I. FOREIGN TRADE.

The items of the balance of payments resulting
from foreign trade consist of the following groups :
MOVEMENTS OF MERCHANDISE.
a) Value of imports and exports.
(b) Precious metals.
(c) Parcels traffic.
(d) Contraband.
Costs OF SERVICES directly connected with the
movement of merchandise.
fa) Overhead and administrative expenses of
Soviet commercial organisations abroad.
Brokerage, commission, etc.
MOVEMENTS OF MERCHANDISE.
(a) Imports AND Exports. The value of
imported and exported goods should be shown
in the Customs returns. But in order to ascertain
how far these returns represent the real international
 value of the imports and exports it is
necessary to determine: first, the methods of
valuation adopted in the Soviet Customs Statistics,
and secondly, the nature of the currency in which
the value of foreign trade is expressed.
Imports. The valuation of imports is based
in the Customs Statistics upon prices given in
the invoices presented to the Soviet trading
organisations by foreign suppliers, an addition
seing made of an approximate lump sum to cover
Ireights, insurance premiums, port duties and
credit costs. When credit costs amounting to
7-89, per annum are added to invoice prices the
Customs returns represent a more or less accurate
statement of the value of imports c.i.f. Russian
port or frontier (in the case of goods bought on
2-3 years credit terms, such costs actually amount
from 14 to 249%, ad valorem). But we are not
satisfied that failing inclusion of credit costs in
the invoice price, the Soviet Customs make an
addition to cover this deficiency, and we are, therefore,
 of opinion that the value of Soviet imports
is. to a certain extent, underestimated.

b)

Exports. Up to 1923/24, the value of the
exports of the U.S.S.R. were estimated in pre-war
current prices on the Russian home market,
which did not coincide with the prices actually
received for the goods exported during the period.

Since 1924/25 exports are valued in current
prices, but the reliability of the method adopted
in valuation is questionable. Exports from the
U.S.S.R. are usually estimated f.o.b. Russian port
or frontier. As part of Russian exports leave
rome ports unsold, the prices declared by the
sxporters to the customs authorities are merely
price-limits fixed for the general guidance of
Soviet trading organisations abroad, who act
as selling agents of trading organisations in Soviet
Russia. These price-limits are as a rule much
sigher than the prices at which the goods are
realised abroad, the reasons being as follows :
(a) In order toinduce their agents abroad to command
foreign markets and to exercise a certain form of control,
Moscow institutions often deliberatelv declare exaggerated
Jrices.
(b) The business relationships of the Soviet exportng
 organisations in the U.S.S.R. and Soviet trading
sstablishments abroad are very loose. The information
sent by these establishments to Moscow concerning the
jituation on international markets is inadequate,
specially when drastic changes in international values
ire occurring.
(¢) Goods are often badly packed and remain in
torage for excessive periods. Non-seasonal shipments,
sarticularly of timber, are frequent. Often goods are
:arelessly transported, to be sold eventually at low
prices.
(d) The policy of underselling, commonly called
‘dumping,” increases the disparity between the prices
ictually paid by foreign buyers and calculated f.o.b.
Russian port or frontier, and those declared to the customs
wthorities in Soviet Russia.
Hence in our view, exports for the period
1920/21 to 1923/24, as expressed in pre-war prices,
wre substantially undervalued; and those for the
seriod 1924/25 to 1930/31, are over valued in the
Soviet Customs Statistics.
In using Soviet data on foreign trade we have
nade the following adjustments, further explanajon
 of which will be found in Appendix No. 1:
1. Period 1920/21-1923/24. The values of
imports and exports are converted into current
values by means of indices of pre-war and current
nternational prices.
2. Period 1924/25-1930/31. To ascertain
ipproximately the amount of foreign currency
which the Soviet Union has actually received for
ts exports, a certain deduction is made from the