EFFECT OF THE YOUNG PLAN ON GERMANY’S PROSPERITY.

Star (Christchurch), Volume XLIV, Issue 43, 20 February 1931, Page 6

EFFECT OF THE YOUNG PLAN ON GERMANY’S PROSPERITY.

In Germany To-day

By

G. H. Morison.

(Copyright to the “ Star.”)

This is the last of six consecutive articles presenting a study of Germany as it is to-day, economically, politically and socially.

When, in the midst of the great semi-annual Trade Fair, I got to Leipzig, I could hardly believe my eyes. 'The earliest record in existence referring to the Leipzig Fair is dated 1210. Originally it was just a place where peasants met to exchange their crops for hand-made articles. Since then it has changed its character many times. But in the last ten years it has developed more than in all the preceding 700 years.

JUST OUTSIDE LEIPZIG is a stupendous stone monument commemorating the victory of the Allied nations over Napoleon in 1813. The blow sealed Napoleon’s fate. In those days the place where the monument stands was a swampy prairie over which armies could roam. When I saw it in 1919 it was very much as Napoleon left it. To-day it is covered with a city of exhibition halls, one of them the largest cupola hall in the world. The streets are paved with granite, motor-buses whirl visitors about, two enormous aerial masts show that a radio service is in full swing. place is called “ The Technical Town.” The old time fairs had nothing like it. The V sample fair ’* for merchandise is in quite a different part of Leipzig. This section, which shows all Germany’s new technical triumphs, all her latest machinery and works’ equipment, has swollen to this remarkabre size under the restless initiative of a man still urtder fifty—Direktor Paul Voss. “ Our pre-war selling organisations, privately owned, were all confiscated in 1919,” Herr Voss explained, speaking in sharp brisk sentences as if his time were exceedingly precious. He speaks several languages as well as his own and has been all over the world. Do It While Others Think. “ In March, 1914, we had only 15,774 German and 4226 foreign buyers. The numbers can be exactly checked, since every buyer must obtain a numbered check to enter the halls. In 1924, there were only 700 American guests, but in 1930 there were 2570 Americans. In 1930 there were approximately ten times the number of German visitors and eight times the pumber of foreigners, compared with 1914. Since 1924 the number of Germans has fallen, while the foreigners have reached two and a half times the previous number. This shows that the Fair is achieving its object in exports. German manufacturers not only exhibit to get orders, but they send salesmen and engineers to talk to all prospective buyers, in order to find opt what kind of machines they are actually looking for. Again and again one hears the question, 4 Does any machine exist for doing such and such a job we now have done by hand ? ’ or The machines we use have this and that fault. Does anything better exist?* If not, you may be sure the German manufacturer willWery soon put the thing required on the market. Thus we keep in touch with the whole world and its wants and fill them while other people are thinking about it.” s Direktor Voss told me that while exports business is going up by leaps and bounds, the home market is the source of increasing anxiety. This he explained in this way: “ Why? Simplicity itself, my dear sir. The country has no working capital. There are 3,000,000 unemployed at present who can buy nothing. As many as 43.6 per cent of our workers earn less than 400 dollars per year. The middle class—here you have the official statistics—earn on the average between 1000 dollars and 1250 dollars per year. How could new capital accumulate through the savings of the people out of such incomes? Effect of Reparations. “ Qn top of that comes the effect of reparations. The bulk of the taxation is borne by people with incomes like these. What they would spend—to smarten up business, or save—to increase our working capital—is taken away in taxes. Only 18 per cent

of the population have incomes between 750 dollars and 2000 dollars a year. Only this class can buy to any extent. If this crushing taxation were taken from one set of Germans and the proceeds given to another, the general effect on home trade might not be very serious. But when payments are made across frontiers—as when reparations are paid—this means a transfer of buying power. “ What do the foreign creditors do with money paid -under the Young Plan? Why, they send the money back to Germany and demand useful things io exchange. That is why Germany’s exports are swelling so amazingly year by year. German goods are being driven all over the world to clog up the world’s markets, while the people at home have to go without. And, mind you, even then it is necessary for us to make these goods better and cheaper than all our -competitors, otherwise our money would remain abroad and soon start to depreciate.” Rimiianisation of Germany. Russianisation of German economic life fs clearly going on at an alarming rate. Politically, Germany is hostile to Communism in any form. Bolshevism is no political danger among that part of the population that is employed. But the way German business is developing is leading the Soviet system by a different road. Businesses without enough working capital are amalgamating with one another to economise resources. Little • businesses, unable to* compete, are disappearing. They will never again be able to get a start. Vast organisations like the Dye-Chemical-Trust, the United Steel Works, the Optical Trust, the Hamburg-Amerika-Norddeutscher-lloyd, the Deutsche-Bank-Dlscontogesell-schaft, are merely prominent examples of the tendency to gather every form of business into immense national units. Presently everyone will have to buy from or sell to a trust to do business at all. And this suits the German character entirely. He is far happier as an obscure unit in a vast complex than as a man with responsibilities in a small one. This has grave dangers for the whole world. Consider Soviet Russia, where all business is concentrated in the hands of the State. The Soviet' Government can dump wheat, timber, matches, linen, coal, oil and other natural products anywhere in the world with disastrous effects for everyone. Russia must get machinery from abroad for its programme of industrialisation. The only things it can give in exchange are the foodstuffs and raw materials needed so badly at home. And to sell these at all, Russia must offer them at prices lower than the lowest on the world’s market, whether the goods have cost more to produce or not. These things may be wanted desperately in Russia, but the Government thinks that •machinery is wanted still more. Under the compulsion of the Young Plan, Germany is doing almost the same thing, though the fact is not so apparent. Is Russia or Germany justified in this policy or not? After six months of travel, I came to the conclusion that modern Germany is technically far ahead of all the rest of Europe in equipment. It could pay all that the Young Plan demands if it had working capital enough to produce the values represented and if it could sell freely. Without capital enough, its productivity is lamed. But research goes on and potential wealth is being amassed, ready to be exploited when capital is available.