AMERICANS WARNED

Evening Post, Volume CXIII, Issue 97, 26 April 1932, Page 9

AMERICANS WARNED

A CRISIS APPROACHING CASH BASIS ADVISED (From "The Post's" Representative.) NEW YORK 25th, March. The United States Government is warning business firms, which have been trading with Eussia, that they should ask cash in future for their sales to that country." This is liberally construed to mean that Eussia is expected to modify, the basis on which she has built her hopes of securing sufficient gold'exchange externally, to pay for raw materials and machinery. In other words, something approaching a financial crisis is anticipated in Russia, to be followed by th 6 Soviet taking a further step toward blending Communism with capifalism.

The Department of Commerce has made a continuing, exhaustive examination of the situation in Bussia, mainly to protect its traders. It discovers that Britain's suspension of the gold standard was a severe How to the Soviet— more damaging^ than the world realised. England was, under the lat» Labour Government, Eussia's best customer; her returns in gold are now depreciated 20 per cent. The Soviet out look is darkened by the refusal of the peasants to surrender all their/ wheat to the State; 50 per cent, of it is reported as being held back. Scandinavian countries, since they, too, went off the gold standard, are paying Eussia less for her exports. Italy, still on the gold standard, is insisting on cash, or a substantial collateral in goods, with the result that Eussian' goods are piling up in Italian warehouses. German banks are demanding redemption of their gold credit to Eussia. DETAILS OF THE'POSITION. ■ Briefly, that is the position, a3 disclosed by the Department of Commerce at Washington. American business men are warned that the Soviet is short of gold for foreign purchases, and that further sales will be attended with "unusual risks." The Five-Year Plan has not yet produced sufficient for domestic needs, aside from, any surplus for export. A-list-, of seventy articles, classed as "necessaries of life," discloses a dire, shortage .of every one of them in Bussia. Conditions under the Soviet are still far below the standard of living ik Germany and other countries. Stalin promised that rationing would be dispensed with in 1932. In the light of existing shortages, this means, according to American economists, soaring prices and the end of the inflated rouble, unless Eussia can stabilise her internal currency in. terms of external money. To-day the rouble trades internally at about two shillings, but actually it has a value of not more than fifty to the florin, and would long since have reached the fanciful heights of the old German mark but for the Soviet control system which gave a flat value to money within its borders.

But American business men wish to trade with Eussia. United. States foreign trade has declined 1500 million, dollars a year. With the end of the depression in sight, comprehensive plans are being evolved for rebuilding foreign trade. The task will be more difficult when Britain, which has now replaced Canada as Uncle Sam's best customer, adopts a tariff. A huge credit pool, to finance trade with Eussia is to be submitted to the forthcoming meeting of Congress. . 8