The price
differential
is very large.
Soviet Union - 1931 - Fighting the Red Trade Menace
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 185
Soviet Union, but that in that very short time
the existence of a movement to check trade with the
United States became apparent. And this despite the
fact that Denmark has as little friendliness for Com-
munism as any non-Communist state and that Den-
mark has no discoverable inclination to be antago-
nistic to Americans as Americans. Nevertheless here
are the same arguments used against America that
are used in France, Belgium and England against
the Soviet Union. It is some satisfaction that nobody
claims American workmen produce more cheaply be-
cause they are slaves.
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? CHAPTER XVIII
Oslo:
The Five-Year Plan for whales has made its
debut and the unwitting beasts, happy today in the
security afforded them by Norway's decision to
cease whaling for a whole year, are living in a fool's
paradise. For the Soviet Union has just ordered
three whaling vessels from Norwegian shipyards.
Were whales skilled in Five-Year Plan perspec-
tives they might realize that it is only a matter of
time when Moby Dick's last descendant may sur-
render to a red-flagged ship and slip down the maw
of a Soviet refinery.
Lacking the capacity to visualize this melancholy
prospect, unmindful as are many European nations
of "The Red Trade Menace," and perhaps with as
much and as little reason, the world of whales may
celebrate now while the celebrating is good. This
year for the first time in fifty years they may in-
crease and multiply, safe from Norway's eager hunt-
ers, not yet victims of the Five-Year Plan.
For Norway's whaling fleet of thirty giant "float-
ing cookeries," 166 hunting ships and 10,000 men, is
staying at home this season. Not a ship will sail.
There is Ross Sea where in 1923 the first Nor-
186
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? FIGHTING THE RED TRADE MENACE 187
wegian whaler broke its way through the pack-ice
barrier and where in 1929 Admiral Byrd won fame,
Norway for the last seven years has won whale oil.
It has won so much from the Antarctic that in 1929
the catch of 1,210,235 barrels, double the world
catch of 1922, made whale oil a drug on the market.
So the most romantic business left on earth, a
business that sent each year a whole armada of
Norsemen 12,000 miles away to the nether side of
the globe to spend our winter hunting whales under
the steady lights of the Antarctic summer, has been
suspended. There is too much whale oil in the world.
But it is in the non-Soviet world that there is too
much whale oil. In the Soviet world they need whale
oil and intend to have their own supply.
There is too much wheat they say, but the Soviet
plans more wheat this year than ever in Russia's
history; there is too much petroleum, they say, but
the Soviet wells have doubled their production since
1928 and will double it again by 1933 if the Five-
Year Plan is followed; there is too much timber, they
say, but the Soviet planners for 1932 will lay the
axe to 109,000,000,000 board feet, three times the
total cut in the United States, if the Five-Year goal
is reached.
Now whales are next in line. Three whaling ves-
sels of course are only a beginning and a small one.
And too much need not be made of it, but if anything
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? 188 FIGHTING THE RED TRADE MENACE
were needed to emphasize once more the all-inclusive
character of the Soviet's Five-Year Plan, the plan
for whales provides the emphasis. From whale oil to
Chakwa tea the Soviet Union proposes to make itself
utterly independent of the outside world if necessary,
with a strong line under the qualifying clause, "if
necessary. "
In another respect too this curious discovery in
Norway of a fresh example of Five-Year Plan am-
bition deserves attention. Manchester men who make
textile machinery sold quantities of it to the Soviet
Union. Today Manchester men who make textiles are
complaining of Soviet competition. Swedish men who
make saws sold scores of modern gang frames to the
Soviet Union. Today Swedish men who make sawn
timber complain of Soviet competition. Now Nor-
wegian men who make whaling ships are selling them
to the Soviet Union. One wonders if their colleagues
who catch whales will ever join the chorus of com-
plainers. The Russians whaled before the war off the
Korean and Murmansk coasts. They say they want
these whaling ships to resume operations in the east
Asiatic waters and probably it will be some time be-
fore the Ross Sea feels a Soviet keel.
Oslo has other things to think about than "The
Red Trade Menace. " This city of 260,000 has the
prettiest girls, the best whale meat, the biggest labor
lockout, the most rhythmic jazz bands, the largest
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? FIGHTING THE RED TRADE MENACE 189
number of ships laid up and the most liberal interest
rates on Soviet credits of any city yet visited.
It has a surprising capacity to fill its excellent
hotels with diners and dancers after two months of a
nationwide lockout that has thrown two-thirds of the
workers in key industries out of work and closed most
of the nation's factories and mills. Only this lockout
has halted temporarily the profitable process of buy-
ing pulp wood from the Soviet Union, grinding it
here and selling the wood pulp to America.
Moscow may and doubtless does appreciate this
item on its Five-Year Plan, but more fundamentally
important for the Marxist observers of capitalist dis-
sension is the Nationalist spirit now rife in Norway.
It may be recalled that it is the profound belief of
many party leaders in the Kremlin that the non-
Soviet world is going to assemble its forces to attack
the Soviet State before Communism has consolidated
its strength. It may also be recalled that in opposition
to these Communist Jeremiahs, there is a little group
of cheerful spirits who claim that Nationalist rival-
ries, capitalist competition will save the Soviet Union
from assault.
Scandinavia affords good arguments for the sec-
ond group. Here in Norway public opinion is excited
or disturbed or merely interested over two principal
questions, leaving out of account for the moment the
now chronic lockout and the now historical decision
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? 190 FIGHTING THE RED TRADE MENACE
to take a whaling holiday. One is the question, "Shall
Norway permit foreign capital to gain a foothold in
the country, or shall she not? " The "shall nots" have
won the day and John Ludwig Mowinckel's Cabinet
was overthrown because it granted a concession to the
British soap and margarine trust to acquire an in-
terest in a Norwegian concern.
Even more indicative and typical of Europe's
nationalistic trend is the fraternal dispute now going
on between Norway and Denmark over Greenland, a
dispute that has reached the point where imaginative
persons even in this city, where the Nobel Peace Prize
is awarded, think back to days when such disputes
were settled by Norsemen's strong right arms and not
by The Hague Court that probably will be called upon
to settle it in the end.
Since 1814 when Norway broke away from Den-
mark this country has remembered with none too
friendly feelings the 364 years of its unwilling union
with that state. Today the two nations, speaking a
language that differs chiefly in pronunciation, shar-
ing centuries of common history, are again at odds
and the feeling between them recalls the mutual af-
fection of the Belgians and the Dutch.
Denmark owns Greenland. Norway hunts on Green-
land. With that imposing spirit of adventure that has
sent her pioneers to do the world's most perilous
jobs, the Norwegian hunters have established them-
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? FIGHTING THE RED TRADE MENACE 191
selves on Greenland's east coast, have set up eighty
base huts and carry on in their customary way the
business of hunting and fishing in places where citizens
of other nations would only venture with an exploring
expedition. Likewise Norsemen, the Danes, not less
venturesome, for years have preempted Greenland's
west coast for their own. Norwegians and other
hunters were forbidden to make camp on the west
coast and could only land for food and water.
This differentiation between Denmark's admin-
istration of the west and east coasts led Norway to
claim that the east coast did not belong under Danish
sovereignity at all, but really should be Norway's,
and at any rate was a no man's land. The Danes re-
plied by obtaining from twenty-three Governments
recognition of Danish sovereignty over all Green-
land. Norway alone denied this recognition. In retort
to this denial, the Danes organized an expedition
to visit the east coast of Greenland in the summer
of 1931. Norway is sure that the expedition intends
to establish police authority over Norwegian hunters.
The Danes hint darkly that the Norwegians have been
poisoning fur animals, spoiling the stock. Incensed,
the Norwegians, speaking through their "Arctic
Council," a semi-official advisory commission of prom-
inent citizens and patriotic organizations, have pub-
licly demanded of Parliament that Norway proclaim
the east coast of Greenland Norwegian territory,
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? 192 FIGHTING THE RED TRADE MENACE
plant the Norwegian flag upon it and "occupy" the
disputed land. Meanwhile the Danes are hastening to
get there first and The Hague Court may be pre-
pared for another knotty case.
More weighty in its effects upon this country's
economic life is the lockout. It is strange that so little
should have been published abroad of this worst labor
conflict that any country in Europe has experienced
since the British general strike. It virtually amounts
to a general strike, and although Norway's 2,821,000
inhabitants class her numerically as one of the small-
est nations, in point of world importance she occupies
a much greater place than her numbers would in-
dicate, and a practical paralysis of her entire in-
dustry cannot be a matter of indifference to Europe
or America.
The lockout is based in the last analysis on the
Norwegian's character. They have more of that com-
modity than most. Their workmen are the best paid
in Europe, and are likewise the best organized and
the most stubborn, and when last April employers
proposed a cut in wages of 15 per cent, the trade
unions replied by demanding a 10 per cent increase
and a reduction in the working day from eight to
seven hours. They agreed to disagree and since that
time Norway's leather, tobacco, paper, pulp, electro
chemical, rubber, soap, electrical, clothing, chocolate,
shipyard, shoe, textile, sawmill, building trades and
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? FIGHTING THE RED TRADE MENACE 198
printing industries have been as good as hermetically
sealed. The unions are air tight, dock workers and
transport men refuse to handle any wares from
locked-out plants and the net balance of the first
two months of the conflict was estimated at $9,000,000
in lost wages and a $32,000,000 loss to industry. The
trade unions paid out to the unemployed $6,000,000
from the war chest. With all this labor trouble, there
is not a single Communist in Parliament. And with all
its internecine wrangles within its own household and
within the broader household of Scandinavia,
wrangles that divert attention from the problem of
relationships between the Soviet and the non-Soviet
worlds, Norway has nevertheless taken several im-
portant measures that bear on those relationships.
For Norway already has moved so far in the direction
of state monopolies that it is possible to draw a cer-
tain comparison between her system and that of the
Soviet Union.
In four important commodities the state in a dif-
ferent degree and in a different form is in control:
in grain and flour, in herrings and in wine. The wine
and spirits monopoly is an expression of the Nor-
wegian attempt at prohibition dictated more by
sociological than by economic considerations. The
herring monopoly, semi-private but under govern-
mental supervision, is for export alone. The grain and
flour monopoly, the most interesting of all, is a
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? 194 FIGHTING THE RED TRADE MENACE
straight state organ monopolizing all export and im-
port buying and selling.
Norway has to import grain. She wishes however
to encourage as much as possible local production.
For Norway remembers her slim rations of wartime
when German submarines sank nearly one-half of
her merchant fleet.
With this in mind and only incidentally in a year
when the Soviet's Five-Year Plan began,--in 1928,
the Government established a "state grain monopoly. "
The essential task of the monopoly is to buy all home
grown grain produced at a price above the price of
imported grain.
The price differential is very large.
It amounts to about 30 cents per bushel on wheat,
rye, barley and to a fraction less on oats.
The important point is that the monopoly always
pays home growers more than it pays for foreign
grain and that the home growers is always sure of
disposing of all of his crop. Of course, if foreign
grain prices fall, so do the prices for home-grown
grain, but never below those of foreign grain and the
home grower is never in danger of having his crop rot
on his hands while foreign grain, be it Russian or
otherwise, floods the market. Having bought all the
grain produced at home and sufficient more from
abroad to fill out the country's needs, the monopoly
then sells it at a price that will enable just enough
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? FIGHTING THE RED TRADE MENACE 195
profit to meet the overhead--the same price for simi-
lar qualities whether domestic or foreign, and the
same price to all buyers.
This obviously is one way of meeting "dumping. "
It is a system that is said to have worked well during
the initial three years of its operation under the en-
ergetic management of Oscar Jahnsen, who, as the
managing director with an advisory council of seven
members, by reason of this office is the chief of Nor-
way's largest business enterprise.
In one respect it worked a hardship on the Ameri-
can exporters of flour to Norway, for the monopoly
decreed all trade marked flour should have the trade
mark removed, be classified and branded with the
monopoly's own brands. In this way the American
millers, who had spent large sums in advertising, lost
sales appeal to the Norwegian public. In another
and more important respect the monopoly, however,
certainly has not been disadvantageous to the Ameri-
can producers, for in 1930 when Russian wheat was
avalanching down on Europe, the Norwegian mo-
nopoly, it is true, bought 150,000 tons from the
Soviets against none in 1929, but it continued to buy
in 1930 more from America than it bought in 1929.
The record of Norway's wheat purchases for those
two years shows again that it was the Argentine that
suffered most from Soviet competition and that Can-
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? 196 FIGHTING THE RED TRADE MENACE
ada lost some, but much less than the South American
producer, handicapped by a long freight haul. In
1929 Argentina sold to Norway 137,157 tons and in
1930 under the pressure of Russian wheat, Argentina
sold only 16,380 tons. Canada in 1929 sold to Norway
82,864 tons and in 1930 sold 69,000 tons. But the
American exports to Norway in 1929 were 28,968
tons and in 1930 were 35,846.
Several Central European countries have been
watching this Norwegian experiment with interest and
already Sweden has adopted it. The Norwegians them-
selves on the whole are satisfied with it, even though
the consumers have complained that grain and flour
cost more under the monopoly than under free trade.
It is obvious, however, that if the Norwegian farmers
are to make more money somebody has to pay for
it and the final payer is always the consumer.
The Norwegians as a matter of fact liked the mo-
nopoly idea so well that important groups in Parlia-
ment that were behind the late Mowinckel Govern-
ment have brought forth a serious proposal for a
general State monopoly for export. For Americans
it is especially interesting to observe that the purpose
of the state export monopoly scheme is to promote the
formation of syndicates and trusts exactly contrary
to the efforts of the American Government to prevent
their formation. Price fixing is held in Norway to be
beneficial to the national economy and under the state
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? FIGHTING THE RED TRADE MENACE 197
export monopoly as projected in the bill only those
persons or corporations would be permitted to export
what belonged to an export association.
This idea developed from the herring trade export
syndicate, which, by reason of the fact that it con-
trols the entire herring output of Norway is able to
determine the extent of the catch, limiting it to a
figure calculated to give a maximum profit, is able
to limit and direct exports and is able to present a
united front to purchasers abroad. The clear ad-
vantages of such an organization, proved in practice
in the herring trade, gave rise to the suggestion that
it be extended to all branches of export trade, al-
though it has been suggested that the wood pulp
manufacturers' syndicate, desiring to force several
strong outsiders to join the combination, have been
chiefly instrumental in promoting the project.
Whatever special interests may be concerned, it
will strike the observer at once that such export or-
ganizations are effective counterparts to the Soviet
Foreign Trade Monopoly. They are able to equalize
the advantage the Soviet monopoly has in its com-
mercial dealings with the unorganized, mutually com-
petitive bourgeois concerns and are equivalent to the
sort of organization the Germans tried to bring to life
three years ago with their Russian committee of the
Reich's Manufacturers' Association. The decisive dif-
ference is that the German committee, formed to unify
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? 198 FIGHTING THE RED TRADE MENACE
German industrialists for trading with the Soviet
Union, but only with the Soviet Union, was killed by
the Soviet objection that this was discrimination,
whereas the Soviets cannot oppose or refuse to deal
with an export monopoly that is intended to deal
with all countries.
In the same way that the Norwegian state grain
and flour monopoly is an effective instrument of de-
fense against "dumping," so the Norwegian export
monopoly would be especially useful for sales to the
Soviet Union. These sales as far as Norway is con-
cerned have been profitable, for the Five-Year Plan
has put the Russian population on the cheapest fish
diet possible and Norway supplied in the second year
of the plan in 1929, 50,000 tons of salt herring. She
also has supplied to the Soviet Union aluminum and
ferro-alloys in such volume that in that year her
foreign trade balance was strongly active, showing
about $4,500,000 in exports to the Soviet Union
against $1,800,000 in imports from the Soviet Union.
Lumber was Norway's chief import from the Soviet
Union until 1930, when the Russian grain came for-
ward. It needs to be emphasized that Norway is one
Scandinavian country that suffered but little if any-
thing from Soviet timber exports. Norway exports
chiefly finished, planed, sawn timber or wood pulp,
while the Soviet exports so far chiefly have been rough
products. So that the Norwegian mills actually prof-
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? FIGHTING THE RED TRADE MENACE 199
ited from the import of Russian wood to finish here
and re-export. In this, however, as in most countries,
there is a conflict of interests and the forest owners
here protest against Russian imports while the mill
owners defend them.
Meanwhile the Norwegian Government does its
share to promote the Soviet trade by the export credit
system, guaranteeing 75 per cent of the face value of
Soviet bills. The fund available has just been raised
from $3,900,000 to $5,200,000 and the terms of in-
terest are even more reasonable than Denmark's. The
payments on Soviet purchases of herring afford a
good illustration. Against the presentation of a bill
of lading for purchased herrings, the Soviet com-
mercial representative gives the exporter two twelve-
months promissory notes dated the day of shipment
for 25 per cent and 75 per cent of the invoice value
in Norwegian crowns, plus the current discount rate
and an additional 1% per cent. In other words, if
the invoice f . o. b. port is 100 crowns, the notes would
be for 105. 75 crowns, the difference being the Norges
bank discount rate of 4 per cent plus a 1% per
cent additional charge. Having obtained the Govern-
ment's export credits guarantee on the 75 per cent
bill, the exporter can then present his notes to the
Norges Bank and receive 75 per cent in cash against
the normal discount rate and the other 25 per cent
if he wants it at a rate that would bring the total cost
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? 200 FIGHTING THE RED TRADE MENACE
to the exporter up to around 6 or 7 per cent. The
law, however, only provides for twelve months' credit
and notes may not be renewed except for ships under
construction by Norwegian yards for the Soviets.
At no discoverable point has Soviet competition
touched American trade with Norway, although the
American and other foreign oil companies are nerv-
ous. A Soviet delegation just came here to choose
and buy sites for gasoline and kerosene tanks. The
Norwegians are willing to do business. It is only now
and then that the Norwegian gazing at the map of
this part of the world looks at that 600 mile long
imaginary line separating Finland from the Soviet
Union and exclaims, "The poor Finns! "
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? CHAPTER XIX
Stockholm:
Standing in the center of Kungstraed Garden in
Stockholm, Charles XII, heroic figure of Sweden's
brilliant military period, stretches a bronze left arm
eastward, holds in his right hand an unsheathed
sword. Russia is the target of his pointing forefinger.
Danger lies in the East for the Sweden of Charles
XII. It lies in the East for Sweden now, but Sweden
holds no sword in her right hand today. Not war but
peace with the Soviets is the hope of Sweden's key
industry, the timber trade. "Fight" has been the
slogan of this industry and the struggle has been
bitter, costing each side more than either can afford.
"Pact" is today the talk in Stockholm, and although
the war may go much further there are many signs
that on this particular sector of the conflict of the
non-Soviet with the Soviet world an armistice is in
sight.
This country is the one European land where the
Soviet Five-Year Plan has struck harder than in any
other, with the possible exception of Finland. Sweden
is feeling Soviet competition in timber more painfully
than any other country save Finland. And for Sweden
201
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? 202 FIGHTING THE RED TRADE MENACE
timber is a matter of economic life or death. Half her
exports are timber and timber products.
Chief timber exporter of the world, Sweden is
proud of that title. Sweden now is about to relinquish
it. The same power that 200 years ago crushed
Sweden's great military king under the sheer weight
of numbers today is bringing an unbearable pres-
sure on Sweden's primary industry and by sheer
weight of timber is forcing a decision. One does not
have to have a keen appetite for economics to be in-
terested in this conflict. Here are all the elements of
a drama, of warfare, even of a great sporting event,
though of a sporting event that has a good deal more
significance for the world than the mere totaling up
of scores. And it is a game in which no one can proph-
esy when the whistle will blow to end it.
Stockholm itself, one must observe, shows no out-
ward sign of injury in this timber-war, though this
is a "timber-minded" city, where every one knows
and talks timber and where in the last analysis of
a very large section of the population is dependent
on timber for a living. Stockholm's famous standard
of living is still very high, her waterways are full of
ships, her streets of American automobiles, her hotels
of fashionable folk, and one of the first stories one
hears is the perhaps misleading tale that the Swedish
bricklayers are better paid than Cabinet Ministers.
Specifically, it is related that there have been times
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? FIGHTING THE RED TRADE MENACE 203
when bricklayers working on piece work toward the
end of a job that must be finished, are able, by holding
up a contractor, to get as much as $25 a day, while
a Cabinet Minister receives but $15 a day. This, it
must be admitted, is a record worthy of a place beside
some exploits of the American building trades unions.
Whether it is typical of Swedish wages may be
doubted, but those wages still are generous and
Sweden as a whole has suffered, according to the
reports of its own citizens, less than most European
countries from the world economic crisis. Some even
deny that Denmark deserves the title of the most
prosperous country in Europe, pointing out that
Sweden, too, has but one unemployed in every sixty
inhabitants. These optimists are not, however, to be
found in the timber trade itself. In this trade there
is one dominating thought: Russia. And here in this
trade may be found the most sharply outlined and
clearly defined sector of the broader economic con-
flict now going on between the Soviet and non-Soviet
world.
In most sectors of this world-wide front the factors
are too complicated and the contestants too widely
separated to permit a comprehensive view. Here the
lineup is in sight of every one. On one side the "Swed-
ish Wood Exporters' Association" and the "Finnish
Sawmill Owners' Association"; on the other side the
"Exportles," the Soviet timber export syndicate.
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? 204, FIGHTING THE RED TRADE MENACE
Here, too, the battlefield is limited. England, the
world's best timber market for exporters, is the site
where the contest will be decided.
The timber war began in 1928, the first year of
the Five-Year Plan. Until that year England's im-
ports of softwood from the Soviet Union amounted
to but 17 per cent of the total of her softwood timber
imports, while Sweden's share was 20 per cent, and
Finland's 27 per cent. Canada sent 5 per cent. Back
in 1921 the Soviet Union had only 5 per cent of Eng-
land's total imports. It was a long jump for the Soviet
Union to climb from 5 per cent to 17 per cent, but
Sweden and Finland still had so much of the market
that no particular anxiety was felt about the Soviet
competition. Russia, it was believed, would scarcely
do more since for the four years from 1924 to 1927
her timber exports had remained about the same. The
Five-Year Plan was the occasion at first for sniffs,
next for doubts, then for alarm, now for something
approaching panic, though of course no combatant
will admit defeat. The comparative record of the Rus-
sian, Swedish and Finnish exports to Great Britain
since the Five-Year Plan began tells the story. The
Soviet's share of England's total softwood imports
leaped by 1930 to 32 per cent, Finland's fell to 22
per cent; Sweden's to 19 per cent and in 1931 the
share of the Soviet Union will probably be more than
50 per cent.
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? FIGHTING THE RED TRADE MENACE 205
This would be bad enough from the Swedish and
Finnish standpoint, if the situation rested there. Pre-
war Russia also supplied 51 per cent of the British
softwood timber requirements. But the Five-Year
Plan foresees exports that far surpass anything that
Czarist Russia did. Pre-war Russia exported from
the territory occupied by the Soviet Union about
800,000 standards of sawn and planed timber. In
1926 the Soviet Union exported 320,000; in 1928,
560,000; in 1930, 965,000 and in 1931 the Swedish
exporters estimate the Soviet export will be more than
1,000,000 standards, although they hope it won't
reach the 1,300,000 called for by the plan. In 1932
the plan calls for the export of 1,500,000; in 1933,
1,800,000, although one of the maximum variations
of the plan fixes even 3,000,000 as the goal for 1933.
That is as much as the total exports of the Soviet
Union, Sweden and Finland put together in 1930.
Meanwhile, the Swedish total exports of sawn and
planed timber decreased from 1,200,000 standards
in 1929 to 996,000 in 1930 and an estimated 850,000
in 1931, and Finland's exports decreased from
1,200,000 in 1929 to 899,000 in 1930 and an esti-
mated 750,000 in 1931. These are statistics sent by
the Swedish and Finnish exporters to the British
Members of Parliament after the Soviets last autumn
disposed of from 600,000 to 750,000 standards of
timber in their famous deal with the British Soft-
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? 206 FIGHTING THE RED TRADE MENACE
wood Buyers Corporation. The statistics meant, said
the Swedish and Finnish representatives, that the
producers in their two countries had been forced to
agree to reduce their exports next year to 80 per cent
of the 1929 exports. I asked authoritative sources in
Stockholm, "Does that mean you surrender 20 per
cent of your market to the Soviets? " "It does," was
the reply.
"And if the Five-Year Plan is fulfilled? "
"It means the Swedes and Finns will have to give
up 50 per cent of their exports. "
"And what is there to be done about it? "
Then followed a reasoned statement that deserves
the attention of anybody who is interested in know-
ing what Europe is doing or thinking of doing to
protect itself against "The Red Trade Menace," a
phrase that may or may not be justified as the des-
cription of the effect of the Soviet exports upon some
countries and upon some industries, but that would
be admitted even by Soviet partisans to be thoroughly
applicable in the case of the Swedish and Finnish
timber industry.
"There are three conceivable ways to check the
Soviet competition, or to ameliorate its effects upon
us.
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 185
Soviet Union, but that in that very short time
the existence of a movement to check trade with the
United States became apparent. And this despite the
fact that Denmark has as little friendliness for Com-
munism as any non-Communist state and that Den-
mark has no discoverable inclination to be antago-
nistic to Americans as Americans. Nevertheless here
are the same arguments used against America that
are used in France, Belgium and England against
the Soviet Union. It is some satisfaction that nobody
claims American workmen produce more cheaply be-
cause they are slaves.
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? CHAPTER XVIII
Oslo:
The Five-Year Plan for whales has made its
debut and the unwitting beasts, happy today in the
security afforded them by Norway's decision to
cease whaling for a whole year, are living in a fool's
paradise. For the Soviet Union has just ordered
three whaling vessels from Norwegian shipyards.
Were whales skilled in Five-Year Plan perspec-
tives they might realize that it is only a matter of
time when Moby Dick's last descendant may sur-
render to a red-flagged ship and slip down the maw
of a Soviet refinery.
Lacking the capacity to visualize this melancholy
prospect, unmindful as are many European nations
of "The Red Trade Menace," and perhaps with as
much and as little reason, the world of whales may
celebrate now while the celebrating is good. This
year for the first time in fifty years they may in-
crease and multiply, safe from Norway's eager hunt-
ers, not yet victims of the Five-Year Plan.
For Norway's whaling fleet of thirty giant "float-
ing cookeries," 166 hunting ships and 10,000 men, is
staying at home this season. Not a ship will sail.
There is Ross Sea where in 1923 the first Nor-
186
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? FIGHTING THE RED TRADE MENACE 187
wegian whaler broke its way through the pack-ice
barrier and where in 1929 Admiral Byrd won fame,
Norway for the last seven years has won whale oil.
It has won so much from the Antarctic that in 1929
the catch of 1,210,235 barrels, double the world
catch of 1922, made whale oil a drug on the market.
So the most romantic business left on earth, a
business that sent each year a whole armada of
Norsemen 12,000 miles away to the nether side of
the globe to spend our winter hunting whales under
the steady lights of the Antarctic summer, has been
suspended. There is too much whale oil in the world.
But it is in the non-Soviet world that there is too
much whale oil. In the Soviet world they need whale
oil and intend to have their own supply.
There is too much wheat they say, but the Soviet
plans more wheat this year than ever in Russia's
history; there is too much petroleum, they say, but
the Soviet wells have doubled their production since
1928 and will double it again by 1933 if the Five-
Year Plan is followed; there is too much timber, they
say, but the Soviet planners for 1932 will lay the
axe to 109,000,000,000 board feet, three times the
total cut in the United States, if the Five-Year goal
is reached.
Now whales are next in line. Three whaling ves-
sels of course are only a beginning and a small one.
And too much need not be made of it, but if anything
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? 188 FIGHTING THE RED TRADE MENACE
were needed to emphasize once more the all-inclusive
character of the Soviet's Five-Year Plan, the plan
for whales provides the emphasis. From whale oil to
Chakwa tea the Soviet Union proposes to make itself
utterly independent of the outside world if necessary,
with a strong line under the qualifying clause, "if
necessary. "
In another respect too this curious discovery in
Norway of a fresh example of Five-Year Plan am-
bition deserves attention. Manchester men who make
textile machinery sold quantities of it to the Soviet
Union. Today Manchester men who make textiles are
complaining of Soviet competition. Swedish men who
make saws sold scores of modern gang frames to the
Soviet Union. Today Swedish men who make sawn
timber complain of Soviet competition. Now Nor-
wegian men who make whaling ships are selling them
to the Soviet Union. One wonders if their colleagues
who catch whales will ever join the chorus of com-
plainers. The Russians whaled before the war off the
Korean and Murmansk coasts. They say they want
these whaling ships to resume operations in the east
Asiatic waters and probably it will be some time be-
fore the Ross Sea feels a Soviet keel.
Oslo has other things to think about than "The
Red Trade Menace. " This city of 260,000 has the
prettiest girls, the best whale meat, the biggest labor
lockout, the most rhythmic jazz bands, the largest
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? FIGHTING THE RED TRADE MENACE 189
number of ships laid up and the most liberal interest
rates on Soviet credits of any city yet visited.
It has a surprising capacity to fill its excellent
hotels with diners and dancers after two months of a
nationwide lockout that has thrown two-thirds of the
workers in key industries out of work and closed most
of the nation's factories and mills. Only this lockout
has halted temporarily the profitable process of buy-
ing pulp wood from the Soviet Union, grinding it
here and selling the wood pulp to America.
Moscow may and doubtless does appreciate this
item on its Five-Year Plan, but more fundamentally
important for the Marxist observers of capitalist dis-
sension is the Nationalist spirit now rife in Norway.
It may be recalled that it is the profound belief of
many party leaders in the Kremlin that the non-
Soviet world is going to assemble its forces to attack
the Soviet State before Communism has consolidated
its strength. It may also be recalled that in opposition
to these Communist Jeremiahs, there is a little group
of cheerful spirits who claim that Nationalist rival-
ries, capitalist competition will save the Soviet Union
from assault.
Scandinavia affords good arguments for the sec-
ond group. Here in Norway public opinion is excited
or disturbed or merely interested over two principal
questions, leaving out of account for the moment the
now chronic lockout and the now historical decision
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? 190 FIGHTING THE RED TRADE MENACE
to take a whaling holiday. One is the question, "Shall
Norway permit foreign capital to gain a foothold in
the country, or shall she not? " The "shall nots" have
won the day and John Ludwig Mowinckel's Cabinet
was overthrown because it granted a concession to the
British soap and margarine trust to acquire an in-
terest in a Norwegian concern.
Even more indicative and typical of Europe's
nationalistic trend is the fraternal dispute now going
on between Norway and Denmark over Greenland, a
dispute that has reached the point where imaginative
persons even in this city, where the Nobel Peace Prize
is awarded, think back to days when such disputes
were settled by Norsemen's strong right arms and not
by The Hague Court that probably will be called upon
to settle it in the end.
Since 1814 when Norway broke away from Den-
mark this country has remembered with none too
friendly feelings the 364 years of its unwilling union
with that state. Today the two nations, speaking a
language that differs chiefly in pronunciation, shar-
ing centuries of common history, are again at odds
and the feeling between them recalls the mutual af-
fection of the Belgians and the Dutch.
Denmark owns Greenland. Norway hunts on Green-
land. With that imposing spirit of adventure that has
sent her pioneers to do the world's most perilous
jobs, the Norwegian hunters have established them-
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? FIGHTING THE RED TRADE MENACE 191
selves on Greenland's east coast, have set up eighty
base huts and carry on in their customary way the
business of hunting and fishing in places where citizens
of other nations would only venture with an exploring
expedition. Likewise Norsemen, the Danes, not less
venturesome, for years have preempted Greenland's
west coast for their own. Norwegians and other
hunters were forbidden to make camp on the west
coast and could only land for food and water.
This differentiation between Denmark's admin-
istration of the west and east coasts led Norway to
claim that the east coast did not belong under Danish
sovereignity at all, but really should be Norway's,
and at any rate was a no man's land. The Danes re-
plied by obtaining from twenty-three Governments
recognition of Danish sovereignty over all Green-
land. Norway alone denied this recognition. In retort
to this denial, the Danes organized an expedition
to visit the east coast of Greenland in the summer
of 1931. Norway is sure that the expedition intends
to establish police authority over Norwegian hunters.
The Danes hint darkly that the Norwegians have been
poisoning fur animals, spoiling the stock. Incensed,
the Norwegians, speaking through their "Arctic
Council," a semi-official advisory commission of prom-
inent citizens and patriotic organizations, have pub-
licly demanded of Parliament that Norway proclaim
the east coast of Greenland Norwegian territory,
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? 192 FIGHTING THE RED TRADE MENACE
plant the Norwegian flag upon it and "occupy" the
disputed land. Meanwhile the Danes are hastening to
get there first and The Hague Court may be pre-
pared for another knotty case.
More weighty in its effects upon this country's
economic life is the lockout. It is strange that so little
should have been published abroad of this worst labor
conflict that any country in Europe has experienced
since the British general strike. It virtually amounts
to a general strike, and although Norway's 2,821,000
inhabitants class her numerically as one of the small-
est nations, in point of world importance she occupies
a much greater place than her numbers would in-
dicate, and a practical paralysis of her entire in-
dustry cannot be a matter of indifference to Europe
or America.
The lockout is based in the last analysis on the
Norwegian's character. They have more of that com-
modity than most. Their workmen are the best paid
in Europe, and are likewise the best organized and
the most stubborn, and when last April employers
proposed a cut in wages of 15 per cent, the trade
unions replied by demanding a 10 per cent increase
and a reduction in the working day from eight to
seven hours. They agreed to disagree and since that
time Norway's leather, tobacco, paper, pulp, electro
chemical, rubber, soap, electrical, clothing, chocolate,
shipyard, shoe, textile, sawmill, building trades and
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? FIGHTING THE RED TRADE MENACE 198
printing industries have been as good as hermetically
sealed. The unions are air tight, dock workers and
transport men refuse to handle any wares from
locked-out plants and the net balance of the first
two months of the conflict was estimated at $9,000,000
in lost wages and a $32,000,000 loss to industry. The
trade unions paid out to the unemployed $6,000,000
from the war chest. With all this labor trouble, there
is not a single Communist in Parliament. And with all
its internecine wrangles within its own household and
within the broader household of Scandinavia,
wrangles that divert attention from the problem of
relationships between the Soviet and the non-Soviet
worlds, Norway has nevertheless taken several im-
portant measures that bear on those relationships.
For Norway already has moved so far in the direction
of state monopolies that it is possible to draw a cer-
tain comparison between her system and that of the
Soviet Union.
In four important commodities the state in a dif-
ferent degree and in a different form is in control:
in grain and flour, in herrings and in wine. The wine
and spirits monopoly is an expression of the Nor-
wegian attempt at prohibition dictated more by
sociological than by economic considerations. The
herring monopoly, semi-private but under govern-
mental supervision, is for export alone. The grain and
flour monopoly, the most interesting of all, is a
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? 194 FIGHTING THE RED TRADE MENACE
straight state organ monopolizing all export and im-
port buying and selling.
Norway has to import grain. She wishes however
to encourage as much as possible local production.
For Norway remembers her slim rations of wartime
when German submarines sank nearly one-half of
her merchant fleet.
With this in mind and only incidentally in a year
when the Soviet's Five-Year Plan began,--in 1928,
the Government established a "state grain monopoly. "
The essential task of the monopoly is to buy all home
grown grain produced at a price above the price of
imported grain.
The price differential is very large.
It amounts to about 30 cents per bushel on wheat,
rye, barley and to a fraction less on oats.
The important point is that the monopoly always
pays home growers more than it pays for foreign
grain and that the home growers is always sure of
disposing of all of his crop. Of course, if foreign
grain prices fall, so do the prices for home-grown
grain, but never below those of foreign grain and the
home grower is never in danger of having his crop rot
on his hands while foreign grain, be it Russian or
otherwise, floods the market. Having bought all the
grain produced at home and sufficient more from
abroad to fill out the country's needs, the monopoly
then sells it at a price that will enable just enough
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? FIGHTING THE RED TRADE MENACE 195
profit to meet the overhead--the same price for simi-
lar qualities whether domestic or foreign, and the
same price to all buyers.
This obviously is one way of meeting "dumping. "
It is a system that is said to have worked well during
the initial three years of its operation under the en-
ergetic management of Oscar Jahnsen, who, as the
managing director with an advisory council of seven
members, by reason of this office is the chief of Nor-
way's largest business enterprise.
In one respect it worked a hardship on the Ameri-
can exporters of flour to Norway, for the monopoly
decreed all trade marked flour should have the trade
mark removed, be classified and branded with the
monopoly's own brands. In this way the American
millers, who had spent large sums in advertising, lost
sales appeal to the Norwegian public. In another
and more important respect the monopoly, however,
certainly has not been disadvantageous to the Ameri-
can producers, for in 1930 when Russian wheat was
avalanching down on Europe, the Norwegian mo-
nopoly, it is true, bought 150,000 tons from the
Soviets against none in 1929, but it continued to buy
in 1930 more from America than it bought in 1929.
The record of Norway's wheat purchases for those
two years shows again that it was the Argentine that
suffered most from Soviet competition and that Can-
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? 196 FIGHTING THE RED TRADE MENACE
ada lost some, but much less than the South American
producer, handicapped by a long freight haul. In
1929 Argentina sold to Norway 137,157 tons and in
1930 under the pressure of Russian wheat, Argentina
sold only 16,380 tons. Canada in 1929 sold to Norway
82,864 tons and in 1930 sold 69,000 tons. But the
American exports to Norway in 1929 were 28,968
tons and in 1930 were 35,846.
Several Central European countries have been
watching this Norwegian experiment with interest and
already Sweden has adopted it. The Norwegians them-
selves on the whole are satisfied with it, even though
the consumers have complained that grain and flour
cost more under the monopoly than under free trade.
It is obvious, however, that if the Norwegian farmers
are to make more money somebody has to pay for
it and the final payer is always the consumer.
The Norwegians as a matter of fact liked the mo-
nopoly idea so well that important groups in Parlia-
ment that were behind the late Mowinckel Govern-
ment have brought forth a serious proposal for a
general State monopoly for export. For Americans
it is especially interesting to observe that the purpose
of the state export monopoly scheme is to promote the
formation of syndicates and trusts exactly contrary
to the efforts of the American Government to prevent
their formation. Price fixing is held in Norway to be
beneficial to the national economy and under the state
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? FIGHTING THE RED TRADE MENACE 197
export monopoly as projected in the bill only those
persons or corporations would be permitted to export
what belonged to an export association.
This idea developed from the herring trade export
syndicate, which, by reason of the fact that it con-
trols the entire herring output of Norway is able to
determine the extent of the catch, limiting it to a
figure calculated to give a maximum profit, is able
to limit and direct exports and is able to present a
united front to purchasers abroad. The clear ad-
vantages of such an organization, proved in practice
in the herring trade, gave rise to the suggestion that
it be extended to all branches of export trade, al-
though it has been suggested that the wood pulp
manufacturers' syndicate, desiring to force several
strong outsiders to join the combination, have been
chiefly instrumental in promoting the project.
Whatever special interests may be concerned, it
will strike the observer at once that such export or-
ganizations are effective counterparts to the Soviet
Foreign Trade Monopoly. They are able to equalize
the advantage the Soviet monopoly has in its com-
mercial dealings with the unorganized, mutually com-
petitive bourgeois concerns and are equivalent to the
sort of organization the Germans tried to bring to life
three years ago with their Russian committee of the
Reich's Manufacturers' Association. The decisive dif-
ference is that the German committee, formed to unify
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? 198 FIGHTING THE RED TRADE MENACE
German industrialists for trading with the Soviet
Union, but only with the Soviet Union, was killed by
the Soviet objection that this was discrimination,
whereas the Soviets cannot oppose or refuse to deal
with an export monopoly that is intended to deal
with all countries.
In the same way that the Norwegian state grain
and flour monopoly is an effective instrument of de-
fense against "dumping," so the Norwegian export
monopoly would be especially useful for sales to the
Soviet Union. These sales as far as Norway is con-
cerned have been profitable, for the Five-Year Plan
has put the Russian population on the cheapest fish
diet possible and Norway supplied in the second year
of the plan in 1929, 50,000 tons of salt herring. She
also has supplied to the Soviet Union aluminum and
ferro-alloys in such volume that in that year her
foreign trade balance was strongly active, showing
about $4,500,000 in exports to the Soviet Union
against $1,800,000 in imports from the Soviet Union.
Lumber was Norway's chief import from the Soviet
Union until 1930, when the Russian grain came for-
ward. It needs to be emphasized that Norway is one
Scandinavian country that suffered but little if any-
thing from Soviet timber exports. Norway exports
chiefly finished, planed, sawn timber or wood pulp,
while the Soviet exports so far chiefly have been rough
products. So that the Norwegian mills actually prof-
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? FIGHTING THE RED TRADE MENACE 199
ited from the import of Russian wood to finish here
and re-export. In this, however, as in most countries,
there is a conflict of interests and the forest owners
here protest against Russian imports while the mill
owners defend them.
Meanwhile the Norwegian Government does its
share to promote the Soviet trade by the export credit
system, guaranteeing 75 per cent of the face value of
Soviet bills. The fund available has just been raised
from $3,900,000 to $5,200,000 and the terms of in-
terest are even more reasonable than Denmark's. The
payments on Soviet purchases of herring afford a
good illustration. Against the presentation of a bill
of lading for purchased herrings, the Soviet com-
mercial representative gives the exporter two twelve-
months promissory notes dated the day of shipment
for 25 per cent and 75 per cent of the invoice value
in Norwegian crowns, plus the current discount rate
and an additional 1% per cent. In other words, if
the invoice f . o. b. port is 100 crowns, the notes would
be for 105. 75 crowns, the difference being the Norges
bank discount rate of 4 per cent plus a 1% per
cent additional charge. Having obtained the Govern-
ment's export credits guarantee on the 75 per cent
bill, the exporter can then present his notes to the
Norges Bank and receive 75 per cent in cash against
the normal discount rate and the other 25 per cent
if he wants it at a rate that would bring the total cost
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? 200 FIGHTING THE RED TRADE MENACE
to the exporter up to around 6 or 7 per cent. The
law, however, only provides for twelve months' credit
and notes may not be renewed except for ships under
construction by Norwegian yards for the Soviets.
At no discoverable point has Soviet competition
touched American trade with Norway, although the
American and other foreign oil companies are nerv-
ous. A Soviet delegation just came here to choose
and buy sites for gasoline and kerosene tanks. The
Norwegians are willing to do business. It is only now
and then that the Norwegian gazing at the map of
this part of the world looks at that 600 mile long
imaginary line separating Finland from the Soviet
Union and exclaims, "The poor Finns! "
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? CHAPTER XIX
Stockholm:
Standing in the center of Kungstraed Garden in
Stockholm, Charles XII, heroic figure of Sweden's
brilliant military period, stretches a bronze left arm
eastward, holds in his right hand an unsheathed
sword. Russia is the target of his pointing forefinger.
Danger lies in the East for the Sweden of Charles
XII. It lies in the East for Sweden now, but Sweden
holds no sword in her right hand today. Not war but
peace with the Soviets is the hope of Sweden's key
industry, the timber trade. "Fight" has been the
slogan of this industry and the struggle has been
bitter, costing each side more than either can afford.
"Pact" is today the talk in Stockholm, and although
the war may go much further there are many signs
that on this particular sector of the conflict of the
non-Soviet with the Soviet world an armistice is in
sight.
This country is the one European land where the
Soviet Five-Year Plan has struck harder than in any
other, with the possible exception of Finland. Sweden
is feeling Soviet competition in timber more painfully
than any other country save Finland. And for Sweden
201
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? 202 FIGHTING THE RED TRADE MENACE
timber is a matter of economic life or death. Half her
exports are timber and timber products.
Chief timber exporter of the world, Sweden is
proud of that title. Sweden now is about to relinquish
it. The same power that 200 years ago crushed
Sweden's great military king under the sheer weight
of numbers today is bringing an unbearable pres-
sure on Sweden's primary industry and by sheer
weight of timber is forcing a decision. One does not
have to have a keen appetite for economics to be in-
terested in this conflict. Here are all the elements of
a drama, of warfare, even of a great sporting event,
though of a sporting event that has a good deal more
significance for the world than the mere totaling up
of scores. And it is a game in which no one can proph-
esy when the whistle will blow to end it.
Stockholm itself, one must observe, shows no out-
ward sign of injury in this timber-war, though this
is a "timber-minded" city, where every one knows
and talks timber and where in the last analysis of
a very large section of the population is dependent
on timber for a living. Stockholm's famous standard
of living is still very high, her waterways are full of
ships, her streets of American automobiles, her hotels
of fashionable folk, and one of the first stories one
hears is the perhaps misleading tale that the Swedish
bricklayers are better paid than Cabinet Ministers.
Specifically, it is related that there have been times
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? FIGHTING THE RED TRADE MENACE 203
when bricklayers working on piece work toward the
end of a job that must be finished, are able, by holding
up a contractor, to get as much as $25 a day, while
a Cabinet Minister receives but $15 a day. This, it
must be admitted, is a record worthy of a place beside
some exploits of the American building trades unions.
Whether it is typical of Swedish wages may be
doubted, but those wages still are generous and
Sweden as a whole has suffered, according to the
reports of its own citizens, less than most European
countries from the world economic crisis. Some even
deny that Denmark deserves the title of the most
prosperous country in Europe, pointing out that
Sweden, too, has but one unemployed in every sixty
inhabitants. These optimists are not, however, to be
found in the timber trade itself. In this trade there
is one dominating thought: Russia. And here in this
trade may be found the most sharply outlined and
clearly defined sector of the broader economic con-
flict now going on between the Soviet and non-Soviet
world.
In most sectors of this world-wide front the factors
are too complicated and the contestants too widely
separated to permit a comprehensive view. Here the
lineup is in sight of every one. On one side the "Swed-
ish Wood Exporters' Association" and the "Finnish
Sawmill Owners' Association"; on the other side the
"Exportles," the Soviet timber export syndicate.
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? 204, FIGHTING THE RED TRADE MENACE
Here, too, the battlefield is limited. England, the
world's best timber market for exporters, is the site
where the contest will be decided.
The timber war began in 1928, the first year of
the Five-Year Plan. Until that year England's im-
ports of softwood from the Soviet Union amounted
to but 17 per cent of the total of her softwood timber
imports, while Sweden's share was 20 per cent, and
Finland's 27 per cent. Canada sent 5 per cent. Back
in 1921 the Soviet Union had only 5 per cent of Eng-
land's total imports. It was a long jump for the Soviet
Union to climb from 5 per cent to 17 per cent, but
Sweden and Finland still had so much of the market
that no particular anxiety was felt about the Soviet
competition. Russia, it was believed, would scarcely
do more since for the four years from 1924 to 1927
her timber exports had remained about the same. The
Five-Year Plan was the occasion at first for sniffs,
next for doubts, then for alarm, now for something
approaching panic, though of course no combatant
will admit defeat. The comparative record of the Rus-
sian, Swedish and Finnish exports to Great Britain
since the Five-Year Plan began tells the story. The
Soviet's share of England's total softwood imports
leaped by 1930 to 32 per cent, Finland's fell to 22
per cent; Sweden's to 19 per cent and in 1931 the
share of the Soviet Union will probably be more than
50 per cent.
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? FIGHTING THE RED TRADE MENACE 205
This would be bad enough from the Swedish and
Finnish standpoint, if the situation rested there. Pre-
war Russia also supplied 51 per cent of the British
softwood timber requirements. But the Five-Year
Plan foresees exports that far surpass anything that
Czarist Russia did. Pre-war Russia exported from
the territory occupied by the Soviet Union about
800,000 standards of sawn and planed timber. In
1926 the Soviet Union exported 320,000; in 1928,
560,000; in 1930, 965,000 and in 1931 the Swedish
exporters estimate the Soviet export will be more than
1,000,000 standards, although they hope it won't
reach the 1,300,000 called for by the plan. In 1932
the plan calls for the export of 1,500,000; in 1933,
1,800,000, although one of the maximum variations
of the plan fixes even 3,000,000 as the goal for 1933.
That is as much as the total exports of the Soviet
Union, Sweden and Finland put together in 1930.
Meanwhile, the Swedish total exports of sawn and
planed timber decreased from 1,200,000 standards
in 1929 to 996,000 in 1930 and an estimated 850,000
in 1931, and Finland's exports decreased from
1,200,000 in 1929 to 899,000 in 1930 and an esti-
mated 750,000 in 1931. These are statistics sent by
the Swedish and Finnish exporters to the British
Members of Parliament after the Soviets last autumn
disposed of from 600,000 to 750,000 standards of
timber in their famous deal with the British Soft-
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? 206 FIGHTING THE RED TRADE MENACE
wood Buyers Corporation. The statistics meant, said
the Swedish and Finnish representatives, that the
producers in their two countries had been forced to
agree to reduce their exports next year to 80 per cent
of the 1929 exports. I asked authoritative sources in
Stockholm, "Does that mean you surrender 20 per
cent of your market to the Soviets? " "It does," was
the reply.
"And if the Five-Year Plan is fulfilled? "
"It means the Swedes and Finns will have to give
up 50 per cent of their exports. "
"And what is there to be done about it? "
Then followed a reasoned statement that deserves
the attention of anybody who is interested in know-
ing what Europe is doing or thinking of doing to
protect itself against "The Red Trade Menace," a
phrase that may or may not be justified as the des-
cription of the effect of the Soviet exports upon some
countries and upon some industries, but that would
be admitted even by Soviet partisans to be thoroughly
applicable in the case of the Swedish and Finnish
timber industry.
"There are three conceivable ways to check the
Soviet competition, or to ameliorate its effects upon
us.
