Evening star., 1923-08-12
GERMAN PLANTS
LOOK FOR SLUMP
Manner in Which They Con.
! sumo Themselves Ex-
! planned by Deutsch.
BY HIRAM KELLY MoDERwELL.

By HIRAM KELLY MODLH"ELL
Special Correspondence Of The Star and Chicago
Daily News
BERLIN. Germany, July 2o.-Ge-
heimrat Felix Deutsch. director or the
great Rathenau korzen, the "A. +. H.,
Is, next to Hugo SHINES. the outstand-
ing figure in German industrial lie.
His trust. which centers around the
eIectrotechnic industry, but includes
an enormous number of subsidiary and
allied companies. is we'll nigh as large
as that of SHINES. And 1t is ques-
ton whether it will not some day turn
out to be greater. for SHINES has as
Sembled his konzern in a somewhat ad-
venturous and speculative way.
whereas the "A Z. G." expansion has
been notably conservative and solid.
Geheimrat (privy councilor) Deutsch
was for years the right-hand man:
first, CT Emil Rathenau and then or
his son, the late Walter Rathenau.
Both the RathenauS, but especially the
father. We're technical specialists. II
was Geheimrat Deutsch who brought
to the undertaking the commercial
genius that enabled the Rathenau IN
rentions to make millions. AS Walter
Rathenau devoted himself more and
more to literature and politics, II was
ienelNlraC DeuISCn VINO gradually tooh
over all the management of the busi-
ness. Since Rathenau'S ASSASSINATION
Deutsch has been supreme. Part or
his strength has consisted III the conf
dence he enjoys in New YORK banking
circles.
business nt n Loss.
l asked Geheimrat Deutsch's opinion
as to the real condition of German bust
ness since the war. So many eNtraor-
dinary statements have been made on
this subject that il seemed especially
valuable to get the view of d business
man who is cognizant of all the facts.
His opinion. which accords with the
view of many highly competent foreign
observers. is pessimistic.
German business. despite its hlgh
paper profits, has been working at a
loss since the war" said Geheimrat
Deutsch. Up to the present We have
been won't to reckon the usual deduc-
tions for depreciation or the sums in
vested in machines. apparatus, tools and
so on. and we were able to get on very
well. because these standard deductions
We're accommodated to the length Of the
life of the works and we were able to
@ccUmuiate the necessary sums for re-
newalS.
To-day we face a totally different
situation. Prices for machines and ap-
inaratus amount to many thousand times
their pre-war cost and will continue TO
adapt themselves 70 prices in the
worlds markets. We are forced. there
Eoit To iIiakS Our HSuuCTlonS lff gold
II We d" not propose t. exist on our
ca: hat is, on the substance of our
dIrdy.;akinS
Distinction to Be Made.
There is. Of course, a distinction to
b. made between heavy Industrial plants
Constructed to withstand many years of
We and tear and purely commercial
businesses on the one hand. and the
specialized manufacturing industry on
the other. In the latter the charge for
depreciation is especially high. There
is continual necessity for introducing
essential improvements in working
methods. designs. machine tools and
equipment so that successive invest
lnents are inevitable if the plant is to
De Kept up to date and competitive
Here regular deductions for renewals
ana maintenance are of the highest i'm
portaEce.
works with an equipment worth about
le.OOh.O00 gold marks (S2.3S0.OOO)
would normally have reckoned with
an average depreciation OF 90 per
cent per annum and would have made
deductions of 100000 marks (S476,-
o00). In my opinion, this should be
done today. but under present cur
rency conditions it is quite impos-
sible. Goods sold in Germany are
sold as we know. at a much lower
gold price than that obtaining abroad.
Out of this diminished real turnover
1t IS impossible to save the enormous
sums necessary to re-equip the plant
on a gold basis. And, of course If
me manufacturer has no opportunity
TO obtain foreign currency he must
see mis- paper savings diminish in
value to almost nothing
Exist on own Substance,
Tho result is that the plant is
forced to exist upon its substance
and am sorry to say that during the
coming years in my opinion, many
works in the finishing industry will
cease to exist after having eaten up
the total of their substance. Plants
with foreign markets for the greater
part Of their products will be able to
survive the crisis. since they have
the opportunity to make the neces-
.sssry deductions in gold for deprecia-
,tton. These plants will be able to
survive the depression which must
ensue when the mark is stabilized
But large part of German industry
will inevitably succumb''
German Money Holdings Abroad.
Geheimrat Deutsch does not deny
that considerable sums of foreign
currency are held abroad by German
fnduGtrialists.
In consequence of the loss Of all
our foreign Investments" he said. lit
IS absolutely necessary for German
Industry to hold a stock of foreign
exchanges to import such raw mate
.rials as copper, iron. minerals, etc.
which it needs. But the amount of
these sums has been greatly over
estimated in the foreign press. In
stead of the $4,000.000,000 or $1,000
100000 which some foreigners have
talked OF. Prof. Keynes has estimated
$475.o0o,0o0 to 100000. 900 and from
my experience I should think even
these figures much too high"
--~-