Appendix No. 2.
GREAT BRITAIN AND GERMANY'S SHARE IN SOVIET RUSSIA'S FOREIGN DEBT.
The financing of Soviet Russia is chiefly undertaken The financing of Soviet trade is at present effected by
by Great Britain and Germany. The participation of British banks in the following forms :
the United States in this financing was of a temporary AccepraNcE CREDITS. These credits are granted by
character and of secondary importance. London Banks in connection with exports to the Soviet
From the moment when Moscow established trade Union either from Great Britain or from other ‘countries.
relations with the outside world, Germany acquired a They are covered by goods stored within the U.S.S.R.
predominant position in financing exports to the U.S.S.R. for a certain period, running from six to nine weeks,
On the other hand, Great Britain became interested The London banks hand over bills of lading to Soviet
mainly in exports from Russia, and before long absorbed rrading and banking organisations in England against
nearly a third of all Soviet exports. But as London was Trusts receipts, but the value of such documents issued by
the principal centre of international short-term credits ‘he Soviet trading establishments is not over-estimated
it soon became involved in financing imports as well as oy English bankers who, as a rule, demand in addition
exports. This was achieved either by directly advancing 1 substantial currency deposit amounting to 25-309,
acceptance credits to Soviet banks, or, by indirectly n the average, and as much as 50% in some instances.
discounting Soviet bills offered by industrial suppliers \ substantial part of the currency and gold reserve of
of various countries. ‘he Soviet State Bank is being used for such purposes.
Apvances. The London banks grant advances
secured by goods stored in this country or in other countries
rutside the U.S.S.R. Gradually these advances were
seing secured by foreign bills of lading, and in later
years by goods in Soviet ports or in the interior of the Soviet
Jnion. These credits are granted directly by the banks or
hrough brokers, who sell the goods on the London market.
Che following goods are involved: grain, timber, oil,
Jutter, eggs, poultry, etc. This form of financing is
Jeculiar to the City of London, and the U.S.S.R. does not
:njoy similar facilities in any other country. Usually
advances are extended on the following conditions :
(a) Soviet organisations, as for example, the Russian
Wood Agency, the White Sea Timber Trust, the Russian-British
 Grain Export Co., Arcos Ltd., Centrosoyus, and
Selosoyus, etc., undertake to supply English brokers
with certain quantities of goods to be sold on commission,
or jointly with Soviet organisations.
(b) On signature of the contract or during a speciied
 period, the broker grants an advance amounting to
15-25%, of the approximate value of the goods to be
supplied.
(c) In addition, a credit is granted against shipping
documents, bringing the total amount of the financing
‘ncluding the advance already made up to 65-80%, of the
7alue of the goods.
The 20-259, given in the form of an advance,
s practically an open credit covered by Soviet bills of
six months duration during which it is estimated that the
vhole transaction will be liquidated.
The 2.6 million pounds of credit which were extended
to the U.S.S.R. by ten banks and one broker in the Spring
»f 1929 were secured in the following way: a quantity
of timber warehoused in the U.S.S.R. of a value equalling
nominally the advance granted by the banks was placed
ander the supervision of the representative of the bank
n Russia. Apart from that an insurance policy for 683
housand pounds indemnifying the banks in the case of
:mergency, the premium being paid by the Soviet organisation,
 was handed over to the foreign banks. In addition,
ne of the Big Five Banks participating in the transaction
and its subsidiary, demanded a bank deposit of 25% of the
»utstanding debt.

GREAT BRITAIN