Germany

on the World Today

ANY valid assessment of the chances for Western Germany to become an economic partner in the European Recovery Program must start with the basic facts, however unpleasant. First of all, some 10 million out of the 45 million— more than one in five — are refugees; and since these people are mostly very old or very young, they are a continuing drain on West German resources.

Secondly, the complete absence of housing programs in the last four years has had two bad effects: it has rendered German manpower in the Western zones immobile and has indefinitely postponed transferring refugee and other German workers to the right spot in clearing up the ruins; it has made the 10 million refugees an added burden on housing facilities already reduced drastically by bombing.

Furthermore, while it is true that the present Western zones contained the Ruhr and most of the basic industries of pre-war Germany, the present Russian zone contained a high proportion of Germany’s most profitable secondary, or processing, industries such as precision instruments, electrical apparatus (80 per cent of which lay in the present Russian zone), and textile and other machinery.

Will the regime of trade decided upon by the Russians and the Allies really give West German basic industries a share of the profits of secondary processing industries? Or will we and the Germans in Trizonia finally have to create entirely new German processing industries? If so, who will provide and invest the capital required? Or will we all just wriggle along as we have since the Americans and the British drew a logical conclusion from the Russian attitude and established Bizonia?

Make no mistake: lack of necessary working and long-term capital for German recovery - whether a united Germany or only Trizonia in the future—is the Achilles’ heel of the whole Allied policy towards Germany’s future.

Both the Germans and the Allies admit the remarkable extent of German economic recovery in the West after the Allied currency reform one year ago. But Allied and German economists are less impressed by it than by the economic uncertainty which has descended on Bizonia’s industries, particularly since Christmas.

This, the experts agree, is due to tightness of credit, lack of working capital, the hardness of Germany’s new deutsche mark for foreign trade — since it is equivalent to dollars — and above all to the ordinary German workman’s inability to make ends meet with existing wages. (Living costs have risen steeply since the new currency was issued, and payments in kind have been abolished; so he must provide for his family from earnings only.)

Who puts now capital in Germany?

It is generally said by economic experts in Frankfurt and elsewhere that all will be well once the financial powers of the new German federal government are exercised to expand credit and “manage” the West German economic position better. But the matter is not so simple.

It is true that henceforward the new central German government authorities can distribute the colossal burden of supporting 10 million refugees over all eleven states of Trizonia, and thus relieve the three states of Bavaria, Lower Saxony, and Schleswig-Holstein, which thus far have borne the brunt of this burden since most of tHe refugees are in those states. But the fact remains that such a rapid recovery as is foreseen by l952 for Trizonia by ECA and ERP officials can only be ensured if much more than mere working capital (or shortterm credits) is quickly provided.

On this point of the need for capital there has been an unnecessary amount of confusion and clashing interests among the Western Allies including the three Benelux powers, Take the International Ruhr Authority agreed upon by the United States, France, Britain, and Benelux last December, and then add last winter’s inter-Allied squabbles over the dismantling of factories and decartelization of industries.

Nevertheless, substantial investment of somebody’s long-term capital in Trizonia must occur and occur soon — if either Trizonia alone, or a united Germany, or some coöperative combination of both sides of Germany is to deliver its due contribution to ERP by 1952 and make outside aid unnecessary thereafter.

Both the Western Allies as a whole and the new German government must make a go at least of Trizonian economy. Otherwise German politicians will be tempted to throw in their hand, blaming us, and the only net gainer with the mass of the German people will be Russia and Communism. But to make a go of Trizonian economy demands the utmost industrial efficiency, the utmost economy in production, the utmost use of German manpower and other resources—if for no other reason than to release every possible economic resource for the building up of productive capital equipment, housing, and new processing industries.

The cost of dismantling the Ruhr

Yet the effect of the dismantling, and in particular of the decartelization in the Ruhr — which is breaking up the old and proved efficient low cost of productive units and big concerns — is to raise the level of German costs reckoned in the new marks — marks, be it remembered, which are pegged to the dollar as a hard currency.

One does not have to love the hard-faced Krupp and other ruling coal and steel families of the Ruhr to see that much of the Allied dismantling and decartelization policy, as now being carried out in practice and as finally agreed in order to please mainly the French or British, is replacing the former big and efficient integrated productive units in the Ruhr with a bewildering set of their former component units.

The component units must henceforth stand on their own feet, cover all separate costs, set up their own selling and distributing sections, and in general shoulder heavier single costs than they need have done if the Allies had been able to agree on running the big Ruhr Konzernen as competing trusts under different ownerships. The trouble really is that it suits French, Benelux, and British coal, coke, and iron and steel industries — whether socialized or not — to have the competitive ability of the Ruhr curbed.

With the stage now set for a new German government in the West, with Russia and the Allies committed to what must seem to the German masses outright competition for the German people’s allegiance, it is a dubious moment to persist in forcing through an Allied reorganization of Ruhr industrial control and managements, which must — at least in marks —raise all basic production costs in West Germany.

It must be admitted that the remaining reactionary industrialists in the Ruhr still hope that American capital can be attracted into that area, so that they can effectively oppose French, British, and Benelux views and policies. The Ruhr reactionaries are few and not typical. The bulk of German managements genuinely cling to the hope of fair and efficient integration of the Ruhr with the Western European Recovery Program, industrial investment programs for Western Europe, and rehabilitation of the age-long industrial and communications network involving France and Benelux.

The basic economic problems can be solved, and a floor be built beneath the West German social, political, and economic unit, only if leading protagonists in the ERP, Brussels, and Atlantic Pacts — that is, the United States, France, Benelux, and Britain — have the same plan and stick to it. That is the test.

Germany is not Communist

The effect of the economic difficulties on the German politicians and people depends on Allied policy too. The struggle between East and West is not simply a straight fight between the Russians and the Western Allies for the soul of the German nation. The Communist danger in Trizonia today is negligible, for the millions of refugees from beyond the Iron Curtain and Russia’s open diplomatic confession of the failure of the blockade have had an enormous impact on all non-Communist Germans in the West.

There is every evidence for belief that they have also had an enormous impact on the 18 million Germans in the Russian zone and on non-Germans throughout Russia’s satellite states from the Baltic to the Black Sea. Hence, perhaps, the sudden intensification of Russian jamming of American and British news broadcasts.

The greater danger in all of Germany, West and East, now is that the overwhelming majority of the Germans, who are bitterly anti-Communist and whose only morsel of hope and faith for any conceivable German future so far has depended on a realistic but decent partnership with the Western Allies, may have that hope dashed by inter-Allied conflicts of interests, administrative fumbling of the German ball, or outright indecision.

The most striking feature of the ordinary German citizen after the lifting of the blockade was not happiness, relief, or upsurge of hope, but a continuation of a four-year-old political apathy, and a disbelief in the efficacy of his new post-war German parties and politicians (who seem to him unpleasantly like those who failed before Hitler’s arrival in power). Again he shows the familiar German tendency in crises to wait for someone to tell him what to do.

What the German wants

Today, despite the new federal German government, your average German adult still really looks to, and believes in, the Western Allies. He wants an entire reunited Germany. He emphatically does not want any Western Allied occupation military forces to quit German soil.

He does not believe in this hybrid federal-cum-separatist provisional West German Republic with its temporary “cultural capital ” at Beethoven’s birthplace. He shrewdly suspects all this to be as provisional as most of the Nazi setup was and as those who opposed Hitler knew it was all the time.

Your average German today after the blockade admires what Germans have long admired: the side that knows its own mind, says what it will do, and goes ahead and does it.

All this puts us Western Allies on the spot, because the German people still hope that we can give them something to believe in and work for — namely, a reasonable future.

In one year of the blockade we really made a West German economic entity. Henceforward, with or without Russian coöperation, our task is harder. It is to make that economic entity work so well that a social and political structure can be soundly raised on it, and can endure as the nucleus for an eventually reunited and democratic Germany.

None of us in the West ought at this crucial juncture in our post-war relations with Germany to kid ourselves into believing that Trizonia is a going concern, or even that it has a sound economic basis. It hasn’t. And its own German leaders cannot give it one either, not by any purely German effort.