THE New Zealand Herald AND DAILY SOUTHERN CROSS. SATURDAY, NOVEMBER 20, 1920. TRADE WITH RUSSIA.

New Zealand Herald, Volume LVII, Issue 17633, 20 November 1920, Page 6

THE New Zealand Herald AND DAILY SOUTHERN CROSS. SATURDAY, NOVEMBER 20, 1920. TRADE WITH RUSSIA.

The Russo-British trade agreement which, it is stated, will be submitted to the Soviet Government within a few days, has been under negotiation for several months. It is probably correct to say that it is regarded with disfavour by several members of the British Cabinet, and with suspicion by the greater part of the British nation, which fears it will merely perpetuate Bolshevism by saving Soviet Russia from an economic collapse. There are other good reasons for refusing to enter into commercial relations with Russia, among them the fact that the Red armies have only now desisted from an attempt to overwhelm Poland and may renew their attack in the spring. These arguments, strong as they are, have failed to overcome the growing anxiety of the British consumer to receive Russian supplies and of the British manufacturer to find a new market for his products. With bread and butter at almost famine prices it is easy to understand—even if one doubts the wisdom of — eagerness of the working classes to open, up trade with the dairying districts of Siberia and the wheat regions of Southern Russia. With home and foreign markets unsettled it is easy to realise that Russian trade is a very attractive line to manufacturers who find themselves holding large stocks of goods they cannot sell. Long before negotiations had reached finality Yorkshire firms had signed contracts with the Soviet delegation for £2,000,000 worth of cloth, and manufacturers of ploughs and other agricultural machinery.had also accepted large orders. Similar and much larger orders have been —and, according to to-day's cable news are still —accept ted in America, but the United States Government i has refused to open negotiations

either political or commercial with Soviet Russia. Britain, on the other hand, has endeavoured to make trade terms with Bolshevik delegates, and it would be idle to pretend that British policy in this connection has been governed by anything but expediency.

It is highly probable that the resumption of trade will dash many hopes. The most reliable reports indicate that Russia has little to export. Several seasons must elapse before Siberia can reach her normal output of butter, and even cereal growing, which is one of the easiest branches of farming to resuscitate, will recover but slowly. There is doubtless surplus food in some parts of Russia, but transport is so disorganised that in vast territories there is famine. Under these circumstances the outlook for an export trade is not bright. A glance at the map will show how completely Russia depends upon her railways for transport. Before the war Russia had very large constitutional resources at the service of her railways. An Imperial law had given Russian manufacturers a virtual monopoly in railway materials and machinery, and many large works had been developed in several parts of the country for the building of rolling stock and the manufacture of rails. The Soviet Government dealt this industry a deadly blow by removing the technical administration of the workshops and traffic staffs and substituting its own committees. The consequence was that of 9000 engines available on 17 lines, in April of last year, barely more than half were in running order, and there is little reason to suppose that the conditions have improved since. Moscow, the nerve centre of the Soviet system, is practically isolated from the oilfields of the Caucasus, the coalmines of the Donetz basin, the cotton fields of Turkestan, and the mineral resources of_ the Ural Mountains. Petrograd is even worse served, and the. manufacturing towns of the Volga and in the Urals are practically cut off from the rest of Russia. Even if Russia were overflowing with foodstuffs their export would depend upon the reorganisation of the railway system, and this would be a matter of some considerable time.

If Russia has no goods to offer for British cloth and machinery, with what, then, can she purchase? The answer of the Soviet is, gold; but this raises new and very doubtful factors. Swedish firms which have accepted Soviet gold have discovered that it contains impurities, depreciating its value by about 18 per cent., but this was not their only difficulty. They have found it impossible to dispose of the gold in the United States, which offers the on 7 y really free market for gold, because Americans fear the risk of attachment. Russia has many creditors, and she has repudiated her debts. It is possible her creditors may claim the gold she exports, but even if merchants avoid legal complications, how can they transact business on a large scale with a state which may repudiate payment? The Russian gold will not go very far in re-establishing trade— is estimated that the Soviet has only £80,000,000 worth left—and for the rest Russia must, in the meantime, depend on credit. But credit is based' on confidence, and until Russia recognises all her debts there can be no confidence. Unfortunately, the British. Cabinet appears to be divided ■on the wisdom or practicability of making Russia recognise her foreign debts. It is safe to say that the business community will regard any agreement which overlooks or slurs this important point as unsatisfactory and illusory.