ECONOMIC FUSION

Ashburton Guardian, Volume 67, Issue 47, 5 December 1946, Page 5

ECONOMIC FUSION

ZONES IN GERMANY COMMENT ON AGREEMENT (N.Z. Press Association— Copyright.) LONDON, December 4. The news of the signing of the Anglo-American agreement for the, economic fusion of their two zones will! be regarded everywhere in Germany as the first development in Allied policy after months of stagnation and uncertanty, says the Berlin correspondent of “The Times.” Nobody who has been In the British zone in recent weeks can fail to be deeply distubed by the deterioration of German morale in industrial towns or to perceive behind the immediate concern over food, warmth, clothing and shelter the constant fear that German industry would never revive. The remark most frequently heard has been: “We see no way out.” Such a position has been, intolerable, to people who still regard their industriousness and talent for organisation as one of their greatest assets. If the agreement can be given effect reasonably soon, it is not likely that German co-operation will be withheld.

“The Times,” in a leading article on the British and American agreement, says the Germans would be well advised not. to expect spectacular improvements in conditions in Western Germany. No amount of dollars or determination can get goods and raw materials into Germany faster than shortages, rising prices, transport bottlenecks and strikes permit. The agreement gives the Germans what they most lacked hitherto, a sense of purpose and hope. “The Times” adds that German repayment of. £250,000,000 threatens to collide with reparations, but repayment must have priority. The new plan can scarcely be combined with further reparations: payments out of German 'capital equipment in the West, with the exception of unconvertible Avar factories. British Austerity Unrelieved The Britisli-American Zone, fusion Aviil mean that Britons in the next few months will he denied any improvement in the austerity diet on which they are at present living, say the political correspondents of the Press Association and Exchange Telegraph Agency.

Britain will probably have to bear well over half her £125,000,000 commitment next year before the Euro pean harvests begin to ease the food situation in Germany. Meanwhile most of the food for Germany will have to -be imported. Mr John Strachey (Minister of Food) as a result will have to curtail dollar purchases of tinned 'fruits, canned meat and other trimmings which helped to add variety to the British diet. The correspondents. add that £80,000,000 which the feritish taxpayer has been paying annually to maintain the British Zone will not continue. In addition to the new •commitment of £125,000,000 spread over three years, the joint zone will in future be responsible for providing foodstugs and medical supplies which represented about two-thirds of the annual British expenditure in their zone. The cost of maintaining the civil administration zone, about £27,000,000, will not be covered by the new agreement, so that the total cost of Germany may be something like £206,000,000 spread over three years. Reuter’s financial editor, Sydney Gampell, says the big economic question is whether £ 250,000,000 will suffice to get Germany going or merely dribble away. Undoubtedly the British contribution, particularly the dollar portion, is all or more than Briain can afford. • Whether it will suffice remains to be seen. The-clause stating that imports will be made as far as possible from sterling sources so as to economise the dollar cost to Britain is a weak safeguard to her scanty dollar supply, since North America and other currency areas based on gold are at present the only sources of most goods and other things Germany needs.

Financial Points Mr Gampell considers that by far the most important financial points in the agreement are the early establishment of an exchange value for the mark and financial reform, as they cut cleanly away from the Potsdam arrangement under which all of Germany’s external and inter-zone trade have to be transacted in dollars. It is reliably reported that orders have been given for the suspension of all “reparations dismantling” of German equipment in the British Zone, says the corresppndent of the British United Press at British headquarters. German official circles so far lia\'e not confirmed the reports. The Paris correspondent of the British United Press says official circles state that the Britian-United States agreement will not affect France’s position. France would continue to administer her zone follOAvir.g the economic and political lines established Avhen Avar ended. Reuter’s Berlin correspondent says that Wilhelm Piec-k, President of the Russian-sponsored Socialist Unity Party, said the merger would have A r alue only if it brought nearer the unity of the whole of Germany. He hoped the merger Avould not he an obstacle to that end.