Evening star., 1933-12-10
BY DIR. JULIUS KLEIN,
Former Assistant Secretary Of Commerce
Of the United States.

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v v by a truly formidable array
Of questions. Overshadow-
ing all others, naturally, is the query
What is this likely to mean to our ex-
port trade? There is excitement, spec
ulation, avid eagerness and wild sur
mise. In the situation and the outlook
there is much that is inscrutable. In
the homely old phrase, "it all depends.
In one of those bleak Moscow Offices
sits Mr.. A. P. Rosengoltz, the Soviet
commissar for foreign trade. He is
shrewd, Jealous, ''proletarian," hewing
strictly to "the party line" Back Of him
Is Stain, the portentous sloe-eyed
Georgian, the successor to the Gears
Back Of him is the shadow Of the i'm
placable theorist Marx. And back Of all
these Is the strange temperament Of the
Slav. the Tartar. the huge agglomera-
up the U. S. S. r. Before we begin to
throw our hats In the air too fervently
In enthusiasm over the prospects for
greater machinery exports, we shall dc
well to contemplate carefully that none
too-inviting picture of retarded buying
power and to realize that the ultimate
commercial issue is problematical.
Lack Human Factor.
Recently an American engineer with
years of distinguished experience in
Soviet Russia gave me this frank view:
The prospect for American machin-
cry exports for the mechanization of the
new economic life" of that country
has been vastly overrated-because, al
though the need Is great and the fuel
and raw material for industrial order
are abundant, there is lacking q vital
human factor which only time (and
plenty of it, will be able to supply.
The Russian people are not equipped
temperamentally or Intellectually to
man a vast mechanized industrial sys-
tenn. The "high command" for such
an army might, as Is now the case, be
brought in largely from aboard; but
the rank and file, the countless thou
sands Of "non-coms" and "privates" to
operate and care for great factory
system, are not available and cannot be
until after generations of technical
schooling and fundamental changes in
national psychology. Those are obstruc-
tlons which even the diplomatic formal
1ties OF recognition cannot surmount.
Confident prophecies, therefore, of
100000 American workmen to be added
to our factory pay rolls by new Russian
trade OF many hundreds of millions of
dollars" seem bit premature, to say
the least. One of the outstanding ex-
amples OF large-scale industrialization
TOOK place in our own South; but even
under far more favorable geographical
and social circumstances than are evi-
dent in Russia the process took many
decades. We shall do well to keep our
heads in contemplating the prospects of
any potential Russia market for fabri-
Gated products in time to be of lob
making value in our present emergency.
Undoubtedly one of the chief bene-
nclar1es OF any arrangements worked
out between the United States and
Russia will be Germany. At present at
least half and probably more of Russia,s
external financing comes from German
sources, directly or indirectly. The
German government has long had a
large credit fund for the protection of
It's merchants operating in Russian
business.
If the United States Government,
through the Reconstruction Finance
corporation, makes any advances to
Russia, there will be an indirect
Strengthening in equal measure of
Russias commitments to Germany. The
situation well may have far-reaching
consequences IN connection with the
prospects of the present regime in the
Reich as well as the material strength
ening OF Germany's general position in
the European economic scheme.
Hinges on Expanded Credit.
The Russian market will naturally be
eager to absorb as much American
merchandise as the American Govern
ment is willing to finance. The degree
OF expansion of our Russian trade will
be directly determined by the amount
Of that trade for which the administra-
tion Is ready to advance the funds, at
least for some years to come. The whole
question hinges around the question of
expanded credit for Russia, as has been
the case in every instance of important
gains IN Russian trade everywhere.
The man in the street" in the United
States often has, ! think, a quite
erroneous idea as to the previous status
Of our trade with the Soviet Union and
as to the commercial significance of
formal recognition. He is likely to be-
lieve that the prior absence of diplo-
matte relations between the two coun-
tries has meant complete barrier or
blockade to buSineSs-and that now
with startling suddenness new trade
currents will commence to flow with a
torrential and immensely invigorating
rush.
The idea is, of course, the reverse of
the truth. The purchase and sale of
do not require the pres
ence Of an ambassador or minister in
the capital city of the prospective GUS
toners. In the last dozen years, with
out a semblance of governmental rec
quantities of their goods to the Soviets,
and have bought very considerable
amounts Of Russian products in return.
The imposing Russian embassy on
Sixteenth street In Washington for
many years was the abode merely of
shadows-but in New York and else
where, throughout those same years,
there was constant, keen, live business
activity by the Amtorg Trading Cor
poration, the ably directed Soviet COM
organization in this country,
and affiliated bodies
From 1929 to 1880 our sales to the
''unrecognized" Soviets mounted from
s84 .000, 900 to $114,000 ,000 and even in
1881 they totaled 100000, 900. In 1882,
however, came dramatic change; the
trade took terrific nose dive-it sank
to the insignificant sum of $4,000, 900.
And the present year is even worse: in
the first six months of 1888 we sold
to Russia only a little more than S.
600 900 worth Of goods. It looked as
though this trade was approaching the
vanishing point.
Recognition Not Factor.
What have been the reasons for this
enormous variation? Clearly, "recog-
milton" did not figure; 1t was absent
in boom years as well as bad ones. The
FIRST cause was credits (or rather, the
absence thereof: the second was the
Of Russia in the direction
of self-suficiency; third reason was
the peculiar administrative system OBJ
tanning in the management OF Soviet
foreign trade. Because Of its singularly
aspect, let US consider this
factor first.
Here is one great, glaring fact that
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