108 FIGHTING THE RED TRADE MENACE
from a larger quantity of exports outside a quota
scheme, the Soviet Union is able to continue to in-
crease production and yet dispose advantageously of
its increased production on the home market.
from a larger quantity of exports outside a quota
scheme, the Soviet Union is able to continue to in-
crease production and yet dispose advantageously of
its increased production on the home market.
Soviet Union - 1931 - Fighting the Red Trade Menace
Russian rye was
quoted the same day at exactly the same price as rye
from other countries. This bears out the observation
already made that in the grain market the Soviet
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? FIGHTING THE RED TRADE MENACE 95
does not always or often find it necessary to cut prices
more than a shade. Informed circles here are aware
that there is still a stock of surplus grain in Russia.
How much of this stock from the old crop will be
sold depends on the prospects for the new crop. If
the new crop is favorable, it is anticipated the Soviet
Union will come on the market again with fairly large
quantities. If the new crop is unfavorable, the mar-
ket may be spared further Soviet exports of grain
until the actual harvest in the Summer and Autumn
of 1931 has proved the supplies are sufficient both
for the Russian internal consumption and for ex-
port.
But grain is only one set of items worth pausing
before in these ship manifests from Russia. The mani-
fests, it must be recorded, have been made available
in the reports of the American consular service in
Holland--reports on Dutch imports from the Soviet
Union that for comprehensiveness surpass any piece
of official reporting on Soviet trade yet encountered
on this trip.
Here one reads that the Soviets imported into Hol-
land 853 cases of frozen eggs, 157 cases of egg yolks,
although the Soviet foreign trade delegations abroad
have frequently sought to give the impression that
so long as the acute shortage of eggs for the popu-
lation persisted at home, export of eggs would be
eliminated.
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? 96 FIGHTING THE RED TRADE MENACE
Of particular value for the light it throws on the
attitude of the German Dye Trust toward the Soviet
Union is the list of chemicals Holland imported from
Russia. It may be recalled that the German Dye
Trust, Europe's greatest chemical concern, is ad-
verse to trading with the Soviet Union, although in
that respect it differs not only from the official
policy of the German Government but from the gen-
eral attitude of most of the larger German manu-
facturing concerns. Few of these concerns have been
hit by Soviet competition. Here in the ports of Hol-
land one finds the reason for the German Dye Trust's
unwillingness to keep step with its own Government
on the Russian problem.
The infant Soviet chemical industry has sent to
Holland in the first three months of this year 990
sacks of calcined soda, 180 drums of calcium chlo-
ride, 440 drums of calcium carbide, 3,362 drums of
caustic soda, 19 drums of chromic acid, 340 demi-
johns of formic acid, 325 drums of glycerin,
9,528 bags of magnesite and 3,858 tons of sodium
sulphite.
One surprising item of Soviet exports was clothing.
No specifications were given and one was left in the
dark as to what sort of clothing it could have been
or who could have been the prospective wearers, but
at any rate there is the fact--three bales and 1,262
cases of Soviet clothing exported into Holland.
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? FIGHTING THE RED TRADE MENACE 97
Of other manufactured articles there are items in
plenty, although the total volume is not sufficient to
be evidence that any serious export of manufactured
goods has begun from the Soviet Union to this
country. The list nevertheless is long and various.
According to the ships' manifests Holland took from
the Soviet Union in the first quarter of this year
among other things various quantities of aniline
dyes, billiard balls, blankets, brass ware, brushes,
buttons, cables, carpets, celluloid, cotton textiles,
drugs, embroideries, electric light bulbs, lacquered
goods, lampsteads, finished leather, matches, metal-
ware, paint, paper, pencils, porcelain, rubber ga-
loshes, rubber tires, shawls, shoes, silk, window glass,
plywood and telegraph poles.
But what a really large place Soviet wares have
won recently in the Dutch market can best be judged
by the fact that in the period under consideration
Russia contributed more than two-thirds of all the
wheat Holland imported, 93 per cent of all rye, 73
per cent of all oats, 64 per cent of all lumber, 99 per
cent of all pulpwood, 94 per cent of all manganese
and so on down a long list of products including forty
of the more important Dutch imports, of which on the
average Holland took from the Soviet Union more
than 30 per cent of her total acquirements from
abroad.
A similar study of Soviet exports to Holland in the
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? 98 FIGHTING THE RED TRADE MENACE
year 1930 reveals that during the year the quantity
and value of exports steadily rose, although not so
rapidly as after Belgium and France laid down their
restrictive measures. During these months, however,
when the Soviet grain crop was being rushed to the
market, the Rotterdam market had a busy time of it,
as a large part of the total Soviet grain exports went
through that port. Rotterdam grain merchants are
unanimous in their opinion of the quality of the sales-
manship and the mastery of market tactics displayed
by the Soviet foreign trade monopoly.
According to one grain broker, the Russian or-
ganization for the marketing of their grain was
"elaborate, farflung and farsighted. " The Russians
received in their headquarters, he said, from every
important grain center in the world information
covering supplies both on hand and expected from
crops and other sources, as well as on the market
trend, demand and other factors. They not only
gauged correctly the trend of 1930 prices as strongly
downward, helped by their own knowledge of gener-
ally unsuspected Russian supplies, but they maneu-
vered arrivals of their grain in various market cen-
ters, so as to take the utmost advantage of any local
conditions favoring them.
In view of the fact that the Soviet grain exporters
knew the market was going to decline continuously,
they hastened to sell their own grain as fast as pos-
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? FIGHTING THE RED TRADE MENACE 99
sible. It was reported in Rotterdam that a ship often
would be chartered by the Soviets, loaded and dis-
patched on its way with instructions to deliver the
cargo as indicated later. Sometimes the point of des-
tination was not decided until almost at the last
moment. Sometimes on arrival at the designated port,
instructions were received to deliver the cargo at an-
other port. With its hand on the pulse of the market,
the Soviet Foreign Trade Monopoly made the best
of its advantage and Rotterdam is convinced that
even if the Russians were willing to shade prices to
dispose of their stocks, they probably made more out
of the quantities they had to sell than any other na-
tions' traders divided among many competing firms,
could have made out of the same volume of trade.
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? CHAPTER XI
Rotterdam:
It is impossible to get away from superlatives in
dealing with the Soviet Union and here in Rotter-
dam one is compelled to use a timeworn phrase to
record that the largest grain elevator in Europe--
one of the largest in the world--has just been pre-
empted for Soviet grain.
Another monument to the Five-Year Plan in trade,
this huge structure, whose bins had been intended for
wheat from the Dakotas, Manitoba and the Argen-
tine, today embraces in its capacious hold the prod-
ucts of the North Caucasian plains, the Ural steppes,
the Ukrainian fields of Russia.
It is the sort of building that young Soviet poets
choose for subject of their odes and its dimensions
would be spelled in dithyrambs if Demyan Bedny,
Kremlin troubadour, could stand beneath its looming
bulk. Two million bushels of grain can he within its
walls.
All Holland is proud of the "Graansilo" of Rot-
terdam. Its builders, a Dutch "Maatschappij," ad-
mit it is magnificent. It is worthy of pride. It is mag-
nificent, but the wheat growers of America and
Canada may perhaps be pardoned for contemplating
100
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? FIGHTING THE RED TRADE MENACE 101
its contents with less enthusiasm than does "Export
Chleb," the Soviet grain export company that at one
leap in one year has become the greatest single mer-
chant of cereals on earth.
One is irresistibly reminded in the block-long
shadow of the "Graansilo" of the remark the manager
of one of the principal Soviet state farms made last
autumn. He declared soberly and without excitement:
"It is probable that American wheat farmers will be
compelled to confine their production to domestic
consumption, for Russia is the logical granary of
Europe. "
Rotterdam makes the dull term "commerce" ex-
citing. Its crowded ways are populated by ships of
every nation bearing wares from every portion of the
globe. The sirens of the harbor are never still and
the white plumes of its steamers paint romance on
the sky.
For Rotterdam trade is romance. It means the one
thing that has a universal interest for mankind--a
fight. And today Rotterdam is excited at the entrance
of the new contestant in the age-old fight for the
market, at the entrance of the Soviet Union in the
lists of commerce.
"They are doing a big business here, sir," said a
boy on the docks, pointing at a Soviet steamship.
"Oh, yes, the Russkies 'ave got the grain all right,"
remarked a stevedore as he jerked this thumb in the
-
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? 102 FIGHTING THE RED TRADE MENACE
direction of a fleet of 210 great barges anchored side
by side in the Waalhaven.
So great was the inflow of Soviet grain last au-
tumn, and so large the stock still remaining that when
combined with the quantities that came in from other
countries the grain elevators of this fourth largest
port in the world could not accommodate it all and
millions of bushels had to be stored in barges.
Grain receipts totaled as high as 3,600,000 bushels
a week. Rotterdam stocks at the end of the year were
nearly 30,000,000 bushels and even the dock employ-
ees, chauffeurs and newsboys of Rotterdam today dis-
cuss Russian trade with almost as much avidity as they
do football.
It is a huge game for Holland and her traders are
enjoying it. As one very competent observer formu-
lated the attitude here: "Whether Russian imports
are looked upon favorably or condemned, those in
need of any article generally buy it where it can be
had to advantage and with but very few exceptions
do not care whether it originates from Russia or from
any other country in the world provided the com-
modity meets the requirements.
Holland is simply not aware of any "Red trade
menace" any more than Italy is. It only exists here
in the apprehensions of those firms of other countries
which deal in the export of wares competing with
Soviet wares. The Dutch, however, look upon this
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? FIGHTING THE RED TRADE MENACE 103
competition as an excellent opportunity to get bar-
gains, and inasmuch as in this country consumer in-
terest far outbalances producer interest at least in
those articles which the Soviet Union has to offer it
was not surprising that the feeble protest recently
made in the Dutch Parliament against Russian
"dumping" of grain was answered by the Foreign
Minister:
"While Holland is at liberty to raise its tariffs, this
does not mean that it will do so nor will it now fix any
special tariffs against dumping. "
The Dutch attempt at organizing an anti-
dumping, anti-Soviet campaign met a melancholy
end. Its history deserves to be related as an example
of the sort of surrender that often has taken place
when capitalist groups in Europe, at first inveighing
against Soviet trade, are offered definite immediate
profit. The central office of the "Dutch Agrarian
Committee," an organization of more than 400
farmers' cooperatives, last June took a strong line
on the Russian question and published resolutions to
the effect that no patriotic Dutchman should trade
with the Soviet Union, no upright merchant should
lend his hand to aid the Soviets, no right thinking
citizen should become "an accomplice to Soviet
methods," in the words of the resolution.
Nine months later the Dutch Agrarian Committee,
on behalf of its member cooperatives who were in
-
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? 104 FIGHTING THE RED TRADE MENACE
need of barley for fodder, succumbed to the attractive
prices offered by the Soviet trade representative and
purchased a quantity described by the Dutch press
as "considerable. " At one stroke the Soviet trade
representative had disposed of a "considerable" quan-
tity of barley fodder, had silenced forever the pious
protestations of the Dutch Agrarian Committee and
had made it difficult for similar protests to be taken
seriously by Dutch governmental authorities in the
future. Dutch wits had material for their lampoons
and the prestige of the Soviet trade representative
rose.
So far only two important Dutch interests have
been so nearly touched by Soviet competition that a
movement toward reprisal could have been expected.
There are the sugar and petroleum interests. The
very important Dutch Java Corporation, producing
nearly one-sixth of all the world's supply of cane
sugar, possesses thirty of the ninety votes in the In-
ternational Sugar Council organized in Brussels by
Thomas L. Chadbourne. This council was able to
unite in its attempt to limit the export of sugar all
sugar-producing countries in the world with the ex-
ception of the Dominican Republic, Peru and the
Soviet Union.
It is recalled with deep feeling by the Sugar Coun-
cil that at a previous assembly of sugar magnates the
Soviet Union was represented and that at the moment
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? FIGHTING THE RED TRADE MENACE 105
when the comfortable impression had got about that
even the Soviet Union was about to enter the agree-
ment, news reached the Council that the Soviets in
one transaction had disposed of 100,000 tons of sugar
in India at a price and on terms that were declared
to be completely offside. It was asserted that the Rus-
sians had not only sold at a price considerably be-
low the market, but had agreed that if the market
sank still lower before delivery a sum would be ac-
cepted equivalent to the market price on delivery.
The significant fact in this incident is that India
is the bailiwick of the Java sugar producers, is known
as "the Java market. " Dutch sugar interests were
hit hardest by the Soviet's sales in the Java market
but so far the voice of Dutch sugar interests has not
been publicly audible in Holland itself in any serious
protest against the continuance of trade relations
with the Soviet Union.
The reason for this reluctance on the part of the
injured Dutch sugar interests to launch reprisals
against the Soviet Union in the form of a demand for
an embargo or limitation upon Soviet imports into
Holland is the fact that the Sugar Council still hopes
to bring the Soviets into their agreement. In this hope
they are encouraged by the Soviet's generally favor-
able attitude toward attempts at restrictive schemes
for raising world commodity prices.
It is a mistake to believe that the Soviet Union
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? 106 FIGHTING THE RED TRADE MENACE
is in principle or practice against participation in
world pools for the control of commodity prices.
There are only two conditions indispensable for
Soviet cooperation in any such pool. The first is that
the net return in foreign currency to the Soviet
Union from its exports under a control pool shall be
at least as much as the return would have been from
a larger volume of Soviet exports outside such a pool;
second, that no such pool shall impose restrictions as
to the total Soviet production, be it in wheat, sugar,
oil, timber, or what not.
These two conditions made plain by the Soviet
delegates, both at the international negotiations over
sugar and over wheat, point at the same time to the
conclusion that the Soviet Union is only participat-
ing in such international efforts out of the necessities
of the moment and not from any intention perma-
nently to cooperate with the capitalist world.
Temporary cooperation is justified in Soviet's
eyes at the present juncture of Soviet affairs. For
once the principle had been adopted of building up
the Soviet Union and letting the world revolution
take care of itself until the Soviet Union became in-
dependent, the requirements of the Five-Year Plan
had to come ahead of any objections to helping out
the bourgeois world.
The Five-Year Plan peremptorily demands that
imports be kept up to the Plan level; that means that
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? FIGHTING THE RED TRADE MENACE 107
returns from exports must be retained at the Plan
level. The decline of world commodity prices, how-
ever, by forcing the Soviet Union to export up to 50
per cent more than had been planned in order to ob-
tain the planned level of the returns from exports
has hit the Soviet Union harder than it has any other
country, and for this reason the Soviet Union for the
moment has more to gain than any other country by
a world pool agreement that would permit an equal
return in value from a diminished export quantity.
It may be remarked that this would be the atti-
tude equally of any non-Soviet country. But the
Soviet Union's inexorable refusal to accept any
scheme such as that proposed by the Americans at
the London wheat conference, that by limitation of
production might bring about the desired rise in
prices, differentiates the Soviet Union from all bour-
geois countries. Some bourgeois countries have also
protested against the limitation of production, argu-
ing that the trouble in the world markets is not over-
production but faulty distribution and undercon-
sumption. But these countries are open to argument
on the point, are willing for concessions to give in.
Not the Soviet Union.
For the Soviet Union is in a unique position. Un-
der an export quota scheme that would return for a
smaller quantity of exports an amount of money
equivalent to that which would have been obtained
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?
108 FIGHTING THE RED TRADE MENACE
from a larger quantity of exports outside a quota
scheme, the Soviet Union is able to continue to in-
crease production and yet dispose advantageously of
its increased production on the home market.
And the Soviet Union is the only country in a po-
sition to do this, for it is the only country whose in-
ternal market is not saturated.
At the same time by entering into any export
quota system, the Soviet Union encourages the de-
crease of production in all other countries except the
Soviet Union, for the natural effect of an export
quota system restricting the outlet should ultimately
be to reduce the amount produced in a capitalist
country. And this tendency toward a reduction is
encouraged in most capitalist countries by govern-
mental advice to farmers to diversify crops and limit
the area sown to the great staples. While this is going
on in capitalist countries, however, the Soviet Union,
alone among the principal producing nations, not
only does not discourage increased production but
strives with every ounce of energy to raise produc-
tion to ever higher levels. Enabled during the dura-
tion of the quota system to dispose of its increased
production on the home market, but always able to
take it away again from the home market if desir-
able, the Soviet Union is thus in a position at the
expiration of an export quota agreement to appear
upon the world market with a still larger volume of
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? FIGHTING THE RED TRADE MENACE 109
the commodity in question or, in case of a new ex-
port quota agreement, to claim a larger quota by
reason of its larger supplies. But even if the Soviet
internal market were saturated, it is conceivable that
the same policy would be feasible for the Soviet
Union and only for the Soviet Union. For through its
unique state control of national economy the Soviet
Union would be in a position, if necessary, to store
quantities of commodities against the time when, the
export quota having accomplished its effect of reduc-
ing production in bourgeois countries, Soviet reserves
could be released to the market in a volume and at a
price calculated to achieve the desired goal of obtain-
ing permanent control of the market.
That this is the ultimate Soviet goal for many
commodities is not denied by Soviet spokesmen. Cer-
tainly not in the case of wheat, for the assertion too
frequently has been made by the Soviet authorities
that Russia is the natural source of Europe's supply
of bread. It is considerations like these that move
American, British and Dutch petroleum trusts to in-
creasing apprehension over the growth of the Soviet
oil production. So obvious has this apprehension be-
come that a responsible American oil man, occupied
for many profitable years in observation of the inter-
national oil game, told me that in his opinion the
time was not far distant--he named three years--
when Standard, Shell and Anglo-Persian would sink
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? 110 FIGHTING THE RED TRADE MENACE
their differences and approach the Soviet oil trust
with an offer of a very large loan in return for the
privilege of a monopoly on the distribution of Soviet
oil products in the world. Not, be it observed, that
the capitalist oil trusts would combine their re-
sources to inflame public opinion, lay down embar-
goes, choke off Soviet oil, but that the capitalist oil
trusts, that have in part and on occasion tried these
methods and found them wanting, would approach
the Soviets with gifts to purchase by persuasion what
they could not achieve by force. This was the Ameri-
can oil man's considered opinion. "Now," he said, "I
think the Soviets would take such an offer if the loan
were large enough. In three years, perhaps, they
won't. "
Meanwhile, Europe's chief agitator against the
"Bolshevik menace" is Sir Henri Deterding. Sir
Henri's name is used to frighten naughty children in
Soviet Union. Sir Henri does not deny, indeed af-
firms that his efforts have been extensive, intensive
and well financed to organize international public
opinion against the Soviet Union. Yet in Holland
itself, home of Sir Henri's Royal Dutch Shell Com-
pany, where Sir Henri rates as the country's most
influential figure, Sir Henri has not been able to in-
duce even his own Government to impose the faintest
restriction upon Soviet trade.
For one definition of "dumping" is giving much,
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? FIGHTING THE RED TRADE MENACE 111
and asking little, while Holland's traders relate of
themselves
"In matters of commerce the fault of the Dutch
Is in giving too little and asking too much. "
Whatever the rest of the world may say, think or
do about the Soviet Union, the Russians and Dutch
appear for the moment to be pleasantly contented
with each other's commercial policies.
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? CHAPTER XII
London:
A top hat shone in the dim light of the doorway.
Tall, slim, bemonocled, the owner of the hat strode
in, seated himself on a bench, pulled the topper down
over his eyes. He then extended his long legs, elevated
them to a level with his chin and settled his feet
firmly on the table in front of him.
The man with his feet on the table was flanked on
both sides by other men with their feet on the table.
Most of these men wore black cutaway coats and pin-
striped gray trousers.
On the other side of the table sat another row of
men, also with their feet on the table. They wore
business suits.
At the far end of the table sat a man in a black
gown. He read a paragraph. Sir Austen Chamberlain
thereupon took his feet off the table, his colleagues,
the Tory leaders of the Opposition, took their feet off
the table, Mr. Ramsay MacDonald, Prime Minister
of his Majesty's Government, and all his Ministers on
the other bench took their feet off the table and Sir
Austen, doffing his topper, rose, adjusted his monocle
and drawled, "I naturally regret "
It was the House of Commons about to listen to the
best dressed ex-Foreign Minister in Europe open the
112
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? FIGHTING THE RED TRADE MENACE 113
debate on Russia. In the next three hours in this
oldest, most important Parliament in the Eastern
Hemisphere, where extreme formality is linked with
the intimacy of a club, a listener could detect if not
the precise future of Russo-British relations at least
all the elements that determine that future. He could
establish that if the Labor Party stays in, the United
Kingdom will continue to trade with the Soviet Union,
but if the Conservative Party comes in, the United
Kingdom will also continue to trade with the Soviet
Union, though perhaps with reservations. These possi-
ble reservations deserve more detailed treatment later.
Nevertheless this is the one country so far visited
in Europe where Russia is a major public issue,
where there is an active violent anti-Soviet movement,
an equally active, equally violent pro-Soviet move-
ment, dozens of private organizations to wage the
battle on individual issues and masses of information
and huge masses of misinformation about it all.
Around the Conservative Party group the antago-
nists of the Soviet Union. Around the Labor Party
group the proponents of close cooperation with the
Soviet Union.
The fog of dispute is deepened uniquely here by the
fact that the British alone among European peoples
possess the typically Anglo-Saxon capacity to be
moved by arguments of sentiment to let moral issues
play a genuinely effective role in politics. The British
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? 114 FIGHTING THE RED TRADE MENACE
people have been moved to a degree by the Soviets'
treatment of the church. They have been moved to
another degree by the campaign against "slave la-
bor" in Russia. Neither of these issues interests the
Continent at all. Here they play a role and Tory
spokesmen were delighted when they coined the
phrase, "Slave Labor Party" to fling at MacDonald.
These elements cannot be overlooked, yet the rec-
ord of the House of Commons puts the emphasis of
British interest in their relations to Russia on a dif-
ferent note. The House has just refused to pass a bill
to prohibit the import of the products of forced la-
bor, and Winston Churchill, most brilliant, most bit-
ter and most Chauvinist British arch-enemy of the
Bolsheviks, despite his indignation at Communist
propaganda in India, despite his profound sympathy
for "Russian conscripts," concluded his contribution
to this debate in the House with an argument that
boiled down meant "let us break diplomatic relations
with the Soviet Union, for if we do so, we shall re-
ceive more Soviet orders. America proves it. "
To any one interested in the present condition and
future prospects of the world's relations with the
Soviet Union this debate in Commons must be of in-
terest.
For in all Europe Great Britain is the only country
where even a threat to Soviet economic expansion can
be detected and this threat could conceivably have
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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.
quoted the same day at exactly the same price as rye
from other countries. This bears out the observation
already made that in the grain market the Soviet
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? FIGHTING THE RED TRADE MENACE 95
does not always or often find it necessary to cut prices
more than a shade. Informed circles here are aware
that there is still a stock of surplus grain in Russia.
How much of this stock from the old crop will be
sold depends on the prospects for the new crop. If
the new crop is favorable, it is anticipated the Soviet
Union will come on the market again with fairly large
quantities. If the new crop is unfavorable, the mar-
ket may be spared further Soviet exports of grain
until the actual harvest in the Summer and Autumn
of 1931 has proved the supplies are sufficient both
for the Russian internal consumption and for ex-
port.
But grain is only one set of items worth pausing
before in these ship manifests from Russia. The mani-
fests, it must be recorded, have been made available
in the reports of the American consular service in
Holland--reports on Dutch imports from the Soviet
Union that for comprehensiveness surpass any piece
of official reporting on Soviet trade yet encountered
on this trip.
Here one reads that the Soviets imported into Hol-
land 853 cases of frozen eggs, 157 cases of egg yolks,
although the Soviet foreign trade delegations abroad
have frequently sought to give the impression that
so long as the acute shortage of eggs for the popu-
lation persisted at home, export of eggs would be
eliminated.
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? 96 FIGHTING THE RED TRADE MENACE
Of particular value for the light it throws on the
attitude of the German Dye Trust toward the Soviet
Union is the list of chemicals Holland imported from
Russia. It may be recalled that the German Dye
Trust, Europe's greatest chemical concern, is ad-
verse to trading with the Soviet Union, although in
that respect it differs not only from the official
policy of the German Government but from the gen-
eral attitude of most of the larger German manu-
facturing concerns. Few of these concerns have been
hit by Soviet competition. Here in the ports of Hol-
land one finds the reason for the German Dye Trust's
unwillingness to keep step with its own Government
on the Russian problem.
The infant Soviet chemical industry has sent to
Holland in the first three months of this year 990
sacks of calcined soda, 180 drums of calcium chlo-
ride, 440 drums of calcium carbide, 3,362 drums of
caustic soda, 19 drums of chromic acid, 340 demi-
johns of formic acid, 325 drums of glycerin,
9,528 bags of magnesite and 3,858 tons of sodium
sulphite.
One surprising item of Soviet exports was clothing.
No specifications were given and one was left in the
dark as to what sort of clothing it could have been
or who could have been the prospective wearers, but
at any rate there is the fact--three bales and 1,262
cases of Soviet clothing exported into Holland.
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? FIGHTING THE RED TRADE MENACE 97
Of other manufactured articles there are items in
plenty, although the total volume is not sufficient to
be evidence that any serious export of manufactured
goods has begun from the Soviet Union to this
country. The list nevertheless is long and various.
According to the ships' manifests Holland took from
the Soviet Union in the first quarter of this year
among other things various quantities of aniline
dyes, billiard balls, blankets, brass ware, brushes,
buttons, cables, carpets, celluloid, cotton textiles,
drugs, embroideries, electric light bulbs, lacquered
goods, lampsteads, finished leather, matches, metal-
ware, paint, paper, pencils, porcelain, rubber ga-
loshes, rubber tires, shawls, shoes, silk, window glass,
plywood and telegraph poles.
But what a really large place Soviet wares have
won recently in the Dutch market can best be judged
by the fact that in the period under consideration
Russia contributed more than two-thirds of all the
wheat Holland imported, 93 per cent of all rye, 73
per cent of all oats, 64 per cent of all lumber, 99 per
cent of all pulpwood, 94 per cent of all manganese
and so on down a long list of products including forty
of the more important Dutch imports, of which on the
average Holland took from the Soviet Union more
than 30 per cent of her total acquirements from
abroad.
A similar study of Soviet exports to Holland in the
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? 98 FIGHTING THE RED TRADE MENACE
year 1930 reveals that during the year the quantity
and value of exports steadily rose, although not so
rapidly as after Belgium and France laid down their
restrictive measures. During these months, however,
when the Soviet grain crop was being rushed to the
market, the Rotterdam market had a busy time of it,
as a large part of the total Soviet grain exports went
through that port. Rotterdam grain merchants are
unanimous in their opinion of the quality of the sales-
manship and the mastery of market tactics displayed
by the Soviet foreign trade monopoly.
According to one grain broker, the Russian or-
ganization for the marketing of their grain was
"elaborate, farflung and farsighted. " The Russians
received in their headquarters, he said, from every
important grain center in the world information
covering supplies both on hand and expected from
crops and other sources, as well as on the market
trend, demand and other factors. They not only
gauged correctly the trend of 1930 prices as strongly
downward, helped by their own knowledge of gener-
ally unsuspected Russian supplies, but they maneu-
vered arrivals of their grain in various market cen-
ters, so as to take the utmost advantage of any local
conditions favoring them.
In view of the fact that the Soviet grain exporters
knew the market was going to decline continuously,
they hastened to sell their own grain as fast as pos-
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? FIGHTING THE RED TRADE MENACE 99
sible. It was reported in Rotterdam that a ship often
would be chartered by the Soviets, loaded and dis-
patched on its way with instructions to deliver the
cargo as indicated later. Sometimes the point of des-
tination was not decided until almost at the last
moment. Sometimes on arrival at the designated port,
instructions were received to deliver the cargo at an-
other port. With its hand on the pulse of the market,
the Soviet Foreign Trade Monopoly made the best
of its advantage and Rotterdam is convinced that
even if the Russians were willing to shade prices to
dispose of their stocks, they probably made more out
of the quantities they had to sell than any other na-
tions' traders divided among many competing firms,
could have made out of the same volume of trade.
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? CHAPTER XI
Rotterdam:
It is impossible to get away from superlatives in
dealing with the Soviet Union and here in Rotter-
dam one is compelled to use a timeworn phrase to
record that the largest grain elevator in Europe--
one of the largest in the world--has just been pre-
empted for Soviet grain.
Another monument to the Five-Year Plan in trade,
this huge structure, whose bins had been intended for
wheat from the Dakotas, Manitoba and the Argen-
tine, today embraces in its capacious hold the prod-
ucts of the North Caucasian plains, the Ural steppes,
the Ukrainian fields of Russia.
It is the sort of building that young Soviet poets
choose for subject of their odes and its dimensions
would be spelled in dithyrambs if Demyan Bedny,
Kremlin troubadour, could stand beneath its looming
bulk. Two million bushels of grain can he within its
walls.
All Holland is proud of the "Graansilo" of Rot-
terdam. Its builders, a Dutch "Maatschappij," ad-
mit it is magnificent. It is worthy of pride. It is mag-
nificent, but the wheat growers of America and
Canada may perhaps be pardoned for contemplating
100
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? FIGHTING THE RED TRADE MENACE 101
its contents with less enthusiasm than does "Export
Chleb," the Soviet grain export company that at one
leap in one year has become the greatest single mer-
chant of cereals on earth.
One is irresistibly reminded in the block-long
shadow of the "Graansilo" of the remark the manager
of one of the principal Soviet state farms made last
autumn. He declared soberly and without excitement:
"It is probable that American wheat farmers will be
compelled to confine their production to domestic
consumption, for Russia is the logical granary of
Europe. "
Rotterdam makes the dull term "commerce" ex-
citing. Its crowded ways are populated by ships of
every nation bearing wares from every portion of the
globe. The sirens of the harbor are never still and
the white plumes of its steamers paint romance on
the sky.
For Rotterdam trade is romance. It means the one
thing that has a universal interest for mankind--a
fight. And today Rotterdam is excited at the entrance
of the new contestant in the age-old fight for the
market, at the entrance of the Soviet Union in the
lists of commerce.
"They are doing a big business here, sir," said a
boy on the docks, pointing at a Soviet steamship.
"Oh, yes, the Russkies 'ave got the grain all right,"
remarked a stevedore as he jerked this thumb in the
-
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? 102 FIGHTING THE RED TRADE MENACE
direction of a fleet of 210 great barges anchored side
by side in the Waalhaven.
So great was the inflow of Soviet grain last au-
tumn, and so large the stock still remaining that when
combined with the quantities that came in from other
countries the grain elevators of this fourth largest
port in the world could not accommodate it all and
millions of bushels had to be stored in barges.
Grain receipts totaled as high as 3,600,000 bushels
a week. Rotterdam stocks at the end of the year were
nearly 30,000,000 bushels and even the dock employ-
ees, chauffeurs and newsboys of Rotterdam today dis-
cuss Russian trade with almost as much avidity as they
do football.
It is a huge game for Holland and her traders are
enjoying it. As one very competent observer formu-
lated the attitude here: "Whether Russian imports
are looked upon favorably or condemned, those in
need of any article generally buy it where it can be
had to advantage and with but very few exceptions
do not care whether it originates from Russia or from
any other country in the world provided the com-
modity meets the requirements.
Holland is simply not aware of any "Red trade
menace" any more than Italy is. It only exists here
in the apprehensions of those firms of other countries
which deal in the export of wares competing with
Soviet wares. The Dutch, however, look upon this
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? FIGHTING THE RED TRADE MENACE 103
competition as an excellent opportunity to get bar-
gains, and inasmuch as in this country consumer in-
terest far outbalances producer interest at least in
those articles which the Soviet Union has to offer it
was not surprising that the feeble protest recently
made in the Dutch Parliament against Russian
"dumping" of grain was answered by the Foreign
Minister:
"While Holland is at liberty to raise its tariffs, this
does not mean that it will do so nor will it now fix any
special tariffs against dumping. "
The Dutch attempt at organizing an anti-
dumping, anti-Soviet campaign met a melancholy
end. Its history deserves to be related as an example
of the sort of surrender that often has taken place
when capitalist groups in Europe, at first inveighing
against Soviet trade, are offered definite immediate
profit. The central office of the "Dutch Agrarian
Committee," an organization of more than 400
farmers' cooperatives, last June took a strong line
on the Russian question and published resolutions to
the effect that no patriotic Dutchman should trade
with the Soviet Union, no upright merchant should
lend his hand to aid the Soviets, no right thinking
citizen should become "an accomplice to Soviet
methods," in the words of the resolution.
Nine months later the Dutch Agrarian Committee,
on behalf of its member cooperatives who were in
-
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? 104 FIGHTING THE RED TRADE MENACE
need of barley for fodder, succumbed to the attractive
prices offered by the Soviet trade representative and
purchased a quantity described by the Dutch press
as "considerable. " At one stroke the Soviet trade
representative had disposed of a "considerable" quan-
tity of barley fodder, had silenced forever the pious
protestations of the Dutch Agrarian Committee and
had made it difficult for similar protests to be taken
seriously by Dutch governmental authorities in the
future. Dutch wits had material for their lampoons
and the prestige of the Soviet trade representative
rose.
So far only two important Dutch interests have
been so nearly touched by Soviet competition that a
movement toward reprisal could have been expected.
There are the sugar and petroleum interests. The
very important Dutch Java Corporation, producing
nearly one-sixth of all the world's supply of cane
sugar, possesses thirty of the ninety votes in the In-
ternational Sugar Council organized in Brussels by
Thomas L. Chadbourne. This council was able to
unite in its attempt to limit the export of sugar all
sugar-producing countries in the world with the ex-
ception of the Dominican Republic, Peru and the
Soviet Union.
It is recalled with deep feeling by the Sugar Coun-
cil that at a previous assembly of sugar magnates the
Soviet Union was represented and that at the moment
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? FIGHTING THE RED TRADE MENACE 105
when the comfortable impression had got about that
even the Soviet Union was about to enter the agree-
ment, news reached the Council that the Soviets in
one transaction had disposed of 100,000 tons of sugar
in India at a price and on terms that were declared
to be completely offside. It was asserted that the Rus-
sians had not only sold at a price considerably be-
low the market, but had agreed that if the market
sank still lower before delivery a sum would be ac-
cepted equivalent to the market price on delivery.
The significant fact in this incident is that India
is the bailiwick of the Java sugar producers, is known
as "the Java market. " Dutch sugar interests were
hit hardest by the Soviet's sales in the Java market
but so far the voice of Dutch sugar interests has not
been publicly audible in Holland itself in any serious
protest against the continuance of trade relations
with the Soviet Union.
The reason for this reluctance on the part of the
injured Dutch sugar interests to launch reprisals
against the Soviet Union in the form of a demand for
an embargo or limitation upon Soviet imports into
Holland is the fact that the Sugar Council still hopes
to bring the Soviets into their agreement. In this hope
they are encouraged by the Soviet's generally favor-
able attitude toward attempts at restrictive schemes
for raising world commodity prices.
It is a mistake to believe that the Soviet Union
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? 106 FIGHTING THE RED TRADE MENACE
is in principle or practice against participation in
world pools for the control of commodity prices.
There are only two conditions indispensable for
Soviet cooperation in any such pool. The first is that
the net return in foreign currency to the Soviet
Union from its exports under a control pool shall be
at least as much as the return would have been from
a larger volume of Soviet exports outside such a pool;
second, that no such pool shall impose restrictions as
to the total Soviet production, be it in wheat, sugar,
oil, timber, or what not.
These two conditions made plain by the Soviet
delegates, both at the international negotiations over
sugar and over wheat, point at the same time to the
conclusion that the Soviet Union is only participat-
ing in such international efforts out of the necessities
of the moment and not from any intention perma-
nently to cooperate with the capitalist world.
Temporary cooperation is justified in Soviet's
eyes at the present juncture of Soviet affairs. For
once the principle had been adopted of building up
the Soviet Union and letting the world revolution
take care of itself until the Soviet Union became in-
dependent, the requirements of the Five-Year Plan
had to come ahead of any objections to helping out
the bourgeois world.
The Five-Year Plan peremptorily demands that
imports be kept up to the Plan level; that means that
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? FIGHTING THE RED TRADE MENACE 107
returns from exports must be retained at the Plan
level. The decline of world commodity prices, how-
ever, by forcing the Soviet Union to export up to 50
per cent more than had been planned in order to ob-
tain the planned level of the returns from exports
has hit the Soviet Union harder than it has any other
country, and for this reason the Soviet Union for the
moment has more to gain than any other country by
a world pool agreement that would permit an equal
return in value from a diminished export quantity.
It may be remarked that this would be the atti-
tude equally of any non-Soviet country. But the
Soviet Union's inexorable refusal to accept any
scheme such as that proposed by the Americans at
the London wheat conference, that by limitation of
production might bring about the desired rise in
prices, differentiates the Soviet Union from all bour-
geois countries. Some bourgeois countries have also
protested against the limitation of production, argu-
ing that the trouble in the world markets is not over-
production but faulty distribution and undercon-
sumption. But these countries are open to argument
on the point, are willing for concessions to give in.
Not the Soviet Union.
For the Soviet Union is in a unique position. Un-
der an export quota scheme that would return for a
smaller quantity of exports an amount of money
equivalent to that which would have been obtained
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?
108 FIGHTING THE RED TRADE MENACE
from a larger quantity of exports outside a quota
scheme, the Soviet Union is able to continue to in-
crease production and yet dispose advantageously of
its increased production on the home market.
And the Soviet Union is the only country in a po-
sition to do this, for it is the only country whose in-
ternal market is not saturated.
At the same time by entering into any export
quota system, the Soviet Union encourages the de-
crease of production in all other countries except the
Soviet Union, for the natural effect of an export
quota system restricting the outlet should ultimately
be to reduce the amount produced in a capitalist
country. And this tendency toward a reduction is
encouraged in most capitalist countries by govern-
mental advice to farmers to diversify crops and limit
the area sown to the great staples. While this is going
on in capitalist countries, however, the Soviet Union,
alone among the principal producing nations, not
only does not discourage increased production but
strives with every ounce of energy to raise produc-
tion to ever higher levels. Enabled during the dura-
tion of the quota system to dispose of its increased
production on the home market, but always able to
take it away again from the home market if desir-
able, the Soviet Union is thus in a position at the
expiration of an export quota agreement to appear
upon the world market with a still larger volume of
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? FIGHTING THE RED TRADE MENACE 109
the commodity in question or, in case of a new ex-
port quota agreement, to claim a larger quota by
reason of its larger supplies. But even if the Soviet
internal market were saturated, it is conceivable that
the same policy would be feasible for the Soviet
Union and only for the Soviet Union. For through its
unique state control of national economy the Soviet
Union would be in a position, if necessary, to store
quantities of commodities against the time when, the
export quota having accomplished its effect of reduc-
ing production in bourgeois countries, Soviet reserves
could be released to the market in a volume and at a
price calculated to achieve the desired goal of obtain-
ing permanent control of the market.
That this is the ultimate Soviet goal for many
commodities is not denied by Soviet spokesmen. Cer-
tainly not in the case of wheat, for the assertion too
frequently has been made by the Soviet authorities
that Russia is the natural source of Europe's supply
of bread. It is considerations like these that move
American, British and Dutch petroleum trusts to in-
creasing apprehension over the growth of the Soviet
oil production. So obvious has this apprehension be-
come that a responsible American oil man, occupied
for many profitable years in observation of the inter-
national oil game, told me that in his opinion the
time was not far distant--he named three years--
when Standard, Shell and Anglo-Persian would sink
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? 110 FIGHTING THE RED TRADE MENACE
their differences and approach the Soviet oil trust
with an offer of a very large loan in return for the
privilege of a monopoly on the distribution of Soviet
oil products in the world. Not, be it observed, that
the capitalist oil trusts would combine their re-
sources to inflame public opinion, lay down embar-
goes, choke off Soviet oil, but that the capitalist oil
trusts, that have in part and on occasion tried these
methods and found them wanting, would approach
the Soviets with gifts to purchase by persuasion what
they could not achieve by force. This was the Ameri-
can oil man's considered opinion. "Now," he said, "I
think the Soviets would take such an offer if the loan
were large enough. In three years, perhaps, they
won't. "
Meanwhile, Europe's chief agitator against the
"Bolshevik menace" is Sir Henri Deterding. Sir
Henri's name is used to frighten naughty children in
Soviet Union. Sir Henri does not deny, indeed af-
firms that his efforts have been extensive, intensive
and well financed to organize international public
opinion against the Soviet Union. Yet in Holland
itself, home of Sir Henri's Royal Dutch Shell Com-
pany, where Sir Henri rates as the country's most
influential figure, Sir Henri has not been able to in-
duce even his own Government to impose the faintest
restriction upon Soviet trade.
For one definition of "dumping" is giving much,
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? FIGHTING THE RED TRADE MENACE 111
and asking little, while Holland's traders relate of
themselves
"In matters of commerce the fault of the Dutch
Is in giving too little and asking too much. "
Whatever the rest of the world may say, think or
do about the Soviet Union, the Russians and Dutch
appear for the moment to be pleasantly contented
with each other's commercial policies.
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? CHAPTER XII
London:
A top hat shone in the dim light of the doorway.
Tall, slim, bemonocled, the owner of the hat strode
in, seated himself on a bench, pulled the topper down
over his eyes. He then extended his long legs, elevated
them to a level with his chin and settled his feet
firmly on the table in front of him.
The man with his feet on the table was flanked on
both sides by other men with their feet on the table.
Most of these men wore black cutaway coats and pin-
striped gray trousers.
On the other side of the table sat another row of
men, also with their feet on the table. They wore
business suits.
At the far end of the table sat a man in a black
gown. He read a paragraph. Sir Austen Chamberlain
thereupon took his feet off the table, his colleagues,
the Tory leaders of the Opposition, took their feet off
the table, Mr. Ramsay MacDonald, Prime Minister
of his Majesty's Government, and all his Ministers on
the other bench took their feet off the table and Sir
Austen, doffing his topper, rose, adjusted his monocle
and drawled, "I naturally regret "
It was the House of Commons about to listen to the
best dressed ex-Foreign Minister in Europe open the
112
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? FIGHTING THE RED TRADE MENACE 113
debate on Russia. In the next three hours in this
oldest, most important Parliament in the Eastern
Hemisphere, where extreme formality is linked with
the intimacy of a club, a listener could detect if not
the precise future of Russo-British relations at least
all the elements that determine that future. He could
establish that if the Labor Party stays in, the United
Kingdom will continue to trade with the Soviet Union,
but if the Conservative Party comes in, the United
Kingdom will also continue to trade with the Soviet
Union, though perhaps with reservations. These possi-
ble reservations deserve more detailed treatment later.
Nevertheless this is the one country so far visited
in Europe where Russia is a major public issue,
where there is an active violent anti-Soviet movement,
an equally active, equally violent pro-Soviet move-
ment, dozens of private organizations to wage the
battle on individual issues and masses of information
and huge masses of misinformation about it all.
Around the Conservative Party group the antago-
nists of the Soviet Union. Around the Labor Party
group the proponents of close cooperation with the
Soviet Union.
The fog of dispute is deepened uniquely here by the
fact that the British alone among European peoples
possess the typically Anglo-Saxon capacity to be
moved by arguments of sentiment to let moral issues
play a genuinely effective role in politics. The British
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? 114 FIGHTING THE RED TRADE MENACE
people have been moved to a degree by the Soviets'
treatment of the church. They have been moved to
another degree by the campaign against "slave la-
bor" in Russia. Neither of these issues interests the
Continent at all. Here they play a role and Tory
spokesmen were delighted when they coined the
phrase, "Slave Labor Party" to fling at MacDonald.
These elements cannot be overlooked, yet the rec-
ord of the House of Commons puts the emphasis of
British interest in their relations to Russia on a dif-
ferent note. The House has just refused to pass a bill
to prohibit the import of the products of forced la-
bor, and Winston Churchill, most brilliant, most bit-
ter and most Chauvinist British arch-enemy of the
Bolsheviks, despite his indignation at Communist
propaganda in India, despite his profound sympathy
for "Russian conscripts," concluded his contribution
to this debate in the House with an argument that
boiled down meant "let us break diplomatic relations
with the Soviet Union, for if we do so, we shall re-
ceive more Soviet orders. America proves it. "
To any one interested in the present condition and
future prospects of the world's relations with the
Soviet Union this debate in Commons must be of in-
terest.
For in all Europe Great Britain is the only country
where even a threat to Soviet economic expansion can
be detected and this threat could conceivably have
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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.
