FINANCIAL NEWS, Thursday 2nd March 1933
Clash be Industry and Agriculture
By Gareth Jones
National Government in Germany has declared itself clearly against any currency
experiments. Dr. Bang, the State Secretary of the Reichs Economic
Ministry, has stated unequivocally: “There will be no experiments in any
sphere…” He has said: “Whoever believes that our situation can be improved
by open or concealed inflation is either a demagogue or a fool.”
leaders of the present Government recognise that any large-scale inflationary
measures would lead to an unprecedented panic. Dr. Luther, as President of
the Reichsbank, is a bulwark against currency experiments, and it is to be hoped
that the autonomy of the Reichsbank will remain absolutely unimpaired by the
National-Socialists. The lesson of inflation has been well learnt by
Germans, and they look askance at British industrialists who toy with
in currency matters will certainly be a help to the National Government.
The new régime is also helped by the hopeful psychology which has made itself
felt since last autumn. The feeling of panic which impressed visitors in
1931 has disappeared, and one rarely hears those doleful prophecies of the
“breakdown of civilisation” and the “collapse of the economic system”
which were once the commonplace of every luncheon conversation.
last autumn to the end of the year there was a real improvement in the German
economic situation, and, although there is now complete stagnation on account of
uncertain political conditions, the atmosphere of hopefulness has not completely
better industrial conditions were reflected on the Stock Exchange. To take
two representative shares, Vereinigte Stahlwerke, which once dropped to 107/8,
rose to 35 towards the end of the year, while Siemens & Haiske, which had
reached the low level of 951/4, recovered to 127. The better spirit
engendered by improving production still lingers on, in spite of the hush which
has descended upon the Stock Exchange and on business life as a whole.
unemployment figures are, compared with last year, not unsatisfactory. On
February 13 there were 6.047,000 on the lists. This is 80,000 less than
last year. The increase in unemployment since the end of January was
33,000, compared with an increase of 85,000 in the same period last year.
Although little comfort may be gained from such a large total, the figure shows
that from 1932-33 unemployment has, apart from seasonal influences, marked time,
and has not gathered the momentum which was feared.
new Stillhaltung Agreement is also satisfactory to German bankers and is
considered an improvement upon the old. The result is held to be a fair
compromise. The reduction of interest by 4 per cent, is welcomed, and it is
pointed out that this means a saving in foreign currency of 20 million marks.
however, the favourable features of the German economic situation end. The
first difficulty which confronts the new régime is the state of German
finances, from the Reich down to the smallest towns. The total deficit of
the Reich at the end of the budgetary year 1932 was 2,070,000,000 marks.
The receipts from taxation have steadily declined. The issue of
“taxation notes” based upon the expectation of a recovery will be a burden
upon the finances in the future. Moreover, the guarantees which the
Government has undertaken (e.g., for agriculture, for exports to Russia, for
shipping, banks, &c.), amounted on October 1, 1932, to 2,146,000,000 Rm.
The finances of the towns are not in a happy state, and great fear is expressed
as to what will happen if the towns are unable to pay the poor relief. The
burden of unemployment relief falls mainly upon the towns and not upon the
Reich. Cologne, for example, has to support over 210,000 out of a
population of 730,000, or 28.4 per cent. of the population.
financial task facing the new régime is a gigantic one, and one fails to see
how the Government will be able to obtain the funds to carry out any vast scheme
of land settlement or of compulsory labour service.
part which the Government is to play in industry is another problem which the
National-Socialist economists will have to solve, and so far they have offered
no explanation of their attitude. With control over a great section of the
heavy industry, through Gelsenkirchen, with power over the Danat Bank and,
indeed, far-reaching intervention in the whole banking system, and with many
other links with industry, the German Government has inaugurated, as one German
banker described it, “a socialistic system led by capitalists.” What
will Herr Hitler do in this question? It will be a difficult problem for
the most dangerous struggle in German economic life which Herr Hitler will have
to face will be that between industry and agriculture. Herr Hitler will
have to decide whether he is for autarchy, which would mean the victory-but a
victory without gains-for the agriculturists, or a world economy, which would
mean victory for the industrialists.
the first month of the National Government, the agrarians have won all along the
line. Their champion, Herr Hugenberg, has acted in the economic sphere
with as much ruthlessness as Herr Goering has acted in the political sphere.
Tariff increases upon agricultural products have followed rapidly upon each
other. On February 8 the tariffs upon cattle, meat and lard were
increased, and soon after higher duties were placed upon many foodstuffs,
including fish. The tariff upon timber and wooden goods was then raised.
Hugenberg has thus succeeded in alienating every one of Germany’s best
customers, who will have their ability to purchase German industrial goods
considerably curtailed. The difficulties of Germany’s greatest debtor
country, the Soviet Union, are increased. Measures are being planned
towards the further protection of the German market against the import of iron
from Belgium and Japan as well as of other industrial products.
principles guiding the Government in this problem were well defined by Herr von
Rohr, State Secretary in the Reich Ministry of Food, when he stated: “We
expect the German leather industry to use German hides, the linen industry to
use German flax, the paper industry to use German pulp, the German soap industry
to use German fat. Where a voluntary policy does not suffice, the National
Government will employ State compulsion.’
autarchy run mad augurs ill for the future of German industry. The
Government forgets that a large percentage of the population lives directly or
indirectly from foreign trade, and that in 1930-31, 35.5 per cent. of the net
production of German industry was exported. By Herr Hugenberg’s
intensification of tariff madness a severe blow is dealt to industry, which will
lead to a reduced consumption of agricultural products, thus returning like a
boomerang to hit the Agrarians. Costs of production will increase.
Exports will be gravely impaired.
triumph of the Agrarians in February, 1933, fills one with the deepest concern
for German exports, augurs an increase in unemployment (let us hope that the
reliability of German statistics will be maintained by the Nazis), and unless
the industrialists succeed in influencing Herr Hitler, leads one to the belief
that Herr Hugenberg’s policy is injuring greatly both Germany and world trade.
Adolf Hitler, Chancellor of Germany.