Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-10-19
BY DIR. HJALMAR SCHACHT,
Former Head Of the German Reichsbank.

Former Head Of the German Reichsbank.
OR some time the whole world
l. has been experiencing an eco
nomic depression of immense
proportions. This depression Is
lasting longer than former ones.
A severe decline in the prices of nearly
all important raw materials such as
have not been witnessed for several
decades, increasing unemployment, an
increase in the number of failures and
a complete stagnation Of business ac-
tivity are its outstanding features. and
sooner or later even our cultural life
will be affected. At present there is no
sign of an improvement in this situ-
alton. On the contrary, the crisis is
even spreading to those countries which
50 far have managed to keep them
selves to certain extent free from 1t.
It originated in Germany and Eng
land, but by now 1t also includes the
United States and recently it has even
touched France. Pessimists already
seem to agree that one must get ac-
customed to the idea that the present
paralyzation of economic progress and
prosperity must be considered as per-
manent and that the times Of economic
and cultured upward swing which we
witnessed In the past decades are gone
forever.
Certainly such pessimistic point of
view is not justified. Nevertheless, one
thing seems to me to be necessary.
That is that we should not sit and wait
until something happens for the better,
but, on the contrary, that we should
investigate the causes of this crisis and
look for means to overcome 1t through
energetic counter action.
Not Ordinary Business Cycle.
Everybody agrees that this crisis is
not one of an ordinary business cycle,
but that 1t had its origin In the struc-
tural changes that have been made in
world economics. These structural
changes can only be explained through
war meant q frightful setback to the
development of world trade and to
prosperity. 1t is quite true that this
setback started in Europe, and that in
the beginning America proflted from
the war to an extraordinary extent, but
now the economic aftermath of the
war has also spread to America. Never
has there been said more untrue word
than the English slogan at the begin
ming Of the war, Business as usual"
How little truth there was in this
phrase can be seen by the fact that in
1922 the entire turnover of world trade
was no longer than 1t was In 1902.
During the last pre-war decade world
trade increased by about per cent
each year, but in 1920 we had only
arrived again at the level of 1902.
The United States National Foreign
Trade Council has made an interesting
computation on the turnover Of world
trade for 1928. In this 1t was eSti-
mated that world trade IN 1928 was
only about half Of what 1t would have
been had its continuous development
not been interrupted by the war.
Small Nations Raised Barriers.
What are in detail the reasons for
this relative decrease in world trade?
First of all, there are the immediate
consequences of the war. BY the peace
treaties there were created quite q
number of small new states in Eastern
Europe. All at once these small states
began to surround themselves with high
customs barriers and at great cost tried
to build up industries OF their own SO
that they would not have to buy from
their neighbors. Mr.. BRAND, the
French foreign minister himself mas
| called the attention of the world TO this
| fact. In his memorandum on Pan
Europe he showed that through the
peace treaties about 10000 kilometers
OF new customs barriers have been
erected. The enlarging Of the European
market IS Q unity Is one Of the de.
mands which would follow from Mr.
6rAnd's gtateuaents 80