Distress Goods

If Russia's last ruling Romanov had not overreached himself by building a railway clear across Manchuria and down to Port Arthur, thus provoking the disastrous Russo-Japanese War, he might conceivably be on his throne today. From the shame of their defeat by yellow men, Russia's Imperial Government never entirely recovered but they did always manage to hold the steel ribbons into furthest Asia which they had built, the Chinese Eastern Railway. Last week, to the shame of Soviet Russia, her rights over the C. E. R. were sold, or rather yielded to Manchukuo by Joseph Stalin for the insignificant sum of 140,000,000 Japanese paper yen ($39,200,000), plus an allowance of 30,000,000 yen ($8,400,000) to pay off Soviet railwaymen who now lose their jobs to Japanese and Manchukuans.

The C. E. R. cost over $400,000,000 some 30 years ago. Its net profit for 1933 was over $5,000,000 (before Roosevelt). Prior to Japanese interference in setting up the puppet Empire of Manchukuo, the C. E. R. earned $10,000,000 (before Roosevelt) yearly from 1924 to 1930. Thus the C. E. R. changed hands last week for less than five times its earnings in an average year, the worst bargain made by Soviet Russia since Lenin accepted the Peace of Brest-Litovsk.

Explanation: Neither under Lenin in 1920 nor under Stalin in 1935 has the Union of Soviet Socialist Republics ever been strong enough, despite its present "World's Largest Army" (see p. 15), to outbluff, much less outfight, a resolute adversary like Japan. With boundless insolence the yellow men, as they bought Stalin's railway for a song last week, actually egged their puppet Emperor of Manchukuo to extend official recognition to the Grand Duke Cyril, pretender to the Throne of Russia. One more insult to Stalin & Co. came when Emperor Kang Te announced that while all Red Russian employes of the C. E. R. are to be fired, all its White Russian employes may keep their jobs.

In Moscow the Chinese Embassy blandly pointed out that Soviet Russia, by her agreement of 1924 with China, specifically engaged not to sell or surrender Russia's rights in the C. E. R. to any third power without China's consent. Nettled, the Soviet Embassy spokesman in Nanking snapped: "China has for years been unable to exercise her rights or duties regarding the C. E. R. She cannot properly reproach us. We consider this Chinese protest a mere formality."

The terms of sale were initialed in Tokyo last week by Soviet Ambassador Konstantin Yurenev and a General Ting, so-called Minister from so-called Manchukuo. Actually the real buyer was Japan through her shrewd Foreign Minister Koki Hirota at whose home the initialing took place.

That Japan is the real buyer sufficiently appeared when the Japanese South Manchuria Railway announced that it will operate the Chinese Eastern Railway henceforth as the "North Manchuria Railway," re-equipping it--with British rolling stock--to match the narrower "American gauge" of its own lines.

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