DANUBE TRADE

Otago Daily Times, Issue 23707, 14 January 1939, Page 20

DANUBE TRADE

i PROBLEM FOR THE REICH EFFECT OF OVER PURCHASES FEARS FOR THE MAkKi i i The visit which Walther Funk, the German Minister of Economics, is paying to Istanbul, if Turkish repots are correct, is connected (says a writer in the Christian Science Monitor) with the formation of a navigable route for shipping through from the Rhine to the Black Sea via the Danube. Whether this project is under immediate consideration or not remains, to be seen. But there are other vital matters sufficient to occupy Herr Funk, whose visit included some key point# in the Balkan countries, where the plans laid down by his predecessor, Dr Hjalmar Schacht. to collar the trade I of this part of the world are believed to be faring none too well. I With respect to Danube trade, Germany has some reason to be concerned over Turkey’s agreements with Britain, signed this spring, aiming at building up Dgnubia's non-German trade. In virtue of these, Turkey is now in process of buying £16,000,000 worth of British goods to develop its defences, its harbours, and mines, and is paying for them over a series of year’s by i exports of Turkish products specially j earmarked for this purpose. 1 To facilitate the arrangement, the British Government, through its Trade Facilities Act, guarantees payment to the British exporter in case Turkey should default.

Similar Bargains Sought Greece, Rumania, and indeed all the East European countries pricked, up iheir ears when they heard of the , Anglo-Turkish agreements and have all been busy trying to make, similar 1 bargains. Turkey, however, was ia.a I specially favourable position both politically and economically. In the first place, a strong and friendly Turkey I is vital to the British strategic position in the Mediterranean. In the second, Turkey has discovered certain valuable mineral resources which enable it to delve a great deal more deeply into British pockets than most of the Danubian and Balkan countries. But there is no doubt that, given a less unsettled political atmosphere in Europe, . Great Britain—and one might add. France and the United States—could do much, to help Central and Eastern Europe, overcome its economic and social difficulties, the existence of which contribute largely to Europe’s present political instability. . _ The poverty of the Danubian countries cannot be readily understood by those who have not been there. But low though the standard of living is, it is at present rising throughout Danubia except in Hungary. That is why Hungary alone of the Danubian countries to-day shows signs of seri- / ous social discontent. The trouble is that the overwhelming preponderance of Germar y’s trade m the economic life of these countries makes them feel uncertain of what the future holds m store for them. Any appreciable contrction in the German demand spells ruin for Danubia, The Soil Is Rich r Yet the soil.-of all - .the Danubian countries is- rich, and there is no insuperable obstable to their citizens becoming reasonably prosperous provided the necessary help is extended ' to them by the richer countries of the west—to the benefit, be it added, not only of the Danubian fariner but also of western industry. But although tha difficulties may not be insuperable, they are at least serious. A major one is the lact that most of the Danubian States have little to sell except agricultural produce which the Western democracies are already getting from other sources. Great Britain, for instance, would have to think very seriously before disturbing the Ottawa agreements and itg special trade treaties with Denmark, the Argentihe, and other potential consumers of British industrial goods on a large scale merely to do a little more business with-Danubia. Actually, however, when compared with the total British imports of £953,000,000 for 1937, the total amount of new trade needed to set Danubia on its feet is so small as to be unlikely to make an appreciable difference to Great Britain’s other arrangements. With the exception of semiindustrialised Czechoslovakia, there is not a single Danubian country whose total exports exceed £ 35,000,000 a year. An increased turnover of £2,000,000 a year, spread over a number of different items, would mean a great deal to even the richest of the Danubian States and need not involve any difficulties with Great Britain's bigger suppliers and customers. Surplus Crops Taken By the Schacht plan, Germany buys the Danubian and Balkan surplus crops at pre-arranged prices anything from 10 to 15 per cent, above the world level, and pays for them in marks placed to the credit of the exporting country in the German Reichsbank. The creditor then . uses these “blocked” marks to buy the products of German industry. If one side sells more than it buys, one year, it canon paper—redress the balance by increasing its purchaser the following year. So. still on paper, international trade is reduced to a rule of thumb and book-keeping, and everybpdy concerned ought to be perfectly happy. At first the plan seemed to work admirably—so much so that Germany last year had obtained anything from one-third to two-thirds of the export and import trade of all the Danubian and Balkan countries, except. Albania and Turkey. But gradually things began to go wrong. In particular, Germany bought so much more than it sold that each of these, countries soon built up huge credits in blocked marks which it could not take out of Germany in the form of goods because it had exhausted Germany s capacity to supply the kind of goods it needed. . Several East European countries have already bought more German industrial products than they can possibly use in years. Danubian Produce Resold

In some cases, German purchases of Danubian produce have been so big that when Germany needed foreign exchange to buy non-Danubian products on the world market, it simply resold Danubian goods in, say, Rotterdam or London at very much lower prices than either Germany itself had originally paid in blocked marks or the Danubian countries were asking on the international market. Herr Funk’s trip, however, does not end the matter. There is a general feeling in Danubia that some day -or other Germany’s economic difficulties will force the German Government to devalue the mark. . When that time comes, Danubia believes that Germany will no longer buy in the expensive Danubian market, but will 1111 its larder with the products of the much cheaper overseas market. If that should happen while Danubia is in its present stage of undevelopmeht. It spells not only economic ruin for . Danubia but also serious social unrest and maybe even revolution in several countries,