Millions for Lena?

In London last week a famed German professor of metallurgy and an English lawyer of 'such distinction that he sits upon His Majesty's Privy Council resolutely announced this awful decision:

The Russian Government is ordered to pay the sum of $65,000,000 to Lena Goldfields Ltd., and this company's concession --the largest ever granted in Soviet Russia to foreign businessmen--is at an end.

Would Russia obey this order? Could two private citizens successfully command a Great Power? How did they ever get to thinking that they could? Was this to be the historic test case on the outcome of which businessmen throughout the world may base their opinion of the Soviet State's good or bad faith?

Young Comrade Litvinov. The stock control of Lena Goldfields Ltd. is held by a small group of U. S. and British tycoons who maintain the privacy of their identity. Board Chairman of the company in London is Herbert Guedalla, cousin of elegant British essayist-poet-biographer Philip Guedalla. Of the Directors close-lipped Major Frederick Davis Gwynne is easily outstanding. He went to Moscow in 1925 and signed the original terms of the Concession Agreement, a Russian signatory being young Comrade Maxim Maximovitch Litvinov who has since risen until today he is Foreign Minister of the Soviet State. Last week the Soviet Embassy in London, acting upon orders from Comrad Litvinov, declared that the German and the Englishman who ordered Russia to pay Lena Ltd. $65,000,000 had absolutely no right or jurisdiction to do so, and that their act is a total nullity.

Lena's Choice. The German thus smackingly snubbed is Herr Professor Doktor Otto Stutzer. Early this year he was peacefully lecturing upon metallurgy to beer-drowsy students at the University of Freiburg. He read in the papers of disputes, ever more violent, between Lena Ltd. and the Soviet Government over operating details of the concession. Gradually the rupture grew so wide as to demand arbitration. Thereupon, under Article 90 of the Lena Goldfields Concession Agreement of 1925, the Soviet Government chose a panel of six German professors, and Lena made ready to pick one of these as chairman of the Arbitral Board. When she had looked over all the six professors carefully Lena picked Dr. Stutzer.

The Arbitral Board was to consist of three, and Lena chose as her personal champion a man in whom she knew all England (and particularly "The City") would have confidence, Rt. Hon. Sir Leslie Frederic Scott, P. C., onetime Solicitor General of Great Britain. In due course last Spring arbitral Chairman Stutzer summoned his Board to meet in Berlin. All seemed to be going swimmingly when:

1) Lena Ltd. informed the Soviet Gov ernment by telegraph that working condi tions in the gold fields had been made in tolerable and impossible by the interference and oppression of Soviet officials and. secret police. In these circumstances Lena wired that she was cancelling the powers of attorney of her representatives in Rus sia, withdrawing all her Occidental representatives from the country, and would await the decision of the Arbitral Board upon what must inevitably be the final winding up of the concession.

2) Promptly the Soviet Government replied by wire that the essence of the concession had been that both parties must continue to play their roles under the document until released from this obligation by some act of the Arbitral Board. Since Lena had started to withdraw before the Board met she had, declared the Soviet telegram, completely ruptured and destroyed the concession agreement including of course its machinery of arbitration. Therefore the Arbitral Board had become a nullity, and as it had ceased to exist the Soviet Government could not and would not send any representative to sit with Dr. Stutzer and Sir Leslie.

"Implacable Hostility." This Soviet view was not concurred in by the German and the Englishman. They plainly regarded it as a mere subterfuge. Holding that the original concession had not been destroyed, and therefore that its arbitration machinery remained valid, they pointed to Article 90. It plainly provides that if one of the disputant parties shall fail to send a representative to the Arbitral Board then a unanimous decision of the Chairman and the representative of the other party shall be binding upon both disputants. This was the unanimous decision of two that the German and the Englishman made last week, having carried their deliberations from Berlin to London during the past month.

In their decision the arbiters did not mince words, betrayed thoroughgoing exasperation with Soviet logic, methods, conduct. With frank partiality they expressed the opinion that the "friendliness" of the Soviet authorities to Lena in 1925 had changed gradually until it became in the last months of 1929 "implacable hostility." Reason: according to the Board the inception of Soviet Dictator Josef Stalin's famed Five Year Plan of Russian self-industrialization (TIME, June 9) rendered any such capitalist company as Lena "radically incongruous" in Soviet Russia. In terminating the concession (already terminated months ago in fact by the Soviet Government) the arbiters roundly defended their order that Lena should receive $65,000,000 compensation--although the investment of Lena's tycoons totals to date less than $20,000,000.

"The sum of $65,000,000," reads the decision, "represents the future profits which the company would have made and which the Soviet Government can now make on the assumption of good commercial management" of the equipment set up in the field by Lena.

In British business circles the Soviet rejection of a highly "correct" arbitral award (one in the normal tradition of British jurisprudence and made with the concurrence of a Privy Councilor of His Majesty the King) produced a most lugubrious effect. Cabled one fiscal correspondent, "This outcome is regarded in the financial district as a complete demonstration of the impossibility of working concessions in Soviet territory."

"GoodWill & Fair Dealing." Impartial observers were particularly impressed by something which did not figure in despatches last week because it had nothing to do with the award. This something is Article 89 of the Concession and consists of a single sentence: "The parties base their relations with regard to this agreement on the principle of mutual good-will and fairdealing as well as on reasonable interpretation of the terms of the agreement."

In Moscow the statesmen of Soviet Russia presumably feel that in declaring the entire agreement and its arbitral structure void they acted in a spirit of goodwill, fairdealing and reasonable interpretation. Their principal overt grudge against Lena for the past several years has been that her mining camps were "centers of counterrevolution and nests of British spies"--a. charge frequently hurled in the Moscow press.

Russia's Gold. Irrespective of Lena's troubles, the paramount gold fact about Russia is that she ranks after South Africa, the U. S. and Canada as the world's fourth largest producer. Even in her year of reddest revolution (1918) she produced $12,000,000 in gold, and last year she reached an output of $24,000,000, nearly up to pre-War volume. Under Tsar Nicholas II the gold reserve of the Imperial Russian Bank was maintained at $800,000,000--twice that of the Bank of England. Today the gold reserve of the Soviet State Bank is $250,000,000.

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