THE OTAGO DAILY TIMES TUESDAY, MARCH 17, 1936. GERMANY’S ECONOMIC PLIGHT

Otago Daily Times, Issue 22832, 17 March 1936, Page 8

THE OTAGO DAILY TIMES TUESDAY, MARCH 17, 1936. GERMANY’S ECONOMIC PLIGHT

The Berlin correspondent of the Morning Post hinted, in a gloomy survey of economic conditions in Germany, that the coming Budget would have to provide for heavy increases in taxation to finance the prodigious expenditure on armaments. All the news that is filtering through from Germany supports this view, making it appear that the Third Reich is indeed almost on the verge of financial catastrophe. Dr Schacht, who is President of the Reichsbank and Minister of National Economy, has not made any attempt in recent months to conceal his anxiety concerning the rapid deterioration of the national finances. He is now reported as having told Herr Hitler that expenditure on armaments must be curtailed and that a four per cent, capital levy, a thirty per cent, excess profits tax and a five per cent, cut in wages will be required to avert bankruptcy. “ It is no secret,” says the Morning Post, “that Herr Hitler is incensed with Dr Schacht, and that he decided on the Rhineland action not only in the teeth of his advice, but also against the counsels of the German general staff and Foreign Office officials.” This appreciation of the gravity of the economic crisis is confirmed by the respective correspondents of the Manchester Guardian and the Daily Telegraph. The former declares that there has

been a run on the savings banks, and adds that “ every symptom of discontent is hushed up.” The latter comments on the insecurity of Dr Schacht’s position, but says that financial circles, feeling that his dismissal would be the prelude to economic collapse, are strongly behind him. In the face of these facts it is not unreasonable to conclude that the Rhineland occupation was intended to distract the attention of the populace from rumours of impending disaster, as much as to provide a grandiose “ gesture ” for the vindication of German honour. Behind the elaborate and carefully stagemanaged demonstrations of “ loyalty ” to the Fuhrer, of which there have been several lately, it is possible to sense the working of sinister forces of repression. There was little or no improvement in the condition of German tj-ade and industry last year, nor is the outlook for the current year encouraging. Rearmament has meant, for the masses at any rate, the continuance of high food prices, incredibly low wages and taxation at a fantastic level. The prolonged shortage of fats, butter and meat, it is .stated, has made a profound impression on the average German housewife, and the prestige of the regime has suffered in consequence. There is, however, little prospect of active rebellion against working conditions. The dreaded Himmler Black Guard has for one of its functions the ruthless suppression of working-class revolt, and residents of Berlin are grimly reminded of the fact by posters which, according to .the Manchester Guardian, call upon “ all responsible persons to spy out those seeking to sabotage German unity and report them to local Nazi headquarters.” The shadow of the concentration camp apparently still looms across the German scene, for the discouragement of movements against the stability of the regime.

Yet it is almost impossible to resist the conclusion that Herr Hitler, and the fanatical coterie supporting him, are facing the gravest crisis of their experience. The Cabinet itself is obviously divided on the vital question of financial policy. Months ago Dr Schacht submitted to the Chancellor that rearmament could not be carried on - without capitalist aid, and the battle was joined between the two factions, with the Nazi radicals demanding the abolition of “ high finance ” in an endeavour to get rid of the more orthodox capitalist element led by the President of the Reichsbank. The indications are that the advocates of National Socialism, pure and unalloyed, have triumphed in this latest clash of policies. But if the only way out for the Chancellor is tljat suggested by Dr Schacht—still heavier taxes and still lower wages—one may hesitate to speculate on the reception that will be accorded to Herr Hitler’s next Budget. The fourth year of the Nazi dictatorship finds Germany’s foreign credit at an appallingly low ebb. The country cannot borrow in London or New York to purchase necessary raw materials and food. There has been no appreciable improvement in the trading position in spite of Dr Sehacht’s drastic measures. Imports, it is authoritatively stated, are less than half of what they were in 1913, and less than one-third of the 1929 figure. Exports, in the latter half of last year, were increased somewhat by means of a subsidy scheme, the money being obtained by a monthly levy on all industry, said to run, in some cases, as high as seven per cent, of the annual turnover. Gold reserves arc at an alarmingly low level in relation to note issue, and the rearmament programme and the campaign to reduce unemployment have together sent the public debt soaring to dizzy heights. Herr Hitler clearly has good I’eason for not desiring that these facts should be generally known to a population which is already largely deprived of its purchasing power, and upon which, it would appear, ho will have to make a demand for still greater sacrifices.