This
passivity
of balance they
exclaim is ruinous.
exclaim is ruinous.
Soviet Union - 1931 - Fighting the Red Trade Menace
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? FIGHTING THE RED TRADE MENACE US
such consequences that, no matter how remote its
execution into action may appear, it deserves the clos-
est attention.
Great Britain takes nearly one-third of the Soviet
Union's total exports. If Britain were to embargo these
Soviet goods it is difficult to see where they could be
sent. It was this consideration that led the German
Government to refuse to take any more than $75,000,-
000 worth of new orders from the Soviet a few months
ago, though Moscow offered to buy $125,000,000
worth over and above the normal year's purchases.
The reduction by one-third or even by one-fourth
or fifth of the Soviet Union's exports, especially if
it came suddenly, would impose a serious strain upon
Moscow's ability to meet her obligations. Informed
opinion in conservative banking circles believes that
Moscow would meet her obligations anyway, even if she
had to sell the treasures of the Hermitage and dump
the crown jewels of Nicholas in one glittering $100,-
000,000 heap on the Amsterdam diamond market. For
Soviet credit is an imperative condition for the fulfill-
ment of the Five-Year Plan. But the risk, nevertheless,
of credits to the Soviet Union, whatever that risk may
normally be, would indubitably be increased by a
British embargo and it was apprehension of a Brit-
ish embargo on Soviet goods that more than anything
else kept Germany from taking that extra $50,000,-
000 of orders badly as she wanted them.
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? 116 FIGHTING THE RED TRADE MENACE
To what degree that apprehension was justified is
one of the most important points to be established in
this entire investigation of Russo-European relations.
Moscow itself is puzzled. Moscow believes that profits
come before patriotism in every capitalist country.
But Moscow has trouble judging when politics come
before profit. And Moscow is quite confused when pity
and passion join politics in obscuring the otherwise
matter of fact view that greed rules the world.
On this puzzle the House of Commons debate shed
much light. And had it not been the least instructive,
its entertainment value remained high.
Said Mr. Haycock, Labor, "Russia is the most
wonderful country in the world. "
Said Commander Locker-Lampson, Conservative,
"Lenin was a German agent and today Russian
rubles would be found in the pockets of Mr. Gandhi,
if he wore breeches like the rest of us. "
Said Sir Rennell Rodd, Conservative, "A former
colleague of mine who at one time represented in
Russia a foreign Government told me of a discovery
which he made in his own bedroom at the Embassy,
of a microphone fixed into the wall behind the cur-
tains of his bed which would enable any observations
he might make to his wife to be transmitted at once
to headquarters. "
Said Mr. Haycock, "Scotland Yard forged a copy
of Pravda to mislead British workers. "
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? FIGHTING THE RED TRADE MENACE 117
Said Mr. Churchill, "I see that a gentleman named
Menjinsky, chief of the GPU. has said 'as long as
there are idiots to take our signature seriously and
to put their trust in it we must promise everything
that is being asked and as much as one likes, if we
can only get something tangible in exchange. ' "
Mr. Churchill cited no source. Nobody cited any
sources save Mr. MacDonald. The Prime Minister,
replying to Sir Austen Chamberlain's plea for break-
ing relations merely cited Sir Austen Chamberlain,
who in June 25, 1926, when he was Foreign Minister
and when the members of his own party were urging
him to break with Russia, had said: "It would create
division where we seek union and would in its echoes
abroad increase the uncertainty, increase the fears,
increase the instability of European conditions, which
it is and ought to be our chief object to remove. "
This, declared MacDonald, is precisely the view of
the Labor Government today. But MacDonald went
further, and, with singular frankness, took up the
challenge to discuss "The Red Menace" in realistic
terms. "Germany is closer to the danger, closer to
propaganda, has suffered far more, not merely in
words thrown at her but in deeds done within Ger-
many. If there was any uprising, any trouble, Ger-
many would be in trouble, would be involved and
whirling in the maelstrom long before we either at
home or abroad would be involved, and yet Germany
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? 118 FIGHTING THE RED TRADE MENACE
today retains diplomatic relations with Moscow. "
This statement deserves more than casual atten-
tion for the light it throws on two remarkable charac-
teristics of Europe's attitude toward the Soviet
Union: First, the matter-of-fact assumption that
"trouble" from the Soviet Union, "whirling in the
maelstrom," may be admitted to the realm of possi-
bilities, may even be publicly and officially mentioned
by the Prime Minister of a Government maintaining
correct relations with Moscow, and, second, the com-
fortable assurance on the part of all that Germany
will receive that impact first.
Finally, however, out of the fog emerged the real
substance of the debate. Sir Austen had intended to
attack MacDonald on the charge that the Soviets had
violated their promise not to spread propaganda, had
incited to rebellion in India. Curiously enough, he
had completely omitted to specify the indictment, an
omission that a colleague later made good with quo-
tations from a Communist International circular on
the new program of the Indian Communist Party.
But at the end of his speech Sir Austen did remem-
ber the one concrete charge, "the Government have
never succeeded with their diplomatic relations in se-
curing as much trade as America has constantly had
without diplomatic relations. "
On this key the debate continued. "We all wish,"
retorted the Prime Minister, "that trade returns
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? FIGHTING THE RED TRADE MENACE 119
from Russia were better, but when the trade agree-
ment was abrogated and denounced in 1927 what
happened? Trade went down. When relations were
resumed trade began to go up, and it is very extraor-
dinary that in the first three months of 1930 the ex-
ports of British products to Russia were ? 1,000,000
sterling and in the first three months of 1931 they
were ? 1,500,000 sterling. "
This did not satisfy Mr. Churchill, but in his dis-
satisfaction he too revealed that not the existence of
trade with the Soviet Union but lack of more trade
with the Soviet Union was what rankled. "You," he
exclaimed to the Prime Minister, "are responsible for
the lamentable failure to trade between the two coun-
tries. The United States have done far more trade
and more profitable trade. They have sold a much
larger quantity of goods. "
If any further statement of the Conservative posi-
tion were required Commander Locker-Lampson, he
who believed that Lenin was paid by the Germans
and Gandhi by the Bolsheviks, provided it when in
the same address he summed up with, "there is no
one on this side of the house who is against trade with
Russia. We signed the trade agreement of 1921 and
voted for it. We would vote again for agreements
that would facilitate and encourage trade with that
great country. We are ready to trade with Mormons
or with anybody else who is ready to pay. "
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? 120 FIGHTING THE RED TRADE MENACE
Back on this familiar ground the Under Secretary
of State of Foreign Affairs, Mr. Dalton, struck the
note that harmonizes not only the conflicting parties
in the House no matter how they vote but that repre-
sents as well the feeling of the entire Continent of
Europe. It is the one sentiment common to Italians,
Frenchmen, Belgians, the Dutch, the Germans, the
British. "We shall be gravely disappointed," he as-
serted, "unless in the near future we get a consider-
able increase of orders from the Soviet Union. "
The vote was taken. Two hundred and twenty-three
who said they believed that more Soviet orders could
be gotten by breaking off diplomatic relations voted
against the Government. Two hundred and forty-
three who believed that more Soviet orders could be
gotten by maintaining diplomatic relations voted
with the Government. The Government was saved.
Soviet trade had never been in danger.
This matter of stating the result of the vote is
open to one objection. It is certainly true that many
of the Conservatives, who today argue somewhat spe-
ciously perhaps and perhaps without meaning it that
more trade would follow from a break in diplomatic
relations because America had enjoyed more trade
without diplomatic relations, would not have troubled
about trade at all in more prosperous times. There
was a time when Winston Churchill and his fellow
extremists were in principle and in practice against
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? FIGHTING THE RED TRADE MENACE 121
all relations with the Soviet Union whether profit-
able or unprofitable.
But the world economic crisis has had this curious
double-edged effect on the Soviet Union in its rela-
tions to the outside world. On the one hand the fall
in commodity prices has had a most injurious effect
upon the Soviet's economic plans. On the other hand
that same crisis has made virtually the entire world of
bourgeois business men and politicians much more
sensitive to opportunities for trade with the Soviet
Union. In the present state of the economic affairs
of Great Britain no party could afford to take a
stand that would exclude chances of trade, not even
with "Forces of Evil Incorporated" as many Con-
servatives believe the Soviets to be.
Despite this acknowledged fact, however, there are
individuals and individual organizations whose prin-
ciple remains "better bankruptcy than barter with
the devil. " There for example is Commander Carlyon
Bellairs of the Conservatives, who has organized "The
Trade Defense Union" to fight for a common front
against the "Soviet slave war" and who together
with the "American Coalition of Patriotic Societies"
is laboring for a complete embargo on Russian trade.
The fact that the Soviet factory worker considers
himself not merely no slave but the master of his
country, the fact that the proletariat of Russia
thoroughly approves the expropriation and exile to
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? 122 FIGHTING THE RED TRADE MENACE
timber camps of "kulaks," the fact that the Five-
Year Plan is being pushed to completion as much by
zealotry as by terror and more by piecework and
premiums than by disciplinary measures--these facts
do not prevent the Trade Defense Union from de-
claring in its pamphlets that "Russia has been trans-
formed into a vast slave state with an enslaved popu-
lation of 160,000,000. Working with slave labor in
shifts day and night for 360 days out of 365, they
gain on us one year in every five. It is a question of
fighting for the life of free labor in civilized coun-
tries against the greatest menace the world has ever
known, namely, the slave labor of 160,000,000
people, increasing by 3,650,000 a year, harnessed to
the most modern mass production machinery. "
The Trade Defense Union believes the Five-Year
Plan will succeed but cannot conceive that it can suc-
ceed except by the use of slave labor. Commander
Bellairs is not interested in maintaining trade with
the Soviet Union, but his arguments against it are
by no means widely accepted in Britain, even among
those not personally acquainted with the inaccuracy
of the statements concerning the 160,000,000 Rus-
sian slaves.
There too is the "Christian Protest Movement" un-
der Prebendary Gough, counterpole of the Moscow
"League of the Godless," to arouse the conscience of
the Christian world against the Soviet persecution
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? FIGHTING THE RED TRADE MENACE 123
of the church. "The Christian Protest Movement"
also has no interest in maintaining trade with the
godless.
There are the "Young Britons" and the "British
Fascists Ltd. " who have furnished Aldous Huxley
with rich material for satire. There is the "Economic
League" that supplies speakers with notes for dia-
tribes on dumping. It has no objection to British ex-
ports to the Soviet Union, but regards Soviet exports
to Great Britain as an unqualified catastrophe.
Finally, there is the "Anti-slavery and Aborigines
Protection Society" that exposed to the world the
slave barracks of the Belgian King Leopold's Puta-
mayo rubber plantations and by that exposure put
an end to the system, and that intends to do the same
for the timber camps of Russia. It intends, in the
words of an authority who certainly should know
its intentions "to awaken the conscience of the Soviet
authorities, to bring the moral pressure of the world
to bear to enforce reforms. "
Some persons in Britain today recall the days of
Gladstone and his nation wide, successful campaign
against the Turkish atrocities in Bulgaria. But a
city banker analysing the prospects in Russo-Britain
relations said to me, "if the Soviets would only put
a few more orders in this country the chances of a
break in relations would be materially diminished. "
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? CHAPTER XIII
London:
England alone of all the countries in Europe so
far visited on this trip of investigation is genuinely
excited about "The Red Trade Menace" and the
fight against it, though at times partaking of the na-
ture of shadow boxing, is at the forefront of public
consciousness.
Organs of the Conservative press attend to this.
From their columns the Red threat glowers daily.
Hardly a pound of Russian goods can cross a gro-
cery counter without the finger of Tory reproach
pointing at the purchaser. Every boatload of Soviet
wares that touches British land is welcomed with
headlines, "Red Russia's Ruthless Trade War,"
"Moscow's Shock' Dumping," "Grave Peril. " The
"Alexy Rykoff," a Soviet ship, put in at Hays
Wharf and the correspondent of the most violently
anti-Soviet newspaper in England, visiting her, re-
ports in an aggrieved half column, "Cold Reception,"
"No one to Greet Us. "
It is precisely this phase of "Fighting the Red
Trade Menace" that may be described as partaking
of the nature of shadow boxing. For under the influ-
124
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? FIGHTING THE RED TRADE MENACE 125
ence of political expediency this phase of the con-
test is carried out with so little regard for propor-
tion and so little reference to reality that proponents
of Soviet trade are able to counter it with simple and
effective arguments.
In one breath the anti-Soviet Party announces that
the Soviet Government is bankrupt and that it is
purchasing vast amounts of war material. In another
breath it declares the Five-Year Plan an utter failure
and that it will overwhelm the British market with
manufactured goods.
The arrival of two shiploads of Soviet butter
evoked a panic in the Tory press that could hardly
have been exceeded if ships loaded with dynamite
had arrived. It was days before representatives of
the British Butter Trade managed to point out that
whereas Russia before the war was the second largest
exporter of butter in the world, she is now the sixth,
and whereas she exported in 1930 about 10,000 tons,
and that England last year took but one-fiftieth of
her butter imports from Russia, and that when all
was said and done the menace to British dairy
farmers was from Danish, and not Russian, butter.
Quieter, but no less bitterly, goes on the fight over
trade returns as they come in from month to month.
In this fight there have developed two whole schools
of foreign trade students, who in their zeal to prove
different points from the same figures resemble theo-
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? 126 FIGHTING THE RED TRADE MENACE
logians expounding Scripture or Bolsheviks disput-
ing paragraphs from the works of Lenin.
The chief concern of one school is to prove that
trade with the Soviet Union is a delusion and a snare
and more particularly that the resumption of diplo-
matic relations in November, 1929 and the signing
of a temporary commercial agreement in April, 1930,
were followed by a decrease in Soviet orders to
Britain. Furthermore, to prove America has enjoyed
more profit from Soviet trade without diplomatic
recognition than Britain has enjoyed with full rela-
tions.
The chief concern of the other school is to prove
the opposite. Both use the same exegetical methods,
both quote chapter and verse.
The anti-Soviet party cites with satisfaction the
figures of the British Customs House showing that in
the first quarter of 1931 the Soviet Union sold
Britain goods to the value of 6,433,886 pounds ster-
ling and bought from Britain only to the value of
1,425,113 pounds.
This passivity of balance they
exclaim is ruinous.
Was it ruinous, retort Soviet friends, when in 1913
Britain bought from imperial Russia 40,270,539
pounds worth of goods and sold to imperial Russia
only 18,102,683 pounds? And, anyway, point out
Soviet sympathizers, Britain is selling more and more
to the Soviet Union, for in the first quarter of 1929
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? FIGHTING THE RED TRADE MENACE 127
British sales to Russia were 729,344 pounds sterling;
in the first quarter of 1930 they were 1,127,258
pounds and in the first quarter of 1931, 1,425,113
pounds.
Undismayed, the anti-Soviet party calls in a
pundit, former employee of the Soviet trade delega-
tion in London, one of the "new emigration" of those
who, having been ordered to return to Moscow, find it
expedient often for perfectly sound reasons having to
do with their health to refuse to go.
This authority discovers and announces in "The
Statist" of London that in the six months from
October, 1929, to March, 1930, after the resumption
of diplomatic relations, but before the signing of the
temporary trade agreement, Soviet purchases in
England amounted to only 6,308,853 pounds, obvi-
ous proof that trade agreements ruin trade.
But the pundit meets his equal when the editor of
the "Bank for Russian Trade Review" swears on his
oath that the total value of Soviet purchases from
Britain in the whole year, October, 1929, to Septem-
ber, 1930, amounted to ? 15,400,000 sterling, com-
pared to ? 9,346,322 worth of Russian purchases in
the year from October, 1928, to September, 1929.
Obvious proof that trade agreements help trade.
The latest communique from this battle of statis-
tics gives voice to the Emigre authority broadcasting
that "according to absolutely reliable private in-
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? 128 FIGHTING THE RED TRADE MENACE
formation" Soviet purchases for the half-year, Octo-
ber, 1930, to March, 1931, amount to no more than
? 5,000,000 sterling, compared to ? 6,308,853 ster-
ling of purchases in the six months, April, 1930, to
September, 1931.
Speedier foreign trade tabulations would enable
the two schools to carry on their comparisons from
day to day with twenty-four hour reports on the last
shilling's worth of business done. In the present tem-
per of the British business world the tabulations
would find readers. For others, however, this phe-
nomenon is chiefly significant as proof of the intense
interest British business takes today in every chance
to turn a penny, as proof of the predominant impor-
tance given to the trade aspect of British relations
with the Soviet Union, and as confirmation of the
city banker's remark that a few more Soviet orders
in this country would change the complexion of Brit-
ish feelings toward "the Red Trade Menace. "
Meanwhile, behind the political racket and behind
the hairsplitting over trade returns there is go-
ing on a much more significant effort in serious busi-
ness circles to find a solution for the problem of com-
mercial relationships between the Soviet Union and
the non-Soviet world. These circles have already to a
large extent defined their field of action. The best in-
formed among them have ruled out international po-
litical action as hopeless in the present condition of
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? FIGHTING THE RED TRADE MENACE 129
Europe. Even if the apparently impossible should
occur and Briand's scheme for the United States of
Europe were effectuated on the Continent, it is doubt-
ful if Britain would join it, not even to combat the
Soviet Union.
These earnest business circles have ruled out to all
practical intents and purposes the hope of interna-
tional private commercial action except on the part
of these great firms whose international connections
already give them a dominant position in more than
one country. For when the International Chamber of
Commerce held its last congress in Washington it had
been planned to put "Soviet dumping" in a promi-
nent place on the list of topics for debate. But the
German and Italian delegates announced they would
be compelled publicly to oppose measures against
unrestricted trade with the Soviet Union. Since una-
nimity was required to pass a resolution, it was
agreed that rather than risk public defeat it would
be better to leave the subject untouched. So the In-
ternational Chamber of Commerce delegates went
home without a word having been officially uttered on
one of the topics uppermost in their minds. These
British business men, however, have ruled in first of
all careful inquiry into the actual status of "the Red
Trade Menace" as it affects British trade. The As-
sociation of British Chambers of Commerce, meeting
in April last, accepted the following resolution pro-
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? 130 FIGHTING THE RED TRADE MENACE
posed by Sir John Sandeman Allen, M. P. of Liver-
pool:
"That the executive council be requested to study
the effect on the trade and industries of this country
through exports from Russia to the United King-
dom and its important world markets, especially of
manufactured goods which are steadily increasing
as the Five-Year Plan develops and the offering of
such goods for sale at prices which bear no relation
to the true cost of production calculated on a regular
commercial basis and to consider what, if any, steps
can be taken in this country by the Government or
the business world jointly or separately to counteract
this entirely new method of marketing, which mani-
festly constitutes an organized and serious attack on
the commercial system of the whole world. "
It will be noted that the emphasis is on "the method
of marketing" and on manufactured goods. It is con-
ceivable that the investigation now under way may
result in the discovery that Russian exports at this
stage are no menace to a predominantly industrial
population, heavy consumers of agricultural imports.
Or it may be discovered they are a menace, but there
is nothing to be done about it. In either case, no pub-
lic report may be anticipated. It now seems probable,
however, that the association may report that Russo-
British trade relations are unsatisfactory and that
something must be done about it. In any case, Sir
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? FIGHTING THE RED TRADE MENACE 131
John's formulation of the question has the unique
merit of having isolated the practical problem for the
bourgeois world of disunited, disharmonious, com-
petitive, conflicting business interests to reflect upon,
namely, how to meet "the methods of marketing" of
the world's largest industrial and commercial trust,
uniting the resources of one-seventh of the earth's
land surface under the harmonious, purposeful con-
trol of its board of directors, the leaders of the Com-
munist Party of Russia.
Already several adumbrations of solutions have
been proposed as a result of the Association's pre-
liminary investigations. The first and most impor-
tant is sponsored by the London Chamber of Com-
merce, though it must in advance be emphasized that
nothing has yet been arrived at definite enough to
present as the official opinion of that body.
The scheme the London business circles now are
considering, however, is sufficiently developed to be
usefully discussed. It resembles in principle that of
Caillaux and Berenger in France, but without the
French complication of the desire to compensate
owners of the czarist Russian bonds.
The scheme has the double interlocking purpose:
By control over Russian exports to Britain to exer-
cise a check on the sale here at low prices of products
competing with British products and possibly also
with Empire products, and through this control over
r
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? 132 FIGHTING THE RED TRADE MENACE
Russian exports to exercise a coercive stimulation of
Soviet purchases from Britain. In other words, in the
last analysis, to force the Soviet to buy more in
Britain.
It is proposed that either by voluntary consent of
all British firms buying from or selling to the Soviet
Union or by act of Parliament or by an Order in
Council all purchases from the Soviet Union should
be required to be made through a "Clearing House
for Soviet Trade," or whatever it might be called.
The voluntary consent of British sellers to the Soviet
Union might be obtained for such an arrangement,
for it is proposed that the money due to the Soviet
Union from British purchasers of Soviet goods
should not be turned over directly to the Soviet trade
representative, but should be turned into a fund out
of which British sellers to the Soviet Union should
be paid. 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-
? ?
? FIGHTING THE RED TRADE MENACE US
such consequences that, no matter how remote its
execution into action may appear, it deserves the clos-
est attention.
Great Britain takes nearly one-third of the Soviet
Union's total exports. If Britain were to embargo these
Soviet goods it is difficult to see where they could be
sent. It was this consideration that led the German
Government to refuse to take any more than $75,000,-
000 worth of new orders from the Soviet a few months
ago, though Moscow offered to buy $125,000,000
worth over and above the normal year's purchases.
The reduction by one-third or even by one-fourth
or fifth of the Soviet Union's exports, especially if
it came suddenly, would impose a serious strain upon
Moscow's ability to meet her obligations. Informed
opinion in conservative banking circles believes that
Moscow would meet her obligations anyway, even if she
had to sell the treasures of the Hermitage and dump
the crown jewels of Nicholas in one glittering $100,-
000,000 heap on the Amsterdam diamond market. For
Soviet credit is an imperative condition for the fulfill-
ment of the Five-Year Plan. But the risk, nevertheless,
of credits to the Soviet Union, whatever that risk may
normally be, would indubitably be increased by a
British embargo and it was apprehension of a Brit-
ish embargo on Soviet goods that more than anything
else kept Germany from taking that extra $50,000,-
000 of orders badly as she wanted them.
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? 116 FIGHTING THE RED TRADE MENACE
To what degree that apprehension was justified is
one of the most important points to be established in
this entire investigation of Russo-European relations.
Moscow itself is puzzled. Moscow believes that profits
come before patriotism in every capitalist country.
But Moscow has trouble judging when politics come
before profit. And Moscow is quite confused when pity
and passion join politics in obscuring the otherwise
matter of fact view that greed rules the world.
On this puzzle the House of Commons debate shed
much light. And had it not been the least instructive,
its entertainment value remained high.
Said Mr. Haycock, Labor, "Russia is the most
wonderful country in the world. "
Said Commander Locker-Lampson, Conservative,
"Lenin was a German agent and today Russian
rubles would be found in the pockets of Mr. Gandhi,
if he wore breeches like the rest of us. "
Said Sir Rennell Rodd, Conservative, "A former
colleague of mine who at one time represented in
Russia a foreign Government told me of a discovery
which he made in his own bedroom at the Embassy,
of a microphone fixed into the wall behind the cur-
tains of his bed which would enable any observations
he might make to his wife to be transmitted at once
to headquarters. "
Said Mr. Haycock, "Scotland Yard forged a copy
of Pravda to mislead British workers. "
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? FIGHTING THE RED TRADE MENACE 117
Said Mr. Churchill, "I see that a gentleman named
Menjinsky, chief of the GPU. has said 'as long as
there are idiots to take our signature seriously and
to put their trust in it we must promise everything
that is being asked and as much as one likes, if we
can only get something tangible in exchange. ' "
Mr. Churchill cited no source. Nobody cited any
sources save Mr. MacDonald. The Prime Minister,
replying to Sir Austen Chamberlain's plea for break-
ing relations merely cited Sir Austen Chamberlain,
who in June 25, 1926, when he was Foreign Minister
and when the members of his own party were urging
him to break with Russia, had said: "It would create
division where we seek union and would in its echoes
abroad increase the uncertainty, increase the fears,
increase the instability of European conditions, which
it is and ought to be our chief object to remove. "
This, declared MacDonald, is precisely the view of
the Labor Government today. But MacDonald went
further, and, with singular frankness, took up the
challenge to discuss "The Red Menace" in realistic
terms. "Germany is closer to the danger, closer to
propaganda, has suffered far more, not merely in
words thrown at her but in deeds done within Ger-
many. If there was any uprising, any trouble, Ger-
many would be in trouble, would be involved and
whirling in the maelstrom long before we either at
home or abroad would be involved, and yet Germany
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? 118 FIGHTING THE RED TRADE MENACE
today retains diplomatic relations with Moscow. "
This statement deserves more than casual atten-
tion for the light it throws on two remarkable charac-
teristics of Europe's attitude toward the Soviet
Union: First, the matter-of-fact assumption that
"trouble" from the Soviet Union, "whirling in the
maelstrom," may be admitted to the realm of possi-
bilities, may even be publicly and officially mentioned
by the Prime Minister of a Government maintaining
correct relations with Moscow, and, second, the com-
fortable assurance on the part of all that Germany
will receive that impact first.
Finally, however, out of the fog emerged the real
substance of the debate. Sir Austen had intended to
attack MacDonald on the charge that the Soviets had
violated their promise not to spread propaganda, had
incited to rebellion in India. Curiously enough, he
had completely omitted to specify the indictment, an
omission that a colleague later made good with quo-
tations from a Communist International circular on
the new program of the Indian Communist Party.
But at the end of his speech Sir Austen did remem-
ber the one concrete charge, "the Government have
never succeeded with their diplomatic relations in se-
curing as much trade as America has constantly had
without diplomatic relations. "
On this key the debate continued. "We all wish,"
retorted the Prime Minister, "that trade returns
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? FIGHTING THE RED TRADE MENACE 119
from Russia were better, but when the trade agree-
ment was abrogated and denounced in 1927 what
happened? Trade went down. When relations were
resumed trade began to go up, and it is very extraor-
dinary that in the first three months of 1930 the ex-
ports of British products to Russia were ? 1,000,000
sterling and in the first three months of 1931 they
were ? 1,500,000 sterling. "
This did not satisfy Mr. Churchill, but in his dis-
satisfaction he too revealed that not the existence of
trade with the Soviet Union but lack of more trade
with the Soviet Union was what rankled. "You," he
exclaimed to the Prime Minister, "are responsible for
the lamentable failure to trade between the two coun-
tries. The United States have done far more trade
and more profitable trade. They have sold a much
larger quantity of goods. "
If any further statement of the Conservative posi-
tion were required Commander Locker-Lampson, he
who believed that Lenin was paid by the Germans
and Gandhi by the Bolsheviks, provided it when in
the same address he summed up with, "there is no
one on this side of the house who is against trade with
Russia. We signed the trade agreement of 1921 and
voted for it. We would vote again for agreements
that would facilitate and encourage trade with that
great country. We are ready to trade with Mormons
or with anybody else who is ready to pay. "
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? 120 FIGHTING THE RED TRADE MENACE
Back on this familiar ground the Under Secretary
of State of Foreign Affairs, Mr. Dalton, struck the
note that harmonizes not only the conflicting parties
in the House no matter how they vote but that repre-
sents as well the feeling of the entire Continent of
Europe. It is the one sentiment common to Italians,
Frenchmen, Belgians, the Dutch, the Germans, the
British. "We shall be gravely disappointed," he as-
serted, "unless in the near future we get a consider-
able increase of orders from the Soviet Union. "
The vote was taken. Two hundred and twenty-three
who said they believed that more Soviet orders could
be gotten by breaking off diplomatic relations voted
against the Government. Two hundred and forty-
three who believed that more Soviet orders could be
gotten by maintaining diplomatic relations voted
with the Government. The Government was saved.
Soviet trade had never been in danger.
This matter of stating the result of the vote is
open to one objection. It is certainly true that many
of the Conservatives, who today argue somewhat spe-
ciously perhaps and perhaps without meaning it that
more trade would follow from a break in diplomatic
relations because America had enjoyed more trade
without diplomatic relations, would not have troubled
about trade at all in more prosperous times. There
was a time when Winston Churchill and his fellow
extremists were in principle and in practice against
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? FIGHTING THE RED TRADE MENACE 121
all relations with the Soviet Union whether profit-
able or unprofitable.
But the world economic crisis has had this curious
double-edged effect on the Soviet Union in its rela-
tions to the outside world. On the one hand the fall
in commodity prices has had a most injurious effect
upon the Soviet's economic plans. On the other hand
that same crisis has made virtually the entire world of
bourgeois business men and politicians much more
sensitive to opportunities for trade with the Soviet
Union. In the present state of the economic affairs
of Great Britain no party could afford to take a
stand that would exclude chances of trade, not even
with "Forces of Evil Incorporated" as many Con-
servatives believe the Soviets to be.
Despite this acknowledged fact, however, there are
individuals and individual organizations whose prin-
ciple remains "better bankruptcy than barter with
the devil. " There for example is Commander Carlyon
Bellairs of the Conservatives, who has organized "The
Trade Defense Union" to fight for a common front
against the "Soviet slave war" and who together
with the "American Coalition of Patriotic Societies"
is laboring for a complete embargo on Russian trade.
The fact that the Soviet factory worker considers
himself not merely no slave but the master of his
country, the fact that the proletariat of Russia
thoroughly approves the expropriation and exile to
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? 122 FIGHTING THE RED TRADE MENACE
timber camps of "kulaks," the fact that the Five-
Year Plan is being pushed to completion as much by
zealotry as by terror and more by piecework and
premiums than by disciplinary measures--these facts
do not prevent the Trade Defense Union from de-
claring in its pamphlets that "Russia has been trans-
formed into a vast slave state with an enslaved popu-
lation of 160,000,000. Working with slave labor in
shifts day and night for 360 days out of 365, they
gain on us one year in every five. It is a question of
fighting for the life of free labor in civilized coun-
tries against the greatest menace the world has ever
known, namely, the slave labor of 160,000,000
people, increasing by 3,650,000 a year, harnessed to
the most modern mass production machinery. "
The Trade Defense Union believes the Five-Year
Plan will succeed but cannot conceive that it can suc-
ceed except by the use of slave labor. Commander
Bellairs is not interested in maintaining trade with
the Soviet Union, but his arguments against it are
by no means widely accepted in Britain, even among
those not personally acquainted with the inaccuracy
of the statements concerning the 160,000,000 Rus-
sian slaves.
There too is the "Christian Protest Movement" un-
der Prebendary Gough, counterpole of the Moscow
"League of the Godless," to arouse the conscience of
the Christian world against the Soviet persecution
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? FIGHTING THE RED TRADE MENACE 123
of the church. "The Christian Protest Movement"
also has no interest in maintaining trade with the
godless.
There are the "Young Britons" and the "British
Fascists Ltd. " who have furnished Aldous Huxley
with rich material for satire. There is the "Economic
League" that supplies speakers with notes for dia-
tribes on dumping. It has no objection to British ex-
ports to the Soviet Union, but regards Soviet exports
to Great Britain as an unqualified catastrophe.
Finally, there is the "Anti-slavery and Aborigines
Protection Society" that exposed to the world the
slave barracks of the Belgian King Leopold's Puta-
mayo rubber plantations and by that exposure put
an end to the system, and that intends to do the same
for the timber camps of Russia. It intends, in the
words of an authority who certainly should know
its intentions "to awaken the conscience of the Soviet
authorities, to bring the moral pressure of the world
to bear to enforce reforms. "
Some persons in Britain today recall the days of
Gladstone and his nation wide, successful campaign
against the Turkish atrocities in Bulgaria. But a
city banker analysing the prospects in Russo-Britain
relations said to me, "if the Soviets would only put
a few more orders in this country the chances of a
break in relations would be materially diminished. "
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? CHAPTER XIII
London:
England alone of all the countries in Europe so
far visited on this trip of investigation is genuinely
excited about "The Red Trade Menace" and the
fight against it, though at times partaking of the na-
ture of shadow boxing, is at the forefront of public
consciousness.
Organs of the Conservative press attend to this.
From their columns the Red threat glowers daily.
Hardly a pound of Russian goods can cross a gro-
cery counter without the finger of Tory reproach
pointing at the purchaser. Every boatload of Soviet
wares that touches British land is welcomed with
headlines, "Red Russia's Ruthless Trade War,"
"Moscow's Shock' Dumping," "Grave Peril. " The
"Alexy Rykoff," a Soviet ship, put in at Hays
Wharf and the correspondent of the most violently
anti-Soviet newspaper in England, visiting her, re-
ports in an aggrieved half column, "Cold Reception,"
"No one to Greet Us. "
It is precisely this phase of "Fighting the Red
Trade Menace" that may be described as partaking
of the nature of shadow boxing. For under the influ-
124
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? FIGHTING THE RED TRADE MENACE 125
ence of political expediency this phase of the con-
test is carried out with so little regard for propor-
tion and so little reference to reality that proponents
of Soviet trade are able to counter it with simple and
effective arguments.
In one breath the anti-Soviet Party announces that
the Soviet Government is bankrupt and that it is
purchasing vast amounts of war material. In another
breath it declares the Five-Year Plan an utter failure
and that it will overwhelm the British market with
manufactured goods.
The arrival of two shiploads of Soviet butter
evoked a panic in the Tory press that could hardly
have been exceeded if ships loaded with dynamite
had arrived. It was days before representatives of
the British Butter Trade managed to point out that
whereas Russia before the war was the second largest
exporter of butter in the world, she is now the sixth,
and whereas she exported in 1930 about 10,000 tons,
and that England last year took but one-fiftieth of
her butter imports from Russia, and that when all
was said and done the menace to British dairy
farmers was from Danish, and not Russian, butter.
Quieter, but no less bitterly, goes on the fight over
trade returns as they come in from month to month.
In this fight there have developed two whole schools
of foreign trade students, who in their zeal to prove
different points from the same figures resemble theo-
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? 126 FIGHTING THE RED TRADE MENACE
logians expounding Scripture or Bolsheviks disput-
ing paragraphs from the works of Lenin.
The chief concern of one school is to prove that
trade with the Soviet Union is a delusion and a snare
and more particularly that the resumption of diplo-
matic relations in November, 1929 and the signing
of a temporary commercial agreement in April, 1930,
were followed by a decrease in Soviet orders to
Britain. Furthermore, to prove America has enjoyed
more profit from Soviet trade without diplomatic
recognition than Britain has enjoyed with full rela-
tions.
The chief concern of the other school is to prove
the opposite. Both use the same exegetical methods,
both quote chapter and verse.
The anti-Soviet party cites with satisfaction the
figures of the British Customs House showing that in
the first quarter of 1931 the Soviet Union sold
Britain goods to the value of 6,433,886 pounds ster-
ling and bought from Britain only to the value of
1,425,113 pounds.
This passivity of balance they
exclaim is ruinous.
Was it ruinous, retort Soviet friends, when in 1913
Britain bought from imperial Russia 40,270,539
pounds worth of goods and sold to imperial Russia
only 18,102,683 pounds? And, anyway, point out
Soviet sympathizers, Britain is selling more and more
to the Soviet Union, for in the first quarter of 1929
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? FIGHTING THE RED TRADE MENACE 127
British sales to Russia were 729,344 pounds sterling;
in the first quarter of 1930 they were 1,127,258
pounds and in the first quarter of 1931, 1,425,113
pounds.
Undismayed, the anti-Soviet party calls in a
pundit, former employee of the Soviet trade delega-
tion in London, one of the "new emigration" of those
who, having been ordered to return to Moscow, find it
expedient often for perfectly sound reasons having to
do with their health to refuse to go.
This authority discovers and announces in "The
Statist" of London that in the six months from
October, 1929, to March, 1930, after the resumption
of diplomatic relations, but before the signing of the
temporary trade agreement, Soviet purchases in
England amounted to only 6,308,853 pounds, obvi-
ous proof that trade agreements ruin trade.
But the pundit meets his equal when the editor of
the "Bank for Russian Trade Review" swears on his
oath that the total value of Soviet purchases from
Britain in the whole year, October, 1929, to Septem-
ber, 1930, amounted to ? 15,400,000 sterling, com-
pared to ? 9,346,322 worth of Russian purchases in
the year from October, 1928, to September, 1929.
Obvious proof that trade agreements help trade.
The latest communique from this battle of statis-
tics gives voice to the Emigre authority broadcasting
that "according to absolutely reliable private in-
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? 128 FIGHTING THE RED TRADE MENACE
formation" Soviet purchases for the half-year, Octo-
ber, 1930, to March, 1931, amount to no more than
? 5,000,000 sterling, compared to ? 6,308,853 ster-
ling of purchases in the six months, April, 1930, to
September, 1931.
Speedier foreign trade tabulations would enable
the two schools to carry on their comparisons from
day to day with twenty-four hour reports on the last
shilling's worth of business done. In the present tem-
per of the British business world the tabulations
would find readers. For others, however, this phe-
nomenon is chiefly significant as proof of the intense
interest British business takes today in every chance
to turn a penny, as proof of the predominant impor-
tance given to the trade aspect of British relations
with the Soviet Union, and as confirmation of the
city banker's remark that a few more Soviet orders
in this country would change the complexion of Brit-
ish feelings toward "the Red Trade Menace. "
Meanwhile, behind the political racket and behind
the hairsplitting over trade returns there is go-
ing on a much more significant effort in serious busi-
ness circles to find a solution for the problem of com-
mercial relationships between the Soviet Union and
the non-Soviet world. These circles have already to a
large extent defined their field of action. The best in-
formed among them have ruled out international po-
litical action as hopeless in the present condition of
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? FIGHTING THE RED TRADE MENACE 129
Europe. Even if the apparently impossible should
occur and Briand's scheme for the United States of
Europe were effectuated on the Continent, it is doubt-
ful if Britain would join it, not even to combat the
Soviet Union.
These earnest business circles have ruled out to all
practical intents and purposes the hope of interna-
tional private commercial action except on the part
of these great firms whose international connections
already give them a dominant position in more than
one country. For when the International Chamber of
Commerce held its last congress in Washington it had
been planned to put "Soviet dumping" in a promi-
nent place on the list of topics for debate. But the
German and Italian delegates announced they would
be compelled publicly to oppose measures against
unrestricted trade with the Soviet Union. Since una-
nimity was required to pass a resolution, it was
agreed that rather than risk public defeat it would
be better to leave the subject untouched. So the In-
ternational Chamber of Commerce delegates went
home without a word having been officially uttered on
one of the topics uppermost in their minds. These
British business men, however, have ruled in first of
all careful inquiry into the actual status of "the Red
Trade Menace" as it affects British trade. The As-
sociation of British Chambers of Commerce, meeting
in April last, accepted the following resolution pro-
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? 130 FIGHTING THE RED TRADE MENACE
posed by Sir John Sandeman Allen, M. P. of Liver-
pool:
"That the executive council be requested to study
the effect on the trade and industries of this country
through exports from Russia to the United King-
dom and its important world markets, especially of
manufactured goods which are steadily increasing
as the Five-Year Plan develops and the offering of
such goods for sale at prices which bear no relation
to the true cost of production calculated on a regular
commercial basis and to consider what, if any, steps
can be taken in this country by the Government or
the business world jointly or separately to counteract
this entirely new method of marketing, which mani-
festly constitutes an organized and serious attack on
the commercial system of the whole world. "
It will be noted that the emphasis is on "the method
of marketing" and on manufactured goods. It is con-
ceivable that the investigation now under way may
result in the discovery that Russian exports at this
stage are no menace to a predominantly industrial
population, heavy consumers of agricultural imports.
Or it may be discovered they are a menace, but there
is nothing to be done about it. In either case, no pub-
lic report may be anticipated. It now seems probable,
however, that the association may report that Russo-
British trade relations are unsatisfactory and that
something must be done about it. In any case, Sir
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? FIGHTING THE RED TRADE MENACE 131
John's formulation of the question has the unique
merit of having isolated the practical problem for the
bourgeois world of disunited, disharmonious, com-
petitive, conflicting business interests to reflect upon,
namely, how to meet "the methods of marketing" of
the world's largest industrial and commercial trust,
uniting the resources of one-seventh of the earth's
land surface under the harmonious, purposeful con-
trol of its board of directors, the leaders of the Com-
munist Party of Russia.
Already several adumbrations of solutions have
been proposed as a result of the Association's pre-
liminary investigations. The first and most impor-
tant is sponsored by the London Chamber of Com-
merce, though it must in advance be emphasized that
nothing has yet been arrived at definite enough to
present as the official opinion of that body.
The scheme the London business circles now are
considering, however, is sufficiently developed to be
usefully discussed. It resembles in principle that of
Caillaux and Berenger in France, but without the
French complication of the desire to compensate
owners of the czarist Russian bonds.
The scheme has the double interlocking purpose:
By control over Russian exports to Britain to exer-
cise a check on the sale here at low prices of products
competing with British products and possibly also
with Empire products, and through this control over
r
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? 132 FIGHTING THE RED TRADE MENACE
Russian exports to exercise a coercive stimulation of
Soviet purchases from Britain. In other words, in the
last analysis, to force the Soviet to buy more in
Britain.
It is proposed that either by voluntary consent of
all British firms buying from or selling to the Soviet
Union or by act of Parliament or by an Order in
Council all purchases from the Soviet Union should
be required to be made through a "Clearing House
for Soviet Trade," or whatever it might be called.
The voluntary consent of British sellers to the Soviet
Union might be obtained for such an arrangement,
for it is proposed that the money due to the Soviet
Union from British purchasers of Soviet goods
should not be turned over directly to the Soviet trade
representative, but should be turned into a fund out
of which British sellers to the Soviet Union should
be paid. 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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