GERMAN POLICY.

Auckland Star, Volume LXVII, Issue 297, 15 December 1936, Page 10

GERMAN POLICY.

EXPORT SUBSIDIES

GIFT TO FOREIGN BUYERS

NEARLY £100,000.000 YEARLY.

(Special.—By Air Mail.) LONDON, Xovembc-r 24. Fantastic and unexpected are the consequences of German economic policy. Unexpected most of all, one imagines, to the" Nazis themselves, fantastic to everyone else, writes the financial correspondent of the London "Daily Herald." And the most unexpected and fantastic consequence of all is one that clo#s not seem yet to have been generally appreciated. It is that as a. result of Hitler's economic policy Germany is now in effect paying to the rest of the world an amount per year almost identical with that of reparations. Under Hitler she may, indeed, be said in tiuth to have restarted paying reparations in a new form. Moreover, the burden, so far from diminishing, will increase under the new economic policy..

] This is tlie situation. Under the IS Young Plan, Germany had to pay in lij reparations an annual total equal, at the ■ I then rate of exchange, to just under [if £100,000.000 a year. The only way in ! « which this sum could he paid was by [ I sell ins: goods abroad to that value over I and above the exports needed for her [| normal trade requirements. Interna- ? tional debts car only be paid by the II export of goods.- The burden was too [ I heavy. Reparations were abandoned. S ? But Germany's freedom from them was | i not to be for long. Hitler came to « power as a symbol of, among other II tliinsrs, the Germans' revolt the i j Treaty of Versailles and reparations. I And Hitler evolved an economic policy fl which, now that it has reached fruition, | means that Germany shall again pay |if reparations —under a different name Is but at almost the same rate. Twenty-five Per Cent. ' 1 This is how the German people now f I pay- Germany must have imports par- ? I ticularly the Nazis want imports of raw 111 materials for arms. In order to obtain '< imports she must export. And to J;! stimulate exports the Nazis have 5$ evolved an amazingly comprehensive !i scheme of export subsidies, jtf According to the last report of_ the y'j Commercial Counsellor to the British Embassy in Berlin, the over-all average |I rate of subsidy in all German exports §f now amounts to 25 per cent. d That means that Germany is selling II her exports abroad at 75 per cent of IS what they cost her manufacturers to j][ produce. |j She is, in other words, in order to | obtain trade, making a free gift of a k quarter of the value of her exports to f' foreign buyers, and the German manu--1 facturer is being recompensed by the | German Government, which collects tlie i|i money from the German people. They Pay £92,516,000. | What does this mean in value? ij ' Germany exported in the first half of I , the current year goods to a total value I I of 2,242,000,000 reichsmarks. As her exports are on the upgrade, her total 11 exports for the whole year will prob- || ably be at least 4,500,000,000 reiclisj marks. Tlie equivalent of that in pounds |i at tlio current rate of exchange is j! £370,065,800. But sis there is, 011 the authority of the British Commercial Counsellor, an over-all average subsidy ' on these exports of 25 per cent, the i real price at which these exports should | have been sold was 25 per cent more, I that is £462,582,250. In other words, Germany is selling | goods £92,516,450 below cost. She is i making a free gift of that amount, of ' goods to her foreign customers. I Under reparations Germany had to ;S sell just under £100,000,000 of* her goods | abroad for which she did not' receive 'i; anything, since she :had to pay' all proceeds to her foreign creditors. I Under the present system she sends abroad Just under £1.00,000,000 worth of j goods for which she receives nothing. The net result to the German people is, will be seen, therefore the same as when reparations were in existence. But this is one of the things the German people are not told. Anxious Stock Markets. The Stock Exchange was yesterday shaken, out of its recent lightliearted optimism by the increasing gravity of' the international situation. All markets were dull. Although this 16 evidence that the Stock Exchange has at last awakened to the serious nature . of the situation in Spain and to the potential international consequences of the revolt to which the city has, on the whole, been so sympathetic, it indicates something else also. Previously because of the strong foundation of genuine investment business, the Stock Exchange had been able to withstand international shocks. It has failed to do so now, not only because the international situation is becoming ! j more serious, but also because the Stock Exchange position is becoming weaker. :• While there still remains a substantial amount of investment buying, there lias been built up on this basis a large [' amount of unhealthy speculation, a good i. deal of which has been financed on borrowed money. It is those concerned [ in this speculation who have now [ become frightened and who were anxi- [ ous yesterday to sell securities. Arms Programme Effects. ' The effect the armament programme is having in forcing big development programmes upon various industries is made clear in the current report of Tube Investments, Ltd. j The company's manufacturing resources have, it is stated, been so taxed to keep pace with all demands that f it became evident some time ago that delays would occur unless extra provision were made to deal with this demand. The directors, therefore, decided to authorise expenditure for 1 developments which under normal circumstances would have been spread over i four or five years. Moreover, whereas i< these developments would normally have been paid out of profits it was necessary to obtain new finance by an issue of ordinary shares on bonus terms to shareholders to meet the costi Tube Investments, Ltd., has always een noted for its sound financial manaement. and the report comments: rto I; , e i ct ° r3 are not enamoured of and nrnfi! flotations in emplovment . the armamKL 16 "'T made provision £ } I,ave onl - v material that is d^rc^i Ply arnl » nl ent your £rora State has a right to expect fr tll ° of companies supplviL the * g [° U . P "requirements of thVvarious gooTi?'" 6 your business to make." 0 is , Evidence of the increased activity ■ -to be found in the balance-sheet whiofc shows Tevenue for the year of against ' 0