172 FIGHTING THE RED TRADE MENACE
of Italy and Germany, guarantees up to 60 per cent
of the face value of the Soviet bills of exchange
drawn to favor British sellers.
of Italy and Germany, guarantees up to 60 per cent
of the face value of the Soviet bills of exchange
drawn to favor British sellers.
Soviet Union - 1931 - Fighting the Red Trade Menace
b3292264 Public Domain, Google-digitized / http://www.
hathitrust.
org/access_use#pd-google
? FIGHTING THE RED TRADE MENACE 159
feelings than those of mild astonishment they may
evoke in an outsider.
They help to explain why the bewilderment that
is shared by all Manchester is bitter bewilderment
on the part of textile manufacturers when they hear
the explanation that the Five-Year Plan does not
necessarily mean that the new textile machinery is to
be used to make textiles just now for the Russian
population, but that the new machinery will make
cloth to sell abroad to buy more machinery to make
more cloth to sell abroad and so on, until Russia has
all the textile machinery she can possibly use for
home consumption or for export. Manchester's
Chamber of Commerce president, even as late as
July, 1930 expressed the optimistic sentiment that,
"As Russia increases in prosperity, and we hope it
may do so rapidly, it ought to be able not only to
take our machinery but to have room also for con-
siderable quantities of our textiles. " Slowly but
finally Manchester is coming to realize that every
textile machine sent to Russia means just so many
less bolts of cloth that Russia will have to import.
Meanwhile, it may have occurred to some ob-
servers to wonder why the Manchester Chamber of
Commerce should feel so closely touched by competi-
tion that is as yet mostly a threat and especially after
a year when Soviet textile exports actually, if
slightly, decreased. A partial answer may be found
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? 160 FIGHTING THE RED TRADE MENACE
in the report of the British customs authorities that,
whereas in the first quarter of 1929, 2,504 tons of
textile machinery were shipped to the Soviet Union,
in the first quarter of 1930 only 396 tons were
shipped. Decreased Soviet orders equal increased
British bitterness, appears to be the equation that
holds true in Manchester as well as in the rest of Eng-
land.
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? CHAPTER XVI
Liverpool:
"Like a cloud the size of a man's hand" Soviet ex-
ports creep up on the horizon of world trade. For
grain growers all over the world it is a cloud that
already covers a considerable portion of the heavens.
For American cotton planters it is a cloud that can
best be observed from latitude 53 degrees 24 minutes
5 seconds North and longitude 3 degrees 4 minutes
20 seconds West, namely Liverpool.
It may be the general world depression that has
caused a major portion of the uneasiness among
American cotton agents in this city, but the 163,000
bales of Soviet cotton imported into Britain this year
at prices averaging $3 a bale less than the same
quality of American cotton certainly did nothing to
decrease that uneasiness.
Liverpool itself is unconcerned. Cotton is cotton
to Liverpool and commissions on the sale of Soviet
cotton are just as high as commissions on the sale of
American cotton. In fact, this is another instance
where, search as one will, one can find not even a
chemical trace of excitement on the part of European
nations over the Soviet export of goods competing
not with their own but with American products. One
161
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? 162 FIGHTING THE RED TRADE MENACE
hundred and sixty-three thousand bales of cotton is
not a very large amount compared to the American
sales in Liverpool of 847,000 bales from August to
March, especially when one must take into considera-
tion that the Russian bale weighs but 375 pounds
against the American bale's 500 pounds. Neverthe-
less, these 163,000 bales have attracted more atten-
tion in Liverpool than all the rest of the 1,575,000
bales of cotton imports in this greatest cotton im-
porting port in the world, and to Americans they
came at an unusually inconvenient time when, for the
first time in history, sales of non-American growths
exceeded total American sales.
Attention on the part of Liverpool in general was
coolly professional. The city's experts established
that Soviet cotton, known to the trade as "Turkes-
tan," was incomprehensibly "of bread and butter
Texas type, but of Memphis character," meaning
merely that it was like middling to good middling
American with staple up to one and one-eighth inch,
whitish, clean and in good condition.
Attention on the part of the Lancashire mills was
less cool, ever warm. Under present day conditions
here every penny shaved is a penny saved and mill
owners are seeking economies as never before. They
snapped up the Soviet cotton. None of them adver-
tises nor willingly lets it be known that they are us-
ing Soviet cotton, for Bolshevik is still a term of
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? FIGHTING THE RED TRADE MENACE 163
reproach in this part of the world, but nevertheless
they bought it. Furthermore, they indicated they
would be glad to get more. And when some remark
was passed in Liverpool cotton circles as to the ad-
visability of cutting loose from old business friends
for the sake of new ones, an anonymous contributor
to the Liverpool "Post and Mercury" in a letter to
the editor avowed: "Spinners who have found out
the merits of this cotton are buying it from Liver-
pool brokers and merchants in the usual way. There
is no reason why there should be a prejudice against
this cotton any more than there should be against
Peruvian, Argentinian or American. "
American cotton men here reluctantly admit the
argument and declare that so far they have not been
hurt perceptibly but observe with some anxiety that
if, as seems quite possible, Soviet cotton comes in
during the next years in greater quantities, it is
going to meet no hindrance in the Liverpool trade
despite all of Britain's grumbling about the Soviets,
and that if it continues to be offered at prices averag-
ing 1 point under the American prices it will be
bought in preference to the American cotton.
American cotton men would not perhaps have dis-
played even what little anxiety they do permit to be
displayed about Soviet cotton if they were not
acquainted with so many grain men in this cotton
and grainman's town. It is recalled that only a little
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? 164 FIGHTING THE RED TRADE MENACE
while ago the world was convinced that Russia under
Soviet rule would be lucky if she could produce
enough grain to feed herself. Now, after the Soviet
Union shipped to this country alone more wheat, for
example, in the last quarter of 1930 than all other
wheat exporting countries together with the sole ex-
ception of Canada--shipped to Britain in the entire
year, cotton men are not so inclined to discount en-
tirely the statements of the president of the Soviet
Cotton Syndicate. These prophecies, made more than
a year ago, were to the effect that the Soviet Union
was going to supply not only all its raw cotton needs
previously supplied by America at the rate of several
hundred thousand bales yearly, but was going to be
in the export field before the end of the Five-Year
Plan. Ignored at the time, these statements have now
been taken out of the file and reexamined by Liver-
pool cotton men. They observed that the president of
the Soviet Cotton Syndicate estimated Russia's 1931
crop would be more than double the 1930 crop, or
3,000,000 bales more than last year. They observed
that Russia's cotton crop in 1921 was 57,000 bales,
in 1930 was 2,500,000. The question of how much
she can export in 1931 is one that nobody here will
risk answering.
But one significant fact deserves to be recorded.
No cotton men, American or otherwise, think the
Soviet's export of 163,000 bales is a mere gesture.
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? FIGHTING THE RED TRADE MENACE 165
Some had been inclined to believe that exports had
been made from Turkestan over the Black Sea in
order to save the long rail haul to the mills of Central
Russia and that these exports would be compensated
by imports. But the Soviet Union in the 1930 season
bought only 6,000 bales via the British market and
in the first four months of 1931 imported none, ac-
cording to the Liverpool Chamber of Commerce. All
her cotton exports came out of Leningrad and Mur-
mansk, still further from Turkestan than the Soviet
milling centers. Liverpool trade takes Soviet exports
seriously.
They think that the President of the Soviet Cot-
ton Syndicate meant what he said. Liverpool hopes
he did. Liverpool is like every great port yet visited
on this trip. The more Soviet trade the more harbor
fees, the more stevedore wages, the more warehouse
rent. These are in the main Liverpool's reflections on
the "Red Trade Menace," and if it were not for
echoes from the Tory press that occasionally pene-
trated Liverpool counting rooms, the attitude of this
city probably would be no different from that of
Rotterdam. As it is, on a rough estimate about 75
per cent of Soviet imports into Britain come through
this port and it is all welcome.
Through here came last year most of nearly
3,000,000 loads of wood and timber that made
Britain one of the Soviet's best lumber markets. It
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? 166 FIGHTING THE RED TRADE MENACE
was one of the best, but nevertheless, it contained
seeds of anxiety for the Soviet Union, and the history
of the Central Softwood Buying Corporation's fa-
mous $36,000,000 contract to buy all Russian soft-
wood imported into Britain this year is the history of
a business development not nearly so agreeable to the
Soviet Union as it appeared when announced. The
size of the contract, the fact the Soviet Union was go-
ing to receive such a large sum of money, the fact
that Britain took such a large consignment of Soviet
timber at a moment when American timber men were
complaining most about Soviet competition obscured
for the time being the really important feature of
that transaction.
For its chief significance was that for the first time
in the history of the Soviet Foreign Trade Mo-
nopoly, at least for the first time since it became
strong enough to stand upright, that Monopoly was
beaten by a syndicate of bourgeois business men. It
has been the principle of the Soviet Foreign Trade
Monopoly not to deal with bourgeois syndicates.
There is, of course, no objection to dealing with big
firms. The Soviet prefer big firms, since the bigger
the firm, usually, the lower the prices for goods the
Soviet has to buy and the more prompt the payment
on the goods the Soviet has to sell. But the Foreign
Trade Monopoly always made a point of having at
least two firms bidding against each other.
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? FIGHTING THE RED TRADE MENACE 167
British lumber men for several years had watched
the operations of the Soviet Foreign Trade Mo-
nopoly, noted its superiority as an instrument of
commerce, agreed among themselves to counter it,
and last autumn to Russia's surprise they suddenly
presented a united front of firms representing four-
fifths of the entire British lumber purchasing ca-
pacity. Seven of the largest British firms pledged
themselves not to buy a stick of Russian timber
separately, but to buy together and not to buy at all
unless the Soviets gave their syndicate a monopoly on
Russian softwood, and not to buy more than a maxi-
mum of 600,000 standards, or 100,000 to 200,000
less than the Russians had expected to export to
Britain this year. The price terms they offered were
not so bad, but the Soviet trade representatives here
were extremely reluctant to enter into a contract to
deliver only so much and no more to the British
market. And most reluctant were they to permit the
precedent of a bourgeois business combine operating
successfully against or with the Foreign Trade Mo-
nopoly.
The Russians held out as long as they could, used
all the arts of trade cajolery on the members of the
syndicate to try to pry individual firms loose, but
to no avail. Finally, when it become evident that if
the Soviets did not deal with the British Softwood
Buying Corporation, Soviet sales to the one-fifth of
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? 168 FIGHTING THE RED TRADE MENACE
British lumber buying capacity outside of that
corporation would total only a fraction of Soviet
planned sales, the Russians succumbed and signed
the contract. The Swedes and Finns set up a violent
protest and sent a petition to all the members of
Parliament because the contract completely excluded
them from even a chance at competition, and its
effects still are being felt in Scandinavia. Sympathy
here, though, with the Scandinavians, is much less
than one would expect since the British insist upon
recalling that when the war shut Russian timber out
of the market Scandinavian wood skyrocketed in
price. For those fat years, say the British, the
Scandinavians must now suffer a few lean ones.
The future of the Russo-British timber trade, con-
sidered apart from possible change in general rela-
tions of the two governments, appears certain to
this extent that through the unique example of busi-
ness loyalty, dictated though it is by self interest,
British timber dealers will be able to negotiate again
with the Foreign Trade Monopoly on even or better
than even terms.
In softwood America does not compete in this
market to any considerable extent with the Russians,
but in another timber product, this time a manu-
factured article, the Americans have been pushed
severely. Ready-made doors from Soviet factories
are winning a leading role in Britain, as they have
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? FIGHTING THE RED TRADE MENACE 169
begun to do in France and Italy. Britain takes from
all sources an average of 2,000,000 doors a year, of
which the United States for the last several years
contributed seventy-five per cent, the Swedes twenty-
five per cent. Last year for the first time and at one
leap the Soviets brought into Britain 120,000 doors.
This year they have contracted to sell in Britain
400,000 to 500,000 doors to one concern, the Mer-
chant Trading Company, on a sliding scale price
agreement that will keep Soviet prices automatically
a shade, about 18 cents, per door under American
competitors' prices. This form of contract, making it
literally impossible for a competitor to undercut the
Soviets unless he gives his product away, is particu-
larly irksome to the trade.
Miscellaneous as is the list of Soviet goods for sale
to the world markets, just so miscellaneous but not
nearly so long is the list of Soviet products that com-
pete with America in Britain. One rather important
minor item is canned salmon. In 1924 the United
States sent 33,000,000 pounds of canned salmon and
the Soviet Union sent 26,000,000 to Britain while in
1930 the United States share had dropped to 24,-
000,000 pounds and the Soviet share had risen to
64,000,000 pounds. The Soviets have more than
doubled their exports of canned salmon: the United
States exports declined about 25 per cent.
The old familiar figure of Soviet petroleum is very
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? 170 FIGHTING THE RED TRADE MENACE
much in evidence in Britain also as a competitor not
only with American but with all other foreign oils.
Here, however, there is a strict price agreement.
Anglo-American, Standard, Anglo-Persian and Shell
have an arrangement with the Soviet oil trust
whereby they maintain not the same price but the
same price differential, amounting now to about one
cent a gallon, so that no matter what price the non-
Soviet trusts fix the Soviet trust sells just a shade
cheaper. This arrangement applies only to gasoline.
There is also a quantity agreement whereby each
concern's imports are confined to a certain quota
proportional to its 1928 sales, each to receive a cer-
tain percentage of increase each year. Details of this
agreement never have been published. The report is
now afloat it may soon be abrogated by the Soviets,
who desire a free hand.
Not any of these products, however, had anything
like the significance for American producers that
wheat did in the Soviet big wheat year 1930-31.
What Russian wheat did to American wheat in the
British market is indicated as well by the 1931
spring export figures as by those in the heavier ex-
porting months of 1930. While the Soviet Union in
the first four months of 1929 exported no wheat to
Britain and in the first four months of 1930 ex-
ported 845,161 bushels, she exported in the first
four months of 1931 11,876,391 bushels--wliile the
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? FIGHTING THE RED TRADE MENACE 171
United States in the same periods under considera-
tion exported to Britain 10,125,146 and 8,249,564
and 3,346,736 bushels respectively.
At the same time, Canadian wheat exports to
Britain suffered, if not quite so heavily, coming down
from 16,129,032 bushels in the first four months of
1929 to 11,290,322 in the same period of 1931.
Britain was the largest single taker of Soviet wheat
and absorbed a third of all Russian wheat exports in
1930. This one circumstance may become decisive for
Russo-British commercial relations. The British
realize it gives them a powerful lever to move the
Russians in the direction of placing more orders in
this country. After all other schemes have been dis-
cussed whereby this movement might be promoted,
the one quite practicable project remains of the
Empire quota system by which grain from the out-
side could be controlled. No other commodity lends
itself so well to this method of pressing the Soviets as
does wheat.
There is not enough or not enough of the right
kind of timber, oil, furs, etc. , in the Empire to satisfy
Britain, but there is enough grain for Britain in
Australia and Canada. The idea of applying this
thumbscrew to one Soviet thumb and the credit
thumbscrew to the other thumb is one that appeals
just now to the Conservatives. Under the Labor
Government the British Treasury, like the treasuries
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172 FIGHTING THE RED TRADE MENACE
of Italy and Germany, guarantees up to 60 per cent
of the face value of the Soviet bills of exchange
drawn to favor British sellers. If the Conservatives
came in they could threaten to withdraw the credit
guarantee, offer to extend it, threaten to decrease
the Soviet share of it, threaten to decrease the Soviet
share of the wheat quota, offer to buy more wheat
and in the long run if they were favored by fortune,
they might get some more Soviet orders.
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? CHAPTER XVII
Copenhagen:
Economics, like politics, makes strange bedfellows,
and here in this cheerful North Sea capital one may
observe how economics has made of tiny Denmark an
ally, even though an unwilling one, of the giant Com-
munist empire on the east; while economics again,
though perhaps misunderstood economics, has
aroused in Denmark a strange antagonism to com-
merce with the United States.
"The Red Trade Menace" is not regarded here
with apprehension. The "menace," if there is one,
exists here in the minds of an exceptionally vocal if
not nationally representative group of large land-
owners as an American menace--"the Red, White
and Blue menace," if Danish landlords were given to
headline phrases.
On this entire all-European survey there has ap-
peared no more interesting if complicated example
of the effect of economic forces upon the relationship
of Europe to America and Europe to the Soviet
Union than here in Denmark. The "melancholy sci-
ence" of Adam Smith, dreariest of studies, becomes
alive and fascinating in Copenhagen.
Here today spring sunshine lights a city, smiling
173
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? 174 FIGHTING THE RED TRADE MENACE
people populate the public gardens, the Tivoli is
crowded with animated coffee drinkers and in the
streets a throng of automobiles gives evidence that
somewhere in the world the "crisis" has held its hand.
Hotels are full, dance music issues from a dozen
doorways and theatre advertisements bear out the
city's fame as the Paris of the North.
Denmark, in short, is the happiest country in
Europe, least troubled by the world depression. Just
six flight hours away lies England, gloomy, black
browed. Just two flight hours away lies Germany,
worried, despondent. In England one in fifteen in-
habitants is jobless, in Germany, one in twelve. In
Denmark one in sixty-six is unemployed and many
of these temporarily.
Danish critics may object, and point a score of
instances where Denmark, too, begins to feel the
pinch. But to one who has just flown here from Lon-
don, a short twenty-four hours from the dark per-
spectives of Manchester and Liverpool, the contrast
is great. It demands explanation, and as all economic
forces operate interdependently it happens, too, that
this attempt at explanation, may do its share to
clarify comprehension of the three-way traffic tangle
of Europe, America and Russia.
Before the effort at explanation, however, one
must lay the phenomena upon the table and, first of
all, the strangest of them, the anti-American boycott
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? FIGHTING THE RED TRADE MENACE 175
movement. This is not the first time nor the first
country in which resentment against the American
tariff has been observed, nor is it the first instance in
which the thesis has been borne out that if Europe
were ever able to combine commercially against the
Soviet Union it would direct that combination
equally against the United States. But nowhere has
the thesis been so clearly confirmed as here in Den-
mark.
Not sentiment but economics determine trade.
Thus argue Marxists and a good many non-Marxist
hardheaded business men of the capitalist world too.
At any rate here in Denmark, where Americans are
received with a kindness and hospitality that leaves
one unwilling to speak critically, there are a sufficient
number of persons who believe that economics dictate
against acceptance of American wares to have given'
rise to a regular boycott movement. Boycott of all
American wares is the goal of an association of 500
of the largest landowners of the country, an associa-
tion that calls itself "The Twelve Men. " Its printed
appeal to the Danish public deserves citation.
"The commercial policy of the United States
against us is of such a character that no considera-
tion of them on our part is warranted. " This the
thesis.
The appeal then sets forth that the United States'
yearly purchases of Danish goods amount only to
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? 176 FIGHTING THE RED TRADE MENACE
18,000,000 crowns, (about $4,680,000), while Den-
mark buys 239,000,000 crowns (about $62,140,000)
of American goods yearly. It stresses that on a per
capita basis every Dane buys about $17 worth of
American goods yearly while Americans buy only
about 4 cents worth of Danish goods apiece a year,
each month the "Twelve Men's Association" an-
nounces they are going to issue a manifesto appeal-
ing for a boycott of American goods and each month
are going to point out some particular item of
American imports that ought not to be bought. They
will watch import returns, they announce, and as
each new packet of American wares arrives will warn
the Danish public not to buy it.
Thus in one month the "Twelve Men" warned
against buying American kerosene. "No American
kerosene on our farms. We have no use for American
kerosene. We are able to change our consumption
from American to British kerosene without a single
penny's expense and without the least trouble. Do
what you are able to do to shift importation from
America, to whom we are indifferent, to our big
customer on the west--England. "
In another month it was flour. "It should be plain
to everybody that there is no sense in giving work to
American mills when our own are idle. During 1930
Denmark imported about 700,000 sacks of wheat
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? FIGHTING THE RED TRADE MENACE 177
flour. The United States supplied about 500,000 of
these sacks, which might as well have been manu-
factured in our own mills. "
Again it was binder twine. "A few days ago a
shipment of 300 tons of American binder twine ar-
rived. Don't buy American binder twine. "
Ekstrabladet, excellent afternoon newspaper of
the "Politiken group" interviewed the director of
the anti-American campaign, V. Kronman, and ob-
tained an illuminating statement.
"Yes, this is the beginning of a real campaign
against American goods," declared Kronman. "We
look upon America as a country being the least
friendly to us from a commercial point of view.
America is so big that it won't make any special im-
pression upon America if we react, but despite that
fact we do it. Even if we are small we still have the
opinion that in all commerce there ought to be a
spirit of reciprocity. "
"Americans flood us with their goods without re-
ciprocating in the least and every time we have
worked up a sale of a special kind of goods in Amer-
ica they run over us with a tariff increase, closing the
market for our goods.
"We have therefore started on a systematic survey
to determine where our members can assist us in
shifting purchases from the United States to Dan-
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? 178 FIGHTING THE RED TRADE MENACE
ish industry or to England or, alternatively, Ger-
many, both of which are our customers.
"It is our intention every month to draw the at-
tention of our members to new fields, for example
rubber, transmission belting, typewriters, rubber
footwear, agricultural machines, etc. "
The spokesman was asked if as a matter of fact
imports from the United States were actually declin-
ing. His answer is interesting: "At any rate it has
declined substantially in cattle feed. America on
account of the heavy drought has not been able to
export cottonseed cakes, but this fact has not bet-
tered our trade balance, as Americans only have been
replaced by Russians. "
There is the phenomenon. If it were really true
that this anti-American campaign were based only
upon the simple theory that international trade
should be done on a two-way barter system, "You
take a ton of goods from me and I take a ton of
goods from you," one might counter it effectively by
asking if a landowning member of the "Twelve Men's
Association" expects his tailor to take a dozen firkins
of butter in exchange for a suit of clothes. As a mat-
ter of fact this sort of kindergarten economics is
applied by a good many European nations in their
attitude toward trade with the Soviet Union as well
as with the United States, and the greatest single
objection to Soviet trade encountered in France,
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? FIGHTING THE RED TRADE MENACE 179
Belgium and even England was that the Soviets sold
more in those countries than they bought.
But it will be noted that in the Danish movement
against American goods the argument constantly is
to shift Danish purchases from America to Britain.
There is a very good reason for this and behind the
reason are factors that have made Denmark an
ally, even though an unconscious ally, of the Soviet
Union.
Secure though she is for the present and still com-
paratively prosperous in a situation that has given
her cheaper food for her cattle while her chief ex-
ports, animal products, have fallen off less in price
than have the raw materials that go to make them,
Denmark has one large shadow on her economic
horizon. That shadow is the possibility that Great
Britain may adopt the long-discussed system of
Empire preference, that England may agree with
her dominions and colonies to establish a tariff favor-
ing an exchange of goods among members of the
British commonwealth to the disadvantage of im-
ports from countries outside the commonwealth.
It is, of course, still uncertain what form the Em-
pire preference system would take. It is uncertain
whether it would be effectuated under a Labor gov-
ernment ; it is uncertain whether it will come to pass
at all. But it is clear that if it does come to pass it
will bring about a substantial price difference in
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? 180 FIGHTING THE RED TRADE MENACE
England in favor of Empire products and especially
of Empire agricultural products--grain, butter,
bacon, eggs, etc.
Denmark is not concerned about grain, but Den-
mark is most concerned about the British butter, egg
and bacon market. Denmark is the big butter and
egg man of Europe. Her exports to England make
her so. Denmark literally lives from butter, eggs and
bacon. Eighty per cent of her entire exports last
year was agricultural and of this 80 per cent, 42 per
cent was of milk products, 51 per cent was of meat
and slaughter products and 7 per cent was of eggs.
And of this majority portion of the total Danish
exports, Great Britain took 68 per cent of all Danish
butter exported, 999io per cent of all Danish bacon
exported and 85 per cent of all Danish eggs ex-
ported.
It is plain why for Denmark the British market is
of paramount importance. It is plain why Denmark
should be nervous about England's Empire prefer-
ence scheme, for even if New Zealand butter does lie
six weeks steamship travel away from England it is
even now being sold there and Danes argue that if
Empire preference is to mean anything at all it will
mean that preferential customs must be fixed high
enough to give New Zealand butter a perceptible ad-
vantage over Danish butter.
Free traders, of course, have here a striking ex-
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? FIGHTING THE RED TRADE MENACE 181
ample of the effect of an economic nationalism that
would send a man to a grocery store half way around
the world to buy a pound of butter rather than to
the grocery store next door because the grocery store
dealer half way around the world was related to the
wife of the man that wanted a pound of butter.
The Danes, however, are not interested in the
theoretical economics of the Empire preference.
They are interested in its practical effect on them
and they are practically interested in trying to head
it off. Therefore they wish to encourage Danes to
buy more British goods, hoping against hope that
this demonstration of Danish good will will soften
Tory hearts in England. But to buy more from
Britain, Danes must buy less from some one else.
In itself and quite independent of the Danish fear
of Empire preference, the American tariff is an an-
noyance; so what could be more logical than a
campaign to buy less American goods and buy more
British goods?
But it so happens that the one other country in
the world that could be most injured by Britain's
proposed Empire preference system is the Soviet
Union. Of all the projects encountered on this trip
for checking Soviet exports the British Empire
preference scheme seems to hold a more genuine
threat to Soviet trade than any other. As Denmark
sends two-thirds of her exports to Britain, so the
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? 182 FIGHTING THE RED TRADE MENACE
Soviet Union sends one-third of hers to Britain. In
this involved and roundabout way Denmark, less
than life-sized model of an efficient bourgeois agri-
cultural country, has been ranged on the same side
of the world economic fence as the anti-capitalist
colossus.
It will not help to clarify this picture but should
be noted that on the other hand the Soviet Union's
existence is one of the reasons for the movement in
England to favor Empire preference, so that if it
were not for Soviet exports to Britain, Danish ex-
ports to Britain might not be threatened.
Probably few Danes have taken the trouble to con-
sider these aspects of their role in the four-cornered
foreign trade bridge game among Denmark, Eng-
land, the United States, and Russia, nor is it clear
why they should or what they could do about it if
they did. About all that occurs to Denmark to con-
sider in respect to its direct trade with the Soviet
Union is the fact that the Soviet Union sells to Den-
mark about $10,000,000 worth of products a year
and buys only about $3,000,000 worth of Danish
goods and that this is undesirable and ought to be
corrected, but that of all Denmark's purchases from
the Soviet Union last year more than three-fourths
were of grain and cattle feed and that cheap grain
can do little harm to a country that depends for its
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? FIGHTING THE RED TRADE MENACE 183
prosperity upon selling no grain but products of
animals that live on grain.
Like Germany, Italy and England, Denmark, too,
wishes the Soviet Union to increase its purchases
and, like those countries, Denmark puts its Govern-
ment credit back of the industrialists who wish to
sell to the Soviet Union. The Danish export credit
system, like most of its counterparts in Europe, was
a post-war development established in 1922, to en-
courage foreign trade by relieving the exporter of
credit risks. Beginning modestly, the system has been
developed until now Government funds for insuring
exports amount to $18,200,000.
During nine years of operation, the Credit Board
reports, it lost but $120,000 on dishonored bills,
none of which were Soviet bills. Having been estab-
lished before Denmark's resumption of trade re-
lations with the Soviet Union April 23, 1923, it can-
not be said to have been intended primarily as an
instrument to promote trade with the Soviet Union.
Nevertheless, although no official statement could be
obtained, it is presumed that most, if not all, of Den-
mark's exports to the Soviet Union are covered by
Government guarantee. This guarantee in the case
of other countries is sometimes as high as 85 per
cent, but in the case of the Soviet Union is limited
to 60 per cent. That is to say, the Government
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? 184 FIGHTING THE RED TRADE MENACE
guarantees the exporter to the Soviet Union pay-
ment of 60 per cent of the amount of the Soviet's
promissory note. For this guarantee the Government
charges a commission of 3 per cent of the guaranteed
portion of the bill.
With this guarantee the exporter can then dis-
count his bill at a Danish bank at a rate correspond-
ing to the prevailing discount rate for the guaranteed
portion of the bill and at a rate that was reported
to me from authoritative sources as not more than
5 per cent for the unguaranteed portion of the bill.
These charges would total about 8 or 9 per cent for
the whole bill and would thus mean that Soviet bills
in Denmark are discounted cheaper than in any
country yet visited in Europe.
A necessary qualification to this statement, how-
ever, is that the Government limits the amount of
Soviet bills it will guarantee and that without Gov-
ernment indorsement Soviet paper here would be
charged as high discount rates as prevail for un-
guaranteed Soviet bills in Berlin, Paris, London and
New York, where "the Black brokers" do a thriving
business in lending money on Soviet notes at 20 or
30 per cent.
In conclusion one cannot help but revert to the
objective fact that as far as could be ascertained
during a very short time in Denmark there is no
trace of a movement to discourage trade with the
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?
? FIGHTING THE RED TRADE MENACE 159
feelings than those of mild astonishment they may
evoke in an outsider.
They help to explain why the bewilderment that
is shared by all Manchester is bitter bewilderment
on the part of textile manufacturers when they hear
the explanation that the Five-Year Plan does not
necessarily mean that the new textile machinery is to
be used to make textiles just now for the Russian
population, but that the new machinery will make
cloth to sell abroad to buy more machinery to make
more cloth to sell abroad and so on, until Russia has
all the textile machinery she can possibly use for
home consumption or for export. Manchester's
Chamber of Commerce president, even as late as
July, 1930 expressed the optimistic sentiment that,
"As Russia increases in prosperity, and we hope it
may do so rapidly, it ought to be able not only to
take our machinery but to have room also for con-
siderable quantities of our textiles. " Slowly but
finally Manchester is coming to realize that every
textile machine sent to Russia means just so many
less bolts of cloth that Russia will have to import.
Meanwhile, it may have occurred to some ob-
servers to wonder why the Manchester Chamber of
Commerce should feel so closely touched by competi-
tion that is as yet mostly a threat and especially after
a year when Soviet textile exports actually, if
slightly, decreased. A partial answer may be found
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? 160 FIGHTING THE RED TRADE MENACE
in the report of the British customs authorities that,
whereas in the first quarter of 1929, 2,504 tons of
textile machinery were shipped to the Soviet Union,
in the first quarter of 1930 only 396 tons were
shipped. Decreased Soviet orders equal increased
British bitterness, appears to be the equation that
holds true in Manchester as well as in the rest of Eng-
land.
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? CHAPTER XVI
Liverpool:
"Like a cloud the size of a man's hand" Soviet ex-
ports creep up on the horizon of world trade. For
grain growers all over the world it is a cloud that
already covers a considerable portion of the heavens.
For American cotton planters it is a cloud that can
best be observed from latitude 53 degrees 24 minutes
5 seconds North and longitude 3 degrees 4 minutes
20 seconds West, namely Liverpool.
It may be the general world depression that has
caused a major portion of the uneasiness among
American cotton agents in this city, but the 163,000
bales of Soviet cotton imported into Britain this year
at prices averaging $3 a bale less than the same
quality of American cotton certainly did nothing to
decrease that uneasiness.
Liverpool itself is unconcerned. Cotton is cotton
to Liverpool and commissions on the sale of Soviet
cotton are just as high as commissions on the sale of
American cotton. In fact, this is another instance
where, search as one will, one can find not even a
chemical trace of excitement on the part of European
nations over the Soviet export of goods competing
not with their own but with American products. One
161
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? 162 FIGHTING THE RED TRADE MENACE
hundred and sixty-three thousand bales of cotton is
not a very large amount compared to the American
sales in Liverpool of 847,000 bales from August to
March, especially when one must take into considera-
tion that the Russian bale weighs but 375 pounds
against the American bale's 500 pounds. Neverthe-
less, these 163,000 bales have attracted more atten-
tion in Liverpool than all the rest of the 1,575,000
bales of cotton imports in this greatest cotton im-
porting port in the world, and to Americans they
came at an unusually inconvenient time when, for the
first time in history, sales of non-American growths
exceeded total American sales.
Attention on the part of Liverpool in general was
coolly professional. The city's experts established
that Soviet cotton, known to the trade as "Turkes-
tan," was incomprehensibly "of bread and butter
Texas type, but of Memphis character," meaning
merely that it was like middling to good middling
American with staple up to one and one-eighth inch,
whitish, clean and in good condition.
Attention on the part of the Lancashire mills was
less cool, ever warm. Under present day conditions
here every penny shaved is a penny saved and mill
owners are seeking economies as never before. They
snapped up the Soviet cotton. None of them adver-
tises nor willingly lets it be known that they are us-
ing Soviet cotton, for Bolshevik is still a term of
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? FIGHTING THE RED TRADE MENACE 163
reproach in this part of the world, but nevertheless
they bought it. Furthermore, they indicated they
would be glad to get more. And when some remark
was passed in Liverpool cotton circles as to the ad-
visability of cutting loose from old business friends
for the sake of new ones, an anonymous contributor
to the Liverpool "Post and Mercury" in a letter to
the editor avowed: "Spinners who have found out
the merits of this cotton are buying it from Liver-
pool brokers and merchants in the usual way. There
is no reason why there should be a prejudice against
this cotton any more than there should be against
Peruvian, Argentinian or American. "
American cotton men here reluctantly admit the
argument and declare that so far they have not been
hurt perceptibly but observe with some anxiety that
if, as seems quite possible, Soviet cotton comes in
during the next years in greater quantities, it is
going to meet no hindrance in the Liverpool trade
despite all of Britain's grumbling about the Soviets,
and that if it continues to be offered at prices averag-
ing 1 point under the American prices it will be
bought in preference to the American cotton.
American cotton men would not perhaps have dis-
played even what little anxiety they do permit to be
displayed about Soviet cotton if they were not
acquainted with so many grain men in this cotton
and grainman's town. It is recalled that only a little
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? 164 FIGHTING THE RED TRADE MENACE
while ago the world was convinced that Russia under
Soviet rule would be lucky if she could produce
enough grain to feed herself. Now, after the Soviet
Union shipped to this country alone more wheat, for
example, in the last quarter of 1930 than all other
wheat exporting countries together with the sole ex-
ception of Canada--shipped to Britain in the entire
year, cotton men are not so inclined to discount en-
tirely the statements of the president of the Soviet
Cotton Syndicate. These prophecies, made more than
a year ago, were to the effect that the Soviet Union
was going to supply not only all its raw cotton needs
previously supplied by America at the rate of several
hundred thousand bales yearly, but was going to be
in the export field before the end of the Five-Year
Plan. Ignored at the time, these statements have now
been taken out of the file and reexamined by Liver-
pool cotton men. They observed that the president of
the Soviet Cotton Syndicate estimated Russia's 1931
crop would be more than double the 1930 crop, or
3,000,000 bales more than last year. They observed
that Russia's cotton crop in 1921 was 57,000 bales,
in 1930 was 2,500,000. The question of how much
she can export in 1931 is one that nobody here will
risk answering.
But one significant fact deserves to be recorded.
No cotton men, American or otherwise, think the
Soviet's export of 163,000 bales is a mere gesture.
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? FIGHTING THE RED TRADE MENACE 165
Some had been inclined to believe that exports had
been made from Turkestan over the Black Sea in
order to save the long rail haul to the mills of Central
Russia and that these exports would be compensated
by imports. But the Soviet Union in the 1930 season
bought only 6,000 bales via the British market and
in the first four months of 1931 imported none, ac-
cording to the Liverpool Chamber of Commerce. All
her cotton exports came out of Leningrad and Mur-
mansk, still further from Turkestan than the Soviet
milling centers. Liverpool trade takes Soviet exports
seriously.
They think that the President of the Soviet Cot-
ton Syndicate meant what he said. Liverpool hopes
he did. Liverpool is like every great port yet visited
on this trip. The more Soviet trade the more harbor
fees, the more stevedore wages, the more warehouse
rent. These are in the main Liverpool's reflections on
the "Red Trade Menace," and if it were not for
echoes from the Tory press that occasionally pene-
trated Liverpool counting rooms, the attitude of this
city probably would be no different from that of
Rotterdam. As it is, on a rough estimate about 75
per cent of Soviet imports into Britain come through
this port and it is all welcome.
Through here came last year most of nearly
3,000,000 loads of wood and timber that made
Britain one of the Soviet's best lumber markets. It
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? 166 FIGHTING THE RED TRADE MENACE
was one of the best, but nevertheless, it contained
seeds of anxiety for the Soviet Union, and the history
of the Central Softwood Buying Corporation's fa-
mous $36,000,000 contract to buy all Russian soft-
wood imported into Britain this year is the history of
a business development not nearly so agreeable to the
Soviet Union as it appeared when announced. The
size of the contract, the fact the Soviet Union was go-
ing to receive such a large sum of money, the fact
that Britain took such a large consignment of Soviet
timber at a moment when American timber men were
complaining most about Soviet competition obscured
for the time being the really important feature of
that transaction.
For its chief significance was that for the first time
in the history of the Soviet Foreign Trade Mo-
nopoly, at least for the first time since it became
strong enough to stand upright, that Monopoly was
beaten by a syndicate of bourgeois business men. It
has been the principle of the Soviet Foreign Trade
Monopoly not to deal with bourgeois syndicates.
There is, of course, no objection to dealing with big
firms. The Soviet prefer big firms, since the bigger
the firm, usually, the lower the prices for goods the
Soviet has to buy and the more prompt the payment
on the goods the Soviet has to sell. But the Foreign
Trade Monopoly always made a point of having at
least two firms bidding against each other.
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? FIGHTING THE RED TRADE MENACE 167
British lumber men for several years had watched
the operations of the Soviet Foreign Trade Mo-
nopoly, noted its superiority as an instrument of
commerce, agreed among themselves to counter it,
and last autumn to Russia's surprise they suddenly
presented a united front of firms representing four-
fifths of the entire British lumber purchasing ca-
pacity. Seven of the largest British firms pledged
themselves not to buy a stick of Russian timber
separately, but to buy together and not to buy at all
unless the Soviets gave their syndicate a monopoly on
Russian softwood, and not to buy more than a maxi-
mum of 600,000 standards, or 100,000 to 200,000
less than the Russians had expected to export to
Britain this year. The price terms they offered were
not so bad, but the Soviet trade representatives here
were extremely reluctant to enter into a contract to
deliver only so much and no more to the British
market. And most reluctant were they to permit the
precedent of a bourgeois business combine operating
successfully against or with the Foreign Trade Mo-
nopoly.
The Russians held out as long as they could, used
all the arts of trade cajolery on the members of the
syndicate to try to pry individual firms loose, but
to no avail. Finally, when it become evident that if
the Soviets did not deal with the British Softwood
Buying Corporation, Soviet sales to the one-fifth of
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? 168 FIGHTING THE RED TRADE MENACE
British lumber buying capacity outside of that
corporation would total only a fraction of Soviet
planned sales, the Russians succumbed and signed
the contract. The Swedes and Finns set up a violent
protest and sent a petition to all the members of
Parliament because the contract completely excluded
them from even a chance at competition, and its
effects still are being felt in Scandinavia. Sympathy
here, though, with the Scandinavians, is much less
than one would expect since the British insist upon
recalling that when the war shut Russian timber out
of the market Scandinavian wood skyrocketed in
price. For those fat years, say the British, the
Scandinavians must now suffer a few lean ones.
The future of the Russo-British timber trade, con-
sidered apart from possible change in general rela-
tions of the two governments, appears certain to
this extent that through the unique example of busi-
ness loyalty, dictated though it is by self interest,
British timber dealers will be able to negotiate again
with the Foreign Trade Monopoly on even or better
than even terms.
In softwood America does not compete in this
market to any considerable extent with the Russians,
but in another timber product, this time a manu-
factured article, the Americans have been pushed
severely. Ready-made doors from Soviet factories
are winning a leading role in Britain, as they have
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? FIGHTING THE RED TRADE MENACE 169
begun to do in France and Italy. Britain takes from
all sources an average of 2,000,000 doors a year, of
which the United States for the last several years
contributed seventy-five per cent, the Swedes twenty-
five per cent. Last year for the first time and at one
leap the Soviets brought into Britain 120,000 doors.
This year they have contracted to sell in Britain
400,000 to 500,000 doors to one concern, the Mer-
chant Trading Company, on a sliding scale price
agreement that will keep Soviet prices automatically
a shade, about 18 cents, per door under American
competitors' prices. This form of contract, making it
literally impossible for a competitor to undercut the
Soviets unless he gives his product away, is particu-
larly irksome to the trade.
Miscellaneous as is the list of Soviet goods for sale
to the world markets, just so miscellaneous but not
nearly so long is the list of Soviet products that com-
pete with America in Britain. One rather important
minor item is canned salmon. In 1924 the United
States sent 33,000,000 pounds of canned salmon and
the Soviet Union sent 26,000,000 to Britain while in
1930 the United States share had dropped to 24,-
000,000 pounds and the Soviet share had risen to
64,000,000 pounds. The Soviets have more than
doubled their exports of canned salmon: the United
States exports declined about 25 per cent.
The old familiar figure of Soviet petroleum is very
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? 170 FIGHTING THE RED TRADE MENACE
much in evidence in Britain also as a competitor not
only with American but with all other foreign oils.
Here, however, there is a strict price agreement.
Anglo-American, Standard, Anglo-Persian and Shell
have an arrangement with the Soviet oil trust
whereby they maintain not the same price but the
same price differential, amounting now to about one
cent a gallon, so that no matter what price the non-
Soviet trusts fix the Soviet trust sells just a shade
cheaper. This arrangement applies only to gasoline.
There is also a quantity agreement whereby each
concern's imports are confined to a certain quota
proportional to its 1928 sales, each to receive a cer-
tain percentage of increase each year. Details of this
agreement never have been published. The report is
now afloat it may soon be abrogated by the Soviets,
who desire a free hand.
Not any of these products, however, had anything
like the significance for American producers that
wheat did in the Soviet big wheat year 1930-31.
What Russian wheat did to American wheat in the
British market is indicated as well by the 1931
spring export figures as by those in the heavier ex-
porting months of 1930. While the Soviet Union in
the first four months of 1929 exported no wheat to
Britain and in the first four months of 1930 ex-
ported 845,161 bushels, she exported in the first
four months of 1931 11,876,391 bushels--wliile the
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? FIGHTING THE RED TRADE MENACE 171
United States in the same periods under considera-
tion exported to Britain 10,125,146 and 8,249,564
and 3,346,736 bushels respectively.
At the same time, Canadian wheat exports to
Britain suffered, if not quite so heavily, coming down
from 16,129,032 bushels in the first four months of
1929 to 11,290,322 in the same period of 1931.
Britain was the largest single taker of Soviet wheat
and absorbed a third of all Russian wheat exports in
1930. This one circumstance may become decisive for
Russo-British commercial relations. The British
realize it gives them a powerful lever to move the
Russians in the direction of placing more orders in
this country. After all other schemes have been dis-
cussed whereby this movement might be promoted,
the one quite practicable project remains of the
Empire quota system by which grain from the out-
side could be controlled. No other commodity lends
itself so well to this method of pressing the Soviets as
does wheat.
There is not enough or not enough of the right
kind of timber, oil, furs, etc. , in the Empire to satisfy
Britain, but there is enough grain for Britain in
Australia and Canada. The idea of applying this
thumbscrew to one Soviet thumb and the credit
thumbscrew to the other thumb is one that appeals
just now to the Conservatives. Under the Labor
Government the British Treasury, like the treasuries
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?
172 FIGHTING THE RED TRADE MENACE
of Italy and Germany, guarantees up to 60 per cent
of the face value of the Soviet bills of exchange
drawn to favor British sellers. If the Conservatives
came in they could threaten to withdraw the credit
guarantee, offer to extend it, threaten to decrease
the Soviet share of it, threaten to decrease the Soviet
share of the wheat quota, offer to buy more wheat
and in the long run if they were favored by fortune,
they might get some more Soviet orders.
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? CHAPTER XVII
Copenhagen:
Economics, like politics, makes strange bedfellows,
and here in this cheerful North Sea capital one may
observe how economics has made of tiny Denmark an
ally, even though an unwilling one, of the giant Com-
munist empire on the east; while economics again,
though perhaps misunderstood economics, has
aroused in Denmark a strange antagonism to com-
merce with the United States.
"The Red Trade Menace" is not regarded here
with apprehension. The "menace," if there is one,
exists here in the minds of an exceptionally vocal if
not nationally representative group of large land-
owners as an American menace--"the Red, White
and Blue menace," if Danish landlords were given to
headline phrases.
On this entire all-European survey there has ap-
peared no more interesting if complicated example
of the effect of economic forces upon the relationship
of Europe to America and Europe to the Soviet
Union than here in Denmark. The "melancholy sci-
ence" of Adam Smith, dreariest of studies, becomes
alive and fascinating in Copenhagen.
Here today spring sunshine lights a city, smiling
173
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? 174 FIGHTING THE RED TRADE MENACE
people populate the public gardens, the Tivoli is
crowded with animated coffee drinkers and in the
streets a throng of automobiles gives evidence that
somewhere in the world the "crisis" has held its hand.
Hotels are full, dance music issues from a dozen
doorways and theatre advertisements bear out the
city's fame as the Paris of the North.
Denmark, in short, is the happiest country in
Europe, least troubled by the world depression. Just
six flight hours away lies England, gloomy, black
browed. Just two flight hours away lies Germany,
worried, despondent. In England one in fifteen in-
habitants is jobless, in Germany, one in twelve. In
Denmark one in sixty-six is unemployed and many
of these temporarily.
Danish critics may object, and point a score of
instances where Denmark, too, begins to feel the
pinch. But to one who has just flown here from Lon-
don, a short twenty-four hours from the dark per-
spectives of Manchester and Liverpool, the contrast
is great. It demands explanation, and as all economic
forces operate interdependently it happens, too, that
this attempt at explanation, may do its share to
clarify comprehension of the three-way traffic tangle
of Europe, America and Russia.
Before the effort at explanation, however, one
must lay the phenomena upon the table and, first of
all, the strangest of them, the anti-American boycott
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? FIGHTING THE RED TRADE MENACE 175
movement. This is not the first time nor the first
country in which resentment against the American
tariff has been observed, nor is it the first instance in
which the thesis has been borne out that if Europe
were ever able to combine commercially against the
Soviet Union it would direct that combination
equally against the United States. But nowhere has
the thesis been so clearly confirmed as here in Den-
mark.
Not sentiment but economics determine trade.
Thus argue Marxists and a good many non-Marxist
hardheaded business men of the capitalist world too.
At any rate here in Denmark, where Americans are
received with a kindness and hospitality that leaves
one unwilling to speak critically, there are a sufficient
number of persons who believe that economics dictate
against acceptance of American wares to have given'
rise to a regular boycott movement. Boycott of all
American wares is the goal of an association of 500
of the largest landowners of the country, an associa-
tion that calls itself "The Twelve Men. " Its printed
appeal to the Danish public deserves citation.
"The commercial policy of the United States
against us is of such a character that no considera-
tion of them on our part is warranted. " This the
thesis.
The appeal then sets forth that the United States'
yearly purchases of Danish goods amount only to
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? 176 FIGHTING THE RED TRADE MENACE
18,000,000 crowns, (about $4,680,000), while Den-
mark buys 239,000,000 crowns (about $62,140,000)
of American goods yearly. It stresses that on a per
capita basis every Dane buys about $17 worth of
American goods yearly while Americans buy only
about 4 cents worth of Danish goods apiece a year,
each month the "Twelve Men's Association" an-
nounces they are going to issue a manifesto appeal-
ing for a boycott of American goods and each month
are going to point out some particular item of
American imports that ought not to be bought. They
will watch import returns, they announce, and as
each new packet of American wares arrives will warn
the Danish public not to buy it.
Thus in one month the "Twelve Men" warned
against buying American kerosene. "No American
kerosene on our farms. We have no use for American
kerosene. We are able to change our consumption
from American to British kerosene without a single
penny's expense and without the least trouble. Do
what you are able to do to shift importation from
America, to whom we are indifferent, to our big
customer on the west--England. "
In another month it was flour. "It should be plain
to everybody that there is no sense in giving work to
American mills when our own are idle. During 1930
Denmark imported about 700,000 sacks of wheat
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? FIGHTING THE RED TRADE MENACE 177
flour. The United States supplied about 500,000 of
these sacks, which might as well have been manu-
factured in our own mills. "
Again it was binder twine. "A few days ago a
shipment of 300 tons of American binder twine ar-
rived. Don't buy American binder twine. "
Ekstrabladet, excellent afternoon newspaper of
the "Politiken group" interviewed the director of
the anti-American campaign, V. Kronman, and ob-
tained an illuminating statement.
"Yes, this is the beginning of a real campaign
against American goods," declared Kronman. "We
look upon America as a country being the least
friendly to us from a commercial point of view.
America is so big that it won't make any special im-
pression upon America if we react, but despite that
fact we do it. Even if we are small we still have the
opinion that in all commerce there ought to be a
spirit of reciprocity. "
"Americans flood us with their goods without re-
ciprocating in the least and every time we have
worked up a sale of a special kind of goods in Amer-
ica they run over us with a tariff increase, closing the
market for our goods.
"We have therefore started on a systematic survey
to determine where our members can assist us in
shifting purchases from the United States to Dan-
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? 178 FIGHTING THE RED TRADE MENACE
ish industry or to England or, alternatively, Ger-
many, both of which are our customers.
"It is our intention every month to draw the at-
tention of our members to new fields, for example
rubber, transmission belting, typewriters, rubber
footwear, agricultural machines, etc. "
The spokesman was asked if as a matter of fact
imports from the United States were actually declin-
ing. His answer is interesting: "At any rate it has
declined substantially in cattle feed. America on
account of the heavy drought has not been able to
export cottonseed cakes, but this fact has not bet-
tered our trade balance, as Americans only have been
replaced by Russians. "
There is the phenomenon. If it were really true
that this anti-American campaign were based only
upon the simple theory that international trade
should be done on a two-way barter system, "You
take a ton of goods from me and I take a ton of
goods from you," one might counter it effectively by
asking if a landowning member of the "Twelve Men's
Association" expects his tailor to take a dozen firkins
of butter in exchange for a suit of clothes. As a mat-
ter of fact this sort of kindergarten economics is
applied by a good many European nations in their
attitude toward trade with the Soviet Union as well
as with the United States, and the greatest single
objection to Soviet trade encountered in France,
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? FIGHTING THE RED TRADE MENACE 179
Belgium and even England was that the Soviets sold
more in those countries than they bought.
But it will be noted that in the Danish movement
against American goods the argument constantly is
to shift Danish purchases from America to Britain.
There is a very good reason for this and behind the
reason are factors that have made Denmark an
ally, even though an unconscious ally, of the Soviet
Union.
Secure though she is for the present and still com-
paratively prosperous in a situation that has given
her cheaper food for her cattle while her chief ex-
ports, animal products, have fallen off less in price
than have the raw materials that go to make them,
Denmark has one large shadow on her economic
horizon. That shadow is the possibility that Great
Britain may adopt the long-discussed system of
Empire preference, that England may agree with
her dominions and colonies to establish a tariff favor-
ing an exchange of goods among members of the
British commonwealth to the disadvantage of im-
ports from countries outside the commonwealth.
It is, of course, still uncertain what form the Em-
pire preference system would take. It is uncertain
whether it would be effectuated under a Labor gov-
ernment ; it is uncertain whether it will come to pass
at all. But it is clear that if it does come to pass it
will bring about a substantial price difference in
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? 180 FIGHTING THE RED TRADE MENACE
England in favor of Empire products and especially
of Empire agricultural products--grain, butter,
bacon, eggs, etc.
Denmark is not concerned about grain, but Den-
mark is most concerned about the British butter, egg
and bacon market. Denmark is the big butter and
egg man of Europe. Her exports to England make
her so. Denmark literally lives from butter, eggs and
bacon. Eighty per cent of her entire exports last
year was agricultural and of this 80 per cent, 42 per
cent was of milk products, 51 per cent was of meat
and slaughter products and 7 per cent was of eggs.
And of this majority portion of the total Danish
exports, Great Britain took 68 per cent of all Danish
butter exported, 999io per cent of all Danish bacon
exported and 85 per cent of all Danish eggs ex-
ported.
It is plain why for Denmark the British market is
of paramount importance. It is plain why Denmark
should be nervous about England's Empire prefer-
ence scheme, for even if New Zealand butter does lie
six weeks steamship travel away from England it is
even now being sold there and Danes argue that if
Empire preference is to mean anything at all it will
mean that preferential customs must be fixed high
enough to give New Zealand butter a perceptible ad-
vantage over Danish butter.
Free traders, of course, have here a striking ex-
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? FIGHTING THE RED TRADE MENACE 181
ample of the effect of an economic nationalism that
would send a man to a grocery store half way around
the world to buy a pound of butter rather than to
the grocery store next door because the grocery store
dealer half way around the world was related to the
wife of the man that wanted a pound of butter.
The Danes, however, are not interested in the
theoretical economics of the Empire preference.
They are interested in its practical effect on them
and they are practically interested in trying to head
it off. Therefore they wish to encourage Danes to
buy more British goods, hoping against hope that
this demonstration of Danish good will will soften
Tory hearts in England. But to buy more from
Britain, Danes must buy less from some one else.
In itself and quite independent of the Danish fear
of Empire preference, the American tariff is an an-
noyance; so what could be more logical than a
campaign to buy less American goods and buy more
British goods?
But it so happens that the one other country in
the world that could be most injured by Britain's
proposed Empire preference system is the Soviet
Union. Of all the projects encountered on this trip
for checking Soviet exports the British Empire
preference scheme seems to hold a more genuine
threat to Soviet trade than any other. As Denmark
sends two-thirds of her exports to Britain, so the
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? 182 FIGHTING THE RED TRADE MENACE
Soviet Union sends one-third of hers to Britain. In
this involved and roundabout way Denmark, less
than life-sized model of an efficient bourgeois agri-
cultural country, has been ranged on the same side
of the world economic fence as the anti-capitalist
colossus.
It will not help to clarify this picture but should
be noted that on the other hand the Soviet Union's
existence is one of the reasons for the movement in
England to favor Empire preference, so that if it
were not for Soviet exports to Britain, Danish ex-
ports to Britain might not be threatened.
Probably few Danes have taken the trouble to con-
sider these aspects of their role in the four-cornered
foreign trade bridge game among Denmark, Eng-
land, the United States, and Russia, nor is it clear
why they should or what they could do about it if
they did. About all that occurs to Denmark to con-
sider in respect to its direct trade with the Soviet
Union is the fact that the Soviet Union sells to Den-
mark about $10,000,000 worth of products a year
and buys only about $3,000,000 worth of Danish
goods and that this is undesirable and ought to be
corrected, but that of all Denmark's purchases from
the Soviet Union last year more than three-fourths
were of grain and cattle feed and that cheap grain
can do little harm to a country that depends for its
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? FIGHTING THE RED TRADE MENACE 183
prosperity upon selling no grain but products of
animals that live on grain.
Like Germany, Italy and England, Denmark, too,
wishes the Soviet Union to increase its purchases
and, like those countries, Denmark puts its Govern-
ment credit back of the industrialists who wish to
sell to the Soviet Union. The Danish export credit
system, like most of its counterparts in Europe, was
a post-war development established in 1922, to en-
courage foreign trade by relieving the exporter of
credit risks. Beginning modestly, the system has been
developed until now Government funds for insuring
exports amount to $18,200,000.
During nine years of operation, the Credit Board
reports, it lost but $120,000 on dishonored bills,
none of which were Soviet bills. Having been estab-
lished before Denmark's resumption of trade re-
lations with the Soviet Union April 23, 1923, it can-
not be said to have been intended primarily as an
instrument to promote trade with the Soviet Union.
Nevertheless, although no official statement could be
obtained, it is presumed that most, if not all, of Den-
mark's exports to the Soviet Union are covered by
Government guarantee. This guarantee in the case
of other countries is sometimes as high as 85 per
cent, but in the case of the Soviet Union is limited
to 60 per cent. That is to say, the Government
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? 184 FIGHTING THE RED TRADE MENACE
guarantees the exporter to the Soviet Union pay-
ment of 60 per cent of the amount of the Soviet's
promissory note. For this guarantee the Government
charges a commission of 3 per cent of the guaranteed
portion of the bill.
With this guarantee the exporter can then dis-
count his bill at a Danish bank at a rate correspond-
ing to the prevailing discount rate for the guaranteed
portion of the bill and at a rate that was reported
to me from authoritative sources as not more than
5 per cent for the unguaranteed portion of the bill.
These charges would total about 8 or 9 per cent for
the whole bill and would thus mean that Soviet bills
in Denmark are discounted cheaper than in any
country yet visited in Europe.
A necessary qualification to this statement, how-
ever, is that the Government limits the amount of
Soviet bills it will guarantee and that without Gov-
ernment indorsement Soviet paper here would be
charged as high discount rates as prevail for un-
guaranteed Soviet bills in Berlin, Paris, London and
New York, where "the Black brokers" do a thriving
business in lending money on Soviet notes at 20 or
30 per cent.
In conclusion one cannot help but revert to the
objective fact that as far as could be ascertained
during a very short time in Denmark there is no
trace of a movement to discourage trade with the
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