Trade: So Who Needs Money?

Bartering is the world’s oldest method of doing business; Esau, one of its early practitioners, swapped his birthright for a mess of pottage. Though the easy flow of money and credit has long since ruled out any need for widespread swapping, the surprising fact is that bartering survives in today’s sophisticated international trade. It is even undergoing something of a revival as more nations sign trade agreements to exchange yearly quotas of goods and commodities with one another; more than 490 such agreements are now in force. About 20 companies, mostly in Switzerland, Holland and Britain, are in the profitable business of helping the barterers to get what they want.

Commodities or Cash. What swappers want frequently requires at least a three-way trade. In Moscow, state-owned tobacco stores recently offered Muscovites unaccustomed to blended tobaccos West German cigarettes at 33¢ to 38¢ a pack. The West Germans had accepted Bulgarian tobacco in exchange for cigarette-paper machinery, processed much of the tobacco into cigarettes that were sent back to Bulgaria; the Bulgarians shipped them on to Russia in payment for more machinery. Sometimes, the trade is not so simple. Lebanon, burdened by a glut of apples, managed to swap some to Jordan in exchange for 40 army tanks, and would like to trade more to Britain in payment for VC 10 jets. Although the British are anxious to sell their jets to Lebanon’s Middle East Airlines, they are not wild about those apples. The government has called in Greek-born Henry Klonarides, 39, whose London-based Emerson Associated is one of the busiest bartering firms, to figure out a transaction that would dispose of the apples for cash.

Klonarides and his competitors find their biggest market in the underdeveloped nations, which usually have commodities to trade but very little cash. Through bartering, Egypt has been able to swap its cotton for German locomotives, for machine tools and for a British power station. Brazil traded coffee for $4,200,000 worth of British tractors. For handling commodity sales, bartering firms take a commission of 1% up, depending partly on the state of the commodity market and partly on the length of time that it takes them to conclude the deal.

Big Bills, Bigger Profit. Successful bartering requires shrewd contacts and lightning communications. The largest, oldest and best-known barterer is Lausanne’s Andre & Co., an 88-year-old firm that last year handled transactions worth $1 billion. Brothers Georges and Jean Andre have 5,000 worldwide agents, a fleet of 15 freighters, leased telex lines to North and South America and, reputedly, Switzerland’s largest telephone bill. Bartering has particularly profited from increased East-West trade because Comecon nations like to do at least part of their dealing in merchandise. In their latest transaction, the Andre brothers shipped diesel engines to Yugoslavia in exchange for ship hulls, sold the completed vessels to Western European shipping companies in a neat $11.4 million deal.