The New York herald., 1921-07-31
GERMAN PROSPERITY
MOSTLY ON SURFACE,
DEEP inquiry SHOWS
Capacity of Plants and
Work People Far Above
Real Output.
EXPORTS STRIKE SNAGS
Arbitrary Price Control and
Allies Demands Are
Hindrances.
CHEAP LABOR A BIG PROP
Customs Barriers Against
Dumping Hit Trade-Con-
sui System Reorganized.
CHEAP LABOR A BIG PROP


ticles on industrial conditions obtain
ing In Germany and ,Uhich represent
careful surrey by SPECIAL correspond
ents there. The first article sho,os
that such prosperity as Is apparent is
largely on the surface, and that real
a,omentary depression erists. due
chiefly to arbitrary price control and
to allied control In connection qoith
repGration payments. These haze re-
suited In loss of markets.
The second article 1oilI appear on
August 7. Tt 1ciH revieio the German
tertile Industry and sho1o there is
little reason to beIieve that Germany
can recover her pre- a0dr place In the
manufacture and marketing of tea
tiles.
The third article 1ciH be printed on
August Ia. In an intimate sketch
of DR.. Walter Rathenau and tells of
the important aoorb that he, as Min
lister of Reconstruction, is called on
to do.
The fourth and last article of this
series a0AI be published on August 21.
1T aoiH tell achy, despite the lac1o OF
large orders, the ,oheels of German in
dustry stH1 turn.
Special Correspondence to THE NEW York
HERALD.
New York Herald Bureau,
Berlin, July 20.
German industry can be compared
to-day with mill built en- the bank
of a river. The machinery installations
are of the latest, and gauged to make
maximum use of the water flow. Man.
ayers and workmen are all at their
posts.
But abruptly the flow of water from
upstream Is turned into another chan
mel, and the hands find themselves
with only enough water power to run
the mill at perhaps a fourth of it's
potential capacity. The water power
in this case happens to be the home
and world markets and they have lost
either their capacity or inclination to
take German wares.
In forming an estimate of Ger
many's present export condition, it is
necessary TO make a sharp distinction
between apparent, potential and real
output The two former are likely to
lead the casual observer to too opti-
mistic conclusions about Germany's
export outlook.
Appearances are not unfavorable. A
traveller through the Ruhr to-day seen
forest of high smokestacks with
black clouds pouring out of them. If
he visits the chemical works of Merse-
burg, of Hoechst, or of Leverkusen he
sees miles of modern parallel factories
connected by intricate piping and vats,
all functioning. II he goes to Saxony
through some of the big spinning mills
the impression there is one of thou
sands of workers carrying on as they
always have.
New Markets Are Captured.
The recovery Of German industry after
q draining war and a decisive defeat
was most rapid. The year 1919, owing
TO disorder, was a bad one, but in the
last year Germany's industry rewon
many old markets and paid large divi-
dends. The recent depression, throwing
millions Of workers on the streets, hit
Germany much later and thus far has
crippled industry relatively less than it
has neighboring countries with higher
currency and the more or less intangi-
BILE fruits of victory.
How far has this German Industrial
recovery been sound? Is German trade
likely to continue to expand at the as
tonishing geometrical rate from almost
zero as it did last year? And finally.
what industries are likely to prosper.
what to succumb under the new condi-
tions in the world market?
Among several factors essential to
formulate an answer to these questions
: the first is cost of production. But It
Is impossible to estimate present costs of
production in Germany" Prof Jastrow,
the distinguished economist of the Uni
versity of Berlin. declared recently.
To prove his point he mentioned the
fact that services as intimately con-
nected with industry as transportation
and the postal service are running with
enormous deficits paid out of the public
purse. The prices OF bread and rentals
are kept arbitrarily low--all these re-
ducing a burden of which ordinarily the
industry would have to bear share.
Then there is joint control over Ger
man industry which tends to turn II out
of normal channels and to deform it to
meet other ends than the fundamentally
economic one of maximum production.
Uindrnnces to German Trade.
The first of these Is arbitrary price
control by the German Government made
for real or imagined reasons OF public
expediency. Coal and iron were long
controlled In this way, and there are
still numerous restrictions on exports of
these commodities.
Secondly Is the control of the Allies
over German industry as a measure to
exact payment OF the tribute of victory
and for reparations. This control In
part is exercised to conhscation of
wares. and. In part. to restricting Ger
man Industrial expansion where there
might be a serious detriment to similar
industries in allied countries.
If Prof. Jastrow has felt Il difficult TO
discover n basis for estimating costs of
production he must find II doubly SO try
ing to draw conclusions from German
official statistics. Nowhere are the raw
ages of war more conspicuous than in
the statistical bureaus of Germany--the
result of five years of patriotic decep-
tfon, resulted In statistical backsliding
and self-deception from which these bu-
reaus have not even now recovered.
German statisticlans are inclined FREE
! ouently TO accumulate only the statistics
that prove what they want to believe.
The one-sided statistics OF the war
oo often became lopsided ones after