The Wanganui Chronicle. TUESDAY, JANUARY 8, 1946. RUSSIA AND INTERNATIONAL CO-OPERATION

Wanganui Chronicle, Volume 90, Issue 6, 8 January 1946, Page 4

The Wanganui Chronicle. TUESDAY, JANUARY 8, 1946. RUSSIA AND INTERNATIONAL CO-OPERATION

IT will be a matter for regret but it will come as no surprise that Russia lias declined to engage in predetermined international co-operation in the financial field. Russia’s position differs from the free countries and approximates nearer to that of New Zealand, where an effort, too, is being made to insulate a country from the rest of the world and make that country as far as possible selfeontained. That these two countries should have acted similarly is the outcome not of temper but of aim. Neither at the present time desires to see the operation of a free marketing system. Russia engages in external trade through a series of bureaux which operate very much in the same manner as New Zealand’s External Marketing Division. It sends produce overseas, obtains credits in the countries that receive the goods, and spends the money there or in countries associated with the country in which the credit is situated. Under a controlled system it is the economic programme which is studied and the imports must fit into that programme: the consumer must take what results from this arrangement for he is given the limited range of choice which the Government grants to him. New Zealanders are experiencing the same limitation in the choice of consumer goods in the interests of the Governmental industrial programme, as are the Russians. The Russian consumers probably are just as dumb as are New Zealand’s consumers, consequently protests against the lack of choice are seldom heard in the land of the Soviets.

Russia has achieved a remarkable increase in industrial production. Between the years 1929 and 1938 the League of Nations Index of Industrial Production registers for Russia an increase of 313 per cent. The extent to which this indicates an increase in production where no production occurred previously and the extent to which it replaces domestic production is not known nor could it easily be estimated. Industrial production increases absorb both demestically-produced raw materials and imported raw and made-up products, including an increasing quantity of semi-manufactured goods as the range of production enlarges.

Russia has always been and still is a country predominantly interested in the export of raw products. She relics upon these products to provide her with the credits, overseas to pay for her expanding purchases. There are two other courses open to her: to raise overseas loans and to export gold. She is endeavouring to-day to raise a loan in the United States and she is also—presumably—continuing her efforts to increase her gold production in the interests of her external credit position. According to the Statistical Year Book of the League of Nations, 1942-44, world gold production in the year 1940 was 1,130,000 kilograms. Russia has not seen fit to supply data concerning her gold production, but in 1940 it was set down at 130,000 kilograms. Russia may be estimated, therefore, to be able to produce 10 per cent, of the world’s annual gold output. Is this amount likely to be disturbing to world cur-' rency stability? It can be said that with a World Stabilisation Fund in operation it would be less likely to act as a disturbing agent than without that fund in existence. But gold is one of many of Russia’s exportable commodities and it is upon the other commodities that the Soviets chiefly depend for the external credit supply. When world prices fall—as they did during the Great Depression—raw materials fall lowest and capital goods fall least in price. As Russia is hungry for capital goods she desires to secure as high a price as possible for her exportable raw materials, and consequently she has no interest in promoting depressions in the world. There is no evidence that she has done so nor is there any reason within sight why she should do so. The increased value of her exportable gold would not bring her sufficient advantage to outweigh the losses suffered in consequence of the price fall in her exported raw products. Despite Russia being a large gold producer and notwithstanding her decision to remain outside the Bretton Woods plan, there is every reason for assuming that she will, in the pursuit of her own interests, prove to be co-operative in conduct. It is possible that the operation of the International Bank will prove to he one instrument for the wearing down of that deep suspicion which seems to have possessed the Russian mind for a long time in her dealings with the outside world.