Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-13
NEW SOVIET AGENT
| TO PLAN INCREASE
| IN TRADE WITH j. S.
Russian Organization Will
Act as Intermediary in
Promoting Business.
EXTENSION OF CREDITS
ON WIDER SCALE Is AIM
Money Will Be Used in Pushing
Five-Ye Development
Project.
BY DIR. MAX WINKLER.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, September H. Two
million dollars of Russian trade bills,
maturing in 10 months, were recently
offered to q New York bank at an an
nuai rate of So per cent. OF the total
or per cent would have to be paid
to an Intermediary, which would still
leave a handsome return to the bank,
had it chosen to do the business.
How is 1t possible, many will ask.
for any serious borrower to pay So per
cent for the use of money, especially
when the latter Is obtained in a mar
ket where l8-month Government ma
TURTLES return about l per cent or one
thirty-sixth the yield on which Russia
is willing to borrow?
Does perhaps the reason for this re-
side in the statement made recently by
enc familiar with Russian affairs to
the effect that If one buys on credit
but sells for cash there is always a
profit, irrespective of tie low price at
which sale Is registeredf?
Soviet Has Paid Debts.
Within recent weeks, the rate has
come down somewhat as a result of
the increase In the demand for busi-
ness of the character referred to in the
foregoing paragraph. A member Of a
prominent investment firm which has
been handling Russian business on a
restricted scale but with great salts
faction, remarked that his firm would
be IN an enviable position today If it
mad handled Russian deals exclusively.
Thus far. the Soviets have met all
their engagements promptly and faith
1ully. cynic remarked that their
oeots have not as yet reached an
amount where reputation would be
profitable
Hcwever, plans are being worked cut
70 increase Russian business in the
united states to such point, by means
OF financial institution to be organ
lzed In New York for the purpose of
engaging in the business Of discount
ing and rediScounting acceptances of
the Amtorg Trading Corporation in the
United States and those of similar So
Wet trading organizations In Europe.
The sponsor of this plan points to the
increase in Amtorg purchases in the
United States, adding that the gain
results from the carrying out of the
f1ve-year plan CT economic develop
ment Of the Soviet Union"
document prepared toward the
end of the past year outlining the rea-
sons for the immediate formation of a
company of the above character con-
tains the following information:
The construction carried on under
this 1.-THE five-year) plan is proceeding
, at an accelerated pace. According to
information received during the current
| year, construction work will be contin-
| ued on the many machine building.
power and other plants for which
| American industry has supplied equip
| ment, and the building Of many new
plants will be started.
Expansion Of Farms.
The great expansion of state farms
and the further development of COL
lectivization in agriculture have created
an ever-increasing demand for modern
agricultural machinery which the So
Wet Union Is not able to satisfy through
| its domestic production. 1t will be seen.
therefore that the Soviet market for
| foreign machinery and equipment is
greater than ever, and the greater the
improvement in credit conditions, the
more favorable are the prospects of
| American manufacturers obtaining a
large share of this market.
Germany, Great Britain and italy
have extended to the Soviet Union SUBJ
stantial government-guaranteed credits
Certain improvements in the financing
| OF Soviet purchases in the United
| States may also be noted. Not only has
the number of American firms granting
credits to Soviet purchasing organiza-
lions increased, but the terms have be-
come more favorable. Credits of three
years or over were received by Amtorg
Trading Corporation from a number of
leading firms during 1929 and 1880, in
Guiding such firms as Ford Motor Co.,
| General Motors, International Harves-
ter, Newport News Shipbuilding g. Dry
dock Co.. General Electric Co, etc.
Credits for one year or more were ex-
tended by nearly $50 companies. These
facts are the best exhibits, that the
credits granted to Amtorg in the United
States. In connection with the growth
OF purchasing operation, have greatly
| increased"
According to the above informant.
all financial transactions of Amtorg
are conducted by two or three local
banks which generally demand and OBJ
tain security for whatever credits they
may grant. American firms doing bust
ness with Russia receive. as a rule,
from Amtorg a cash payment of Is
per cent. The balance is represented
by Amtorg acceptances running from
TO 18 months. Corporations holding
these acceptances offer them for sale
through brokers specializing in this
type OF business, and obtain from 70
to 81 per cent of their face value.
Business Method.
] From one familiar with the business
the following has been learned: Amtorg
places an order with corporation "A"
! agreeing to pay rs per cent cash and
the remainder on credit. This Is the
first deal with the Soviet, and the cor
poration arranges its prices in such
manner that II nothing Is paid in adj
dition to the cash payment, the loss
would be rather nominal.
In order to execute the order, the
company is obliged to make certain
extensions end additions to its exist
ing facilities. 1t disposes Of the ac-
! ceptances at the discount intimated
above. The Soviet proceeds to place
a second order. but is prepared to pay
all cash. Taking into account the
enormous discount at which the cor
poration had profited, the Soviet main
tains that by paying cash it is entitled
| to the corresponding reduction In the
cost Of the transaction.
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