Sword Sheathed

In a hot moment the Treasury Department drew a sharp economic sword, brandished it menacingly at Soviet Russia. Anti-Reds clamored for a general onslaught upon U. S.-U. S. S. R. trade. Last week the Treasury thrust its weapon back into the scabbard.

Embargo On. Fortnight ago Assistant Secretary of the Treasury Seymour Lowman, once in charge of Prohibition enforcement, now of Customs, precipitately slapped a tariff embargo on Russian pulpwood, imported chiefly by International Paper Co. through Amtorg Trading Corp. from Archangel (TIME, August 4). His authority: Section 307 of the Tariff Act of 1930 which prohibits importation of "all goods, wares, articles and merchandise mined, produced or manufactured wholly or in part in any foreign country by convict labor." His reason: secret evidence that Soviet political prisoners were logging the forests of North Russia. Pressed for details, he would only say: "We haven't gone off half-cocked in this matter."

Prejudice? The suspicion that Mr. Lowman's personal prejudice against Communism was involved with his enforcement of the tariff law grew when he gave the New York Herald Tribune an inflammatory interview against the Soviet program. Excerpts:

"Russia, having failed to conquer the world by propaganda, now seeks to achieve the goal of a world-wide Bolshevik state through a program of economic ruin. . . . Moscow has embarked on a program that means the enslavement of every Russian man and woman. ... No American industry could compete against such a menace. . . . We are facing what amounts to a declaration of war!"

Loudest Voice. Matthew Woll, third vice president of the American Federation of Labor, raised the loudest voice in favor of an embargo against all Soviet goods. Claiming to represent 500,000 workmen as the head of the Wage Earners Protective Association, he talked of invoking a similar embargo against convict-made goods from Fascist Italy. His language became so intemperate that William Green, president of the A. F. of L., was forced to disavow him as a spokesman for that organization.

Cool Reason. When agitation against Soviet trade reached its peak, a breath of cool reason from the White House blew on the hotheads. President Hoover declared that the U. S. would not discriminate against Russia in enforcing the tariff law. Politics and economics were to be kept separate. Said a Voice that sounded like the President's:

"This Government does not intend to embargo Russian goods just because we do not happen to like the character of the Russian Government."

Taking his cue from the White House, Assistant Secretary Lowman reopened his pulpwood embargo which had already held up six vessels in U. S. ports, had blocked 68 others in transit. Big U.S. Business, the Soviet's good friend, hustled to Washington. Representatives of Amtorg, International Paper and the foreign shipping companies fairly swept Mr. Lowman off his feet with categorical denials that any of Russia's 1929 pulpwood had been produced by convict labor. Soviet officials in charge of the Russian Export Trust cabled that the pulpwood workers were free "to leave any time at their own will," that they were paid a set scale of wages and were in no sense convicts or prisoners. Witnesses belittled Russian imports as an economic menace to the U. S.*

Embargo Off. Impressed, Assistant Secretary Lowman decided that the Treasury had "gone off half-cocked." He revoked his pulpwood embargo. He admitted that the evidence "was conflicting and inconclusive . . . and not sufficient to establish the fact that the pulpwood was produced by convict labor."

Muddled Geography. What the original embargo evidence was remained an official secret. But it was understood that Mr. Lowman had acted on: 1) a general Soviet order for use of convicts in the lumber industry; 2) affidavits of escaped prisoners from a lumber camp. It developed that the "escaped prisoners" were not from the pulpwood forests along the Dvina River, but from the island of Silesky, 1,200 mi. away, where no export timber is cut. Mr. Lowman, it appeared, had never studied Russia's geography very closely.

At Williamstown. Meanwhile U. S.-U. S. S. R. trade relations came to the fore in another quarter of the week's news when the Institute of Politics at Williamstown, Mass., opened its discussions. In halting English, Peter A. Bogdanov, board chairman of Amtorg, complained that his agency suffered from "a certain lack of confidence created by the many baseless rumors regarding economic conditions in the Soviet Union and the recent unwarranted attacks on the Amtorg." He repeated his warning that if U. S. financing conditions for Russian trade continued "unsatisfactory," Soviet purchasers would shift their business from the U. S.

Paul Drennan Cravath, potent New York lawyer, urged diplomatic recognition of Russia by the U. S. Col. Hugh Lincoln Cooper, engineer for the huge Soviet power plant on the Dnieper, declared: "The world is making a big mistake in underestimating Russian leadership."

*Last year Russia sold $30,749,044 worth of goods to the U.S. Chief items: furs ($8,299,215), manganese ($6,050,839), platinum ($3,612,464), sausage casings ($2,675,595). Hard and soft Soviet lumber totalled 38 million feet, compared with U. S. production of 33 billion feet; 113,000 tons of Soviet Anthracite against U. S. production of 75,000,000 tons. In an export trade of $107,651,000 to Russia, the U. S. shipped $29,000,000 worth of cotton, $20,000,000 worth of farm machinery. Last week International Harvester increased its Milwaukee plant 50% to handle a big Soviet order.

This file is automatically generated by a robot program, so reader's discretion is required.