Evening star., 1934-06-24
JOHNSON ACT CUTS
u. S.-SOV|ET TRADE
Russia Seen Purchasing
Less Here Now Than
Before Recognition.

Conversations between the Ameri-
can and Soviet governments are pro-
crossing slowly. This delay Is re-
sented by American business men as
we'll as by the Moscow government
which is anxious to complete its in
dustrial plans with goods purchased
in the United States.
Because of the Interpretation given
by the Attorney General to the john
son act, the Soviets are placed in the
position of purchasing less in the
United States now than when there
were no official relations between the
two countries.
When there were no diplomatic re-
lations between the Soviet and the
American Government, the Russians
were able to purchase cotton and ma
chinery on credit in this country.
Banks Accepted Notes.
The few banks which considered
Russia a fair risk were in position
to accept the notes given by the Rus
sian government through the Amtorg
Trading Corporation. Even when well
established banks were unable to take
these notes from exporters because
the Federal Reserve Banks would not
discount them. there was the famous
BLACK Exchange" in New York. where
Russian bills were discounted at a
bootleg rate.
This cannot be done today because
Of the heavy penalties imposed by the
johnson act against defaulting nations.
1t Is true that manufacturers and
cotton growers are not prohibited from
accepting Russian notes, but in such
a case they are compelled to keep
them in a safe until they mature and
no concern in the United States now
can afford to keep capital locked up
for two. three or four years, the length
of credit demanded by the Soviets.
But what Is irking the Russians
most is that while Russia, which, in
their opinion, has not defaulted since
there has been no funding agree
ment made with the Government Of
the United States, cannot obtain loans
or credits in this country, the default
| ing nations can obtain indirectly all
the credit they want.
Towns Get Financing.
The johnson act forbids financial
transaction between the debtor gov
ernments and the American bankers,
but the townships Of France Great
! Britain. Italy or any other defaulting
country can float loan in the United
States. AS a matter of fact the credit
of French towns stands high in the
/ rLr !,
meet their obligations in gold.
The Soviet government maintains
that the Interpretation given the
johnson act is harming the Ameri-
cans exporters as well as the Russian
! government, and this seems to have
been also the opinion of Senator
Hiram johnson who declared during
the hearings in the Senate committee
| that his bill was not directed against
| the Soviet government.
| The Russians say that they rec
| ognize an indebtedness to the United
States; that while they recognize the
claims of the American Government
and the American bondholders of
| Russian securities and while they
agree to refund American private
citizens for the conflscations of their
property when the Bolshevist regime
came into Office, they, too. have coun-
terclaims A settlement is not pos
sible until the exact value of the
American property is established and
| the amount of the Russian counter
claims is agreed upon. For instance,
the Russians say the total amount
of American private capital invested
in Russia does not exceed 10000, 900
gold rubleS, or about $85 100000 in
gold. As far as the Russian Claims
| against the United States ere con-
! cerned, the Soviet government de-
clares itself unwilling to appeal to
the Court of Claims in this country
because of the length of the pro-
ceedings of that court. Moscow wants
everything discussed at the same
time and a final decision of what
their total Indebtedness will be after
all claims have been taken into COIL
! sideration.
| Credits Asked.
The Soviet government does not
| disclaim its indebtedness, but it