Evening star., 1932-11-29
SYSTEM OF BARTER
IN TRADE SPREADS.
Approval by Poland Put
Plan Into Effect Virtually
Throughout World.

With the Polish government placing
its approval en- the plan last week, the
barter system of carrying on interna-
the entire world in the past two years,
with the exception of the Orient, a
check-up at the Commerce Department
revealed today.
Apparently in the belief that barter
Is destined to play an increasingly i'm
portant part in its foreign trade, Poland
IS now supporting limited liability
company to aid exporters and importers
in their commercial relations with fer
eign countries where freedom of trade
is restricted by means of artificial bar
riers, the department was advised by
Assistant Trade Commissioner Gilbert
Redfern at Warsaw.
Upon receipt of Redfern's report the
department explained, it was difficult to
determine what percentage of foreign
trade Is now being conducted by barter
ing, but it was believed that with the
exception of Central Europe, it accounts
for a small part of total transactions.
In the United States and Canada, for
example, this type of trade has been
confined to a relatively small number
Of fairly large deals.
Machinery Is Complicated.
AS the barter method of doing busi-
ness increased in popularity, the de-
partment said, the machinery by which
it is accomplished became more COM
plicatcd as importers and exporters
sought to make it more efficient, SO
that it could be applied to a greater
number of commodities and products. !.
It was pointed out that the first OF
the deals in recent years was between
governments which controlled certain
commodities. Among the leaders was
Fhe United States exchange of wheat
swith Brazil for coffee. This led to the
development of the three-cornered sys-
tenn of "Ring-Tausch" in Germany this
year. Under the system, it was said at
the department, Germany, Brazil and
the United States, for example, could
work out deal either as governments
or through private representatives.
The deal whereby the United States
Government traded $4,000 900 bushels
of wheat for 1,275,000 bags of coffee
was among the first large ones in the
Western Hemisphere. Although this
deal was branded failure recently by
Murrillo Mendes, Brazilian coffee mag
nate, the. Brazilian government said
the following Of the deal:
Il. 1t gave the Brazilian govern
ment means to continue buying surplus
coffee.
20. Relieved the exchange market of
remlssions amounting to more than
$12 100000, which otherwise would have
been made for wheat and flour.
"3. Expended 1,275,000 bags of sur
plus coffee without disturbing the mar
ket, and saved the government a con-
siderable amount In warehouse fees.
a. Gave work to the -four mills, in
creaSing production to 100000 sacks,
in ;v,-
crease In production of cloth and in
the consumption Of the national 60
day moratorium on cotton debts involv-
ing foreign exchange"
Barter With Germany.
Another barter deal involving Brazil
ian coffee was worked with Germany.
This was not direct exchange of goods.
The respective governments removed
import restrictions and private buyers
IN Germany paid for coffee in Reichs-
marks which in turn were used to pur-
chase coal in Germany for expo. 20
Brazil
Such a barter agreement Is becoming
more common and according to some
experts, such deal should be looked
upon as guaranteed purchase rather
than barter. Uruguay and Soviet Rus
sia recently completed negotiations on
similar deal involving Russian Oil and
whatever Uruguayan prooucts are in
demand by the Soviet government.
Under the terms of this deal, Uruguay
Is to take 10000 tons of gasoline and
10000 tons OF kerosene. The gasoline
and kerosene are to be paid for In Uru-
guayan currency which Is to be de-
posted in the Bank of the Republic, in
special account, and may be with
drawn only to pay for cattle, hides, wool
or other products or commodities pur-
chased for export to Russia.
Russia also has completed negotia-
0onS to ship about million dollars
worth of oil to Canada to be paid for
by shipment Of aluminium to Russia.
in this instance, the Aluminium Co. of
Canada is supplying the aluminium and
the La Sale Petroleum Refining Co. of
Canaca is receiving the oil from the
Russian trust.
Among the countries which have COM
pleted large portion of the barter
deals IN the past two years are Greece,
Turkey, Czechoslovakia, Persia, Poland,
Germany, Hungary. These deals in
volvc many commodities and products
ranging from butter and eggs to tobacco
lumber, lard, cotton and coal, to men,
tion but few.
Balances Foreign Trade.
In many instances, barter agreements
are relied upon as a method of balanc-
ing foreign trade between two particu-
lar countries.
Among the drawbacks to the barter
system is the delay usually accompany
ing such deals. In many instances the
parties involved in such transactions
are much like the horse traders Of a
couple Of decades ago. Not only do
they try to get rid of surpluses Of their
own, but they want only the commodi-
ties or products which have a ready
sale in their own country. The inability
of the interested parties to find a COM
mon meeting ground as TO price and
time of delivery has blocked many large
deals There also is the obvious neces-
sity Of developing distributing sys-
TEN for the goods secured.
Foreign trade experts say the nature
of trade in the Orient does not make
barter necessary. The japanese, for ex-
ample, are buying raw cotton for cash
because it is cheap and are holding
much of their silk for better prices.
Barter between China and Japan has
not been developed probably, it is in
dicated. because there is no possibility
for such agreements to be reached that
would move more merchandise than Is
moving now.
o. :1TEE:.za