"No Matter What Happens"

"No Matter What Happens"

When a U. S. Ambassador or Minister appears in the U. S. and declares that the government to which he is accredited is as strong as Gibraltar-then all too often the next news is Revolution.

Back from Poland last week came Ambassador John North Willys, retired motorman. He said nothing about the strength or weakness of the Polish Government. That was good news. But of the Soviet Government (to which no U. S. diplomat is accredited) Ambassador Willys said: "No matter what happens the Soviet Government will endure. Even if the Five-Year Plan should fail, the Soviet leaders would simply launch another plan. There is no fear in Poland of a war with Russia, and the likelihood of war anywhere in Europe is slight. Poland is weathering the depression with energy and fortitude."

In the Department of Commerce at Washington (where the opinions of U. S. Ambassadors and Ministers are held in low esteem) officials were especially careful last week to remain impartial in view of Wall Street rumors that the Soviet Government's credit is becoming more than ever overstrained. The Department, which speaks ill of nobody, has said of the Soviet Government recently nothing more alarming than that, while the Soviet unfavorable balance of trade for the first eight months of last year was only $20,000,000, that same unfavorable balance has quintupled this year to some $100,000,000.

In Manhattan last week the Soviet trade agency, Amtorg announced abandonment of two of its six office floors at No. 261 Fifth Ave. and dismissal of half its clerical staff of 450. In the first ten months of last year Amtorg placed $102,800,000 of orders in the U. S. This year Amtorg has placed only $49,400.000, a decline in Soviet purchases from the U. S. of 52%. Last week Chairman Peter A. Bogdanov of Amtorg explained & complained: "It must be clear to any one engaged in large commercial operations that the basic prerequisite is adequate banking accommodations. These have not been provided in the United States with respect to Soviet business."

To make the reticent chairman's point clearer, other Amtorg officials declared that Russian purchases from Germany have totaled over $200,000,000 so far this year, an increase of 100%. They attributed this to freer granting of credit to Russia by German banks (see p. 19). Obviously the Amtorg moral, plain for depressed U. S. business to read, is that U. S. Bankers might loosen up.

But dare they? In Manhattan one Basile W. Delgass, former vice president of Amtorg but now its foe and an informant to U. S. businessmen (TIME, Sept. 29, 1930) termed Amtorg's reference to easy European credits "a song of days that are past."

Declaring that the Soviet Government faces "a rapidly developing economic and financial crisis," Mr. Delgass called the credit arrangement concluded last April between Germany and Russia " now practically nonexistent as a result of the German financial crisis." But this autumn the hard-pressed German Reichsbank extended $35,000,000 more credit to Russia, informer Delgass notwithstanding.

In Berlin arrived a Soviet trade mission last week and went to work with German Minister of Economics Hermann Warm-bold. The Russians were reported offering $23,000,000 of new orders, but contingent upon either: 1) further German credit extension; or 2) some lowering of German tariff barriers to permit an increase of Russian sales to Germany, thus bringing the unfavorable Red trade balance back under control.

In Moscow, finally, something happened last week which made Washington, Wall Street, Berlin and possibly Ambassador Willys take notice. With Dictator Josef Stalin sitting in, the State Planning Commission drastically modified the "Second Five-Year Plan," drafted last summer to go into effect at the end of the First Five-Year Plan in 1933.

Pig iron, production had been planned to approximate 60,000,000 tons in the last year of the Second F. Y. P. This was cut last week to 25,000,000 tons at Comrade Stalin's suggestion. More important, a switch was indicated from the program of expanding Soviet heavy industries ("to catch up with and surpass the U. S." as Stalin once put it) to concentrate at once on light industries. These would make shoes, clothing, farm implements, sewing machines and simple necessities like needles for which Soviet peasants clamor. From light industries would also come readily salable articles which Russia could "dump" abroad, thus further redressing her trade balance, bolstering her credit.

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