Evening star., 1931-11-05
AMERICAN FIRMS
ADVISED TO SEEK
CASH FROM RUSSIA
Soviet Finances Nearing
Crisis, Federal AdviCes
Here Indicate.
MOSCOW MAY REVISE
SYSTEM or PAYMENT
Britain's Suspension of Gold
Standard Seriously Hurt
Program of Stain.
BY DAVID LAWRENCE.

Russia's economic experiment is slow
ly approaching a financial crisis. Amer
ican business firms are receiving letters
from the Department of Commerce
which they are constituting as advice to
require cash or equivalent in goods as
collateral for their sales to Russia.
The next big news the world may
hear rivaling the recent suspension OF
the gold standard by Great Britain is
that Russia has modified the basis on
which she has hoped TO get sufficient
gold exchange externally to pay for raw
materials and machinery needed for her
new plant and equipment. And this may
mean, temporarily at least, the end ot
the dumping policy which has unsettled
the markets of the world including
American wheat prices.
The foregoing inferences which may
be derived from information supplied
to os1cial sources here represents
change that may ultimately mean q
better blend between the communism
of Russia and the capitalism OF the rest
of the world. While the United states
Government has no official relations
with the Soviet government, the state
and Commerce Departments, as wen
as the Treasury, have been gathering
information constantly in perhaps the
most exhaustive study ever made by
one nation of another'S economic evolu-
ton. 1t is a continuing inquiry en-
bracing both unofficial and official in
formation.
British Situation Hurt.
Several things stand out in the
opinion of observers here as 1nolcating
the latest trend in Russian affairs.
They NAV be enumerated as follows.
First, the suspension Of the gold
standard by Great Britain was a body
blow to Russian finances and more
damaging than the world realized.
Russia had contracted to sell much OF
her production, expecting, OF course,
the pound sterling to yield her certain
sums which now are reduced by more
than 20 per cent due to the deprecia-
ton in the British pound. England is
Russia's best customer.
Second, the Russian peasants are re-
fusing to give up to the government all
their grain production and are with
holding it in such quantities that Rus
sia will not have available for export
the amounts she has counted on. Her
production figures and estimates were
correct. but it is only now leaking out
that the collections by the government
from the farmers are falling down by
perhaps so per cent.
Third. the Scandinavian countries
which have gone of the gold standard
are paying Russia less for her exports
because they, like Britain, are paying
in their own currencies.
Italy Gets Heavy Stocks.
Fourth, italy is insisting on such q
large collateral as security for her sales
that heavy stock of Russian goods Is
piled up in Italian markets. Italy
eventually will buy and since Rome is
still on the gold standard, Russia will
have a balance in her favor but not
big enough to give her much free gold
elsewhere
Fifth. Germany Is following the prac-
tice of some other countries in having
the central government of the selling
country guarantee the risks for the
merchants who sell in Russia. but Ger
man banks are insisting and are get
ting gold or equivalent collateral.
Sixth, American business Arms know
the SovietS have not, as "a result OF
their commerce with other countries,
enough gold to pay for many more
purchases in cash. The American Gov
ernment has lately reiterated to the
inquiring American firms that sales are
made to Russia at unusual risks and
that increased protection would seem
to be desirable.
1t is estimated Russia owes approx
mately $l25 900 600 in gold to mer-
chants in other countries She can
get this money only by selling her ex-
ports at sacrifice prices or by in
creasing her own gold production. The
latter has been found expensive and
IS rot coming up to expectations
The sale of goods Is becoming every
day more difficult because the five-
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