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.
British bitterness, appears to be the equation that
holds true in Manchester as well as in the rest of Eng-
land.
Soviet Union - 1931 - Fighting the Red Trade Menace
org/access_use#pd-google
? FIGHTING THE RED TRADE MENACE 147
Soviet Union now has greatly extended this business
and is also exporting dyed furs and these, it is al-
leged, are sold at prices considerably below what the
British have to pay for the raw article. The British
glucose industry, say the association's investigators,
has been built up over a number of years against
American competition, and now that it has about
won its footing against the Americans, it has to face
the Russian imports at $15 to $25 below the normal
price of $100 per ton.
Cornstarch, note the reporters, now is coming into
Britain from the Soviet Union at prices greatly be-
low the cost of production here. The amount im-
ported has been comparatively small, but contracts
for very large amounts are said to have been ar-
ranged.
More than 3,000 tons per year of Russian glues are
being shipped into Britain, say the investigators, at
prices alleged to be about one-third the cost of pro-
duction here.
A really important Soviet manufactured export is
ready-made wooden doors, and the investigators re-
port about 600,000 will be imported this year, ap-
proximately the quantity usually imported from
Sweden and at a price alleged to be 25 to 30 per cent
below normal. Soap, it is said, is coming in from the
Soviet Union where, be it noted, it has been for
nearly two years on the deficit list. Over 500 tons of
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? 148 FIGHTING THE RED TRADE MENACE
Russian candy have been imported into Britain re-
cently at prices reported ranging around $251 a ton,
compared with British prices of $360 a ton.
A considerable quantity of malt extract recently
has been offered by the Soviet trade representative,
according to the reporters, at a price of $65 per
ton, or about one-half the British production price.
Fruit pulp, pit props, rubber goods, asbestos are
mentioned as Soviet products that are beginning to
make progress in British markets, while of Soviet
matches it is remarked that "export of these at cut
prices is greatly increasing. "
The list is long and varied, but it will at once
strike the reader that in it is contained not a single
article except anthracite coal that plays a decisive
role in British economics. The only Soviet manu-
factured articles that might conceivably have be-
come a serious competitor to a genuinely important
British industry in Britain itself were textiles. In
Britain textiles and coal lead big business, and were
textile and coal operators genuinely alarmed, their
influence might be sufficient to introduce serious
checks to Soviet trade. By this may be judged the
disappointment of the more radical in the Anti-
Soviet Party when the announcement was made that
the Soviet trade representative in Britain had
promised the Manchester Chamber of Commerce that
the Soviet Union would export no textiles either to
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? FIGHTING THE RED TRADE MENACE 149
Britain or to the Empire. With this gesture the
Soviets offered a truce to one of the most powerful
sets of business interests in England. As will be seen
later, some of these interests have even developed an
active desire to see at least one category of Soviet
exports that competes chiefly with American wares
increase.
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? ?
CHAPTER XV
Manchester:
This textile center of the British Empire that on
Sundays has a population of 700,000 and on week-
days a population of double that number, this his-
torical home of Liberalism and piety with the statue
of a bishop on its central square, is receiving a lesson
in methods of Soviet trade. It is paying careful at-
tention, for the chimneys that smoked for decades
over some of Manchester's factories are smokeless to-
day and the town's elders declare that times have
not been so moldy since memory of man runneth not
to the contrary.
Manchester's instructor is Saul G. Bron, one-time
head of Amtorg, today chief of Arcos, the British
corporation acting for the Soviet trade delegation.
Manchester likes its teacher personally but has not
yet been able fully to comprehend the course of
study. This course is not yet ended and no one is
able to forecast what its conclusion will be, but for
the rest of the world perhaps it is worth passing on
as far as it has proceeded to date.
Bron, be it said, has accomplished a job remind-
ing one that the Soviet foreign trade monopoly not
only has all the well-known advantages of a trust
150
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? FIGHTING THE RED TRADE MENACE 151
but disposes over diplomatic talent of a high order.
His task was to take over an organization "Arcos,"
that had been literally dynamited out of existence by
British authorities in the famous raid that led to the
break in diplomatic relations in 1927 and as that
organization's head to regain the confidence of the
British trading public.
Plainly, no easy assignment, but Bron, the target
today of innumerable attacks in the Conservative
press, has achieved something when a Manchester
business man says of him as he did to me, "He made
a good impression, an honest man; a capable fellow
who puts his case well. "
Just the same Manchester is puzzled and its
puzzlement mirrors in fine the uncertainty and even
the bewilderment of the trade and industrial world
of Europe in the face of this strange new phenome-
non--the Bolshevik in business. More than that,
Manchester is today a perfect example of a divided
personality, of that sort of neurosis that occurs
among Bourgeois business groups when brought in
commercial contact with the Soviet, in contact with
its lure and with its threat. For Manchester is the
home of men who make machines that make cloth,
and the Soviet Union is buying these machines and
pleasing thus their makers, while the cloth that the
Soviet Union is making and will make from these
machines is to Manchester textile manufacturers an
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? 152 FIGHTING THE RED TRADE MENACE
extremely displeasing addition to the world's over-
supply of that commodity. So Manchester is torn
between satisfaction over the present profit of its
textile machine manufacturers and dissatisfaction
over the few slight present losses and expected larger
future losses of its cloth manufacturers from Soviet
competition.
The city has been trying to make up its mind what
it thinks. To help the process, it invited Bron to
address the Chamber of Commerce shortly after his
arrival in England. He came. The hall was crowded
as seldom before. For this was the first session the
Manchester Chamber of Commerce had devoted to
Russia since before the war, when Lancashire did a
rushing business with the great Eastern empire.
Herbert W. Lee, president of the Chamber,
cordially welcomed Bron with the statement that
Manchester was now of the opinion that, "the pos-
sibilities of safe and profitable trade with Russia are
rather better than formerly," and that "if Russia
places large orders, if she keeps to the spirit as well
as the letter of her contract, what more do we need
as business men? "
Then diplomatically but in clear enough language,
Mr. Lee asked Mr. Bron to tell the Chamber two
things: first, was Russia going to buy much textile
machinery; second, was she going to sell much tex-
tiles, and, if so, where ? Mr. Bron answered to every-
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? FIGHTING THE RED TRADE MENACE 153
body's satisfaction and made one announcement that
sent the Chamber's members home in high spirits.
The Soviet Union, he said, had decided not to sell
any more textiles in England. Not only would it not
sell any more here, where a few consignments had
been shipped in a more or less experimental or
desultory way, but it would not sell any in any part
of the British Empire. This, he said, was official,
authorized by the Soviet Government, "We will," he
declared, "abstain from competition with your pro-
ducers in British colonies and British dominions. "
As to textile machinery, he sincerely hoped that
the last word had not been said in the Soviet's rela-
tions with the textile machinery industry of Lanca-
shire, and as to the Five-Year Plan, Mr. Bron ex-
plained in a few words that it was a plan for raising
as quickly as possible the standard of living of the
Russian people.
After the announcement that the Soviet Union
intended to "abstain from competition," at any rate
in Britain's own home territory, the textile makers of
the Chamber had few thoughts left for the Five-Year
Plan and indeed the news was sufficiently significant
to have a world-wide echo. At one stroke the Soviet
Union had pulled the teeth of one of England's key
industries and had stepped out of a field of competi-
tion that might have led to really serious economic
friction.
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? 154 FIGHTING THE RED TRADE MENACE
A month later the president of the Chamber, hav-
ing had time to reflect, addressed the Chamber's
semiannual meeting and among other things about
Russia remarked, "it would obviously be unreason-
able for them to expect us to supply them with ma-
chinery on long credit terms unless we had some as-
surance that this machinery would not be used under
the cheap conditions under which they are working
to take trade away from us in markets on which we
depend for keeping our own workers employed. They
state that they have decided to give an undertaking
that they will not export textiles to any part of the
Empire in competition with our manufacturers. We
are willing to believe in Mr. Bron's good faith, but
we are not yet convinced that circumstances will per-
mit him to guarantee the full safeguards we should
desire. " Reserved, the Chamber was still cautiously
friendly.
Six months later, having had much more time to
reflect, and equipped with somewhat more experience,
Mr. Lee in the annual report of the Chamber of
Commerce expressed himself as follows: "Mr. Bron
made an official statement that Russia would not at-
tempt to sell cotton goods in competition with us in
the British market and would abstain from competi-
tion with us in British colonies and British dominions.
These assurances seemed to the Chamber of con-
siderable value and calculated to encourage among
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? FIGHTING THE RED TRADE MENACE 155
Lancashire business men a more favorable attitude
toward the policy on the part of the British Govern-
ment of fostering Russian trade and assisting it by
credits.
"After the meeting, however, facts were brought
to the notice of the Chamber concerning a large con-
tract designed to run for a long period for the sale
of Russian textiles in a market within the British
Empire at prices much below those obtainable in any
other producing country, especially Lancashire.
"Mr. Bron complied with the request from the
Chamber to investigate this matter. He found that
there was such a contract. He stated that it was made
before the policy which he announced had been de-
cided upon. He explained that it was being executed
not through his office in London but through another
European center and he declared that it arose from
an unfortunate but now irretrievable error which
would not be repeated. "
Mr. Lee went on to say that the board had con-
vinced itself of the good faith of the Russian au-
thorities in promising to abstain from direct sales to
Britain and the British Empire, but it had convinced
itself likewise that it was impossible to guarantee
that no purchaser of Russian cotton goods would
seek to resell them in British markets. "Therefore,
despite all assurances," said Mr. Lee, "the board are
of the opinion that the situation is one which must
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? 156 FIGHTING THE RED TRADE MENACE
provoke considerable anxiety and they believe the
British Government should seek to promote some
stable arrangements to remove all grounds of ap-
prehension possible in concert with other powers. "
No longer even cautiously friendly, the Chamber
now was calling for international action.
Further, Mr. Lee delivered some reflections on the
Five-Year Plan: "Russia makes all trade the busi-
ness of the state and it may suit so gigantic an
amalgamation at any given moment to sell at very
low prices. Controlling production and wages as well
as distribution within its own borders, the Russian
state may theoretically feel able so to arrange mat-
ters that these prices will not necessarily involve loss
on its operations for a whole year or five years. But
Russia must realize that such action on her part,
whilst apparently of temporary advantage to her,
causes such disturbance in the economic situation
elsewhere that other countries in the long run will be
obliged to protect themselves. "
Another month later at the annual meeting of the
Chamber in February, 1931 Mr. Lee had dropped
diplomatic phraseology entirely and exclaimed: "I
want to emphasize as strongly as I can that the
granting of further credit facilities to Russia should
be made absolutely conditional upon obtaining
satisfactory assurances from Russia that the Rus-
sians will not jeopardize our trade by selling goods
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? FIGHTING THE RED TRADE MENACE 157
in competition with us at prices which bear no rela-
tion to cost of production. Some of my textile ma-
chinery friends who are anxious to get more orders
from Russia backed by the British Government's
credits may take exception to this view, but I think
they would be penny wise and pound foolish to go on
selling machinery to Russia if the goods which that
machinery was used to produce are going to be
thrown on markets in which we are interested at a
price which will completely disorganize those markets
for other supplying countries. "
All of which, as one Britisher remarked, is only
proof that Manchester wanted to have its cake and
eat it too. Sales of textile machinery to Russia con-
tinue and when Lancashire textile machinery manu-
facturers meet Lancashire Textile Manufacturers in
the Club the most frequent remark heard is, "Well
if we didn't, somebody else would. " Nobody blames
Bron, particularly since Manchester is beginning to
realize now it is a literal fact that there is no way to
guarantee enforcement of any such Soviet agreement
to abstain from competition, no matter how sincerely
the agreement may have been meant.
As a matter of fact, Soviet textile exports ac-
tually fell off in the year from October, 1929, to
September, 1930. According to Soviet returns, 14,-
924 tons of textiles were exported in the 1928-1929
period and 14,378 tons in 1929-1930. Nevertheless,
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? 158 FIGHTING THE RED TRADE MENACE
Manchester cannot understand why the Soviet Union
should export textiles at all at this stage when, as
Bron took pains to emphasize, Russian internal con-
sumption of textiles is now only sixteen meters per
person per year, that figure representing, however, a
great increase over his figure of pre-war consumption
of eleven meters per person.
Now when British salesmen in Persia write home
that it is useless to send any more samples of Lan-
cashire fabrics to that once good British market, be-
cause Persian merchants declare the Russian cotton
goods not only are too cheap to resist but are actually
of better quality than the British goods, and when
east and west Africa and numerous Far Eastern
markets report initial signs of the Soviets "muscling
in," Manchester's gloom deepens. First it was Japan,
that little country that also industrialized itself with
foreign engineers and by following foreign example,
and that also had been the object of forecasts of in-
evitable failure. But Japan industrialized herself to
such a point that she now has taken a very painful
slice from Lancashire's one-time near monopoly of
the Far Eastern market. Then it was reconstructed
Poland with her Lodz mills. Then came the Indian
boycott. And now comes Russia. British exports of
cotton piece goods fell from 7,075 million square
yards in 1913 to 2,407 million square yards in 1930.
Manchester looks at those figures with quite other
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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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? FIGHTING THE RED TRADE MENACE 147
Soviet Union now has greatly extended this business
and is also exporting dyed furs and these, it is al-
leged, are sold at prices considerably below what the
British have to pay for the raw article. The British
glucose industry, say the association's investigators,
has been built up over a number of years against
American competition, and now that it has about
won its footing against the Americans, it has to face
the Russian imports at $15 to $25 below the normal
price of $100 per ton.
Cornstarch, note the reporters, now is coming into
Britain from the Soviet Union at prices greatly be-
low the cost of production here. The amount im-
ported has been comparatively small, but contracts
for very large amounts are said to have been ar-
ranged.
More than 3,000 tons per year of Russian glues are
being shipped into Britain, say the investigators, at
prices alleged to be about one-third the cost of pro-
duction here.
A really important Soviet manufactured export is
ready-made wooden doors, and the investigators re-
port about 600,000 will be imported this year, ap-
proximately the quantity usually imported from
Sweden and at a price alleged to be 25 to 30 per cent
below normal. Soap, it is said, is coming in from the
Soviet Union where, be it noted, it has been for
nearly two years on the deficit list. Over 500 tons of
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? 148 FIGHTING THE RED TRADE MENACE
Russian candy have been imported into Britain re-
cently at prices reported ranging around $251 a ton,
compared with British prices of $360 a ton.
A considerable quantity of malt extract recently
has been offered by the Soviet trade representative,
according to the reporters, at a price of $65 per
ton, or about one-half the British production price.
Fruit pulp, pit props, rubber goods, asbestos are
mentioned as Soviet products that are beginning to
make progress in British markets, while of Soviet
matches it is remarked that "export of these at cut
prices is greatly increasing. "
The list is long and varied, but it will at once
strike the reader that in it is contained not a single
article except anthracite coal that plays a decisive
role in British economics. The only Soviet manu-
factured articles that might conceivably have be-
come a serious competitor to a genuinely important
British industry in Britain itself were textiles. In
Britain textiles and coal lead big business, and were
textile and coal operators genuinely alarmed, their
influence might be sufficient to introduce serious
checks to Soviet trade. By this may be judged the
disappointment of the more radical in the Anti-
Soviet Party when the announcement was made that
the Soviet trade representative in Britain had
promised the Manchester Chamber of Commerce that
the Soviet Union would export no textiles either to
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? FIGHTING THE RED TRADE MENACE 149
Britain or to the Empire. With this gesture the
Soviets offered a truce to one of the most powerful
sets of business interests in England. As will be seen
later, some of these interests have even developed an
active desire to see at least one category of Soviet
exports that competes chiefly with American wares
increase.
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? ?
CHAPTER XV
Manchester:
This textile center of the British Empire that on
Sundays has a population of 700,000 and on week-
days a population of double that number, this his-
torical home of Liberalism and piety with the statue
of a bishop on its central square, is receiving a lesson
in methods of Soviet trade. It is paying careful at-
tention, for the chimneys that smoked for decades
over some of Manchester's factories are smokeless to-
day and the town's elders declare that times have
not been so moldy since memory of man runneth not
to the contrary.
Manchester's instructor is Saul G. Bron, one-time
head of Amtorg, today chief of Arcos, the British
corporation acting for the Soviet trade delegation.
Manchester likes its teacher personally but has not
yet been able fully to comprehend the course of
study. This course is not yet ended and no one is
able to forecast what its conclusion will be, but for
the rest of the world perhaps it is worth passing on
as far as it has proceeded to date.
Bron, be it said, has accomplished a job remind-
ing one that the Soviet foreign trade monopoly not
only has all the well-known advantages of a trust
150
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? FIGHTING THE RED TRADE MENACE 151
but disposes over diplomatic talent of a high order.
His task was to take over an organization "Arcos,"
that had been literally dynamited out of existence by
British authorities in the famous raid that led to the
break in diplomatic relations in 1927 and as that
organization's head to regain the confidence of the
British trading public.
Plainly, no easy assignment, but Bron, the target
today of innumerable attacks in the Conservative
press, has achieved something when a Manchester
business man says of him as he did to me, "He made
a good impression, an honest man; a capable fellow
who puts his case well. "
Just the same Manchester is puzzled and its
puzzlement mirrors in fine the uncertainty and even
the bewilderment of the trade and industrial world
of Europe in the face of this strange new phenome-
non--the Bolshevik in business. More than that,
Manchester is today a perfect example of a divided
personality, of that sort of neurosis that occurs
among Bourgeois business groups when brought in
commercial contact with the Soviet, in contact with
its lure and with its threat. For Manchester is the
home of men who make machines that make cloth,
and the Soviet Union is buying these machines and
pleasing thus their makers, while the cloth that the
Soviet Union is making and will make from these
machines is to Manchester textile manufacturers an
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? 152 FIGHTING THE RED TRADE MENACE
extremely displeasing addition to the world's over-
supply of that commodity. So Manchester is torn
between satisfaction over the present profit of its
textile machine manufacturers and dissatisfaction
over the few slight present losses and expected larger
future losses of its cloth manufacturers from Soviet
competition.
The city has been trying to make up its mind what
it thinks. To help the process, it invited Bron to
address the Chamber of Commerce shortly after his
arrival in England. He came. The hall was crowded
as seldom before. For this was the first session the
Manchester Chamber of Commerce had devoted to
Russia since before the war, when Lancashire did a
rushing business with the great Eastern empire.
Herbert W. Lee, president of the Chamber,
cordially welcomed Bron with the statement that
Manchester was now of the opinion that, "the pos-
sibilities of safe and profitable trade with Russia are
rather better than formerly," and that "if Russia
places large orders, if she keeps to the spirit as well
as the letter of her contract, what more do we need
as business men? "
Then diplomatically but in clear enough language,
Mr. Lee asked Mr. Bron to tell the Chamber two
things: first, was Russia going to buy much textile
machinery; second, was she going to sell much tex-
tiles, and, if so, where ? Mr. Bron answered to every-
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? FIGHTING THE RED TRADE MENACE 153
body's satisfaction and made one announcement that
sent the Chamber's members home in high spirits.
The Soviet Union, he said, had decided not to sell
any more textiles in England. Not only would it not
sell any more here, where a few consignments had
been shipped in a more or less experimental or
desultory way, but it would not sell any in any part
of the British Empire. This, he said, was official,
authorized by the Soviet Government, "We will," he
declared, "abstain from competition with your pro-
ducers in British colonies and British dominions. "
As to textile machinery, he sincerely hoped that
the last word had not been said in the Soviet's rela-
tions with the textile machinery industry of Lanca-
shire, and as to the Five-Year Plan, Mr. Bron ex-
plained in a few words that it was a plan for raising
as quickly as possible the standard of living of the
Russian people.
After the announcement that the Soviet Union
intended to "abstain from competition," at any rate
in Britain's own home territory, the textile makers of
the Chamber had few thoughts left for the Five-Year
Plan and indeed the news was sufficiently significant
to have a world-wide echo. At one stroke the Soviet
Union had pulled the teeth of one of England's key
industries and had stepped out of a field of competi-
tion that might have led to really serious economic
friction.
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? 154 FIGHTING THE RED TRADE MENACE
A month later the president of the Chamber, hav-
ing had time to reflect, addressed the Chamber's
semiannual meeting and among other things about
Russia remarked, "it would obviously be unreason-
able for them to expect us to supply them with ma-
chinery on long credit terms unless we had some as-
surance that this machinery would not be used under
the cheap conditions under which they are working
to take trade away from us in markets on which we
depend for keeping our own workers employed. They
state that they have decided to give an undertaking
that they will not export textiles to any part of the
Empire in competition with our manufacturers. We
are willing to believe in Mr. Bron's good faith, but
we are not yet convinced that circumstances will per-
mit him to guarantee the full safeguards we should
desire. " Reserved, the Chamber was still cautiously
friendly.
Six months later, having had much more time to
reflect, and equipped with somewhat more experience,
Mr. Lee in the annual report of the Chamber of
Commerce expressed himself as follows: "Mr. Bron
made an official statement that Russia would not at-
tempt to sell cotton goods in competition with us in
the British market and would abstain from competi-
tion with us in British colonies and British dominions.
These assurances seemed to the Chamber of con-
siderable value and calculated to encourage among
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? FIGHTING THE RED TRADE MENACE 155
Lancashire business men a more favorable attitude
toward the policy on the part of the British Govern-
ment of fostering Russian trade and assisting it by
credits.
"After the meeting, however, facts were brought
to the notice of the Chamber concerning a large con-
tract designed to run for a long period for the sale
of Russian textiles in a market within the British
Empire at prices much below those obtainable in any
other producing country, especially Lancashire.
"Mr. Bron complied with the request from the
Chamber to investigate this matter. He found that
there was such a contract. He stated that it was made
before the policy which he announced had been de-
cided upon. He explained that it was being executed
not through his office in London but through another
European center and he declared that it arose from
an unfortunate but now irretrievable error which
would not be repeated. "
Mr. Lee went on to say that the board had con-
vinced itself of the good faith of the Russian au-
thorities in promising to abstain from direct sales to
Britain and the British Empire, but it had convinced
itself likewise that it was impossible to guarantee
that no purchaser of Russian cotton goods would
seek to resell them in British markets. "Therefore,
despite all assurances," said Mr. Lee, "the board are
of the opinion that the situation is one which must
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? 156 FIGHTING THE RED TRADE MENACE
provoke considerable anxiety and they believe the
British Government should seek to promote some
stable arrangements to remove all grounds of ap-
prehension possible in concert with other powers. "
No longer even cautiously friendly, the Chamber
now was calling for international action.
Further, Mr. Lee delivered some reflections on the
Five-Year Plan: "Russia makes all trade the busi-
ness of the state and it may suit so gigantic an
amalgamation at any given moment to sell at very
low prices. Controlling production and wages as well
as distribution within its own borders, the Russian
state may theoretically feel able so to arrange mat-
ters that these prices will not necessarily involve loss
on its operations for a whole year or five years. But
Russia must realize that such action on her part,
whilst apparently of temporary advantage to her,
causes such disturbance in the economic situation
elsewhere that other countries in the long run will be
obliged to protect themselves. "
Another month later at the annual meeting of the
Chamber in February, 1931 Mr. Lee had dropped
diplomatic phraseology entirely and exclaimed: "I
want to emphasize as strongly as I can that the
granting of further credit facilities to Russia should
be made absolutely conditional upon obtaining
satisfactory assurances from Russia that the Rus-
sians will not jeopardize our trade by selling goods
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? FIGHTING THE RED TRADE MENACE 157
in competition with us at prices which bear no rela-
tion to cost of production. Some of my textile ma-
chinery friends who are anxious to get more orders
from Russia backed by the British Government's
credits may take exception to this view, but I think
they would be penny wise and pound foolish to go on
selling machinery to Russia if the goods which that
machinery was used to produce are going to be
thrown on markets in which we are interested at a
price which will completely disorganize those markets
for other supplying countries. "
All of which, as one Britisher remarked, is only
proof that Manchester wanted to have its cake and
eat it too. Sales of textile machinery to Russia con-
tinue and when Lancashire textile machinery manu-
facturers meet Lancashire Textile Manufacturers in
the Club the most frequent remark heard is, "Well
if we didn't, somebody else would. " Nobody blames
Bron, particularly since Manchester is beginning to
realize now it is a literal fact that there is no way to
guarantee enforcement of any such Soviet agreement
to abstain from competition, no matter how sincerely
the agreement may have been meant.
As a matter of fact, Soviet textile exports ac-
tually fell off in the year from October, 1929, to
September, 1930. According to Soviet returns, 14,-
924 tons of textiles were exported in the 1928-1929
period and 14,378 tons in 1929-1930. Nevertheless,
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? 158 FIGHTING THE RED TRADE MENACE
Manchester cannot understand why the Soviet Union
should export textiles at all at this stage when, as
Bron took pains to emphasize, Russian internal con-
sumption of textiles is now only sixteen meters per
person per year, that figure representing, however, a
great increase over his figure of pre-war consumption
of eleven meters per person.
Now when British salesmen in Persia write home
that it is useless to send any more samples of Lan-
cashire fabrics to that once good British market, be-
cause Persian merchants declare the Russian cotton
goods not only are too cheap to resist but are actually
of better quality than the British goods, and when
east and west Africa and numerous Far Eastern
markets report initial signs of the Soviets "muscling
in," Manchester's gloom deepens. First it was Japan,
that little country that also industrialized itself with
foreign engineers and by following foreign example,
and that also had been the object of forecasts of in-
evitable failure. But Japan industrialized herself to
such a point that she now has taken a very painful
slice from Lancashire's one-time near monopoly of
the Far Eastern market. Then it was reconstructed
Poland with her Lodz mills. Then came the Indian
boycott. And now comes Russia. British exports of
cotton piece goods fell from 7,075 million square
yards in 1913 to 2,407 million square yards in 1930.
Manchester looks at those figures with quite other
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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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