine of German make. A seeder from
the Petrovskovo factory in Kherson was priced $74,
against $96 for a German or Czechoslovakian machine
of the same kind. Another flaxbreaking machine of
a different model was priced $20, against $40 for a
German make.
The horse rake of which the salesman said he had
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? FIGHTING THE RED TRADE MENACE 235
sold 1,000 was priced $34, against $46 for German
and Swedish rakes. This rake came from the Soviet's
prize new implement factory, "Selmashstroi," that
I had visited six months ago in Rostov-on-the-Don.
When I was there last October they told me they had
produced 4,000 such rakes, but were scheduled to
turn out 100,000 in 1931.
Many of the implements on sale here in Riga were
produced in pre-revolutionary factories renovated
under the Five-Year Plan, but the horse rakes, of
which they had sold the most, came from the one im-
plement manufactory that has been erected since the
Five-Year Plan without the help of foreign engineers.
A grain sorter from the factory, "Trier," at Voro-
nezh, was priced $64, against $110 for a German
make. Finally, the stationary fuel oil engine, trade-
mark "Vozrozhdenie," from Markstadt on the Volga,
was priced $320, against the $540 of a German com-
peting brand.
The salesman presented me with two catalogues in
Lettish, one containing pictures and description of
fifty varieties of agricultural implements, the other
describing four types of heavy oil stationary and
portable engines as well as one for motor-boats. All
these Soviet products the salesman assured me, could
be obtained on order, and only lack of space prevented
him from showing them in stock.
The Lett salesman explained that his company,
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? 236 FIGHTING THE RED TRADE MENACE
"Standartlini," had exclusive rights for the sale of
Soviet agricultural implements in Latvia. I asked
if Soviet implements were being sold elsewhere. "Oh,
yes," he replied, "all through the border states,
Esthonia, Latvia and Lithuania, and I understand
they are also being sold in Persia and Turkey. "
All this provided a large, substantial mass of ma-
terial upon which to ruminate. It was not possible,
however, so quickly to digest a phenomenon that was
the most surprising discovery of a tour that has not
been lacking in new views of Soviet economy. For,
despite the anxiety of Manchester textile manufac-
turers and of other makers of fabricated goods about
Soviet competition, it has not seemed likely to many
observers of the Five-Year Plan that any serious
export of manufactured products from the Soviet
Union could be expected in some time. At any rate,
not the export of comparatively complicated products
such as agricultural machinery.
It was, therefore, natural that one should view
even this display of implements with considerable
skepticism and the remark of an American, who has
lived long in Latvia and studied the ways of the Rus-
sian trade representatives with care, sounded plausi-
ble. "This is all window dressing, I think," he said.
"Just window dressing. It makes a good impression
on the Latvian public. It is fine propaganda for the
Soviets here, but that's all. "
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? FIGHTING THE RED TRADE MENACE 237
Prepared to have this impression confirmed, I
visited the head of the Baltic agency of one of the
largest agricultural implement concerns in the world
and asked him what it all meant.
Before replying he pressed a button and ordered
files. A clerk brought a thick bundle of papers.
Thumbing them he began, "This is what it means.
Two years ago they began this. We all thought it
was a bluff. Last year they had sold, however, 10 to
12 per cent of the total market. Not much, but enough
to make us sit up and take notice.
"This year," he continued, "they plan to sell in
Latvia alone to the value of $400,000, which would be
equal to our total sales and would be about 40 per
cent of the market. And that is only in Latvia. They
are operating on the same scale in Esthonia and
Lithuania. "
"And how much do you think they actually will
sell? "
"Maybe $200,000 worth. If they do, they will be
doing well. But," he exclaimed, "how can you meet
this sort of thing? "
He turned a sheaf of pages, paused at one and be-
gan to read:
"On spring-tooth harrows, five teeth, they ask $3.
We ask $5. On seven-tooth harrows they ask $3. 60.
We ask $7. On nine-tooth harrows they ask $4. 20. We
ask $8.
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? 238 FIGHTING THE RED TRADE MENACE
"On disc harrows, eight discs, they ask $26. We
ask $44. On disc harrows, ten discs, they ask $29-
We ask $48. On seven-tooth one-horse cultivators
they ask $9. We ask $18. For a nine-tooth cultivator
they ask $9. We ask $23. On a five-foot reaper they
ask $50. We ask $96. On a four-and-one-half-foot
mower they ask $33. We ask $66. On horse rakes
they ask $20. We ask $36. And so on. All along the
fine just about 50 per cent less.
"But that is not the worst. What really cuts us
down are the terms they offer. On nearly all their
sales they let the farmer take the machines with no
cash payment and only ask for a first payment after
six months. On small machines they give from six to
eighteen months' credit, while we can only afford to
give from six to nine. On machines like reapers, mow-
ers and rakes they give up to twenty-four months'
credit. We give six to nine. On tractors they give
thirty months' credit. We give eighteen. "
The gentleman spoke without agitation. His tone
was reflective.
"Well, you can't offer the peasant any better terms
than that. All he has to do is come in the store, pick
out the machine and walk off with it. He doesn't have
to pay a cent of money. "
Hopefully, he continued. "But what will that peas-
ant do after six months when he is called upon to pay ?
I think a lot of them will use their reaper to harvest
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? FIGHTING THE RED TRADE MENACE 289
their crops and after six months bring it back, say
it is no good and refuse to pay. "
This note of optimism disappeared when I asked,
"How about the quality of Soviet implements? "
"Last year they looked so rough and unfinished
that I think that was one reason they did not sell
many. That and the fact that they actually could not
deliver. This year, though they are delivering and--
well, here is the report on two machines my agent
observed. "
He read. The machines in question, according to
the report, were so brightly painted, varnished, pol-
ished, nickled, so gleaming spick and span, that the
agent had written he was almost sure they must be
machines for a special exhibition. Also there was the
fact that these machines had been packed so care-
fully, with so much extra boarding, that it seemed
incredible that they should have been intended for
the regular market.
"And so," he said, "I figure in the first place that
they will lose 25 per cent of their turnover from the
machines the peasants return in order to avoid pay-
ing at all. And then I don't think they can afford to
put out a fancy product like those we've seen. As to
their durability and real efficiency, we haven't had
time to judge. We can tell after this season. But as
to sales. Well, all over this country and in Esthonia
and Lithuania they keep turning up, here, one car-
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? 240 FIGHTING THE RED TRADE MENACE
load, there one carload. It is hard to keep track of
them. "
He paused. "At any rate," he finished, "It's no
joke. "
It is just because this topic of the Soviet Union's
sale abroad of manufactured articles is so hotly de-
bated and because the evidence upon it is so likely to
be called in question that the writer has put this par-
ticular report in quotation form and attempted to
render as nearly as possible, a dictaphone account of
these first-hand findings. From another source, but
not first-hand, were obtained more data of interest.
In the first place, as to tractor sales. As far as
could be ascertained only one has been sold. And this,
apparently, will be the only one sold for awhile. Not,
however, because the Latvians did not want to buy
Soviet tractors, nor because they could not be de-
livered, but because Ford has protested against the
sale abroad of a tractor made on his blueprints and
his patents that had been licensed for use in the Red
Putilov factory at Leningrad for the manufacture of
tractors for Soviet domestic consumption, but not for
export. While Ford is still cooperating with the
Soviets under a $30,000,000 contract to supply
plans, engineers and automobile parts for the Nijny
Novgorod plant, it appears unlikely that the Soviets
should ignore his protest against the sale abroad of
Soviet model Fordsons.
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? FIGHTING THE RED TRADE MENACE 241
Very interesting in this respect was the statement
of the salesman in the "Standartlini" store that "we
expect in six months to be selling Soviet automobiles. "
I asked, "Where from? "
"From Nijny Novgorod. "
I objected that the Nijny plant was apparently so
far behind schedule that it was hard to conceive that
they would be producing so soon, much less export-
ing Soviet Ford cars abroad.
"Well," said the salesman, "that's what we've been
told. We've been told to get ready to push Soviet au-
tomobile sales here this coming autumn. Anyway, we
are already selling Soviet sewing machines. "
"Standartlini," the implement sales concern, it ap-
pears, has been granted the territory in the three
border states, Lithuania, Latvia and Esthonia, by the
Soviet Foreign Trade Monopoly for the sale of Soviet
implements. Prices, it is said, shall be fixed at about
25 per cent below rival prices, but prices at which the
Soviet factories sell to the agents shall be such that
agents will still have a profit of at least 25 per cent.
These items of information came at second hand.
important than for Sweden. Of Finland's total ex-
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? FIGHTING THE RED TRADE MENACE 223
ports 85 per cent are wood or things that come from
wood.
The progress of the timber war between the Soviet
"Exportles" on the one hand and the Swedish Wood
Exporters' Association and the Finnish Sawmill
Owner's Association on the other hand, has been told
from Stockholm.
There it appeared that an armistice was in sight
and that an agreement to divide the market with the
' Russians might eventually come. That still appears
a possibility even a probability in Helsingfors, but
not so probable as in Stockholm. For the Finns have
lived for the last hundred years on the principle that
the only way to get along with the Russians is to
fight them. And fighting a price war is the method
recommended by Risto Ryti, governor of the Bank
of Finland, in an address that has had sufficient res-
onance in the timber world to have evoked already
complaints from London that not the Russians, but
the Finns, were upsetting the market by offering
their timber at dumping prices.
Mr. Ryti's speech was a most refreshing docu-
ment after two months' experience of listening to the
plaints and pleas of business men in other parts of
Europe for government protection and international
protection, but above all for protection by somebody
else against Russian dumping. Mr. Ryti's advice
was: "Protect yourselves. Undersell the Russians. "
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? 224 FIGHTING THE RED TRADE MENACE
It was typical of Finland that while European
nations twenty times the size of this tiny land have
quivered before the "Red Trade Menace," it re-
mained for a Finnish banker to launch the slogan,
"Fight," and to get an immediate response. Mr. Ryti
by this speech became a financial Paavo Nurmi. For
without employing the word, Mr. Ryti called, in
substance, for the Finns to use "seesoo," and it is
with "seesoo," that Nurmi wins his races and makes
his records.
This strange word rendered here phonetically was
the object of much curiosity at the Amsterdam
Olympic games, where Nurmi proved again his title
as the greatest runner of all time. Nurmi, it was said,
used "seesoo. " He went into a trance before each
race, contemplated his navel and gained superhuman
strength therefrom. "Seesoo" was conceived to be a
Finnish form of Yogi. "Seesoo," however, it was
explained to me by a Finnish scholar, is simply Fin-
nish for that quality which the English call "intesti-
nal fortitude" and Americans call "guts. " In the
Finnish scholar's terms it is "the unconscious capital
of a man after he has exhausted his conscious re-
sources. " This capital is what Mr. Ryti told the
Finnish saw-mill owners to draw upon.
After analyzing the various reasons why it ap-
peared improbable that the Five-Year Plan could
succeed Mr. Ryti proceeded to make some remarks
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? FIGHTING THE RED TRADE MENACE 225
that undoubtedly should be interesting to other than
Finnish competitors with Soviet exports.
"If we were to assume, however, that the Five-Year
Plan succeeds it would theoretically only be to the
advantage of world economy, for the greater the
production the more complete the satisfaction of
demand for commodities," he said, "and even though
Russia were to continue to export at low prices, world
economy would still theoretically be the gainer. For
why does Russia export? Naturally in order to be
able to import goods and pay for them. "
"So that," continued Mr. Ryti, "if they sell cheaply
and buy dear the result is that Russia must slave
for the benefit of the rest of the world. In practice,
however, the drawback to this system is that those
who export the same commodities as Russia, lose, and
if their economy is brought into disorder, others lose
indirectly by it. We, and in particular our saw-mill
industry, belong to those fated to lose. "
The banker went on to admit that Finland had
greatly increased her timber export by reason of Rus-
sia's decade of absence from the market and said
that the Soviet Union had now attained Russia's
1913 average export and that Finland's had cor-
respondingly declined also to her 1913 average, and
that this was tolerable, but that any more losses would
be intolerable.
"We cannot withdraw from the market. We must
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? 226 FIGHTING THE RED TRADE MENACE
fight for it. But people say that we cannot compete
with Russia owing to the economic methods employed
by that country. We must, however, do so, and we
can do so with hopes of success. Our forests are better
situated, our waterways are better and shorter, our
men and horses are better provisioned, and the skill
and efficiency of our workers are higher than those
of the conscripted workers of Russia.
"Our organization is more elastic and has a greater
sense of responsibility, our saw-mills are more ef-
ficient, our shipping conditions are better and our
freights are lower. We can offer specifications more
satisfactory to buyers and guarantee prompter and
more regular shipments than can Russia.
"Even Russia does not get her timber for noth-
ing, and the deeper they cut the further they must
go for their timber, and even if Russia cared noth-
ing for making profit the fall in the price of timber
comes at a very inconvenient time for her. Its effect
on the success or non-success of the Five-Year Plan
can be great.
"Every fall in timber prices," the banker finished,
"will affect Russia's trade balance and hinder the
realization of the Five-Year Plan. In our case com-
petition for the markets will demand great efforts--
close cooperation between shippers, and temporary
contentment with low forest prices. It demands also,
regrettably enough, the maintenance of wages at
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? FIGHTING THE RED TRADE MENACE 227
levels lower than before. All this, however, is essential
if we are to retain our markets, for if we lose them
we will have to fight hard to get them back. We must
fight to keep them now. "
Mr. Ryti's recommendations were delivered against
a background that made the possibility of their being
carried successfully into operation appear good. After
all one had heard of the terrific slice Russia had taken
out of Finland's export trade it was natural to expect
to see something like destitution in Helsingfors, to
see mobs of unemployed, to observe, in short, a coun-
try flat on its back.
Nothing of the sort. Helsingfors, like all Northern
cities, has an air of asceticism but in a short sojourn
here, I could discover no signs of real poverty, and
I was credibly informed that there are none who
hunger. The so-called "sum" sections consist of houses
much better than those in Berlin's famous model tene-
ment district. And in Helsingfors I saw more new
apartment houses than I have ever seen since Baku,
where the Soviet oil trust covered several square miles
with homes for workers.
The American Legation, commercial attache and
consular officers are housed in a new office building
that "towers" seven stories and justifies its name of
skyscraper by possessing all the finish and equip-
ment of the most up-to-date structures of that type
in America. Its lower floors are occupied by a de-
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? 228 FIGHTING THE RED TRADE MENACE
partment store that would do credit to an American
city three times the size of Helsingfors. One depart-
ment especially is a real cause for civic pride. It is
a book store "The Academic," said to be the third
largest in the world, and with an English section
larger than many good-sized New York book stores.
It has twelve miles of shelf space, stocks volumes
enough to fill a National Library, and is only one
of thousands of book stores in this land of 1 per cent
illiteracy.
Most of the astonishing number of new houses in
Helsingfors were built since the Finns' war of libera-
tion in 1918, and a good many of them were built
on surplus profits earned when Finland was able to
sell timber to the customers Russia used to have and
has now regained. In part these buildings, too, were
erected on some eighty to ninety millions of dollars
in foreign loans, chiefly from American banks that,
to judge by their long term confidence in Finland, do
not take "the Red Menace" here as seriously as do the
Finns.
The Finns belabored the British market with the
argument that if the Britons bought Russian timber
tens of thousands of Finnish lumbermen would join
the jobless. But the Ministry of Social Affairs re-
ports that in April 11,584 unemployed registered
at the labor exchanges, or about one in 300 popula-
tion, and the highest figures quoted of all jobless,
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? FIGHTING THE RED TRADE MENACE 229
registered and unregistered is 60,000, or one in every
fifty of the population.
Soviet competition, however, explain the Finnish
saw-mill owners, resulted in more part-time employ-
ment than in actual dismissals.
The Lappo League, that super-Fascist organiza-
tion named for the first battleground of the war of
independence, virtually has eliminated strikes as it
also eliminated the Communist Party, and now would
like to eliminate trade with Russia. The Govern-
ment was willing to suppress the Communist Party,
but not trade, and another surprise of this investiga-
tion not lacking in surprises was to find that Finland,
bitterest of all the anti-Soviet front, furnishes govern-
mental guarantees for sales to the Soviet Union with
75 per cent insurance in a general scheme of export
credits similar to England's and Germany's.
Finland has an active trade balance with the Soviet
Union and last year sold $6,000,000 worth to her
best disliked neighbor and bought $3,000,000 worth
from her. And Finland, who claimed that Great
Britain was betraying her principles by buying
timber from the Soviet Union, herself bought nearly
$2,000,000 worth last year, and in the first quarter
of this year, $50,000 worth. This, it was explained
to me, was nearly all bought by one man, who has
been severely criticized for doing so.
To most Finns, though, the Russian menace is not
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? 230 FIGHTING THE RED TRADE MENACE
commercial. It is military. Finland has 32,000 regular
troops under arms, one-third as many as the United
States, with a population forty times as large. Be-
sides these, Finland has a Civic Guard of 100,000
men and 30,000 volunteer women for service of sup-
ply nurses and sanitary corps.
"Mussolini," said one of these women volunteers,
"is no good. He trades with Russia. He is a Red. "
Out on the street a regiment marched past. I asked
her who they were.
"White Guards," was the reply.
"And will they suffice to defend Finland? "
"They and Finnish 'seesoo! ' "
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? CHAPTER XXI
Riga :
Out of the loft of the blue Baltic sky the Helsing-
fors express plane wings down over the roofs of Riga
and follows the winding Dvina. Along its banks one
gazes down on lumber yards, their stacked planks
like innumerable decks of cards ready to be played
in the international game of commerce. Over the fields
beyond the city the plots of green and dark brown
earth alternate beneath one's eyes like patterns on
Scotch tartan. Smoke from a score of factories streak
the landscape and tells of industry in this tiny chip
off the massive block of Russia.
So unpretentious is this little land that the out-
side world has often forgotten that Riga is the capi-
tal of an independent state and letters come addressed
to "Riga, Russia. " Latvia, though, has not forgotten
that she used to be a Russian province. She has not
forgotten that her whole economic existence is de-
pendent upon commercial contact with the vast hinter-
land that now is Soviet, and in this country may be
found a most perfect microcosm of the non-Soviet
world's relations with the strange new state to the east.
How Latvia suffers and how she profits from Soviet
trade is interesting enough, and her flax warehouses,
231
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? 232 FIGHTING THE RED TRADE MENACE
lumber yards, her rubber factories, car barns and
paper mills are rich sources for an investigator of the
influence of the Five-Year Plan on European trade.
But all these places have not a fraction of the interest
and significance of No. 20 Elizabeth Street.
No. 20 Elizabeth Street has a wide show window.
In that show window stands a tractor. Heaped
around it and back of it are a dozen other varieties
of agricultural implements. Surely, not a very excit-
ing sight.
Nevertheless, to anyone who has asked himself
the question whether the Soviet Union under the Five-
Year Plan or after the Five-Year Plan can produce
manufactured articles for competition with the non-
Soviet world would hardly have been able to restrain
an exclamation of surprise upon entering the agri-
cultural implement store at No. 20 Elizabeth Street.
I paused long enough outside to read on the radiator
of a tractor in Russian "Fordson, Krasnaya Puti-
lovetz Leningrad. "
Inside, before I could ask about the tractor, a sign
on the side of a trim, red threshing machine caught
my eye. "Made in U. S. S. R. " The same sign was
on a broad horse rake in another corner, on a reaping
machine, on a row of milk separators, on a bundle of
pitchforks and of scythes, on two kinds of flax
breakers, on disc harrows and tooth harrows, on a
-?
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? FIGHTING THE RED TRADE MENACE 233
grain sorter, on ten varieties of plows all neatly
ranged in rows, on several kinds of pumps and churns,
on a series of implements whose use I did not know,
and, finally on a twelve-horsepower fuel oil engine.
Back in the dim recesses of the store, handles stuck
out of wrappings on indiscernible machines and light
glinted from rows of metal receptacles.
"You only sell Soviet products here? " I queried
the salesman.
"Oh, yes," he replied, "they make a pretty com-
plete line.
"
"How's business ? " I asked.
"Fair and getting better," was the answer.
When I told the salesman that I had been in the
Soviet Union and seen a good many of the factories
whence came the implements he was selling, the man
became cordial. "But I must admit," I said, "that I
didn't expect to find them exporting agricultural im-
plements abroad. Are you really selling them? How
do your prices compare? "
"Really selling them! Of course we are. We've been
selling them now for a couple of years, though this
year is the first that we've done real business. See that
big horse-drawn rake there? We've sold 1,000 of them
already. And the prices? Well, nobody can touch
us there. "
We began with the tractor, an exact model of
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? 234 FIGHTING THE RED TRADE MENACE
Ford's ten to twenty horse-power wheel tractor,
turned out by his Cork plant for the European
market.
"This tractor," said the salesman, who was a Lett,
"is really good. I think it is better than the original.
It stands up better. It is built out of stronger ma-
terials. "
"That's probably a matter of speculation, isn't it ? "
I said, iChut how much do you want for it? "
The price he said, was $900. "But we only ask 20
per cent down and give the buyer thirty months in
which to pay the balance. The original Fordson costs
$1,000 and you only get eighteen months' credit. "
We went from one machine to another. The price
differential on all other implements was much greater.
The thresher, bearing the mark of the Elizavetgrad
factory, formerly Ellworthy works, a British concern,
was priced $300, against the price for a similar
thresher by the International Harvester Company
of $700. A flaxbreaking machine from the Pskov
factory, "Metallist," was priced $40, against $90
for a similar machine of German make. A seeder from
the Petrovskovo factory in Kherson was priced $74,
against $96 for a German or Czechoslovakian machine
of the same kind. Another flaxbreaking machine of
a different model was priced $20, against $40 for a
German make.
The horse rake of which the salesman said he had
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? FIGHTING THE RED TRADE MENACE 235
sold 1,000 was priced $34, against $46 for German
and Swedish rakes. This rake came from the Soviet's
prize new implement factory, "Selmashstroi," that
I had visited six months ago in Rostov-on-the-Don.
When I was there last October they told me they had
produced 4,000 such rakes, but were scheduled to
turn out 100,000 in 1931.
Many of the implements on sale here in Riga were
produced in pre-revolutionary factories renovated
under the Five-Year Plan, but the horse rakes, of
which they had sold the most, came from the one im-
plement manufactory that has been erected since the
Five-Year Plan without the help of foreign engineers.
A grain sorter from the factory, "Trier," at Voro-
nezh, was priced $64, against $110 for a German
make. Finally, the stationary fuel oil engine, trade-
mark "Vozrozhdenie," from Markstadt on the Volga,
was priced $320, against the $540 of a German com-
peting brand.
The salesman presented me with two catalogues in
Lettish, one containing pictures and description of
fifty varieties of agricultural implements, the other
describing four types of heavy oil stationary and
portable engines as well as one for motor-boats. All
these Soviet products the salesman assured me, could
be obtained on order, and only lack of space prevented
him from showing them in stock.
The Lett salesman explained that his company,
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? 236 FIGHTING THE RED TRADE MENACE
"Standartlini," had exclusive rights for the sale of
Soviet agricultural implements in Latvia. I asked
if Soviet implements were being sold elsewhere. "Oh,
yes," he replied, "all through the border states,
Esthonia, Latvia and Lithuania, and I understand
they are also being sold in Persia and Turkey. "
All this provided a large, substantial mass of ma-
terial upon which to ruminate. It was not possible,
however, so quickly to digest a phenomenon that was
the most surprising discovery of a tour that has not
been lacking in new views of Soviet economy. For,
despite the anxiety of Manchester textile manufac-
turers and of other makers of fabricated goods about
Soviet competition, it has not seemed likely to many
observers of the Five-Year Plan that any serious
export of manufactured products from the Soviet
Union could be expected in some time. At any rate,
not the export of comparatively complicated products
such as agricultural machinery.
It was, therefore, natural that one should view
even this display of implements with considerable
skepticism and the remark of an American, who has
lived long in Latvia and studied the ways of the Rus-
sian trade representatives with care, sounded plausi-
ble. "This is all window dressing, I think," he said.
"Just window dressing. It makes a good impression
on the Latvian public. It is fine propaganda for the
Soviets here, but that's all. "
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? FIGHTING THE RED TRADE MENACE 237
Prepared to have this impression confirmed, I
visited the head of the Baltic agency of one of the
largest agricultural implement concerns in the world
and asked him what it all meant.
Before replying he pressed a button and ordered
files. A clerk brought a thick bundle of papers.
Thumbing them he began, "This is what it means.
Two years ago they began this. We all thought it
was a bluff. Last year they had sold, however, 10 to
12 per cent of the total market. Not much, but enough
to make us sit up and take notice.
"This year," he continued, "they plan to sell in
Latvia alone to the value of $400,000, which would be
equal to our total sales and would be about 40 per
cent of the market. And that is only in Latvia. They
are operating on the same scale in Esthonia and
Lithuania. "
"And how much do you think they actually will
sell? "
"Maybe $200,000 worth. If they do, they will be
doing well. But," he exclaimed, "how can you meet
this sort of thing? "
He turned a sheaf of pages, paused at one and be-
gan to read:
"On spring-tooth harrows, five teeth, they ask $3.
We ask $5. On seven-tooth harrows they ask $3. 60.
We ask $7. On nine-tooth harrows they ask $4. 20. We
ask $8.
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? 238 FIGHTING THE RED TRADE MENACE
"On disc harrows, eight discs, they ask $26. We
ask $44. On disc harrows, ten discs, they ask $29-
We ask $48. On seven-tooth one-horse cultivators
they ask $9. We ask $18. For a nine-tooth cultivator
they ask $9. We ask $23. On a five-foot reaper they
ask $50. We ask $96. On a four-and-one-half-foot
mower they ask $33. We ask $66. On horse rakes
they ask $20. We ask $36. And so on. All along the
fine just about 50 per cent less.
"But that is not the worst. What really cuts us
down are the terms they offer. On nearly all their
sales they let the farmer take the machines with no
cash payment and only ask for a first payment after
six months. On small machines they give from six to
eighteen months' credit, while we can only afford to
give from six to nine. On machines like reapers, mow-
ers and rakes they give up to twenty-four months'
credit. We give six to nine. On tractors they give
thirty months' credit. We give eighteen. "
The gentleman spoke without agitation. His tone
was reflective.
"Well, you can't offer the peasant any better terms
than that. All he has to do is come in the store, pick
out the machine and walk off with it. He doesn't have
to pay a cent of money. "
Hopefully, he continued. "But what will that peas-
ant do after six months when he is called upon to pay ?
I think a lot of them will use their reaper to harvest
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? FIGHTING THE RED TRADE MENACE 289
their crops and after six months bring it back, say
it is no good and refuse to pay. "
This note of optimism disappeared when I asked,
"How about the quality of Soviet implements? "
"Last year they looked so rough and unfinished
that I think that was one reason they did not sell
many. That and the fact that they actually could not
deliver. This year, though they are delivering and--
well, here is the report on two machines my agent
observed. "
He read. The machines in question, according to
the report, were so brightly painted, varnished, pol-
ished, nickled, so gleaming spick and span, that the
agent had written he was almost sure they must be
machines for a special exhibition. Also there was the
fact that these machines had been packed so care-
fully, with so much extra boarding, that it seemed
incredible that they should have been intended for
the regular market.
"And so," he said, "I figure in the first place that
they will lose 25 per cent of their turnover from the
machines the peasants return in order to avoid pay-
ing at all. And then I don't think they can afford to
put out a fancy product like those we've seen. As to
their durability and real efficiency, we haven't had
time to judge. We can tell after this season. But as
to sales. Well, all over this country and in Esthonia
and Lithuania they keep turning up, here, one car-
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? 240 FIGHTING THE RED TRADE MENACE
load, there one carload. It is hard to keep track of
them. "
He paused. "At any rate," he finished, "It's no
joke. "
It is just because this topic of the Soviet Union's
sale abroad of manufactured articles is so hotly de-
bated and because the evidence upon it is so likely to
be called in question that the writer has put this par-
ticular report in quotation form and attempted to
render as nearly as possible, a dictaphone account of
these first-hand findings. From another source, but
not first-hand, were obtained more data of interest.
In the first place, as to tractor sales. As far as
could be ascertained only one has been sold. And this,
apparently, will be the only one sold for awhile. Not,
however, because the Latvians did not want to buy
Soviet tractors, nor because they could not be de-
livered, but because Ford has protested against the
sale abroad of a tractor made on his blueprints and
his patents that had been licensed for use in the Red
Putilov factory at Leningrad for the manufacture of
tractors for Soviet domestic consumption, but not for
export. While Ford is still cooperating with the
Soviets under a $30,000,000 contract to supply
plans, engineers and automobile parts for the Nijny
Novgorod plant, it appears unlikely that the Soviets
should ignore his protest against the sale abroad of
Soviet model Fordsons.
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? FIGHTING THE RED TRADE MENACE 241
Very interesting in this respect was the statement
of the salesman in the "Standartlini" store that "we
expect in six months to be selling Soviet automobiles. "
I asked, "Where from? "
"From Nijny Novgorod. "
I objected that the Nijny plant was apparently so
far behind schedule that it was hard to conceive that
they would be producing so soon, much less export-
ing Soviet Ford cars abroad.
"Well," said the salesman, "that's what we've been
told. We've been told to get ready to push Soviet au-
tomobile sales here this coming autumn. Anyway, we
are already selling Soviet sewing machines. "
"Standartlini," the implement sales concern, it ap-
pears, has been granted the territory in the three
border states, Lithuania, Latvia and Esthonia, by the
Soviet Foreign Trade Monopoly for the sale of Soviet
implements. Prices, it is said, shall be fixed at about
25 per cent below rival prices, but prices at which the
Soviet factories sell to the agents shall be such that
agents will still have a profit of at least 25 per cent.
These items of information came at second hand.
