STATE PLANNING

Evening Star, Issue 23038, 17 August 1938, Page 9

STATE PLANNING

POSITION IN GERMANY NAZI THEORY AND PRACTICE THE WAR MACHINE Whatever we may think of Herr Hitler’s foreign policy, of the break up of German democracy, or of the sweeping changes the Third lleich has carried through in the cultural sphere, we have been given a timely warning, writes the financial correspondent of the ‘ Manchester Guardian.’ As far back as 13 years before its rise to power the Nazi Party published the 25 points of its “ irrevocable ” programme of action. Abolition of the peace treaties and establishment of the Greater German Empire, return of the colonies and reintroduction of conscription, social elimination of the Jews, and a “ national ” education, the whole political and cultural order of present-day Germany was then postulated in crude but unmistakable language. The only items in this remarkable document which apparently have been discarded deal with a fundamental reorganisation of the economic system. All unearned incomes, we read there, are to be confiscated, all big concerns nationalised, and the larger estates expropriated without compensation. This sounds very different from the programme Herr Hitler enunciated in March, 1933, on the occasion of his first Governmental declaration: “In the future the economic interests of the German people are to be furthered, not by following the devious paths of bureaucratic centralisation, but by mobilising personal initiative on the basis of private ownership. i

THE SOCIAL REVOLT. How are we to interpret this “ breach of promise,” towards the Socialist followers in the Nazi Party? Did the ruler simply throw overboard the bait which had lured the masses to the Pretender? Or is Socialism to follow after all, once Nationalism has won its ultimate triumph? To find an answer to this question one must bear in mind that Hitler was swept into power not primarily by a proletarian movement, but by a social revolt of the lower middle classes in town and country and by the active support of those very land owners, industrialists ,and financiers whom his economic programme threatened with confiscation. Thus it was only natural that he started by reassuring his partners in the original Government coalition, and not with words alone. _ Within a short time the big combines in banking, heavy industry, and shipping, which under the pressure of bankruptcy had been taken over by the Bruening Government, were refloated and restored to private ownership. Even public discussion of the corporative State was made illegal, and Dr Feder, its main sponsor and one of Hitler’s oldest friends, was deprived of all official functions. ' Finally, in June, 1934, _ the hopes of a “ second revolution ” cherished by the extreme wing of the party and the S.A. were drowned in the “ blood bath.” THE WORK OF SCHACHT. But while capitalism was winning such conspicuous victories _ over its cruder enemies, its most faithful advocate, Dr Schacht, was all the time introducing and extending State planning. The Third Reich had inherited a rigid foreign exchange control, established during the international credit crisis of 1931. When, however, the public works programme and rearmament rapidly increased the demand for foreign raw materials, even stricter measures had to be introduced.

In the autumn of 1934 the " New Plan ” subjected the whole import trade to State regulation. It established, on the one hand, 27 control boards to supervise all details of every single import transaction, such as price, quantity and quality, selling terms, country of origin, and so on. On the other hand, the utilisation of the many types of blocked rfiarks and a moat varied! system of subsidies enabled' the Government to extend control also to exports. Since 1935 virtually the whole of German foreign trade has been administered as a State monopoly. This, however, was only a first step towards the most daring experiment in economic planning that has ever been tried outside Russia. In this connection a word must first of all be said about agriculture. As early as 1933 the “ Agricultural Estate ” was instituted in order to transform the doctrine of “ blood and soil ” into economic reality. Agriculture in the widest sense, from the primary stage of grain-growing and cattle-breeding down to the last baker and butcher, was withdrawn from the free play of demand and supply and reorganised in a kind of guild system. A SCALE OF PRICES. A strict scale of fixed prices was introduced, and quotas for delivery were assigned to every business unit on every stage of production and distribution. Along with the compulsory settlement of the farms these planning measures have de facto abolished private enterprise in this sphere. The results in terms of output are rather depressing. Domestic production is declining, both in cereals and in edible fats, a development which led to even more rigid methods of control, such as the requisitioning of the entire grain crops last autumn. In industry, planning is for the present based on a much subtler principle. Business organisation, technique of production, and diversity of output would possibly defeat any rigid scheme. Ycc, without formally interfering with private ownership and private management, the State has seized a few strategic key positions from which the entire process of industrial production can be regimented. In this connection Germany’s dependence on the import of raw materials provided a real advantage. Not much had to be done to develop import control into an elaborate system of centralised distribution of all basic minerals, textiles, chemical materials, and so on, whether imported or home produced. Since any conditions as to price, quantity and quality of product, or technical organisation may bo imposed in addition, the allocation of raw materials has become the most powerful instrument for the current supervision of each industrial firm. INVESTMENT CONTROL. This is supplemented by rigid investment control. In many industries the expansion of productive capacity is once and for all prohibited. In others it is strictly -licensed, and the granting of permission is often dependent on the applicant’s willingness to erect additional plant for rearmament purposes. Rationing of raw materials and investment control have their equivalent in the financial sphere. A strict sys-

tom of price-fixing and price discrimination, reinforced by the establishment of compulsory cartels, attempts to adjust current supply to the official “ regulation of consumption.” The private capital market is more or less closed by the do facto confiscation of all profits exceeding the maximum limit of 6 per cent, for paid-out dividends. These sums have to be invested in Government stocks, and provide, together with taxes and short-term borrowing, the money for the financing of rearmament and of the four-year plan. The organisation with the help of which industrial planning: is being carried through is extremely complicated. There is, on the one hand, the Reich Industry Group, with seven “ chief groups ” and a thousand branch groups, a corporative body of industrial selfgovernment with compulsory membership. There are, on the other hand, the Government control boards, administered by Civil servants. But in many cases the lack of Civil Service experts has made it necessary to fill the leading posts of the supervising bodies with industrialists, a convenient method for big business to maintain its monopolistic power even under State planning. No doubt the friction under which the whole system works is immense. Over-organisation and sabotage waste a considerable part of the productive effort. Yet industrial planning has made it possible to concentrate all the human and material resources of the Third Reich on one aim—rearmament —and to do so without drifting into open inflation.