BRITAIN AND RUSSIA

Dominion, Volume 26, Issue 186, 4 May 1933, Page 9

BRITAIN AND RUSSIA

Indication of Government’s Policy Sought DEBTS AND LENA AWARD (By Telegraph.—Press Aain.— Copyright.) Loudon, May 2. In the House of Lords, Lord Mount Temple, seeking n statement of Government policy toward the Soviet, welcomed the present change from former "entreaties.” Negotiations backed only by persuasion had been entirely ineffective. "You cannot treat Russia,” he said, “as though she were civilised. Beneath a veneer of civilisation there is the Tartar of savagery.” There should be no diplomatic relations, he added, till the Lena Goldfields award was settled and some payment made toward Russia’s debts to Britain. Our taxpayers were paying forty-five millions annually in interest on account of Russia's failure to carry out her obligations. Lord Marley said that no objections had been raised to the recognition of Russia in Tsarist days. The Russian people, now described as savages, had not changed in fifteen years. Lord Marley added that Mr. Baldwin had pointed out that the Lena Goldfields capital loss was £3,500,000. The suggestion was that the award of thirteen millions was hopelessly exaggerated. The recent embargo, he continued, had robbed Britaiu of an expanding market and the trade was going to France, Italy, and Japan. The decision would throw sixty thousand men out of work. The Earl of Stanhope said that no statement of policy’ was possible at present. They had to be careful in their statements, as everyone desired the liberation of Messrs. Thornton and Macdonald. The Government was drawing attention to the questions of debts and the Lena award. Mr. Baldwin’s reference to three and a half millions was the company's actual capital loss, not the total damages suffered. He believed that as the result of the Government’s action in the recent case British subjects resident in Russia were unlikely to be molested, but he recommended that others postpone prospective visits, as a further interference with British subjects would create even more serious relations between Britain and the Soviet than the recent trial. - THE LENA AWARD What Arbitrators Decided HISTORY OF THE DISPUTE The award of the Arbitration Court which considered the dispute between Lena Goldfields, Limited, and the Soviet Government, at first in Berlin and then in London, was announced on September 3, .1930. The Court found that the Lena Company had been prevented by the Soviet Government from carrying out the concession agreement signed in 192i>; it declared the agreement dissolved and , directed the Soviet Government to pay < the company £12,965,000. i Professor Otto Stutzer, of Freiberg Mining Academy, who was elected by both parties as “super-arbitrator, and Sir Leslie Scott, K.C., the nominee of the Lena Company, formed the Court. The arbitrator nominated by the Soviet Government had been withdrawn before the first slitting in Berlin. The Soviet Government contended that the agreement had been cancelled by certain actions of the company, but as one of the articles of the agreement provided that the agreement could bo cancelled only by a Court of Arbitration this _ contention was rejected. Another article of the agreement provided that if one party refused to take part in the court, then the matter in dispute was to be settled by the super-arbitrator and the other member of the court on condition that their decision was unanimous. The court therefore proceeded with the case. The Agreement. The concession agreement, which was gigned in 1925, granted the company exclusive rights of exploration and mining over vast territories —the Leiiskoi-Vit-imsk mining district of over 7600 square miles in Eastern Siberia, the Sissertski and Revdinski districts of 1500 square miles in the Urals, and the Zmeinogorski and. Zirianovski regions of about 12,000 square miles in the Altai. The company was at the same time given rights of searching and prospecting over all other territory of the U.S.S.R. The duration of the Lenskoi-Vitimsk concession was to be 30 years, that of the remaining enterprises 50 years. In a written judgment. >n German and English, the reading of which in the English version occupied 70 minutes, the court likened the problem - of fixing the present value of these concessions, and the sums to which Lena was therefore entitled in British sterling, j to that of ascertaining a fair purchase price for a going concern, and on this basis arrived at the following valuations: £ Lenskoi-Vitimsk district (gold) 985,000 < Ural districts (copper) 1.900,000 lira! districts (iron ore) 7,000,000 i Altai district (copper, lead, zinc, silver, gold) 3,080.000 i Total £12.965,000 1 The court observed that in 1925 it was . the Soviet Government’s pulley to assist j development and promote employment by , em-.mraging enterprises conducted on | ordinary individualistic lines to' enter , Russia. Had this “New Economic < Policy,” as it was called, been continued, . and the concession agreement carried out f by the Government in accordance with its j true meaning, the Lena Company would < by now have been "far advanced on the ( Toad to very great prosperity.”. But by , the autumn of last year a radically tlif- ( fereut policy—the so-called "Five, Year , Flan” —had been substituted. It involv- , ed the development of the U.S.S.R. and j its whole economic life on purely Com- , monistic lines, and brought with it “a j bitter class-war against capitalistic en- , terprise and everyone connected with , such enterprise.” With such, a system a 5 concern like Lena was radically incon- ( gruous, obedient to the laws of Russia, and purely commercial and non-po!:tieal f in its behaviour as it, had been. This re- j versa! of policy necessarily meant the | j breaking of many fundamental provisions j in the concession agreement by tin' Gov- | eminent, and the end was inevitable. f f Forced Out of Undertaking. “The award of the Court of Arbitra- ' tlon which has been considering the dis- 1 pute between Lena Goldfields. Limited, f and the Soviet Government dissolves, a t concession agreement which Bolshevist s tactics had made unworkable.and directs e the Soviet Government to pay to the E company the large, but in the circumstances moderate, sum of just under < £13,000,000,” said the London "Times’ i In commencing on the court's award. 1 "From the facts disclosed before the court 1 there can be no doubt in any reasonable c mind that at a time suitable to them- ( selves the Soviet Government deliberately | < and persistently did everything in their r power to force the company out nl an 1 undertaking in which il had invested mil- r lions of capital, or well as a vast nmounr. I of highly productive skill and labour. In j 1025 when the agreement was signed the < Soviet Government were hoping to find i

salvation in the ‘New Economic Policy.’ They were encouraging foreign capitalist companies to undertake in Russia enterprises that would help them to develop the country under their dictatorship, and they were glad to make terms with an organisation of the strength of the Lena company. In 1928 the pressure of economic facts had caused a change in Bolshevist policy. The Soviet Union was then to be saved by the ‘Five-Year Plan.’ Russia was to be converted from an agrarian into an ‘agrarian-industrial’ State in which, after the assumed necessary development, industry, was to become predominant. This “industrialisation” was to be accomplished on the strictest Communist principles, and the existence of a great capitalist enterprise within Soviet territory was no longer consistent with official theory. , There was a more practical consideration. By the autumn of last year the undertakings of the Lena company had been organised to the highest degree of excellence. The moment had come wlmn the Soviet. Government could do without the company, and they began a rapidly intensified campaign of hostility that could have only one result. They sought to prevent the company from carrying on its work, and they succeeded. Provisions of Agreement. “By the agreement of 1925 the Lena company was granted, in addition to other valuable but lesser privileges, exclusive rights of exploration and mining in three vast areas—the gold-bearing LenskoiVitimsk district of over 7000 square miles in Eastern Siberia ;. an area of 1500 square miles, containing iron ore and copper ore, in the Urals; and a territory of 12,000 square miles in the Altai, rich in complex ores of copper, lead, and zinc. The concession—much the largest granted by the Soviet Government —gave the company control of 30 per cent, of the gold production of Russia, 80 per cent, of the silver production, and half the production of copper, lead, and zinc. In return the company undertook to develop its enterprises with the ‘highest skill and knowledge known to modern science,’ to invest 22,000,000 roubles in development during the first seven years of the concession, and to pay royalties and taxes. On the other hand, it was to be free to buy and sell in Russia and to import and export; its employees were not to be penalised because they were working for a capitalist company, but to have the same rights as those of the employees of the .State organisations. Trade union committees were not to be allowed to interfere in administration. Also the company was to have adequate police protection for its properties and its precious metals. On paper, indeed, the company had all the guarantees needed to make it possible for a foreign organisation conducted on ordinary Capitalist principles, to venture into business in a Communist State. Had the Soviet Government honoured their bond the company would have been, in the words of the award, ‘by now far advanced on the road to very great prosperity.’ Old-established Concern. "The Lena company is an old-establish-ed concern with long experience in the working of mining properties. Under the old regime in Russia it had large interests iu' the territories that were the subject of the 1925 agreement; and for a time it was able, in spite of the obstacles raised by the Government, to make headway. The profits in the first three years amounted to about £750.000. The company invested nearly £3,500,000 in development in the four and a half yeais from August. 1025. instead of the 22.000.000 roubles—£2,22s,ooo, al the Soviet Government’s fictitious valuation —which it had undertaken to invest in seven years. It installed the finest modern plant, and, until it was prevented by the Soviet Government, it more than carried out its part of the bargain. But with the . adoption of the ‘Five Year Plan’ it was treated as a ‘capitalist outcast.’ The official Press incessantly assailed its representatives as ‘dirty capitalists.’ and its workmen became ‘untouchables,’ The promised open markets ceased to exist. It could buy only from the Government and sell only to the Government, who p.Td for the gold at their own fanciful valuation of the rouble and so robbed the company of—at a very moderate estimate —£1,000.000. The company's right to sell gold freely was effectively nullified by the Government’s decree that the buyer would bo shot. Between 30 and -10 per cent, of the gold was being stolon, but the Government would take no stops to prevent this abuse. Finally the familiar cry of ‘espionage’ was raised. The company’s premises were raided, ami many of its employees were arrested and ‘tried’ according to the well-known Soviet legal maxim that ‘law courts are organs for disposing of the enemies of the revolution.' The raids also provided the Bolshevists with technical informal ion of inestimable value if the company were to be forced nut.

“Tim Lena company has had the same experience ns the Harriman and other groups that tried to work concessions in Russia. Concessions can be obtained, hut they can ho worked only nt the pleasure of the Soviet Government. The validity of the court's finding cannot be questioned. It remains now for the shareholders end creditors of the company in Great Britain. the United Spites. Franco. Germany. and Czechoslovakia, to try to enforce compliance with the award by putting whnf pressure they enn upon n Government still anxious for foreign aid.”