Evening Star Newspaper, January 29, 1933, Page 21

Part 2--8 Pages T ~ EDITORIAL SECTION he Sunday Star. WASHING TON, D. C; SUNDAY MORNING. BOOM IN WAR MACHINES IS BIG PEACE PROBLEM International Trade Issue Dropped Quickly When Taken Up by League and Disarmament Parley. BY C. PATRICK THOMPSON. OWN in Monte Carlo a few weeks ago the strangely youth- ful and penetrating eyes of the ex-King of armaments must have noted with a faint dis- taste the announcement of the Persian legation at Washington that Capt- Saga ‘hey-Pani, an emissary of the imperial ersian government, is in the United tates to buy machine guns and other ar material from Uncle Sam’s great armament factories. Business going to @ rival firm? What are the boys on the sales side doing? ‘True, the old man is a British knight and has extensive British itnerests and associations, while Britain is threaten- g armed intervention in Persia unless Rize. Kahn changes his taciics in the handling of the Anglo-Persian oil con- cession_business. But business is busi- ness. Fifteen years after the Great War funs and shells remain commodities, ike soap and perfume. The interna- tional trade in arms remains merely a eompetitive commercial enterprise. And #he great.British and French armament factories which Sir Basil Zaharoff con- trolled when he was active have seldom found any serious difficulty about sup- plying war material whenever it was wanted. Just a week or two ago, for instance, it was announced that Japan had placed an order for $8,000,000 worth of arms and ammunition. This time Sir Basil must have smiled a fleeting smile, for this order, according to the French paper in which it was reported, went to a French firm. The recent flare-up of activity in the Manchurian controversy and the spread of the fighting into Jehol Province has boomed business as the warfare around Shanghai did a Yeir ago. And these booms in business serve to emphasize the seriousness of this whole armaments problem. For it is a hedgehog of a problem, this private manufacture and interna- tional trade in arms and munitions. The Geneva League and the world dis- armament conference have picked it up several times; but each time the prob- lem put forth all its spikes, and they dropped it in haste. That is the main Teason why the arsenal Brno, which in | re-war days was just a small repair actory, has blossomed since the peace into an immense plant employing 10,000 of the 50,000 men on the pay roll of Skoda, that glant armament concern Wwhich makes everything from a bullet to a tank and from poison gas to bomb- ing airplanes, and which has factories all over Czechoslovakia and in Rumania and Poland, and sells its wares as far E:st s Persia and China and as far West as Mexico and Argentina. Busy Since 1930. The arsenal Brno is no exception. For there is a boom on in the arma- ment trade. From 1930 on the arma- ment salesmen have been kept busier than almost ever before despite the co: Vening of the World Disarmament Con- ference. The Mitsui works in Japan; the mighty Vickers-Armstrong combine, Wwith its factories in Britain, Ireland, Rumania, Spain, New Zealand, Holland, its Japanese steel plant link with Mit- sui, its tie-ups with Fokkers and the great Polish arsenal, the Societe Polo- haise de Materiel de Guerre; Krupp-controlled Bofors ordnance plant in Sweden: the Schnelder-Creusot ring, | the vast French arsenal, and the Skoda organization, Scheider controlled; helf 0zen huge armament manufacturing plants in the United States; the Dider- dus factories, whose offices are hard by the Palace of Peace at The Hague: from all these, and many more, war material has been and still is pouring out in a broad stream. The legitimate trade during this i was magnificent. China and gave immense orders. Irak t arms for her new national force. gnt largely. In Europe, Jugo- slavia spent $50,000.600, Czechoslovakia $60.000,000, Rumama $65.000.000 and Poland $100.005,00C. The Schneider- Skoda ring got almost all the orders fromn these four staies, which have #tanding army strengths totaling, for the four of them, around 800,000 men, | and an aggregatc war sirengih of well cn toward 5,000,000. They stock a total ©of 6,000,000 rifics and 120,000 machine guns and all the etceteras which go therewith, This is only a cross-section of South- eastern Europe. Enlarge that to a ‘world scale, with dark patches in South America, Japan, China, Western Asia and the seas whereon float the gigantic fleets of the five sea powers, and you get a more adequate realization of how, in these piping days of covenants and Kellogg pacts, bravely withstand the slump and the world’s armament bill now aggregates & billior pounds. Business in War Game. The Persian affair is only the latest dronical comment on the problem of the international trade in armaments, big business in the war game. There have been more pungent ones: For instance: Some Japanese armamcnt firms selling China loads of the war material she needed tc resist the sub- sequent Japanese onslaught (37 per cent of all China's immense purchase in 1930). A pre-war British firm selling the Turks the shells they subsequently used to blast the British and Anzac soldiers off Cape Helles and Anzac Cove. The Shearer scondzl inve cen warship builder: The Swedish air force scancal exposed by a government commission last year chief of stuff by, a foreipn aircraft firm). Schneider-Creusot arming anti- French Bulgaria and Hungary. Skoda, Schneider-controlled, supporting the electoral campaign of anti-French Hit- ler. And, last November, the British Vickers-Armstrong armament combine advertising in German journals the merits of its wares, drawing particular attention, by its illustrations, to the peculiar merits of its fleld guns and tanks (the latter being a weapon for- bids '!’)l} to Germany under the Versailles latter affair must have shozked lisht of his long acnt is capable ol ed by anything at all. Ad- ¢ 5 in papars! It was not thus that he worked and traveled in Europe in the old days, building up a business which enabled him at last to dominate the great British firm of Vickers and the arms business in five countries, to negotiate on equal terms with states- men in his flower-bedecked Paris man- sion, to buy up Monte Carlo and sell out at a profit five years later, to con- solidate his position with orders and titles—and to despise the world. The technique of arms selling has improved enormously since the day when a philosophizing Boston mechanic named Maxim, bea-ded. frock-coated, top-hatted, made & round of the Euro- pean stetes with his newly invented gun and a case of ammunition: and in Vienna a tall young man named Zaharoff, then the Baltan agent of the Anglo-Swedish Nordenfelt firm, killed Maxim’s publicity at the dem- oonstration shoot by telling the press men in French, English and German that the miraculous Maxim gun they had just seen was the Nordenfelt gun, and robbing Maxim 4 of an or- @er by telling the Hapsburg war min- the | war material factories | (bribery of the | istry men, whom he knew, that Maxim had made the gun himself and could not produce it in quantity. Zaharoff devised the new methods. That is how he rose from a $25-a-week agent to be armament king of Europe. Astute, worldly, diplomatic, Oriental and of ambassadorial presence, he moved about from capital to capital as quietly and secretively as a Col. House or a Montagu Norman. There ‘were private interviews with men who mattered, discreet little parties given to the right persons, occasionally a demon- stration. | “As he swelled he found (as the | Rothschilds had done before him) that | the external regalia of official rank Is useful. The French granted the “Ad- ministrateur de la Societe Vickers- official decree, the Grand Cross of the | Legion of Honor. He appeared re- splendent at Westminster Abbey in the panoply of a Knight of the Bath. He | endowed chairs of literature at the | Universities of Oxford and Paris in the | respective names of Haig and Foch. Oxford granted the war contractor the honorary degree of doctor of civil law. In short, Zaharoff had found out how to move among the great, who can in- fluence war orders, and how to influ- ence publicity. You may still see the aged arma- ment salesman padding around Monte Carlo in his rubber-soled boots, always overcoated, a funny little round hat pulled down over that head which con- ceals so many secrets. He is out of the game now. After the Great War his armament firms thought war was finished and tried to turn over to the requirements of a peaceful world—saucepan lids, plough shares and the like. But they were inexpert at the unfamiliar job. Vickers lost $62,000,000, Armstrong's $50,000,000. The bankers made the two great rival British firms amalgamate. Zaharofl | had got out with his vast profits. He also thought that the great days were over. He was wrong. There was an- other big boom around the corner. One must regretfully remark that there are no worthy successors to this great artist in arms salesmanship. The business flourishes, but it has ceased | to be picturesque. Even the Sporting | element, implicit in_that masterly deal | of Zaharoff’s when he sold the Greeks, | then preparing for war with Turkey, the first practical submarine, and then crossed over to Constantinople, told the Turks &ll about it and sold them two— even tHat has gone. Like Commercial Travelers. As for the gentlemen of “the busi- ness,” as the gun runners call their trade, they more usually resemble com- mercial travelers than the hatchet- faced crooks or dashing adventurers of popular fiction and film melodrama. They were all on view in Shanghai one day last Summer. News of a $2,500.000 order had brought them hurrying to a hotel, the rt and clearing house, these days, for the war material bought from the British and European arsenals for both China and Japan. There was a lean Dutchman, a fat German, a nervy little Greek, the famous ex- colonel associated with an international | Maxim,” as he was described in the | business group with headquarters at | | Belgrade, and the equally celebrated Irish ex-captain representing a French amalgamation of interests. ~Spies and | | military attaches pricked up their ears. | But almost_immediately they were re-, assured. The Canton crowd were in the market for arms again. Looked | like more trouble for the Nanking group whom the powers find it con- Venient to recognize as the government | of China, but that was all They hang around the fringe of the armament business, the gun runners. and swing the dubious ready money | deals which the big armament firms do not care to handle direct. “We have the arms. Don't ask where they | | come from,” is one of their slogans. Another “We can get the stuff, but have you got the cash?” An in- teresting little crowd, adept at operat- | ing behind the scenes, knowing every inch of the ground of those subter- ranean mazes which link politics and diplomacy to arms. They deal in gov- ernment _surpluses, discarded material and job lots from the stocks of the big armament manufauturers. And how they get “the doings” is nobody's busi- ness. A League commission in 1928 did seek to stop a possible leak or two by suggesting that certain information should be supplied in regard to licenses granted firms to manufacture war ma: terial. But some small nations buyin abroad did not like the idea of the world knowing where, how or what they were purchasing, and the delegate for Britain put the attitude of the big pro- ducers in a nutshell when he said that his government had not the in- formation required, the manufacturers themselves would refuse to furnish it and few governments would have the courage to introduce legislation to com- pel them to do so. Big States’ Attitude. ‘The big states prefer to let the private armament business alone, each confi- dent in the patriotism of its own group, and each concentrating on making things hot for any gentlemen of “the business” who try to run stuff any- where in the territory they are inter- ested in. Try to buy a load of arms in Paris for a_destination known to be within the French mandated territory of Syria, znd see what happens to you. But arrive in Paris or Prague with a large letter of credit, and let it be known in the right quarters that you are in the market for a supply of sec- ond-hand rifles and machine guns, with ammunition and etceteras, for the lord of a brace of Chinese provinces, b;:d (provided you can prove your a fl%es) you will be very unlucky or singu- larly inept if you cannot get ‘“the doings” shipped and delivered without undue delay or fuss. Italy keeps a strict watch on her home and African ‘seaboards. America watches the Philippines like a lynx. It is next to impossible to run arms into Korea. The British secret service sees that nothing st>rts for any troublescme part of the empire, particularly India, and that if it does start it fails Lo ar- rive. The home government keegs a tight control of all exports. You have to get a Board of Trade license, which again requires the indorsement of the foreign office, and relevant service de- partment, war, admiralty or air minis- ter, before you can ship war material out of the island. The British have tightened up control a lot since they nearly innocently land- ed a shipload of arms in Russia in 1921. The hard-pressed bolsheviks wanted arms badly. British and American fac- tories had been turning out the standard Russian rifie for the Czarist armies. One lot of 50,000 stznds of arms, with 600 | rounds for each rifle, hid been bought |by a British a:ms dealer from a dis- | posal commission in England. The pur- chase was on bchalf of a White Rus- | sian group, who said thcy were reselling to pro-British Greece, then preparing for war with Turkey. The rifies were assembled and loaded on a cargo boat at a Thames port. But instead of making for the Mediterran- ean, the boat headed across the North (Continued on Third Page.) | he takes on a very real significance. | JANUARY 29, 1933. How Hitler Trains “Army” Nearly 600,000 Nazi BY VERNON McKENZIE. N the United States a mechanized | age and a reasonably stable form of Government have forced young | men to seek romance and adven- ture in the realm of sport, in the laboratory or in Wall street. In Ger-‘} many certain similar and certain con- | trary forces have enabled men like | Gruppenfuhrer Edmund Heines, one of the major generals of Hitler's Nazi| storm_troops, to carve out careers that | read like chapters from Richard Hard- ing Davis. Only a country in constant | turmoil could produce a man with a' record like this: | Edmund Heines, 34 years old; a vol- | unteer in the German Army in 1915. at | 16; winner of the Iron Cross (first| class) at 17; cited several times for | bravery during the balance of the war; battery cemmander of the Rossbach Pree Corps, under Gen. von der Goltz, against the Bolshevists in the Baltic regions, at 21; officer on the- Rhine m‘ Upper Silesia with the Free Corps, l\:‘ 22; one of the leaders of the first Hit- | ler S. A. (stormgtroops), at 24; a chiet | e of Hitler in the ili-timed Munich “putsch” of November 9, 1923, at 25 | sentenced to death (later commuted to imprisonment) for multiple killings, at 29; pardoned, and a member of the Reichstag, at 32; in command of 42,000 turbulent yet disciplined Nazis in| Silesia, at 34. Gruppenfuhrer Heines he is today, Gruppenfuhrer being a military title roughly equivalent to major general. He reigns like an absolute monarch at his Breslau Braunes Haus. In Septem- ber, 1931, Adolf Hitler gave him one of the toughest assignments in National- Socialist Germany. Heines was ap-| pointed commander of the territory impinging on the festering Polish fron- tier. He found less than 10.000 men wearing the swastika; but in 12 months this number was more than quadrupled. | Beau Ideal of a Soldier. 1‘ Heines is the beau ideal of a soldier. He is tall and heavy set, but lithe and dynamic. He is handsome, with J devil-may-care smile. He has youth, abundant vigor and has won his mili- tary and political spurs. He has the rare quality of being able to fraternize and at the same time to maintain dis- cipline. As Gruppenfuhrer Heines, he is im- But _as the crystallization of he younger German leaders of today ‘There are many adventurers with ideals in the nation, but Heines typifies what war-and-peace-weary Germany seeks— youth, vitality, burning nationalism, discipline and leadership. Although Bavarian-born, he has a definite Prussian ruthlessness. He can click his heels as nicely as a subaltern of the former Kaiser's guard. He can kill without & qualm. He has listened to his death sentence without a quiver. He can charm his quondam enemies, the Breslau police, into presenting him with birthday greetings. He can shg‘ & Reichstag foe and “make him like it. He can chase a night-shirted French officer over the roof of & Munich hotel and live to tell the tale and thumb his nose at the Bavarian police. | Heines is an_idealist whose two chief | obsessions are Germany and Hitler. He lives to train Nazis and to fight ene- mies. He is a soldier of fortune but not a mercenary. He seeks no material rewards, but his activities permit him to revel in adventure and daily toy with death. Of such timber are Ger- many’s younger leaders made. Some are Monarchists, others Communists, but most of them carry, and follow, the banner of Adolf Hitler—flaming red background, solid white circle, with black swastika inset. IMirst met Heines in the throbbing lobby of the Reichstag, a few minutes after the dramatic dissolution of Sep- temboer 12. A fricnd pointed him out: “There is Heines, the chap who was so ccnspicu- ous in the ‘Feme Mora’ trials in 1927. He is supposed to have killed at least scven men, in and around Stettin prin- cipally, about 1922. Come over and meet him.” Heines and I were introduced and for the first time I witnessed his heel- click and felt his hand-grip. Both are things to remember. He remarked on then quickly turned to the training of Nazis in his particular territory, Silesia. “How are you progressing down there?” I inquired. “Why not come down and see?” he flashed back. On the inspiration of the moment I agreed to be at his headquarters, Braunes Haus, 210 miles from Berlin, the following Saturday morning. Nzzi Headquarters. At 10:30 am. Saturiay I reached Bicslau and found my way to the Nazl headquarters. “Gruppenfuhrer Heines, bitte,” Ire- quested of the sentry. He gave the Nazi salute, added a “Heil Hitler,” and turned me over to an ol . It was exactly lik bare racks. l‘éflmm UPPER: A NAZI OUTFIT DOES THE GOOSESTEP AS IT IS REVIEWED BY HITLER. LOWER: HITLER AND THE FATHERLAND. GRUPPENFUHRER HEINES—HIS OBSESSIONS ARE up and down corridors and dashing away on missions. The orderly led me up a creaking staircase and greeted an- other sentry: “Heil Hitler.” “Heil Hitler.” 1 gave my name and in two or three minutes the sentry reccived word that I might enter. Behind a flat-top desk stood Heine He saluted, gave me a “Heil Hitler,” shook hands and waved to a chair. He sat down for perhaps the space of a minute, then jumped up and paced the room. He took my arm and led me to a map. He explained the details of the military organization of the Silesian unit. He led me quick- ly to another wall, and showed me Hit- ler’s photograph and the original of & letter, framed, which Hitler had written to Heines, from prison. Heines was eager as a boy to show me his souve- nirs and trophies. “Would you like to see our quar- ters?” he asked. And taking my reply for granted he started for the door, and showed me the barracks rooms, the mess hall, stables, kitchens and work- shops. The quarters were plain but clean and airy. The men had comfort- able bunks. As we entered each room the first soldier to spot Heines called those in the room to attention and gave a “Heil Hitler.” The discipline was snappy and spontaneous. It would be difficult to exaggerate the “Heil Hitlers.” The salutation has become a mania, an obession and in- vocation. Each soldier we passed, even in the corridors, gave us “Heil Hitler.” ‘Whenever I was introduced to a Nazi, whether he was in uniform or in mufti, he perform=d the “Heil Hitler” ritual before shaking hands. Later I discov- ercd that Nazis end their letters, even those written to non-Nazis, with this greeting. Telephone conversations are similarly concluded. Woman sympa- thizers repeat it. Workers tilling_the flelds shout it when a car with Nazis in uniform whizzes by. The occupants of the car meticulously return it. The repetition soon becomes monotonous, but the fervor with which it is.given is genuine and effective. Having invited me to Breslau, Grup- penfuhrer Heines apparently had de- cided to turn his organization inside out for my benefit, and so I had a unique opportunity to see how the Nazi mili- tary machine operates; to observe their youth-training camp; to witness ma- neuvers and a review. and to study this amazing end almo:t fanatical move- ment from the inside. Heines Called Away. was called away to attend to tion matter and a sushing ' |s facts. First he led me to’a window facing the street. “You see that motor truck there, with seats for about 40 men?” I looked out upon a red motor van, with collapsible sides and cross seats. It had two Nazi flags flying from the bonnet and on the door of the driver’s seat could be seen a prominent Naz wastika. “It looks like a police patrol,” I sug- gested. A “It ought to. Ex- Engels laughed. cept for the insignia, it is an exact y. “But why?" “Just the Grul 's idea. He thought it would be a good joke to imi- tate the police wagon. We aid the po- lice now and then—if they ever need our help in Communist riots. It was bought with profits from our news- papers, A year ago we had no papers in Silesia. We started from scratch. Now we have 40 typewriters and em- ploy 140 men.” Heines burst into the room. 5 “Ah, looking at my ‘police’ wagon!” he ejaculated. “Do you want to see how fast it can be loaded?” It is not Heines’ habit to wait for answers. Leaning out of the window he blew a shrill blast from his whistle and gave & clipped order. Before I could get my “movie” camera trained on the vnnme!dumbeendro&nd.m en had scrambled in and the sides ised again. Heines chuckled. “Too fash for eh? All right, I'll have it done over n ‘When the Gruppenfuhrer commands, or even nods, things happen around Braunes Haus, and happen fast. “Supposing you go out now and see York Castle” suggested Heines. I ex- plained that, famous as it was, I was not primarily interested in castles, but wanted to see men. He laughed im- moderately. “York is now a training camp for our storm troops. You'll see a more than scenery.” He pulled out his watch. ‘The afterncon exercises start in 20 minutes and it's 30 miles away, s0 you couldn’t quite get there in time. But— wait a minute.” He clipped off & command to his or- derly. The man hurried to the tele- phone and bit off & few fast German words. Then he turned to his com- mander, nodding. “That’s all right, then.” tioned to me. Heines mo- “I dont understand; what's all right?” “I told them at Castle York to hold up the maneuvers until you arrive.’ Castle York Scenme. I whisked away in & high-) ered car piloted s uniformed Ni chauffeur. ' As we the yard of Castle Y dent whistle - | find one son of the “Storm Troops” Handle Dummy Guns at Camps Over Nation. rushing pell-mell from their quarters to the cobbled parad: ground. Gen Kallenbach, in charge of the training camp, was wasting no time. No doubt he felt that his exercises had been de- layed long enough. ‘There were 110 men at Castle York undergoing an intensive three weeks’ course. The instruction inciuded pa- rade-ground drill, physical training ex- ercises, extended order drill, difficult obstacle “races” and preliminary work with small arms, minnewerfers, etc.— wooden dummy arms, of course. The obstacle “race” was interesting to watch and_exhausting to perform. The ob- stacles were such as might be encoun- | tered under semi-open warfare condi tions. Here was the sequence: Log barricade, barbed-wire entangle- ment, three-foot wall, low barbed wire under which men crawled tediously on their bellies, trench section, more barb- ed wire, trenches, plain, low hurdles, 10-foot horizonal bars, parados of trench, seven-foot wall. a water-filled ditch and in conclusion some easy hurdles. In groups of 10 each the S. As approached these hazards. At the finish the groups were reassembled, and | the entire unit marched past the Nazi flag, giving the Hitler salute. In Silesia alone there are at least six of these training camps. I say “at least six™ because there is secrecy about certain training bases. The policy ,of the Hitlerites is not to train men in large groups, nor to go in for mass ma- neuvers, but to give intensive training at threescore or more camps, with groups of about 100 at each camp. Most of these intensive training camps have been started during the last six or eijght months. The training base at Castle York was inaugurated in June, 1932 A senjor Nazi officer estimated that between 75,000 and 100,000 young men can thus be made physically fit by means of three-week courses during a 12-month period. Youths who are ob- served to be the kind of raw material which might be whipped into officers are allowed to stay several months. and perhaps they are sent to special officers’ training camps. “Quite a potential army,” I indis- creetly remarked to one of the officers. “It is ridiculous to call it an army,” he retorted. “These exercises combine the best elements of sports and physical training. The men can't even get a smattering of war training in so short a period. But German youth must be trained and disciplined. These courses supply the foundation.” There are admitted to be between $50,000 and 600,000 Sturm-Abteilung members in Germany not paid. They even pay for their own uniforms and, except when they are transported in Nazi trucks, they must provide their own traveling expenses. Between 17 and 30. Most of the S. As are between 17 and 30. The vast majority are unmarried. Without doubt, Germany’s unemployed have aided materially in augmenting Hitler's “army.” Approximately two- thirds of the S. As are unemployed, and they look forward to three profit- able and well fed weeks at the Nazi training camps. These are officered mostly by men with actual war e plies, almost without exception, to the senfor officers. Some of the officers under 30 are, of course, too young to have served during the 1914-1918 fracas, but even many of these have had ex- perience with such units as the Ross- bach Free Corps and the ‘“black” Reichwehr. Many of the Naxi camps are located on the large estates of Germany's aris- tocracy. And this raises an interesting JOU, | question: Why have the aristocracy turned over expensive castle grounds and estates to the Hitlerites? There are several possible answers. Large estates, especially those with elaborate castles, are terrifically taxed. But if an owner turns his estate over to an organization for “philanthropic™” purposes, his taxes are proportionately reduced or even, in the case of taxes levied against the buildings, remitted. Another possible answer is this: If you were a large landowner and one of the mest important political parties fa- vored s form of socialization, including partitioning of large estates, wouldn't you comsider it excellent “insurance” to :fl‘:rughhpnnymeuuumotm Also estate owners may consider that they are doing a national service in facilitating the training of German youth; and many may genuinely sym- pathize with Hitler's aspirations. Sev- eral members of the German nobility are high officers in the Nazi “army,” and there are others in the rank and file. The roster is an extended one, be- ginning with Prince August Wilhelm (popularly called Prince Au’ WI'), the fourth son of the ex-Kaiser, and run- ning on down through the list until we ex-Crown Prince in an 8. A form. But let’s 1 at the present | time (December, 1932). These men are | rience. This ap- | BY MARK SULLIVAN. ing toward a close in the broadest way, we should look upon it in the light of its relation to conditions in the country. In the latter field the phenomenon most full of meaning—the one that springs from the most funda- mental condition—is the appearance in the newspapers of accounts of fore- closure sales of farms, at which neigh- boring farmers appear with the con- certed purpose either of causing the sale to be prevented or of bringing it about that the prices of the foreclosed farm and of the farm equipment, if the latter is sold. should be nominal, their cbject being to kezp the debtor in oc pancy of his farm. These accounts gan to appear some weeks ago as dis- patches from the West; latterly they have come to the surface from points as far east as the rural counties out- side Philadelphia. These episode: e, in effect, a “buy- ers’ strike.” or a “buyers’ boycott.” The purpose of the strike, however, is not primarily to bring down the price of the thing sold nor to enable the buyers to get goods at low prices. On the con- trary, they are essentially a social and political phenomenon. The purpose is to protest against the injustice done the farmer by attempts to collect un- der present conditions mortgages which were made under pre-depression condi- tions. The purpose is not merely to protest against an isolated injustice, but to make communities and the whole Nation aware of this injustice. The at- tempts are effective. Holders of mort- gages attempting to collect are prevent- ed from getting the full amounts of their debts. Effect on Creditors. The experience has its effect upon other holders of mortgages, especially | upon large organizations of lenders on farm mortgages, such as insurance com- panies and joint stock or Federal farm | loan banks—indeed, upen the entire | erediter class of the country. | . At this point, while not germane to | th: main ‘theme of this article, two points should be made. One is that there is not any “creditor class.” Prac- tically every man and every institution is at one and the same time a creditor |and also a debtor. Not all realize it. ‘Scme of the very farmers who partici- pate in these buyers’ boycotts are them- | selves creditors and, whether consciously or not, stand to make a sacrifice through the principle they are under- | taking to establish. | _Some of the embattled farmers are | themselves. for example, holders of in- | surance policies. As such, though they may not realize it, they are in the creditor class. At some future time, upon death or the conclusion of an | endowment term, they expect to re- eive the amounts of their policies in | full. But these very insurance com- | panies are in many cases the mort- gagees whose rights the farmers are | trying to reduce. To the extent that any insurance company having a mort- gage on a farm is prevented from col- | lecting the amount of the mortgage in | full—to that same extent the insurance | company is reduced in its ability to pay | its policyholders in full. | (It should be addcd that this condi- tion, while correct arfd valid as a state- ment of principle. is in practice not very material. Insurance funds are in- | vested over a wide and varied field. | Insurance companies count upon suffer- | ing some losses. While the sum of the losses now being endured is greater than in normal times, there is no faintest reason to suppose that any im- | portant insurance company will be so | hampered in its collection of the funds |t is owed as to be unable to pay its | policies in full as they mature. There | will be inevitably a reduction in cer- itain “premiums,” of the nature of a bonus, which insurance habitually pay to policyholders. the amount will not be material.) Effect as to Taxes. ‘The other point to be made about But farmers is that some of the strikes are mortgagees, but also against “tax sales,” that is, sales by the local county or State government on account of failure of the owner of the farm to pay his taxes. There is some difference in principle, leading to some difference in the ethical attitude, of strikes against the two forms of forced sale. A farmer who has signed his name to a promise to pay is under a greater obligation to live up to the promise than another farmer who, in an action of the Legis- lature or of the tax assessor, in which !the farmer has not participated, is put | under obligation to pay a larger amount in taxes than it is humanly possible to pay. Of the two forms of “buyers’ boycott” the latter would seem to be a little farther in the direction of justi- fication. Co-operative action by the neighbors of a farmer to prevent or discourage a foreclosure sale, a “buyers’ boycott” arises out of the familiar fundamental condition. One repeats it yet again for the hundredth time because it is little understood, but it is the basic fact in this depression. A farmer in 1929, or during any of several years preceding, gave a mortgage on his farm for $10,- {000. At that time wheat was, let us |say, a dollar a bushel. With wheat at a dollar a bushel, or any price approx- imately that, the farmer was able to pay the interest on his mortgage and to meet the principal when due, but with wheat at less than 50 cents a bushel the farmer cannot pay. It is literally im- possible. To make the condition vivid, we can state it thus: When the farmer borrowed $10,000, he borrowed 10,000 bushels of wheat. He is now called on to pay back twice that amount, 20,000 bushels of wheat. What is said here of the farmer is true of all classes of debtors having to do with all classes of goods. The wheat farmer is used here as merely an ex- ample, Only Two Possibilities, ‘The condition of the mortgaged | farmer can be ovefeome in only one of two ways or by both ways operating at the same time)—either the price of wheat must go up or the amount of the debt must be reduced. This is the condition which is at- tempted wmbetnl:f‘t by scores of measures easures designed ey are: st measires Gesighed 15 are: t, measures increase the price of wheat through what is called “inflation” of the cur- rency, and, second, measures designed to_reduce the amount of the debt. Between these two paths of effort financial communities in New York and Europe seem to have concluded that the more likely path to bs followed is | inflation. To Washington this does not |seem to be so. Nevertheless, for the past 10 days or t‘l': :eeks there hfi a prevailing tendency upon o'z ities F we corsider the Congress now com- | companies | these “buyers’ boycotts” on the part of | not only against foreclosure sales by | FARM DEBT COMPROMISE BLOW AT DEPRESSION Congress More Likely to Pass Measure Providing Equitable Adjustment in Federal Courts Than Inflation Bill. !infllflon of currenhy would tend to reise for a time the prices of goods and of some kinds of securities (though |decidedly not all), there has been, among other results of this common | state of mind, a tendency toward higher prices of many commodities and of some forms of securities. I repeat, to Washington as distinct from the financial communities, this judgment about the future trend of legislation does mot at this moment | seem sound. | To complete the picture of attempted and feared inflation, the measures de- signed to raise prices by that process take mainly three forms. They are: Proposals to increase the quantity of currency by additional piper money, | proposals to use silver in one way of another as a basis for aditional cur- (rency and proposals to reduce the quantity of gold in the standard dollar. Of the three, if any one makes progre: it would seem to be likely to be the last, the suggestion of reducing the gold con- tent of the standard dollar. But the actual ultimate actiog of Congress, if it | takes any action, fop tbe amelioration of the funamental condition seems, to ‘Washington, not likely to take the form ;u( inflation to raise prices. Inflation Chances Slim. As one reason for this judgment, it is absolutely certain that no currency in- flation can be enacted in the present | session of Congress which lasts until | March 4. It is absolutely certain that | President Hoover would veto such an | action; and the certainty of Mr. Hoover's{ | veto deadcns the initiative of thcse who | propose inflationary measures. As re- spects the new Congress which will meet after March 4, everything depends upon Gov. Roosevelt. If he should be as_firmly and continuously opposed to inflation as Mr. Hoover is, there would | be no inflation. The common judgment is that Mr. Roosevelt is firmly and de- | pendably opposed to inflation. The more probable—indeed the cer- tain line of attempt to correct the | fundamental distortion of the relation | between debtor and creditor is to reduce | the amount of the debt. This type of |effort will go on. It seems likely to | make progress both among the people in the form of voluntary action and also | through legislation by Congress i Reduction of debt is taking place steadily regardless of any action of Congress. Reduction of debt comes about every day through foreclosure and through voluntary compromise be- tween debtor and creditor- The aggregate of this sort of thing, | going on every day, is enormous. It is one of those quiet processes which, without the aggregate of it catching | much public attention, becomes the | most potent single force working for | the end of depression and the setting | up of business for a new period of prosperity. Efforts to reduce the amount of debt by legislation take several forms. The | sponsors of it include some of the | ablest men in Congress, in both parties | —men of the type of Joseph T. Robin= | son of Arkansas, Democratic Senate ;luder: the accurate-minded and also high-minded Democratic Senator Cor- | deil Hull of Tennessee: the orthodox | conservative Republican Senator Dan- | iel O. Hastings of Delawar>. A line | between the Congresmen who propose currency inflation and those who pro- pose debt reduction is, as respects eco= nomic orthodoxy, a line betwcen the sheep and the goats. Loans to Debtors. Some of the measures to relieve de- pression by relieving debtors, aim to= ward loans of Government money to debtors through the Reconstruction Finance Corporation. In most of the cases, such loans would be confined to situations in which the creditor agrees to accept a reduction in rate of in= terest. . All these measures to relieve debt must, of course. stop short of the pro- hibition, implicit in the Cénsiitution, which prevents changing the terms a private contract. Under presen® c ditions, this constitutional limitation is not a serious handicap. Most private creditors have learned by this time that they cannot collect the whole that is due them and will be only too ready to accept voluntarily an opportunity presented to them by legislation to col- lect more than they otherwise could, or, for example, to preserve the principle | of the debt while the rate of interest is cut in half. Among measures for the relief of debtors, one that is likely to pass at this session gives to a “debtor unable to meet his debts as they mature” the right to take sanctuary in the Federal courts. The courts are given ths duty and oppertunity to, in effect, declare a8 moratorium indefinite in length. During the meratorium the court sue pervises a process in which the debtor makes a compromise with his cred- itors. A striking point is that a minor- ity of the creditors is bound by any compromise entered into by a major- ity. The majority must be a majority in numbers of individual creditors and also a majority in amount of claims, The compromise may take the form of 8 reduction of the debt, or a reduc- tion in rate of interest, or an exten- sion of time, or all three, or it may take any other form equitable under the circumstances. After the compromise is effected the court will ratify it, providing only that it is in the judgment of the court, ‘equitable.” that it is “feasible,” that it is “for the best interests of all the creditors” and that it promises the “financial rehabilitation of the debtor.” It 1s this last, the “financial rehabili- tation of the debtor,” that marks the ne; mure gfi from bankruptcy or an existing legal process for dealing wit debtor, oust the operty; the new in posses- the 'language of the bill, = 12:&13 ge of the e to the creditors. b This bill seems certain to pass in the present session, and it is along lines similar to this (rather than currency inflation) that action by Congress to relieve debtors and achive the cure of depression, seems likely to go. *| Prince Michael Tries To Reduce, but Can"t ROME, Italy.—Young Nrince Michael of Rumania, heir to the throne and once himself King, is growing sg fat that the doctors at Bucharest, after try- ing every means to reduce his weight, have almost grv=2 up hope, according to the Naples newspaper Mattino. Michael is getting especially fat m the legs and ankles, according to the Mattino. Every day Col. Panangeanie, who is in charge of the prince's physi- ¢al well being, gives Swedish exercises to the 11-year-old boy, but these and a special diet seem to be having no ap- preciable effect. Other reducing meas- being discussed. (Copyright, 1933.)