CENTRAL EUROPE

Rotorua Morning Post, Volume 1, Issue 191, 6 April 1932, Page 2

CENTRAL EUROPE

FINANCIAL ISOLATION FORCES RETURN TO BARTER. EFFECT S -OF TARIIFF BARRIERS. YIENNA. Oentral and eastern Europe is fast moving toward a condition of financial isolation which is only comparable to the state of things which prevailed here during the chaos which followed immediately on the close of the World War. The ever-rising tariff barriers which severely limited the normal possibilities of interstate .trade have now been followed by financial restrictions which seem destined to reduce that trade " to , the lowest limits and to l'ead to some system akin to ! barter. The recent conference of national bank representatives from the states now under these abnormal conditions, which met in November in Prague under the aegis of the Bank for , International Settlements, could help only to the extent of proposing individual arrangements for "clearing houses between 'the individual states concerned. Since that time it has been realised that this is almost impossible where the balanee of trade is very unfavourable on the one side. All that could be hoped for was that the better-placed state would either agree to a payment'of its surplus exports in the currency of the other, and that sueh 'payment should be investad in business or securities of the latter;' or, that the surplus should be written up in an account to be opened at the Bank of International Settlements and cleared at some -Fnfnvo r

Negotiations are still proceeding between all these states as to some understanding which will remove the most burdensome of the restrictions now in force, but even if some such arrangement is found, it can only touch the fringe of the real problem. To-day, there are no official exchange rates for any central European currency quoted in any of the neighbouring states, and the wide divergence in the quotations of the same .industrial shares in th'e different capitals gives a good idea of the chaos which prevails. A clearing agreement with Switzerland came into force on December 10, according to which Austrian importers of Swiss goods pay to the Austrian National Bank in Austrian schillings, and the Swiss exporters are paid in Swiss francs by the Swiss National Bank. But this arrangement has been made easy by the fact that Austria has a small active trade balanee with Switzerland, and any, surplus will be used for payment of interest on public loans placed in that country. Negotiations for clearing arrangements with Hungary, Czechoslovakia, Poland, England and other countries are still proceeding. All that central and east Europe can hope for is that the present restrictions will enable them to maintain their currencies until further credit is forthcoming from the international money market. Austria is seeking a 60,000,000 schillings loan (£1,700,00 approximately from France. Hungary is seeking a loan. But further credits alone will not solve the problems of this part of Europe. They will only be palliatives until the present trade barriers are lowered.