CHANGING GERMAN ECONOMY

Gisborne Herald, Volume LXXIII, Issue 21947, 15 February 1946, Page 3

CHANGING GERMAN ECONOMY

ALLIES’ PROGRESS

CUTS IN INDUSTRY

STEEL KEY FACTOR DIVERSION TO FARMING (Special Correspondent.) (9 a.m.) LONDON, Feb. 14. New attempts are being made in Berlin to establish full Allied agreement on the future level of German industry, states The Times’ diplomatic correspondent. The Allied representatives are exchanging views within the control machinery. All agree that industry is to he drastically reduced. The whole structure of German enocomy is to he changed, becoming much more agricultural, but they cannot yet agree on the precise scale of the reduction. The four Allies had agreed that Germany should be left with a potential productive capacity of 7.500.000 tons of steel annually but that, the actual output should not exceed 5.800.000 tons annually unless the Control Council decided otherwise. All the steel plants beyond those required to give a capacity of 7.500 000 annually will bo taken awav or oestroyed. This means, in fact, that by far the greater part of the German steel industry will disappear. Disagreement on Basis Even pre-war Germany was producing 21.124 000 tons of steel annually, 'aking the average of five years’ production. In 1939 the production was 18,500.000 tons. So far the Allies were agreed. But then they turned to settle the level of other industries. Once again there will be a heavy reduction. the inevitable consequence of the cutting down of the output of steel on which almost all industries depend. But the question is which figure for steel should be taken as a measure for the level of other industries: 7.500.000 tons of potential capacity or 5.800.000 tons of permitted production?

The British favour the higher figure. In the British view if the lower figure were now to be taken as the decisive figure in settling the future level of industry as a whole. Germany would not have the means to pay for the necessary imports. She would be a constant liability to the Allies, requiring subsidies. In arguing this case. Britain is in the minority. The other three Powers stand by the lower figure, insisting that Germany cannot be trusted with more than the barest minimum of steel and pointing out that the figure of 5,800,000 tons yearly was reached only as a compromise after still lower levels had been suggested.

The British representatives maintain that a Germany with a balanced economy even though heavily reduced. would be less of a danger to peace than a Germany economically unstable. There tire matter rests for the moment. Disarmament Proceeds Fast

Differences of view have arisen but the sum of what has been achieved by the agreement is enormous and heartening. The complete disarmament of Germany is going forward apace. A general agreement has been reached, subject to the arranging of the export plan, for the elimination of the production of primary aluminium, magnesium. synthetic petrol synthetic rubber, snythetflic ammonia, anti-friction bearings. heavy machine tools, heavy agricultural tractors, and war chemicals, including toxic products from bacteriological or plant sources. Little or no capacity for export will be retained in the machine manufacturing and engineering industries which will be brought down to the level of Germany's reduced domestic requirements.

This limitation applies to the production of cars, trucks and buses, to heavy electrical and metallurgical equipment and to constructional equipment, such as heavy cranes and excavators. Even the production of light agricultural tractors will be limited to 5000 annually. A general agreement has been reached that the permitted list of German exports should include coal, coke, light electrical equipment, textiles, clothing, toys, musical instruments, beer, wines and spirits. The most important items for the list still to be determined are iron and steel goods and these cannot be determined until the level of industry is decided.