From the Bloomberg Echoes blog's "This Week in the Great Depression" series:
With banking systems reeling, credit shrinking and tariff walls rising, customary trade channels began faltering in 1932. In their place, global and local barter economies developed.
“Following the lead of the United States and Brazil, which traded wheat and coffee, Germany has begun to obtain coffee in exchange for coal, Danish cattle for agricultural implements, and Russian petroleum for electrical machinery,” the Wall Street Journal reported in September.
Other bilateral deals appeared. Finland shipped timber to the U.K. for coal, Argentina traded grain for Spanish railway equipment, and Turkey offered tons of figs and currants for armaments. Germany’s dye manufacturers accepted 720 carloads of wheat from Hungary to settle longstanding unpaid accounts.
These exchanges were the result of the overhang of World War I debts, the collapse of the gold standard, currency devaluations and the explosion of protectionist rules, which had increasingly blocked commercial channels. Governments, trade associations and large companies thus initiated private arrangements in which prices and quantities were negotiated outside market trading.Also at Echoes:
Exchange rates favored industrially powerful states or regions. But getting some return was surely better than letting crops rot or trying them out as locomotive fuel, as Brazil was doing with compressed coffee beans....MORE
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