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 THE FINANCIAL NEWS, Thursday 2nd March 1933   


The Clash be Industry and Agriculture

By Gareth Jones 

No 2 

THE National Government in Germany has declared itself clearly against any currency experiments.  Dr. Bang, the State Secretary of the Reichs Economic Ministry, has stated unequivocally: “There will be no experiments in any sphere…” He has said: “Whoever believes that our situation can be improved by open or concealed inflation is either a demagogue or a fool.” 

The leaders of the present Government recognise that any large-scale inflationary measures would lead to an unprecedented panic.  Dr. Luther, as President of the Reichsbank, is a bulwark against currency experiments, and it is to be hoped that the autonomy of the Reichsbank will remain absolutely unimpaired by the National-Socialists.  The lesson of inflation has been well learnt by Germans, and they look askance at British industrialists who toy with inflationary ideas. 

Economic Improvement 

Orthodoxy in currency matters will certainly be a help to the National Government.  The new régime is also helped by the hopeful psychology which has made itself felt since last autumn.  The feeling of panic which impressed visitors in 1931 has disappeared, and one rarely hears those doleful prophecies of the “breakdown of civilisation” and the “collapse of the economic system” which were once the commonplace of every luncheon conversation. 

From last autumn to the end of the year there was a real improvement in the German economic situation, and, although there is now complete stagnation on account of uncertain political conditions, the atmosphere of hopefulness has not completely evaporated. 

The better industrial conditions were reflected on the Stock Exchange.  To take two representative shares, Vereinigte Stahlwerke, which once dropped to 107/8, rose to 35 towards the end of the year, while Siemens & Haiske, which had reached the low level of 951/4, recovered to 127.  The better spirit engendered by improving production still lingers on, in spite of the hush which has descended upon the Stock Exchange and on business life as a whole. 

The unemployment figures are, compared with last year, not unsatisfactory. On February 13 there were 6.047,000 on the lists.  This is 80,000 less than last year.  The increase in unemployment since the end of January was 33,000, compared with an increase of 85,000 in the same period last year.  Although little comfort may be gained from such a large total, the figure shows that from 1932-33 unemployment has, apart from seasonal influences, marked time, and has not gathered the momentum which was feared. 

The new Stillhaltung Agreement is also satisfactory to German bankers and is considered an improvement upon the old.  The result is held to be a fair compromise. The reduction of interest by 4 per cent, is welcomed, and it is pointed out that this means a saving in foreign currency of 20 million marks. 

Here, however, the favourable features of the German economic situation end.  The first difficulty which confronts the new régime is the state of German finances, from the Reich down to the smallest towns.  The total deficit of the Reich at the end of the budgetary year 1932 was 2,070,000,000 marks.  The receipts from taxation have steadily declined.  The issue of “taxation notes” based upon the expectation of a recovery will be a burden upon the finances in the future.  Moreover, the guarantees which the Government has undertaken (e.g., for agriculture, for exports to Russia, for shipping, banks, &c.), amounted on October 1, 1932, to 2,146,000,000 Rm.  The finances of the towns are not in a happy state, and great fear is expressed as to what will happen if the towns are unable to pay the poor relief.  The burden of unemployment relief falls mainly upon the towns and not upon the Reich.  Cologne, for example, has to support over 210,000 out of a population of 730,000, or 28.4 per cent. of the population. 

The financial task facing the new régime is a gigantic one, and one fails to see how the Government will be able to obtain the funds to carry out any vast scheme of land settlement or of compulsory labour service. 

The part which the Government is to play in industry is another problem which the National-Socialist economists will have to solve, and so far they have offered no explanation of their attitude.  With control over a great section of the heavy industry, through Gelsenkirchen, with power over the Danat Bank and, indeed, far-reaching intervention in the whole banking system, and with many other links with industry, the German Government has inaugurated, as one German banker described it, “a socialistic system led by capitalists.”  What will Herr Hitler do in this question?  It will be a difficult problem for him. 

Industry  v. Agriculture 

 But the most dangerous struggle in German economic life which Herr Hitler will have to face will be that between industry and agriculture.  Herr Hitler will have to decide whether he is for autarchy, which would mean the victory-but a victory without gains-for the agriculturists, or a world economy, which would mean victory for the industrialists. 

In the first month of the National Government, the agrarians have won all along the line.  Their champion, Herr Hugenberg, has acted in the economic sphere with as much ruthlessness as Herr Goering has acted in the political sphere.  Tariff increases upon agricultural products have followed rapidly upon each other.  On February 8 the tariffs upon cattle, meat and lard were increased, and soon after higher duties were placed upon many foodstuffs, including fish.  The tariff upon timber and wooden goods was then raised. 

Herr Hugenberg has thus succeeded in alienating every one of Germany’s best customers, who will have their ability to purchase German industrial goods considerably curtailed.  The difficulties of Germany’s greatest debtor country, the Soviet Union, are increased.  Measures are being planned towards the further protection of the German market against the import of iron from Belgium and Japan as well as of other industrial products. 

The principles guiding the Government in this problem were well defined by Herr von Rohr, State Secretary in the Reich Ministry of Food, when he stated: “We expect the German leather industry to use German hides, the linen industry to use German flax, the paper industry to use German pulp, the German soap industry to use German fat.  Where a voluntary policy does not suffice, the National Government will employ State compulsion.’ 

Cause For Concern 

Such autarchy run mad augurs ill for the future of German industry.  The Government forgets that a large percentage of the population lives directly or indirectly from foreign trade, and that in 1930-31, 35.5 per cent. of the net production of German industry was exported.  By Herr Hugenberg’s intensification of tariff madness a severe blow is dealt to industry, which will lead to a reduced consumption of agricultural products, thus returning like a boomerang to hit the Agrarians.  Costs of production will increase.  Exports will be gravely impaired. 

The triumph of the Agrarians in February, 1933, fills one with the deepest concern for German exports, augurs an increase in unemployment (let us hope that the reliability of German statistics will be maintained by the Nazis), and unless the industrialists succeed in influencing Herr Hitler, leads one to the belief that Herr Hugenberg’s policy is injuring greatly both Germany and world trade. 








Adolf Hitler, Chancellor of Germany.


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