POLAND HANDICAPPED

Greymouth Evening Star, 28 July 1936, Page 11

POLAND HANDICAPPED

BY LACK OF CAPITAL. Poland, on whose future course the peace of Europe may largely depend, is faced with political and economic problems of the greatest difficulty (writes George Soloveytchik in the London “Daily Telegraph”). Flanked by such formidable neighbours as Germany and Soviet Russia, she holds a key position in Europe. At the same time, she is suffering from an acute lack of capital. Poland has an area of 150,000 square miles and a population is growing at the rate of 500,000 a year. Poland has the highest birth-rate in Europe. One must see the present situation in Poland against the background both of her historical past and the more recent Pilsudski and post-Pilsudski era. It is not easy to find a country more heavily handicapped to-day by things that happened centuries ago. The Poles regard the late Marshal Pilsudski not only as the creator of their State, but for many years its leader and teacher, its guardian and inspiration. The death of the Marshal just over a year ago removed the one personality that dominated the country and could keep it together. The Marshal, however, concentrated almost entirely on two issued: the army and foreign policy. As a result, Poland’s internal development has been severely handicapped. Since his death, the hollowness of a Pilsudski system without Pilsudski has revealed itself again and again. Poland to-day is a dictatorship without a dictator.

The Marshal has no direct successor. All the people who have at various times participated in the government of Poland under the Marshal are, to give them their colloquial name, “Pilsudchiki.” But among them, various shades of opinion are represented. Yet all the “Pilsudchiki” claim to be carrying out the Marshal’s political testament.

Until the recent change of government, the army and Marshal Pilsudski’s titular successor as inspectorgeneral of the country’s defences, Gen. Rydz-Smigly seemed to keep out of politics. It had been assumed that the former Prime Minister, M. Koscialkowski, would be able to bring about a “rapprochement” between the ruling group and the masses. His attempts proved a failure, especially after the disorders among the unemployer in southern Poland show the ill-effects of the economic crisis on the temper of the working classes. Financial possibilities for reliel schemes or public works are limited, a credit inflation "a la Dr. Schacht” is to the Poles anathema, and if it is impossible to make labour a little less starved and a little more content, the extension of a modicum of political freedom is dangerous to the very regime. , With the reshuffle in the Cabinet, Gen. Skladowsky, acting under orders from Gen. Rydz-Smigly, was appointed Premier and Minister of the Interior. Thus, home affairs will now’ be tackled with a firm army hand. It appears likely that every effort will be made to consolidate a regime of authority by the application of milltary discipline in home affairs and the further expansion of national defences coupled with an active foreign policy. The position of Poland between two such heavily-armed States as Russia and Germany makes the desire for bigger. armaments plausible. Russia, despite pacts and treaties, remains the hereditary enemy. As far as Germany is concerned it is doubtful whether there are many in Poland who believe in the sincerity of Hitler’s professed friendly feelings. The Poles know what the Germans really think of them and how they feel about Silesia. Danzig and the corridor even though Hitler has judged it opportunte to drop for the time being the wild anti-Polish propaganda conducted by Germany with considerable success ever since Versailles. The Poles also know that notwithstanding their present “romance” with Nazi-Germany, the Germans have seen fit to submit the Polish minorities in Westphalia to such treatment that early this year the situation became really alarming. They realise that up to now they have, on balance, benefited from the establishment of “friendly” relations with Germany but they had no illusions as to the lasting character of this state of affairs. For the first time for six years. Poland budget has been properly balanced. The Minister of Finance has promised tax reduction to facilitate an improvement in economic conditions. But increased expenditure and deI creased revenue are hard to reconcile.

FOREIGN EXCHANGE CONTROL A strict foreign exchange control has had to be introduced, ostensibly to stop the hoarding of gold and foreign currency. The authorities assume that about 300,000,000 zloty (£11,500,000 at current rate) is hoarded and that it will now return into circulation. If this were so it would have far-reaching effects on the economic life of the country the total money in circulation being only about three times as much. But such an eventuality appears hardly likely and the great uneasiness about the future of the zloty that has resulted in the draining of the Bank of Poland’s funds during the last few months is far from being allayed. , _ Despite the fact that for a period of years Poland has had a favourable trade balance, the gold reserves of her central bank of issue have fallen during the last eight years by two-thirds to about £17,350,000. This diminution must be due to payments abroad on account of interest and amortisation of foreign loans and credits. Well endowed with natural resources, Poland does not possess means enough to develop them. She has had to attract foreign capital into her industry and commerce as well as into the chests of the State and the municipalities. Poland’s export surplus, shrinking as it is, has been inadequate to meet fully the service and amortisation charges of these foreign investments. . q If the determination to avoid devaluing the zloty—proclaimed by the present Cabinet with such emphasis is maintained, some form of suspension of Poland’s foreign debt service, such as a transfer moratorium, can scarcely be avoided much longer. But that would have a most damaging effect on Poland’s credit and her ebnnees of economic development. The present measures, such as the cunency restrictions, may bring temporary relief, but are no solution in themselves. No one can foretell how the unavoidable internal developments are going to affect Poland’s international situation. But it seems fairly reasonable to assume that in the absence of an immediate vigorous political lead and genuine economic assistance from both England and France, Poland will be unwillingly driven into the hands of Germany in such a way as to make the disentanglement of the European situation far more expensive for both England and France in the long run,