HC Deb 24 June 1935 vol 303 c786

9th April, 1935.

According to summaries which have appeared in the German Press, the Agreement distinguishes between current orders, which are to amount to not less than 60 million marks and will remain subject to the method of financing hitherto in force, and new orders which are to be placed in Germany by the Union of Soviet Socialist Republics within one year up to a value of 200 million marks.

For these additional orders, which are to be placed on condition that terms of delivery and prices are right, the Union of Soviet Socialist Republics will receive a credit of an average duration of five years at 2 per cent. interest over Reichsbank discount rate from a German banking group headed by the Deutsche, Diskonto Gesellschaft & Dresdner Banks. These banks will discount the bills of the German delivery firms and will pay the equivalent to the Soviet Trade Delegation in Berlin which will thus be enabled to pay cash to the suppliers. Bills are guaranteed up to 70 per cent. of their value by the Reich and German suppliers will be liable for 30 per cent. of their value during the whole period of the credit.

The Agreement also provides

  1. (a) for the delivery of goods from the Soviet Union to a value not exceeding 150 million marks—thus effecting a partial balance of trade.
  2. (b) for the liquidation of outstanding Soviet indebtedness to Germany for past purchases. This is said to have amounted to 250 million marks at the end of 1934, of which nearly 200 million marks are due for payment in 1935.