GERMAN SLUMP.

Auckland Star, Volume LXIX, Issue 196, 20 August 1938, Page 15

GERMAN SLUMP.

THAT'S BEHIND IT?

STRAIN OF NAZI POLICIES.

BREAKING-POINT NEAR ?

(By "SEXEX.")

For years economists have been pointing out that Xazi policy has subjected German economy to dangerous strain. There have been warnings of the hi"-h cost, of the achievements of the National Socialist regime, the theory of economic self-sufficiency and the enormous military expenditure. This weakness has been seen as the Achilles heel of the new Germany. Yet for years Germany has carried on; more, she has embarked on more spectacular, projects. The laws of economics might appear to be suspended. But in the past few days there has been an ominous break on the Berlin Bourse. I«j Germany reaching breaking point at last? What is behind this significant collapse? "What is affecting Germany is the same thing that applied the brake to the plans of Russia for similar self-suffi-ciency the approach of a new depression. The fall in prices for foodstuffs and raw materials in the 1,1 months up to May last was almost as great as the similar fall in the first 15 months of the depression of 1929. Crop reports have not been satisfactory. In April there was a marked deterioration of cereals; spring frosts damaged fruit trees very seriously. The consumption of coal has dropped from 15,700 tons in April, 1037, to 14,500 tons in April, 1938. Textile firms expect that their exports this year will be only half of "wh*t they were last year. The figures

giving the export and import trade of Germany and Austria for the first six months of 14)38 reveal that the adverse balance of trade is increasing. Exports have been 10 per cent below the 1937 levels, if Judged by volume, three per cent in terms of prices. The volume of imports, on the other hand, has risen by 13 per cent. The imports of food have been eight per cent higher than in 1937, despite the new production campaign of Herr Darre, the Minister of Agriculture. Pressure of Rising Co?ts. Meantime industry has been subjected to the pressure of rising costs. The half-yearly report of the Reich Kredit Uesellscliaft, issued early last month, reveals that the point has been reached where the manufacturing and farming industries have besn caught between the scissors of increasing costs of production and the barrier to expanding production because of the impossibility of obtaining any more workers. An official estimate puts this deficit of workers at 500,000, of whom 85,000 are wanted for agriculture. The continued increase in costs will, of course, endanger the whole wages system in Germany, a fact recognised by the XazL party, which, through its chief economic organ, has been foreshadow. :ig new pressure to obtain lower priccs. The Xazis have been pointing out that industry must awaken to the fact that, because of the increase in the public debt, the volume of State orders must sometime be reduced. They claim that the reduction of prices should be j>ossible because of the increasing financial resources of industry. The prosperous nitrate and potash industries, for instance, were recently compelled tj cut prices by 30 and 25 per cent respectively. Food Supply Question.

The position to-day is that German productive machinery is fully employed. Since the spring of thi* year, according to an estimate by the Berlin correspondent of the London "Times," rearmament expenditure, military and economic. and public works programmes have been financed, not through bills

drawn against future savings, but from existing savings, in the form of receipts by the Government and money available in the capital market. The inference to be drawn from this is that the Government must now accept the fact that its programmes need adjustment to a slower receipt of taxes and a slower accumulation of capital. In agriculture the same position exists. The proceeds from agricultural products have been greater, but they have increased proportionately less than the national income has risen, and costs have been rising while the receipts of the farmer have been the same. „ The task of feeding the people remains something the Nazis are unable to carrv out from their own soil. Because of the prohibitions they have imposed on the feeding of wheat and rye to livestock, their supplies of bread-making grain are higher than they were a year ago, and there is ample to supply Germans until the harvest is gathered, but 1,600,000 tons of maize have had to be brought into the country, while the wheat fmports between August 1 last and April 30 (819,000 tons) were almost as large as those for the whole year, 1936-37. Load of Taxation. Contributing its mite to the economic tangle is the Anschluss. The Reich is 82 per cent self-sufficient, Austria is only 73 per cent self-sufficient. How is the new territory to be al»orbed into the Reich without reducing the exports of grain and animal foodstuffs which are not available in sufficient quantities in Austria? And capping all is the load of taxation. Last year Germans paid Federal taxes alone amounting to £21 per head (Xew Zealand is now paying taxes amounting to £23 a head). But to these must be added the church tax, the head tax, local taxes, unemployment insurance, and various levies for welfare purposes, all compulsory. To-day, with the pressure of taxes, and the beginning of a decline in profits, is it any wonder that there is uncertainty in Germany? Fears of higher taxes, of compulsory contributions to State loans, the knowledge that returns from business are falling, that the end of tho State-created boom is at hand, are enough to account for the break on the Berlin Bourse.