delayed for a considerable time, the credit which was
originally extended for from four to five months proved
to be of even shorter duration, never exceeding from two
to three months. In 1926, owing to the severity of the
winter, Baltic ports were inaccessible to ships. Hence,
while the credit was repaid in February, a very substantial
part of the goods were not delivered to the U.S.S.R.
before early Spring.
In spite of many clauses, disadvantageous to Soviet
Russia, the agreement paved the way for the large credit
transaction of 1926, known as the ‘300 Million Credit.”
in February of that year, the Budget Commission of the
German Reichstag empowered the Government to
guarantee up to an amount not exceeding 300 million
marks, 60%, of the risks taken by German firms exporting
goods on credit terms to the U.S.S.R. An inter-departmental
committee was set up to consider applications from
German firms, and the guarantee department of the
Deutsche Revisionsund Treuhand-A.G., assumed the
technical management of the transactions which followed.
At the same time, for the purpose of taking over the
financing of the whole business, a special Corporation
under the name Industriefinanzierungs-A.G. Ost, (Ifago),
was established by two financial concerns, one German
and the other Dutch. This Corporation included 27 credit
mstitutions. From the Autumn of 1926 to the Spring of
1927, the Soviet Trade Delegation in Germany placed orders
to the amount of 146.8 million roubles. According to the
letter of the arrangement, the average duration of the
sredit should have amounted to 36 months, on an average
half consisting of two years’ credits, half of four years’
credits. Actually, according to the Soviet Trade Delegation
 in Germany, the average duration of the credit
1id not exceed 26.6 months. But the responsibility for
shortening the credit lay largely with the U.S.S.R.
{nsufficient notice was taken of the fact that repayment
should occur at certain fixed dates, regardless of the date
of the placing of orders, and delay in the completion of
rechnical and commercial arrangements contracted the
period during which the credit extended could be used.
The German firms delaying the delivery of goods have
also shortened the duration of the credit.
As has been mentioned, the Budget Commission of the
Reichstag originally authorised a credit of 300 million
marks. This credit was subsequently increased by the
Reichswirtschaftministerium to 365 million marks in
connection with guarantees given for orders placed in
Germany, both by German and foreign concession enterprises
 (including Lena Goldfields). Actually the consequent
 indebtedness of the Soviet Trade Delegation
never reached 300 million marks, for by October, 1928,
when nearly all bills had been drawn by the German firms
and accepted by the Soviet Trade Delegation, a part of
them had matured. Nevertheless, the increase of Soviet
indebtedness during 1927/28 was chiefly attributable
to the guarantee of 300 million marks by the German
Government. In the following year there was a lull in
Russo-German . trading relations. German industrial
interests were disappointed at the poor results obtained
from the big credit scheme of the previous year, more
sspecially as large orders had been placed by Soviet
Russia in the United States on credit terms much inferior

o those which could have been arranged in Germany.
\ Committee (Russland-Auschuss der Deutschem
Nirtschaft) was created by leading industrial associations
or the purpose of supervising the Soviet financial policy
f individual German firms. During the year 1928/29
.n effort was made to limit the duration of credit to nine
nonths, with extensions to 12 months in exceptional cases.
“his restrictive policy which coincided with the maturing
f large amounts of bills arising out of orders placed
luring the previous two years, led in Spring of 1929 to
. financial crisis of such seriousness that for the first time
he risk of accumulating a big foreign short-term debt was
ally realised by the Soviet Government.
In 1929/30 the German Government financed pur-‘hases
 of Soviet institutions in Germany under the General
ixport Guarantee Scheme, and the necessary funds were
rovided partly by the concern which financed the 300
aillion guarantee, and partly by one of the semi-state
anks. But the period of the guarantees rarely exceeded
.8 months, amounting on the average to only 12 months.
“henceforth a cautious policy was adopted both by
adustrial firms and Governments.
Finaucing of Russian orders was concentrated in the
&gt;llowing sources :
(1) Suppliers.
(2) The Industriefinanzierungs-A.G. Ost (Ifago)
reated by the groups of banks which financed the 300
aillion guarantee.
(3) The Deutsche Golddiskoutbank, a semi-state
nstitution.
(4) The big banks in the process of financing credit
-equirements of clients.
(5) Small banks and individual investors specially
ngaged in financing trading transactions of the Soviet
Jnion.
The situation changed radically in 1930/31. The
sconomic condition of Germany underwent a change for
he worse; the number of unemployed approximated
ive millions. At the same time competition on the world
narkets became acute. In these circumstances the
mportance of the Russian market for many branches
f German industry, particularly engineering, greatly
ncreased. Consequently they were persuaded, though
eluctantly, to raise their commitments in connection
vith financing exports to the U.S.S.R.
Up till 1931, more especially under the old governnent
 guarantee scheme of 1926, the bulk of Soviet orders
vent to a few big German firms in the electrical-engineerag
 and tool-making industries. By the end of 1930 the
Russian commitments of these industries were so large
hat they were not able to undertake new orders to any
onsiderable extent. On the other hand, moderate sized
ndertakings which suffered most as a result of the economic
lepression, were vulnerable to changes in the money market
nd were affected by credit contraction.
Circles, representative of these moderate-sized underakings,
 and closely connected with the liaison Committee,
vere chiefly responsible for an agreement signed in April
931, by the Supreme Economic Council of the U.S.S.R.
nd a group of German industrialists, according to which
he following credit terms were agreed upon for 300
willion marks in connection with orders to be placed by