Evening star., 1922-06-25

Chicago Daily NewS.)
BERLIN. Germany. May 14.-If an
American goes to South America and
tries to obtain u construction con-
tract he will probably learn that
German firm has underbid him. If
he goes to Tabriz and buys a pair of
socks he will probably find a German
trade mark on them. If he goes to
Spain and tries to sell typewriter
he Will almost certainly be told that
such and such a German firm is al
ready supplying excellent typewriters
at a lower price and on more favor
able credit conditions.
one of the strangest of all the eco
nomic paradoXes resulting from the
war is this active prosperity of the
Vanquished in the face of the indus
Germans, deprived of some of their
richest territory. of nearly all their
shipping and practically all their
wealth abroad, and laden with huge.
financial obligations, are prospecting.
The allies, recipients of stores of
goods and ships and money, and of
rich inundated colonies. are POOR.
When they reach out their hands to
get their share of the fruits of the
earth the helpless, vanouished stands
in their way and says: Beg pardon,
but this belongs to me-" Whence the
100000 of unemployed in England
with its beggars mumbling their
pitiful crisonS on the streets of Lon
don. Whence the 90 per cent of
smokeless chimneys belonging to the
acquired in Lorraine. Whence the
trade slump in America, with her
Anillions of unemployed. and her in
ABILITY to export her surplus produce
Depressed Mark.
What has played this trick on the
victors? In the first instance, of
course. the deprecated mark. The
meet all their obligations without
printing paper money. made a weapon
out of their burden. and more or less
deliberately went on printing marks
in order to disturb the world economy
to their advantage.
Still the view held by some that the
mark itself is the explanation, is
false. Because the mark is worth only
a siXtieth of its former value, it does
no follow that Germany can produce
Tor one-siXtieth of the former cost
What gives the German manufac-
turer an advantage in cheapness of
production is not the low value of the
mark, but its longcontinued fall.
While the mark is falling and likely
to fall farther. speculating foreigners
will be shy of it, and will accept it at
only half or a third of its inland
value. Or to look at it another way,
when the mark falls, German prices
rise less rapidly than it falls.
Here is the first important element
in the low cost of German production
the difference between the inland
and the foreign value of the mark.
Within this margin, broadly speak
ing. the German manufacturers un-
dercuts his foreign rivals and makes
his profit.
German prices constantly tend to
approach world prices. The German
manufactured will not willingly sell
at home much more cheaply than he
can sell abroad. And Germany must
pay world prices for the things she
imports. thus forcing up her domestic
costs. If the mark We're stabilized Gt
makes absolutely no difference at
what fgureJ German prices would
presently become approximately equal
to foreign. But when fresh billions or
paper money are issued each month
the mark must continue to sink, and
foreigners will again discount against
its bad prospects. and wages ana
prices will tag along well behind.
Who Pays the Subsidy.
Still the explanation looks
"phoney." The difference between SIS.
Berlin and S35. the price of a SIM
liar suit CT clothes in London is
difference in real values: it cannot
he accounted for by tricks of book
keeping in marks.
OF course. the truth is that the
German manufacturer is subsidized
to enable him to produce thus cheap
ly. Somebody is sweated; somebody
pays part of his expenses, usually
without intending it. often without
sidfes on railroads and bread, of
which the allies complained last year,
are the least part of them. The rail-
road subsidy covers only fraction
of the freight costs. and these cover
only a fraction Of the manufacturers
cost of making and delivering the
goods. The bread subsidy repres-
eitr6 only part of the family budget
They cannot account for a reduction
df50 to 65 per cent in production
gNho then pays the rest, or rather.
Ikp deprives himself of values to
etSBble the manufacturer to put these
y4sliles into his goods without cost
ihA class, to the extent to which
itssufferS>a reduced standard of liv-
itSE. The exact amount is difficult
to determine, but at a rough guess
one might say that the manufacturer
is enabled to cut 10 or 30 per cent in
real values off his wage budget due
to the workers diminished consump-
tion. He can cut a further consid-
cradle amount off on the score of
decreased rents. since the controlled
rents enable his workmsn to live
in their old dwellings, for perhaps
a tenth of the real value they form
erly paid for them. In this instance
it is the landCwning class that pays
the subsidy which it pays: once more
through the diminished cost of retail
ommoditieS due to low shop rent.
Again, the manufactures has paid off
his fixed Indebtedness in deprecated
money, and has. therefore, reduced
his overhead. Here it is the middle
class of small investors which pays
the subsidy.
"German Efficiency" Again.
Finally it is proba BILE that the manu-
facturer subsidies himself out of his
capital. His huge mark profits tempt
him to think he can safely cut his
competition, and he does not always
realize that he is cutting his profits
TOO low, in real money, to replace his
The remaining factor in the cheap
ness of German production is sheer
efficiency. 1t is unquestionably inn
portant. Efficiency in the workman.
efficiency in technical process, eff
cheney in industrial organization-all
these work to eliminate waste in pro-
duction.
1t is the continued fall of the mark
that puts these factors Except the
words. that kids" people into sub
sidizing the industrialists. But there
is no magic in it. If you could per-
suade American workingmen to give
I'M 20 per cent of their food and Amer
lean real estate owners to give up
nine -tenths of their rent and Amert-
can bondholders to give up fifty nine