RUSSIAN SPHINX

Evening Post, Volume CX, Issue 137, 8 December 1930, Page 13

RUSSIAN SPHINX

CHEAP WHEAT

IS THE WORKER SWEATED ?

LOW EEAL WAGE

A few days ago the Canadian Minister of Trade and Commerce, Mr. H. H. Stevens, said:— '' The Eussian Five-year Plan is succeeding all along the line and Canadians are doing their country a disservice by pretending otherwise. The I Soviet will soon be a live competitor with Canada." Any obscuration of the truth is a disservice to any country, and it is to be hoped that the Eussian situation Irill presently clarify itself. Many people are seeking an answer to the apparent anomaly of how a "land of famine" can shako the wheat markets of the world with low-priced wheat exports. Are Eussians going hungry while the outside world is fed? Or are they under-paid by inflation of the currency? If not, what is the catch in it? Or is there no catch in it at all, and has, Bussia succeeded in getting her costs down legitimately, so that she can buy the world's goods by sending the world surplus wheat economically produced? While Mr. Stevens affirms the .success of the Eussian Five-year Plan, other stories are that Bussia remains in political and economic chaos. INTEREST, NOT. WAGE, IS PRIME CHARGE. That Eussian production is being carried on at the expense of the Eussian wage-earner is strongly argued in the "Argus" by J. T. Vinten Smith. He maintains that in Eussia capital is taking a larger share and labour a smaller share than happens elsewhere. He writes:— Judging from their public utterances, nothing would please the militants of the Federal Labour Caucus better than that Australia should emulate Russia's example of repudiation. Having disposed of the country's debts by the simple process of inflation and the destruction of Government stock registers, we should be free to embark upon their Utopian scheme for the nationalisation of industry, assured of all fhe advantages which would follow the overthrow of capitalism. Eussia pays, as much as 12 per cent, per annum for her internal loans. Some loans carry only 6 per cent, interest, but they possess the added attraction of a lottery conducted in conjunction with the loan. A sum approximately ■equal to the total amount of interest at 6 per cent, payable during the currency of the loan is allocated for distribution in prizes. In its official year book the Soviet Government admits that this is the only method by which small investors can be induced to subscribe to Government loans. To attract deposits the Government savings banks have to offer 8 per •cent, on current accounts, or 9 per cent, for fixed deposits. They also issue savings certificates for small sums, on which, the interest—l 2 per • cent, compound—is added to the capital half-yearly, so that the value of the certificate is doubled in six years. Thus, by means of the savings banks, capital is mobilised for the requirements of State credit, the depositors' money being almost entirely invested in Government loans. Loan money thus costs tho: Soviet Government at the very least 12 per cent., and, as the money is borrowed for industry, the first charge- upon the revenuo of any State enterprise must be an interest charge of not less than 12 per cent, on the capital invested. AUSTRALIAN AND SOVIET WAYS COMPARED. In Australia, where industry is conducted chiefly by private enterprise, the first charge is labour, and after provision has been made for all other items of cost incidental to the conduct of industry, including allocations for taxation, depreciation, and reserves, capital receives any surplus in the form of dividends. A review of a representative group of leading industrial companies reveals that in the current financial. year the total amount to be paid in dividends is not likely to exceed 5 per cent, on the aggregate paidup capital. Under the Soviet system of financing industry, 7 per cent, more would have to be paid on the capital employed—the Government having borrowed it at 12 per cent. —and, as the two sides of the profit and loss account must balance, labour (salaries and wages) would have to be reduced by an equal amount. To the employees of the companies selected, having a total paidup capital of £41,600,000, the reduction would mean a «ut in the annual wage bill of £2,912,000. This is the most favourable view that can be presented. The companies chosen are sound_ organisations, and they have been in existence for a considerable period of years. If a much wider selection had been made, including enterprises that, only occasionally have surpluses out of which dividends have been paid, and others that do little more than make ends meet, as well as those that have been losing from their inception, the deduction to be made from labour in order to meet the fixed charge of 12 per cent, would be considerably more than 7 per cent, on the total capital invested. The Soviet makes sure of its revenue from, industry by a tax on turnover, varying from 1.6 per cent, to 14.8 per cent, upon State enterprises, and from 2.15 per cent, to 17.15 per cent, upon private enterprises. Hence we have Eussia, a country which. imagined that it could destroy the capitalistic system, under the heel of a bureaucratic Government, -with capital commanding an extortionate rate of interest, resulting in starvation wages being paid.