Page 13

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