GERMANY TO-DAY.

Auckland Star, Volume LXIV, Issue 84, 10 April 1933, Page 4

GERMANY TO-DAY.

WORST LEFT BEHIND. ADVENT OF HITLER. CONFIDENCE NOT DISTURBED.

(By G. H. MOEISON.)

(Special to "Star.") NEW YORK, February 5. When the news was flashed over Germany on January 30 that'Adolf Hitler had at last seized power, the business world was very near to panic. Hitler, the agitator, and his followers, had been for over ten years preaching the nationalisation of the banks, State ownership of all great industries, suspension of the gold standard, abolition of interest payments of all kinds, and repudiation of commercial debts to foreign countries. But experts have been telling us for years, day in, day out, that the first step towards the return of prosperity —anywhere —is the restoration of confidence. And since Germany was relieved from the burden of further reparations payments by the Conference at Lausanne last summer, confidence has been returning and recovery proceeding in Germany at a very surprising rate. But had Hitler, the Chancellor, breathed one word about putting his fatal programme into effect, calamity would have been certain. But on the very day the Hitler Cabinet Was formed, official statements were poured out hour by hour, assuring the world that everything would go on as usual. No daring experiments with the currency, no wild adventures in economics, no tampering with private property. The

most essential feature of the new regime is to be a fight to the finish against Communism in Germany—a battle where no quarter will be given on-either side, to decide, once for all, whether in future property will belong to private individuals or whether everything will belong to the State. In spite of all the reassuring official statements from the Government, the bottom fell out of the Stock Exchange. Gilt-edged investments dropped 10 per cent and more in value within a day or two. Shares fell still more. Then the tendency reversed. Most of. the setback has already been recovered, and the trend of prices is upward all the time. The advent of Hitler has not turned back the tide of rising, confidence.

There is, however, no surer way of measuring the ebb and flow of confidence of a nation in its own future than the way the rank and file of the people provide for the safety of their property. Benefits From Lausanne. When confidence goes, great masses of the people withdraw their money from the banks, throw their investments on «o the market for whatever they will bring, send what they can abroad, change the rest into foreign money and hide the proceeds at home. So capital lies idle. The machinery of economic life stops. That was the state of Germany until the Lausanne Agreement was signed in July, 1932. The material benefits that followed were not worth mentioning, because Germany in reality had not been paying reparations since the Hoover Moratorium had been proclaimed a year earlier. But the psychological relaxation was tremendous.

One of the most striking proofs of the world-wide relief brought about thereby is the rise of 7 per cent German dollar bonds in New York. On May 28, 1932—before the . Lausanne Agreement—the 100-dollar bonds were selling at 27.7. The Lausanne Agreement was signed on July 8, 1932. By January 14, 1933, the same investments had risen to 72.2 —or to nearly three times the price they had been. It is true that when Hitler took office they fell back to 61.5 and are still in this neighbourhood, but the fall has stopped. The quotations in Germany for all standard investments have shown similar improvement. Gold mortgage bonds—the best form of German security known—averaged 65 in December, 1931. To-day they stand at 86-90. A week or two ago, the then-Minister of Economics, Dr. Warmbold. predicted that the rise to parity was possible at an early date, in which case, Germany would undertake a great conversion operation. The People's Savings. A still more convincing proof of returning confidence is the statement recently published by the German Savings Banks. There are 3200 of these banks in Germany—they gather up the savings of people who bank their money a dime at a time. Until« May, 1931—just prior to the great banking collapse in Germany— I the deposits of the savings banks had been increasing month by month. But from May, 1931, to October, 1932—just after the signature of the Lausanne Agreement —the withdrawals were always greater than the deposits. In this time, the total withdrawals amounted to 1817 mill marks, or 16 per cent of the total deposits. From October, 1932, onwards, the deposits have increased again month by month. On December 31, 1932, the total savings banks deposits were 9917 mill RM—in three months after the turning point, 378 mill or one-fifth of the 1817 mill RM lost by withdrawals had come back. This shows that the whole German people is regaining confidence in its future.

Banking Position. There is" one more very clear indication of the way people hoard their money under the influence of fear. This is provided by the figures published weekly by the Reichsbank, showing how many bank notes are in circulation. During a panic, the amount of cash in the hands of the people becomes a maximum. Everybody wants to have money where he can pet it! No matter what interest the banks offer—nobody is tempted. But a large share of the cash in the hands of the public is not being used —it is hidden away somewhere—sterilised. As far as practical business is concerned, it is nonexistent. •: When confidence returns, back comes this lazy money to the banks, down goes the note circulation. On January 30, 1932. the Reichsbank notes held by the public in Germany amounted to 4407 mill marks. On January 31, 1933, this had fallen to 3338 mill marks, and on February 15. 1933. to 3180 mill—the lowest circulation since 1926. j Business Conditions. These facts prove conclusively that confidence has returned. But has business revived ? There are a number- of tests that economists are accustomed to apply to find out whether any country as a whole is moving towards prosperity or away from it. Among these tests are: (1) Production of coal and coke, (2) output of iron and steel, (3) consumption of electrical power, (4) rail-car loadings, (5) trade figures—import and export, and i 6] unemployment. Every one of these tests, when properly applied, shows that Germany has left the worst of the crisis behind.

Before the war, and indeed up till' 1930, Germany always imported far more than she exported. So the achievement of 1931 —in which an export surplus of 2800 mill marks was created, was unique in more senses than one. Even in 1932 —the worst crisis year as far as Germany is. concerned—Germany's exports were 1080 mill marks higher than imports One reason is that, while the crisis lias been raging, Germany has developed her own agriculture until she can now feed herself almost entirely—hence dispenses with food import. But this seit-denial means an enormous unsatisfied demand for imported goods. The .moment Germany can export more, she will be able and anxious to import more. j

At the end of January, 1932, Germany had 6.042,000 out-of-works. At the end of January, 1933, 6,014,000. Only a drop of 23.000, but it must- be remembered /that, after 1927, Germanv equipped all her factories and mines with kbour-saving machinery. The crisis has intensified unemployment in Germany but not caused ft. .As the crisis subsides, unemployment will decrease but not disappear. The final cure will necessitate changes in the soekl system. . ,