The Washington herald., 1921-02-05
CENTRAL EUROPE
SADLY In NEED OF
PERSONAL PUSH
Economic Reconstruction
Depends Largely Upon
Individual Initiative.
COTTON IN DEMAND
Textile Industry of Austria
And CzechO-Slovakia Furn-
ishes Great Opportunity.

tspeciAl to Business Section Of Ths wash
tnxton HerRld-)
An American business man, who
has given a great deal of his time
and attention to the study Of eco
nomic conditions in Central Europe
and to the plans which have been
suggested for the Improvement of
that situation, has come to the con-
clusion which has apparently finally
been reached by the allied states
men. namely, that the economic re-
construction of Central Europe de-
pends largely upon Individual initi-
atiye and enterprise, and that the
only feasible way to reconstruct the
economic life is industry by indus
try. Having arrived at this conclu-
sion. this American became con-
vinced that in the textile industry
Of Austria and Czecho- Sloyakia
there was an opportunity for Amer
loan business men to make hand
some profit by supplying cotton for
these Industries, and at the same
time to establish business connec-
tions in this part of Europe that
would be of great advantage in the
future, when the political and eco
nomic situation in that part of the
world becomes stabilized.
Improvement Trade Urged.
The method of procedure which
this American Investigator recon-
mends is usually referred to as i'm
provement trade" OF by the Eng
lish expression. the drawback
system or trade" These terms are
used to describe a line of activity.
the underlying idea of which is that
70
trail European manufacturer raw
material without receiving payment
for it the raw material remaining
the property of the foreigner. The
central European manufacturer
converts this material into a I'm
ished product, which is still the
property OF the foreigner. The man
ufaCturer is compensated for his
work in one way or another. fire.
quently by the payment of a certain
sum per unit. The finished article
is sold for the account of the for
cigner either by himself or through
the selling organization of the man
ufacturer. The manufactured prod
uct is either exported to the for
,eigner's own country or sold in Eu-
rope.
As long as conditions remain ap-
proximately as they are now. that
is. with the price of cotton Is and
Il cents a pound laid down in Eu-
rope. and the present price of fin
ished goods, and the present low
rate of exchange, it is estimated
that a transaction carried out along
this line would show a profit of
something like 100 per cent.
The fact that British spinners,
with their exchange at about 80 per
cent discount, can make a profit by,
supplying cotton to Central Euro-]
peaan textile Industries, would seem
to indicate that American concerns
could secure even a greater profit
from similar transactions.
In anticipation of the contention,
that il this plan of operation wo1ld
he so profitable for a foreigner 1t
ought to be equally so for the Cen
trail European concerns, ii is point
ont that because of the present
financial situation and on account
Of the violent fluctuations Of ex-
change. there is for an Austrian an
enormous financial risk in the pur-
chase Of raw materials, especially
in large quantities. The foreigner
doing business under the Improve
ment plan" could purchase raw ma
terial in his own currency and his
simply through fluctuations in ex-
change For an Austrian. however,
an obligation to pay Sf,000,O0O may
be at one time an obligation to pay
500, 100000 kronen; at another time
il may be only 150,00O,O0O kronen;
but it also may mean that there will
be an obligation to pay 6oo,OOO,OOO or
700 600, 900 kronen. Therefore ST.
600. 900 worth Of raw material will
not always remain worth Sf,O00.0OO
to him.
Great Demand for Textiles.
II is asserted by those who have
Investigated the market for textiles
that a great demand has developed
throughout countries formerly con-
tained in the Austro Hungarian
empire, in the Balkans and in the
Near East. At the present time the
manufacturers of Austria and
r'zecho Slovakia are receiving
enough orders to enable them to
utilize all that part of their capac-
ity that they dare operate. Although
these markets are now able to get
goods from any part Of the world,
and Italy and Switzerland have for
some time been shipping consider
able quantities to them, the mer-
z chants are said to prefer their old
sources of supply. 1t is thought
that considering the fact that from
tiers have been drawn so that new
states Of considerable size have been
formed, this industry will profit by
these changes, as the jobbers who
have had connections of long stand
ing with Austrian and Czecho-Slo-
wax firms will be able to extend
their markets in the territories
which now compose Jugo-Slavia,
Rumania and Poland.
II appears to be the opinion Of
those who are most familiar with
the situation that such operations
as have been outlined would result
not only in profit to the foreign in
vestor, but would be Of considerable
Importance in improving the eco
nomic conditions OF the countries
in which the goods were manufac-
tured, and in addition would pro-
vide an excellent opportunity for
American business men to establish
such commercial connections in
Central Europe as would assure
them a foothold when economic and
political conditions have improved.