Wairarapa Times-Age MONDAY, JANUARY 23, 1939. WAR ECONOMY IN GERMANY

Wairarapa Times-Age, 23 January 1939, Page 4

Wairarapa Times-Age MONDAY, JANUARY 23, 1939. WAR ECONOMY IN GERMANY

ACCOUNTS that are somewhat in conflict are given of the changes in Nazi Germany which centre on the replacement, of Dr Schacht by Dr Funk as President of the Reichsbank. One report declares that drastic cuts and economies arc pending, and that “in order to avoid further taxation of the people, who arc already hard pressed, Government Departments and the lighting services will bear the brunt of the economies.” Directly contradicting this somewhat improbable story, the Berlin correspondent of the London “Daily Telegraph” states that the changes mean that Germany’s policy will be one of unrestricted rearmament, the money for which will be raised by every means, regardless of the possibility of financial collapse. It seems very probable that this is the truth of the. matter — that the extreme section of the Nazis has extended its control and is determined to let nothing stand in the way of maximum development, and that it is because he did not wish to be identified with financial methods of which he did not approve that Dr Schacht has been dropped. The retiring President, of the Reichsbank is said to have pressed for increased taxation as a. means of financing expenditure on armaments, but Herr Hitler has preferred Io adopt more devious, and certainly not, less damaging financial methods. ■■ The only real alternative to meeting increasing armament costs out'of revenue no doubt is inflation. The broad prospect, now opened is one of increasing economic stress and. difficulty in Germany, and this is likely to entail an increasingly aggressive attitude on the part of the Nazi dictatorship in dealing with world affairs. Under the “Four-Year Plan of Economic Self-Sufficiency” proclaimed’by Herr Hitler in September, 1936, Germany’s available resources of labour and material have been concentrated more and more on the production of armaments of various kinds and on the construction of defensive and other military works. Under that policy, io quote Air G. H. D. Cole, the well-known British economist: — The German standard of living is being beaten down by two main forces—the diversion of man-power from producing consumable goods to rearmament, and the curtailment of imports as a means both to rearmament and to that national self-sufficiency which is regarded as indispensable for war. The Germans must live wretchedly, first because their incomes will not allow them to live any better, but also because they must live already in the manner of a beleagured city. Tin 1 changes now made certainly promise no economic relief to the workers and middle class in Germany—no increase in. wages or more ample food supply. At an immediate view, however, these changes may be significant chiefly as implying the adoption by the Nazis of a new attitude towards the big industrialists whom they have hitherto done a good deal to encourage and conciliate. Until now it, has been the policy of the Nazis to make it profitable for the capitalists who own. and control great industries in Germany Io employ large bodies of labour. While industrialists have been allowed to earn profits, their liberty in disposing of these profits has, however, been severely curtailed. .Joint stock concerns, Air Cole points out, have been forbidden Io distribute more than a limited rate of dividend and have been compelled to lend their surplus profits to the State, which uses them to finance armaments, subsidies, and other expenses involved in its militarist policy. In this way. the demand for the products of the constructional industries is maintained, and unemployment kept within bounds. The Four-Year Ulan from its inception has paid no regard io the economic welfare of the German people, but has exploited them for the sake of an expansion of armaments and military power. Evidently it is now intended to emphasise these aims and to intensify the methods hitherto pursued. Underlying everything else is the question how far and how long the German people will allow themselves to be exploited in this way. An immediate question also raised, however, concerns Hit 1 probable effects of the action of the Nazis in substituting rigid control for the co-operation they have been able hitherto to obtain, in no small degree through the agency ol Dr Schacht, from the leaders ol German finance and industry. Il was said of Schacht a year or two ago that, he had contrived Io make himself indispensable as a link between Hitler and the whole of German economic life. Falsified as that statement now is bv events, it. by no means follows that at a long view Hitler has strengthened his position by deciding to do without Schacht. The Fuehrer is reported to have ordered Dr Funk to complete the conversion of the Reichsbank into a central bank unconditionally subject to'the State’s sovereignty and also to “guarantee unconditional stability of wages and prices and security of the mark in future.” On the lace of it,' these last are tall orders and it is to be taken for granted that their execution wdl prove to be impracticable, lor the sufficient reason that under the Nazi regime all other aims are being subordinated, in the ordering and directing of German economy, to preparation for war.