Military government weekly information bulletin
Number 97 (June 1947)
Szymczak, M. S.
The United States' stake in German economic recovery, pp. 13-18 PDF (3.9 MB)
The UNITED STATES' STAKE in GERMAN ECONOMIC RECOVERY Two world wars and their after- math have made it clear that the problem of Germany is one of the keys to world peace and prosperity. For two years, your representatives in Military Government have sought a basis for the solution of this pro- blem. They can only succeed if the American people .are aware of both their achievements and their diffi- culties, and if in turn the Military Government officials in Germany understand the attitude of the public at home. To contribute to a mutual exchange of such informaion is the main purpose of this paper. We all know that the German economy operated in the past as one integrated unit. Each part made its contribution to, and received sup- port from, the rest of the country. This integration alone made possible the industrial development of Ger- many. None of the areas that con- stitute the nation was ever self-suf- ficient in the past or can be made self-sufficient in the future... (How- ever) I shall concentrate on dis- cussing the economic problems of the American Zone and as far as neces- sary of the combined American and British Zones... Rebuilding Essential In view of the history of German aggression and the part played there- in by German industry, it may be- difficult to understand that one of the major tasks of Military Govern- ment is the provision of assistance in rebuilding at least part of the German industrial system. Such a re- construction, however, is necessary for two reasons: to prevent Germany from remaining a source of perpetual This article is the text of the address delivered by M. S. Szymczak, Director of the Economics Division, OMGUS, before The Economic Club of Detroit on 19 May in Detroit. Mr. Szymczak is a member of the Board of Governors of the Federal Reserve System, now on leave to assist Military Govern- ment in Germany. By M. S. Szymczak unrest in Europe, and to aid in the recovery of our Allies. In the crop year 1946-47, German farmers in the combined American and British Zones of occupation are producing foodstuffs sufficient to provide an average diet of only about 1,000 calories daily for that part of the population that idoes not live on self-sufficient farms. Such a diet is less than half of the minimum standard endorsed by the United Nations Food and Agriculture Orga- nization. Unless we are prepared to forego payment for the large supplies of food that must be sent to Ger- many for an indefinite period just to prevent wholesale starvation, we must permit Germany to redevelop its manufacturing industries which alone can produce the exports neces- sary to pay for food imports. Moreover, the products of German industry are indispensable for the reconstruction of continental Europe. In 1936 - the last year in which the bulk of the German economy was operated on a peacetime level Germany was the largest exporter to, and the largest importer from Aus- tria, Bulgaria, Czechoslovakia, Greece, Hungary, Italy, Rumania, Switzer- land, Turkey, and Yugoslavia. It was first as a supplier and second as a market for the Netherlands, Poland, and Sweden. Almost the entire man- ufacturing industry of continental Europe was dependent upon German machinery, precision instruments, electrical appliances, optical goods, transportation equipment and chemi- cals. Reconstruction Hampered The fact that Germany today can- not even supply spare parts is ham- pering economic reconstruction in such different countries as Austria, the Netherlands, and Poland. The general shortage of coal, which is the greatest single factor in retarding European recovery, is due largely to low production in the Ruhr mines. Lack of German potash is delaying the rehabilitation of agriculture all over Europe. An increase in the out- put of coal and potash mines, how- ever, depends upon the availability of mining equipment and upon lar- ger supplies of consumer goods for miners. A German miner can earn in two days all he needs to buy his meager weekly rations and there- after has little incentive to work. A relatively small increase in consumer goods offered to miners was an im- portant element in raising production in the Ruhr mines by about one-fifth between the fall of 1946 and the spring of 1947. A largescale revival of German consumer goods industries would have proportionately greater results. Our own economy would benefit from the resumption. of German in- dustrial exports because the avail- ability of German goods would help meet the foreign demand for many American goods which are still in scare supply relative to our own do- mestic demand. Furthermore, some European countries can pay for imports from the United States only with the aid of dollar credits because they lack dollar resources and lack exportable commodities adapted to the Ameri- can market. If they could import goods from Germany, however, they could pay for them by exporting products utgently needed in that country. Mutual Aid Prevented In that way, they would lighten the burden which the American eco- nomy has had to bear both in respect to the reconstruction of their own economy and to the rehabilitation of Germany. For instance, before the war the Netherlands exported substantial quantities of vegetables to Germany while Germany paid for these im- ports in steel machinery. If that com- merce could be restored today, it would make it unnecessary for the American economy to extend credits to the Netherlands in order to enable that country to buy Americn machi- WEEKLY INFORMATION BULLETIN 16 JUNE 1947 '13
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