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ARMS AND THE MEN

Reprinted from "Fortune" by special permission

NO WRITER ATTRIBUTED

A VERY handsome prosperity it has been; one that has endured as few others during the stormy days since 1929. As a result of the operations of these highly international concerns the world's yearly armament bill stands now in the vicinity of a billion and a half dollars. During the last few years the Far East in particular has contributed much to satisfy the MM. de Wendel and Schneider--to say nothing of Vickers-Armstrong's Sir Herbert Lawrence. Japan has been a highly profitable customer; the firm of Mitsul, allied to both Schneider-Creusot and Vickers-Armstrongs, served its country splendidly when Manchuria was flaming brightest. It also served China excellently. In 1930 China, the world's largest importer of arms, bought almost 40 percent of its war material from Japan. The European armament makers who were supplying this trade found the free port of Hamburg convenient; during one famous week in 1932 there cleared from Hamburg two ships loaded with dynamite, grenades, and airplane parts; another with 1,000 cases of explosives, another with 1,700 cases of ammunition, and still another, brining up a triumphal rear, with 100,000,000 francs' worth of French machine guns.

The would traffic in arms has continued unceasingly since the war; the armamount leopards have never changed their spots. Detail upon detail, incident upon incident, illustrate how well the armament makers apply the two axioms of their business. Let one incident suffice here.

Inevitably, after the war, Hungary caught the itch to rearm. The Treaty of Trianon, by which she made peace with the Airlines and Associated Powers, for bade it. Schneider-Creusot, however, was above treaties. Hungary got the money with which to place a large order with Skoda, the Schneider-Creusot subsidiary in Czechoslovakia--got it through the Banquet General de Credit Hongrois; Which in turn is financed by the Banque de 1'Union Parisienne, of which Eugene Schnelder is a director. Thus it was that Schneider contrived once again to circumvent his government and rearm a nation that France had spend blood and treasure in the attempt to disarm.

But the story does not end here. When the Hungarian loan fell due it seemed inevitable that Hungary would default. Thereupon it was conveniently arranged that Hungary negotiate a long from The French government lent the at Hungarian negotiate a loan from the French government just M. Schneider's Banque de 1'Union instead of, as one night have expected, through the Banque de France.

One voice crying in the wilderness was the voice of the French Deputy from the Creusot district, Paul Faure. Several times in 1931 and 1932 M. Faure made speeches to the Chamber. He raised the question of the Hungarian loan and asked, in essence, Who holds the bag? Obviously not Skoda; it had paid a dividend of 28 1/2 per cent in 1930, with never a recession in its steady year-by-year increases. He went further: he traced from the early days of the century the curious fashion in which French governmental loans insisted on relating themselves to Schneider Creusot orders. Throughout these years France had made loans to Mexico, Greece, Japan, Russia, Spain, Italy, Rumania, Serbia, Bulgaria, and Turkey, and every one of these countries had., thereupon placed armament orders with Schelder-Creusot. The last two countries had, in fact, pushed the return compliment as far as turning French guns, so bought, upon French troops at the outbreak of the war. Almost inevitably. M. Faure pointed out, there sat on the directorate of the financing bank of the country that bought the armaments a representative of Schneider Creusot or some other member of the Comite. This precaution did not, however, prevent most of these loans from being in default. Coming to the present, said M. Faure, "we find M. Schneider arming Bulgaria, M. Schnelder arming Turkey, Skoda supporting Hitler, France-Japanese, Franco-Argentine, and Franco-Mexican banks. This is fall"--he ended with a masterpiece of moderation--"extremely suspicious." Then, having made these revelations, M. Faure shortly after found himself defeated for reelection to the Chamber; he was, after all, a deputy from the Creusot district, and M. Schneider found it more convenient to bring about his defeat than to listen to more of his speeches.

Ray of Hope

Have governments ever taken any steps to confiscate the business of the armament makers? Very few. In the early days after the war, Europe's government had small heart for had small heart for proceeding against their betrayers, even though the waxen seals on the Treaty of Versailles were scarcely hard before they were once again busy disturbing the peace.

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