Present-day Germany is a land of economic contradictions. Claims are laid to an economic recovery unparelleled in postwar records and probably in any otherâ€”an officially recorded increase in employment of something like 4,000,000 in less than eighteen months,â€”yet Germany is unable to pay her foreign debts. She has a gold currency, but little gold or gold exchange and a heavy budgetary deficit.
Germany has, too, an adverse visible trade balance coupled with her foreign indebtedness. She has been carrying out an extreme policy of maximum national self-sufficiency â€” her imports of foodstuffs last year were in value a third of what they were in 1930â€”and at the same time wants to maintain a robust international trade and world shipping services.
POLICY ON PRICES IS CONTRADICTORY
International prices are far above world prices, yet the Government policy is price stability â€””no deflation and no devaluation”â€”or, in other words, price rigidity at the present levels, wich are not helping Germany to compete successfully on the world markets. The list of these contradictions, or mutually opposing tendencies, could be extended.
Germany’s international trade is a vital source of the nation’s economic life. What it means can be illustrated with a few figures. A sixth part of all the workpeople engaged in industry, commerce, and transport in Germany, it has been calculated, derive their employment from foreign trade. The total value of the production of German industry last year was, it has been recently stated by a Cabinet Minister, about 20,000,000,000 marks (Â£1,000,000,000 at par), of which 4,400,000,000 marks, or more than a fifth, was for export.
Despite the recent great fall in foreign trade, fourteen per cent of the German production of goods in the first quarter of this year was still being exported, and 1,250,000 workpeople found their employment in industry as a result of the export trade. In 1930 500,000,000 marks a month for wages came from exports. In 1933 the amount had dropped to 180,000,000. A further crisis in German foreign trade has come since with the acute restriction of foreign exchange for goods from abroad.
Perhaps the seeming economic paradoxes are less striking in the great Hansa cities of Hamburg and Bremen, but they are not entirely absent even there.
CITES EFFECT OF WORLD BOYCOTT
From private persons it may be learned that the government’s policy is causing grave damage to trade. The boycott of German goods by Jews in foreign countries as a reprisal for the treatment of their coreligionists in Germany is a case in point. In Eastern and South-eastern Europe gramophone records of Dr. Goebbels’s latest bitter attack and threat against the Jews have been made and widely distributed. They provide a form of entertainment for the Jewish mercantile community of such countries as Poland, Austria, and Hungary which had dire results for the sale of German goods in those parts. Many German merchants lament the fact.
No indication of that nature would, however, be obtained from people occupying official or public posts. It is stated that one of the effects of the boycott is felt in the cotton trade. As a result of the boycott Jews in the textile trade in Central, Eastern, and Southern Europe are said to be trying their untmost to import cotton from alternative markets to Bremen, which is predominant. The cotton trade in Gdynia and in Trieste is stated to be improving and the market extending at the expense of Bremen.
LOATH TO ADMIT HARM TO TRADE
Little in the way of confirmation of this is obtainable even in the cotton market in Bremen. Except for the admission that harm has been done to Bremen’s trade from arbitrary action which is of a passing nature, conditions generally in the cotton business are stated to be normal, and, incidentally, hardly affected by the shortage of foreign exchange. I was told that the exchange restrictions had had no adverse effect on cotton imports up to June.
Under the present rationing procedure German spinners are allowed quotas of raw material based on their output for the first quarter of the year. The restriction on the supplies of foreign exchange had not, I was told, prevented spinners from obtaining 100 per cent of their requirements in June. My informant was not so certain about prospects for the future, however.
DELIVERIES HELD FOR LACK OF EXCHANGE
It is common knowledge in the Hansa cities that deliveries of foreign goods, including textile raw materials and semi-finished products, are being held up in warehouses and on the water because importers are unable to pay for them. So far as raw cotton was concerned, my informant stated that it was a question more or less of technical procedure and that the delays were not abnormal.
Hamburg is Germany’s greatest port and centre of international trade. It has suffered under the great decline in foreign trade of the past few years as has perhaps no other German city. The average of recorded unemployment for Germany in September, 1933, was 61.7 per 1,000 inhabitants. In Hamburg the figure was 129 per 1,000. As the result of the tremendous drive throughout Germany for the provision of work the average of unemployment had been reduced by the end of February, 1934, to 51.7 per 1,000. The figure for Hamburg, however, was 104 per 1,000 again more than double the German average.
Except in the case of unskilled laborers, unemployment in Hamburg was greatest among the black-coat workers of commerce. They form about one-fifth of the whole of Hamburg’s unemployed. Despite all the work-provision schemes, which produced a reduction in the number of registered unemployed in other categories, the number of blackcoat workers out of jobs by the end of March of this year was greater than in February of last year, before the great drive against unemployment began. A large proportion of the people still employed are working short-time, with, of course, corresponding reductions in earnings.
Moreover, Hamburg is placarded from end to end with appeals to younger men to give up their jobs to unemployed older men. Whatever Labor Service organization may stand for in other parts of Germany, its purpose in Hamburg is to take young men out of the office chair, shipyard, or factory for a year and give their jobs to unemployed older men, the hope being that there will be room for both with better times in the future. But where, as is the case today in many firms in the import and export business, there is no personnel left at all and the firm is carrying on in name only, there can be no further spreading of work and no recruiting for the Labor Service.
Unemployment in the shipyards has been mitigated by a big program of shipbreaking and and controlled new building to modernize Germany’s mercantile marine. Over 400,000 tons of ships have been scrapped in two years. The scrapping program, however, is approaching its end, and the yards are faced with the probability of a big increase in unemployment within a few months unless conditions improve or there are further improvisations. It is generally recognized, however, that there is only one rea hope of improvementâ€”through a revival in international trade.
The amount of freight, both incoming and outward, dealt with at Hamburg has dropped steadily year by year since 1930. The same is true of Bremen, except that freights dispatched from Bremen were last year some 600,000 tons greater than in 1932. At the same time the traffic of Rotterdam and Antwerp, which are competitors of the German ports, increased last year. Passenger traffic fell by twenty-nine per cent in Hamburg in 1931, by ten per cent in 1932, and by nearly five per cent again last year. Bremen passenger traffic declined in these years by twenty-nine per cent, five percent, and twenty-two per cent. Despite extensive reorganization the big shipping lines are doing badly; the Hamburg America and the North German Lloyd sustained losses last year, as did the Africa Lines, and the Hamburg-South America #aid no dividend.