3 MARCH 1939, Page 24


Germany's Second Recovery (M. J. Bonn) ... ... 356 Selected English Sermons (Canon Charles Smyth) ... 357 Foreigners Aren't Knaves (E. W. F. Tomlin) 358 Life Within Reason (Prof. Ernest Barker) 358 American Democracy (D. W. Brogan) . 359 Approaches to Shakespeare (Kenneth Muir) • -• 359 My Tanganyika Service (E. it J. Hussey) •• • 360 Congress and Federation (H. J. Fells) ...

360 Three Irishmen



Fiction (Kate O'Brien) ••• 364


By M. J. BONN TEN years ago a very exhaustive American study describing the recovery of Germany from the War and its aftermath ended in the assertion that " expansion will go forward, though at a less spectacular rate than since 1924 "—a prophecy which went wrong not because its .author was incompetent or in- sufficiently informed, but because politics dominate economics.

In explaining the second economic recovery of Germany, Mr. Guillebaud had to rely exclusively on official statistics. He accepts them as trustworthy—as far as they go, perhaps rightly. But they are incomplete and carefully edited under the supervision of the Propaganda Ministry and the military authorities; there is no public criticism. Even personal con- tacts are rather unproductive; grateful mention in a preface might have unpleasant consequences.

Mr. Guillebaud's detachment is admirable. He has rightly neglected outside prophecies ; but he need not have ignored the detailed information, published and unpublished, available abroad, which throws a flood of light on business and labour conditions in Germany. As he has never quite made up his mind to look upon Germany's economics, as her leaders do, as a system of war-economy, he underrates the thickness of the smoke-screen hanging over them.

The Economic Recovery of Germany can be looked upon as a thoroughly dispassionate, well-documented analysis of Nazi economics. Mr. Guillebaud describes in detail " The First Four Years Plan " (Chapter II) and " The Second Four Years Plan " (Chapter III). He deals exhaustively with " Prices, Wages and Standard of Living " (Chapter IV) and in a more sketchy way with " The National Socialist Economic System " (Chapter V) and " The Problems the Present and the Future " (Chapter VI), supplying everywhere adequate well-compressed statistical material. As a succinct description of what has been aimed at, what has been decreed, and what are the officially recognised results, the book is excellent.

Germany used the same means to get rid of unemployment as the U.S.A.—Public Works. But she had no credit with which to finance them. So she fabricated it under Dr. Schacht's leadership on the pattern of her war-finance methods —a marvellous piece of financial technique. The new bills were respectably dressed up as business bills, though they were quite as little " self-liquidating " as the War Treasury bills had been. The Germans had spoken of " cranking the car " long before Mr. Roosevelt was " priming the pump." Want of petrol rather than faulty ignition had been their problem. In Germany Public Works did not shake the confidence of entrepreneurs, as in the U.S.A., for under a regime of coercion there was no room for either capital flight or sit-down strikes. Concentration camps are an efficient substitute for confidence.

These short-term bills were duly prolongated and finally converted into Government loans after credit expansion had sufficiently inflated National Income, just as happened in the War. Banks, insurance companies and public institutions took them up, not because the German people prefer investing through institutions (p. 125)—there are no fixed and flexible Trusts in Germany—but because 'there is no alternative and National Socialist economics are coercive. Dr. Schacht, a money-wizard with a capitalist heart, disliked pressure; the Party disliked him but loved his methods. Mr. Guillebaud rightly points out that National Socialist economics differ funda- mentally from capitalism. In the eyes of the Party leaders, money and finance are mere keys on a switchboard. For this reason it does not much matter whether the German debt is co milliard or 7o milliard marks; if new borrowing cannot The Economic Recovery of Germany. By C. W. Guillebaud. (Macmillan. los. 6d.) continue without genuine inflation, a capital levy, somewhat on the lines of the fine levied on the Jews, will be enacted to reduce the old debt and to make room for a new. For the Party is genuinely socialist and anti-capitalist.

National Socialist economics so far have succeeded in com- bining credit-inflation and price-stability. This is a very creditable achievement, possible only under a system of efficient coercion. But since the armaments race was begun under the second Four Years Plan, and had to be complemented by self-sufficiency schemes, spending is increasing and the huge sums invested raise insufficient additional material goods. Price-rises caused by credit-expansion can be stopped by control measures which break the will of recalcitrant indi- viduals; scarcity as a physical phenomenon is a different matter. Germany's problem, like all problems of war-economy, is how to get physical goods regardless of costs as long as these costs are embodied in national labour. Agriculture can be detached from the play of supply and demand by taking crop quotas at fixed prices from each farm. It is possible, too, to equalise the distribution of goods by coupons and adequate staggering of various commodity prices. This shifts but does not cure the actual scarcity Germany is experiencing. The German leaders would not waste time in anti-scarcity campaigns were they not faced with it. As (according to Mr. Guillebaud's own figures, p. 163 and p. 207) the minimum butter ration per head is 26 German lbs. a year, and the actual consump- tion only 18 lbs., something must be wrong somewhere, either with statistics or with butter supply. Scarcity may be due to the large reserves of foodstuffs and raw materials which the army is accumulating and which do not enter consumption. This accumulation is facilitated by the sale of expropriated German-owned foreign securities—the fruits of earlier capital flights—and of gold, foreign exchange, and private foreign investments acquired through the incorporation of Austria. Mr. Guillebaud is of the opinion that the standard of living has risen since 1933 and has about reached the standard of 1928. Neither during the 1928 boom nor in 1932-3, when the brewing Nazi Revolution paralysed the forces of recovery, did physical scarcity exist. He has unfortunately refrained from describing the rationing of scarce industrial materials, textiles, iron, varnish, &c., by licensing, schedules, and exchange control, which enable the authorities to discriminate between trades and between individual firms.

Had Mr. Guillebaud been less cautious and less anxious to be objective, his book might have been even more illuminating. His knowledge evidently goes beyond his statements. In this age of first-rate propaganda, one never can be quite sure whether one is looking at a bill of fare or actually getting the dish. Though in his own view monetary theories had little to do with the growth of a purely opportunist system (here he is perhaps wrong, for there have been Keynesians in Germany long before Keynes), he approaches the German recovery too much in the light of modern monetary theories.

In this respect German experience is inconclusive; to begin with, it is not yet final. But it is definitely " non-monetary." As long as Germany can get enough physical goods for internal consumption and for payment for essential imports her leaders look upon costs as a matter of secondary import- ance. The country can even afford to spend more on the production of goods than is actually replaced. The physical depreciation of the German railways illustrates this point. If Germany is primarily interested in war economy, she can go on in this way for quite a long time. One can let houses run down and win a war. At present, considerations of war economy are foremost in the minds of the German leaders, not the general theory of employment, interest and money.