FINANCIAL STRAIN

Wairarapa Times-Age, 5 August 1940, Page 9

FINANCIAL STRAIN

INFLATION IN GERMANY BURDEN ON LOW INCOMES. NAZIS WAR ECONOMY. German propaganda is at enormous pains to convince the Germany people that there is not and cannot be any; inflation in Germany, however long the war may last. It is pointed out that the strict regulation of German economic, financial and social life make inflation impossible. Germany’s financial jugglers never tire of saying that the note-circulation of the Reichsbank is relatively small; the Reichsbank. they explain, has to provide directly and. indirectly for the currency needs of Austria, Czechoslovakia and Poland. No financial conjuring, however, can hide the fact that after eight months of war, the economic, financial and social face of Hitler’s Germany shows all the marks of a gigantic inflation. German war economy has now reached, the peak of its output capacity. All available labour (including women and children, the whole technical machine and all raw materials arc fully utilised, and, if in recent weeks there has been a certain slackening in some branches of armament manufacture, the reason lies in a shortage of raw materials. All experts on war economics agree that German armament production cannot be increased beyond its present volume except at the cost of further restrictions upon the German consumer. In other words, the German masses would have to work even harder for a lower wage and under still worse living conditions. Strict rationing, however, has already enforced a standard of living which is, taken all round, well below the minimum necessary for health. All financial measures taken by the German Government since the beginning of the war must be judged from this point of view. The financial, currency and fiscal regulations enacted by Goering and Funk since last September are inevitably designed to impose upon the people still further sacrifices without their noticing them. WHAT INDICES SHOW. In the financial sphere this policy has recourse to an inflation of credit. The following figures, taken from the "Economist.” "The Round Table" and from various German sources, clearly illustrate the present state of affairs: 1933. 1939. 1940.1 Million Reichsmarks? Note circulation .. 5.570 10,346 13937 Internal debt, including special and Treasury bills, tax certificates 11 696 65.000 103.000 1929 equal 100.

Credit inflation is assuming vast dimensions. A surplus calculation will show how inevitable is this process. According to leading international economic and financial experts, Germany’s present war expenditure is 5.500,000.000 marks a month, or 66,000.000.000 marks a year. Now, as to revenue. Since the outbreak of war, the fiscal screw has been applied to curtail consumption: in-j come-tax and other taxes, especially on wages, including direct and indirect wage deductions and taxes and duties on consumption, are enormous. According to official German estimates, taxes for the current financial year 1940-41 are expected to yield about 21,000,000 marks. To this must be added certain recurrent and npne-recurrent expenditure upon which the govern-, ment can lay its hands: — The balances of health and unemployment insurance funds will be confiscated. A large percentage of party subscriptions and payments to the winter relief fund will also be taken over. The loot of Czechoslovakia and Poland is an important factor in war finance, as also are the expropriation of the Jews and the confiscation of church property, etc. These items, itis reckoned, should bring in a further 15.000.000,000 marks. The compulsory realisation of liquid assets, the (rapidly diminishing) savings banks deposits, premiums of private insurance companies, and payments to mortgage banks will yield another 5,000.000.000. A WORKER'S BURDEN. Thus, an annual expenditure of 66,000 000.000 Reichsmarks will face a revenue of 41,000,000,000, leaving a deficit for the current year of at least 25,000 000.000. By the end of the first year of war the national debt will reach the astronomical figure of 117,000,000,000 Reichsmarks. This is already more than two-thirds of the total debt bequeathed to the Weimar Republic by Hohenzollern Germany after the collapse of 1918. Germany, as we know, cancelled this debt by the inflation of 1922-23. From the point of view of labour and cost of living in Germany the effects of war economy are even more disastrous. The “Economist” reckons that, of the annual expenditure of 166.000,000,000 marks, only 3,000.000,000 have been made available for civilian

consumers. The sacrifices demanded of the masses appear most vividly from the rationing figures a head and a week:—Butter 4.60 z, margarine 2.80 z, lard 1.60 z, meat (including sausagemeat and bones, etc) I.llb, bread 3.31 b, cheese 2.20 z, sugar B.Boz. eggs six in' four weeks, milk only for children and expectant mothers, coffee, a chicory substitute, tea substitute of blackberry leaves, cocoa substitute of maple leaves’ soap 3oz, fish not rationed but only obtainable twice a week, game and poultry almost unobtainable, clothing and shoes strictly rationed. The food value of these meagre rations is further reduced by their inferior quality. The plight of the workers is revealed by the following details: Labour if. wholly conscripted; there is no right of union. The working day is 10 hours, but in most armament factories 12 hours must be worked without pay for overtime. Wage deductions are made for: 1. Tax on wages or income, plus 50 per cent war increase. 2. Municipal taxes. 3. Winter relief contribution. 4 Nazi Party subscription. 5. A.R.P. contribution. 6. Contribution towards the people's car. Both food and clothing are of poor quality. A shirt made of “Zellstoff” lasts only two or three months. A worker with an income of 250 G Reichsmarks a year is taxed in Germany as follows:. Bachelor 480 Rm. married man with no children 280 Rmmarried man with two* children 192 Rm. Hitler has accordingly to reckon not only with the strangling grip of the blockacre, but with the annihilating effects of the economic and social burdens he has laid upon the German people.

Output of consumption goods 82 95 90 Output of capital goods 44 148 14G Number employed 13.2 millions 21.6 21