Russian Trade

...we have to look around in other branches in order to get a more complete picture of the extent of SovietAmerican trade...

...it seems as if they would rather give up their small farms and have better food, greater personal convenience, reduced taxes, instead of carrying on a fight against the government which to all appearances is doomed to failure...

...The attitude of the government of the United States toward Soviet Russia is in contrast with the increasing industrial and commercial interchange between the two countries...

...The Amtorg tells us that not only has the number of American firms granting credits to Soviet purchasing organizations increased, but the terms have become more favorable...

...For the purpose of better and more efficient agricultural production the government has attempted to collectivize the great number of farms previously under private management and to organize them into large state farms...

...one is through foreign loans which are obtained, for instance, from Germany and other nations...

...The United States customs figures for 1928 and the first half of 1929 show that the Soviet union is third among the markets for American agricultural machinery and implements, being exceeded only by Canada and the Argentine...

...The reason for this astonishing development apparently lies not so much in the fact that the peasants have been converted to Communism, but rather in their mere desire to save their very existence after the bitter experiences of past years with sequestrations, persecutions, espionage and so on...

...It seems probable that American industry is destined to play the leading part in the Russian reconstruction period on account of the great financial superiority as well as of the large output of machinery and industrial equipment...

...It is at this point that American industry enters into the picture...

...The case of Germany will be remembered when, shortly after the war, foreign nations came to her aid and helped her to build up, or rather reorganize, her industry with which today she competes successfully on the world market...

...And indeed, if one stops to think that American industry is largely relied upon by Soviet Russia in the reconstruction work, the industrial and commercial dependence on one side and the rather reckless political propaganda in the streets and squares of American cities on the other are not easily reconciled in the eyes of an impartial onlooker...

...The stronghold of Stalin and his associates is the cities with their factories and labor population...

...the cities depend on the peasant's products but the peasant wants machines and tractors if he is to produce above his own immediate needs...

...The instances of either actual or threatening competition from the Soviet union could be multiplied almost at will, and they extend to many of those branches in which the American manufacturers are particularly interested...

...the highest estimate, however, shows only 25,000 tractors in existence, of which not less than 50 percent are in need of repair...

...But aside from the political issue the purely industrial development of Soviet Russia with the help of other nations seems interesting enough to warrant a somewhat closer inspection of the present economic evolution of the Soviet union...

...For Russian industry stands on an entirely different platform when compared with any of the industrialized nations of either Europe or North America...

...The Amtorg Trading Corporation which, as has been stated, is the leading firm engaged in Soviet-American trade, tells us that agricultural production fell considerably short of the program...

...we might just as well rely on the official statistics...

...the latter is generously given...

...is about four hundred aside from an additional 800 American business men and engineers who visited the Soviet union during 1929...

...When glancing at these figures it becomes clear that American commercial interests are becoming ever more involved in Russian affairs...

...The logical consequence is that the Soviet union is in the enviable position to underbid every single competitor on the world market and is yet able to cut a sizable profit...

...And it is this pressing need for exports and, of course, the growing capacity of Russian industry to export which is of great significance to the American manufacturer and exporter...

...In her struggle for industrial development and economic independence Russia is considerably helped by foreign nations and particularly by the United States whose manufacturers and financiers, exporters and engineers take an active part in the reconstruction work of the U.S.S.R...

...Soviet Russia has very little cash but two other ways offer a solution...

...When the latter will have been successfully completed and a capable industry is actually at work, the present policy of swamping foreign markets will in all probability be maintained because the Russian people at large are too poor to be able to represent a formidable market for their own industry...

...Due to the absence of American consular representatives in the U.S.S.R., the Soviet exporter finds it very difficult and sometimes impossible to ship to the United States certain commodities which require consular invoices, etc...

...Soil and labor, the two main ingredients of any kind of product are in the hands of the Russian government...

...The soil is free because it is owned by the government and labor is largely paid in devalorized currency, i. e., paper rubles...

...The figures for 1929 show that the Soviet union was the largest foreign market for American track-laying tractors and a close second (after Canada) for wheel tractors...

...In view of these increasing trade activities the question comes to mind of how all these deliveries are paid for...

...In fact, these exports have become so extensive in several branches that they make themselves felt on the European continent already today...

...How does this work out in practice...

...it is, no doubt, true that the exports from Russia are pushed to the utmost possible extent in order to obtain in turn gold and machinery, and it is even maintained that a considerable part of the population within the Soviet union is deprived of grain in order to make large quantities available for the export...

...Another branch of American trade activities is reflected in the technical assistance to the Soviet union...

...Over a score of American technical assistance contracts were signed in 1929, the total by the end of the year x56 THE COMMONWEAL June II, 1930 approaching two score...

...The strangest aspect of the different controversial questions, however, seems to be the fact that the Soviet union accepts with one hand loans and credits, machinery and technical assistance from foreign nations, but pushes with the other hand a political campaign which has for its purpose the destruction of the same economic system that plays a decisive part in the renaissance of Soviet Russia...

...Incidentally, 90 percent of the orders placed in the United States during the ten months ending July 31, 1929, the value of which represented about $51,000,000, are said to have been closed on a credit basis...

...Now let us see how this five-year plan has worked out in its first year of operation...

...Whereas manufacturers and exporters alike visualize the marketing possibilities of the new Russia (though they do not seem to be aware of the prospect of an unwelcome rival on the world market) the government is standing in the background letting the industry take care of itself...

...If we turn to other agricultural machinery it is found that only 10 or 12 percent of the requirements are covered...

...the Russian five-year program provides for an expenditure of between $75,000,000 and $100,000,000 which shall cover the cost of construction of some fifteen rayon plants...

...Here it may be added that the total turnover in the six years since the resumption of regular trade relations between the United States and the Soviet union has amounted to more than $600,000,000...

...From these data the fact may be deduced that not only are American firms (and many of them the leaders in their respective branches) doing extensive business with the Soviet union but they are doing it largely on a credit basis which makes the commercial relationship between the two countries somewhat more intense and increases their dependence upon each other...

...At the present time Soviet organizations do not have any judicial status in this country and thus have no right to the protection of American courts...

...in other words, tractors and other agricultural machinery must be produced in sufficient quantities to make possible the extensive cultivation of the soil and to produce food for everybody...

...Under the present extra-legal status ships of either country, on entering the ports of the other, must pay six times the regular port charges paid by vessels flying the flag of countries that have established normal relations...

...If the majority of this production is thrown on the European market it will undoubtedly affect the balance of production and demand and will, via Europe, strike at the American rayon industry also...

...It is clear that in Soviet Russia we have to see the growth of an industrial power which with the generous aid of the American industry as well as of European nations will soon become a factor to reckon with on the world market...

...The European rayon industry finds itself today in a state of overproduction...

...At that time, too, the German people were not able to support the domestic industry through a large and generous demand, and the manufacturers had to look to foreign markets where they could sell their goods...

...In order to ascertain the extent to which the Soviet union is dependent upon foreign nations it is well to get an idea of the domestic struggle that is going on between Archangel and Sebastopol and between Minsk and Kazan...

...The reason may be found partly in the bitter struggle between individual farmers and government (the latter trying to organize collective, i.e., large state, farms) and partly in the very considerable shortage of tractors and agricultural machinery and implements...

...But all this reflects only a small part of American trade activities with Russia...

...According to Department of Commerce statistics the Soviet union was the fifth largest importer of American industrial machinery in 1928...

...It is still an experiment and the fate of Soviet Russia still hangs in the balance...

...Credits for one year or more were extended by nearly two hundred companies...

...Indeed, one might go so far as to say that without this aid from abroad Russia would have a considerably harder time to develop her natural resources, to build up her industry and to gain that economic freedom without which the Communist rule could not endure for long...

...It therefore seems clear that this great majority of the rural population must be satisfied if the Soviet rule is to endure...

...The Soviet importation is said to represent more than onethird of the total Belgian production...

...Soviet purchases in the United States for the twelve months ending September 30, 1929, totaled more than $107,000,000 as compared with about $91,000,000 for the fiscal year 1927-28...

...Credits of three years or over were received by the Amtorg Trading Corporation from a number of leading firms during 1929...

...The Swedish lumber market is greatly disturbed by the Russian exports...

...the other is through exports from Russia into the United States among which there are such products as furs, precious metals, casings, fish products, coal, lumber, etc...

...The Soviet union is somewhat handicapped with respect to the method of covering its large unfavorable trade balance with the United States, since Soviet gold is not permitted entry into this country...

...they cost practically nothing, one is tempted to say...

...The Amtorg Trading Corporation, which is the leading organization in Soviet-American trade with headquarters in New York City, states that the bulk of the purchases consisted of tractors the value of which amounted to about $20,000,000 during the latter year...

...125,000,000 people of the total population of 155,000,000 live by agriculture...

...The problem is therefore essentially this: people want food and shelter and do not generally care much about the political issue...

...We have also to remember the Russian exports to European markets part of which are reexported to the United States...

...The industrial development of the Soviet union is dependent upon the cooperation of foreign nations...

...Purchases of agricultural equipment in the United States rose from $15,000,000 during the fiscal year 1927-28 (running from October 1 to September 30) to $28,000,000 during the following year...

...Over a year ago the Soviet government adopted a plan for the economic development of the country during the five-year period from October 1, 1928, to September 30, 1933...

...The total number of American engineers and technicians at present working in the U.S.S.R...

...While it is true that the present production figures are not imposing they show clearly the upward trend and a proportionately high and steady industrial development...

...Diplomatic relations have not been resumed although both governments have signed the Kellogg pact which stipulates that "pacific means will be sought for the settlement or solution of all disputes or conflicts...

...It therefore cannot surprise that credits play an important part in American trade activities with the Soviet union...

...the flotation of Soviet loans on the American market is officially prohibited...

...This movement, first doubted in its practical possibility, has grown so rapidly that today a total of 75,000,000 acres or 20,000,000 above the government schedule have been collectivized...

...The present export policy of Russia is guided by the bitter need for funds with which to build up the industry and carry out the five-year plan...

...It has been pointed out that Soviet Russia has to export in order to pay for the bitterly needed machinery...

...According to the latter the Soviet-American trade balance for the fiscal year 1928-29 was adverse to the extent of about $60,000,000...

...June ii, 1930 THE COMMONWEAL 155 According to the present extent of collectivization the number of tractors needed would be about one hundred thousand...

...However, in view of the strict censorship in Moscow on one side and of a certain animosity in non-Russian countries on the other, it is hard to draw the line between optimistic reports originating at Moscow and pessimistic prophecies coming from the centres of capitalism...

...in short, the technical means at the disposal of the Russian government are far below present requirements, and if the attempt to increase very considerably the number of agricultural machines and implements either by large imports or by more intensive domestic output or both is unsuccessful, the Soviet union will face a very critical situation, indeed...

...A recent Times despatch says that matches from Soviet Russia are flooding Belgium to such an extent that one factory has closed and another will soon shut down...

...The Russian government is backed by a political minority which is largely concentrated in the cities...

...the well-known Swedish daily, Stockholms Tidningen, says that laborers in the Russian lumber industry are recruited by force and that in this way the cost of production is kept down to an unbelievably low level which again enables the Soviet union to compete with the most powerful producers and still obtain a considerable profit...

...and the number of orders is still rising as may be seen from the purchases during the last quarter of the past year which amounted to $12,500,000...

...The Communist propaganda that is going on in the United States, and apparently under the protectorate and with the financial aid of the Soviet government, forms probably one of the major obstacles in the way of resumption of diplomatic relations...

...For the calendar year 1929, American industrial and electrical equipment bought exceeded (according to the Amtorg) $40,000,000 which is almost three and onefourth times the purchases of 1928...