West German Economy
By PETER GALLINER One result of the difficulties faced by the average household is that the German worker, who has always objected to women working in industry, today urges his wife to seek employ- ment. Another -source of additional income, though, of course, only available to a minority, is to take a second job in the evening or at night. A good deal of war-damage clearance and road-repair- ing is carried on at night by workers who have another job during the day. While this is officially forbiddel4 and must in the long run prove an enormous strain on those who do it, it does reflect the lack of balance between wages and prices. Average working- class earnings have risen only 10-20 per cent. above their pre-war level, whereas food prices are up by 200-250 per cent. The disequilibrium of German economy is also typified by the inflated level of interest rates-8-10 per cent—which is caused by the inadequacy of investment funds. Industrial and commercial circles are pressing for the removal of the ban on the investment of foreign capital, arguing that this offers the only hope of re- equipping and modernising German industry and of reducing prices for both home and export markets It is, however, impossible to avoid the impression that, as a whole, West German industry has not yet become export-conscious, particularly as far as the West is concerned. Apart from certain industries, which traditionally rely on foreign markets for a major proportion of their business, such as the optical, fine mechanical, pottery and cutlery industries, manu- facturers are still able to find adequate outlets for their goods at home, where sales involve less effort. When producers must export, they tend to give first attention to Eastern European markets, which for one thing represent traditional, well-known outlets and also involve far less competition with other producing countries than would have to be faced in Western Europe or overseas.
West German trade and industrial circles show astonishingly little concern over the young Republic's gaping trade deficit. Western Germany still is paying for only about half its imports, the balance being met by E.R.P. grants and drawing-rights accorded, inter alia, by Britain under the intra-European payments scheme. Perhaps the most perturbing sign to a foreign observer is the fact that there have been no indications of any improvement in the past six months. On the contrary, whereas previously the total trade deficit (1,100 million dollars for 1949) arose largely from an adverse balance with overseas countries, and Western Germany managed to show a credit balance in her trade with European nations, she has now accumulated a trade deficit with several E.R.P. countries and lost her credit balance with others. The numerous German interests opposed to the plans for freeing European trade sponsored, by O.E.E.C. cite this trend in West Germany's trade balance as illustrating the folly of greater trade freedom. Time and again I have heard leading business-men and industrialists ridicule the concept of a free European trade and payments area. Instead they seek the reintegration of West German industry into inter- national cartel agreements, which they regard as the most desirable means of regulating international commercial exchanges. 'This view is not held only by a small, unrepresentative clique, but by numer- ous leading personalities in executive positions. Yet at the same time the Adenauer Government is doing its best to play an effective part in European Economic Co-operation, and, on the domestic side, is preparing legislation against cartels and other restrictive arrangements.
This emphasises what is perhaps one of the most startling pheno- mena of the present political scene in West Germany, the chasm between Bonn and the rest of the West German Republic. The Government and Parliament assembled at Bonn are not regarded as bodies capable of giving effect to the real aspirations of German business and industry, but rather as a debating society whose edicts are ignored whenever they prove inconvenient. This kind of cynicism also expresses itself in the view taken of Western Germany's relations with the outside world ; it is, for example, complacently assumed that Germany's strategic position will make it essential for the United States to continue to meet the West German trade deficit even when Marshall Aid comes to an end in 1952. After all, so the explicit or implicit argument runs, we can always produce the necessary Communist bogy. It would appear to a foreign observer that a far mote real danger lies in West Germany's becoming too dependent on East Europe as a market for its surplus industrial production So far the danger is not great because East Europe has little to offer in exchange. The only goods for which the West German economy has to rely on East Germany are potash and china-clay, since the grain which was formerly one of the main imports from the East is not now available to any great extent. There seems little doubt, however, that the British and American authorities in Germany are aware of the long- term danger of encouraging the intensification of exports to the West. Britain and other West European countries will inevitably be faced before long with the choice between strong German com- petition in Western markets and allowing the West German Republic to be drawn closer into the East European orbit. Up to now inten- sive West German competition has been confined to a few fields,
but it is likely to become, more widespread before long, especially in coal, steel, bicycles, cars, chemicals, toys, musical instruments and so on. Many of the lists of imports froth E.R.P. countries which will henceforth be free from quota restrictions have as yet not been made applicable to West Germany. Important decisions of policy such as the extension of these lists to West Germany may decide the economic, and therefore the political, orientation of Germany for many years to come.
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