The Waterbury Democrat., 1938-10-27

Nova month after Munich Germany has laid the foundation for an almost impregnable economic empire in middle Europe and, per- haps, the basis for an economic struggle that eventually will over shadow the political effects Of Sep tember's war crisis.
 The economic conflict Is not con- fined to central Europe, where the Nazi's dominance is virtually con- ceded, The trade bid of totalitarian governments with controlled econ- omy is echoing from China to Peru even in its preliminary stages.
 Recognize Challenge
 This economic challenge is being recognized by the democratic powers, particularly Great Britain and the United States, which has increased It's efforts to bolster trade in South America.
 Britain has sought to counteract the Nazi trade campaign by tight ening the bonds of the empire, by stern action against revolt in Pales- tine in order to restore her prestige in the Moslem world and by finan- cial cid to small nations not direct ly in the German sphere. The con- ing visits of King George and Queen Elizabeth to Canada and other parts of the empire and appointment of the Duke of Kent as governor gen. eral of Australia indicate the trend.
 Third Reich Powerful
 But Adolf Hitler's third Reich Is more powerful in almost every way than the Germany of 1914 which expanded its military and economic might until 1t came into conflict with the British empire-and col- lapsed in war. Since Munich, Berlin has linked Jugoslavia, Czechoslo- vakia, Turkey, Bulgaria and Hun gary by financial and trade chains that gre inmeasurably stronger than they were two months ago.
 With that domain virtually lnchal- leneod, the Nazi controlled economy and barter system operates to cut under the ordinary methods of trade with democratic nations.
 Italy, reaching out around the { Mediterranean as emphasized by decis1on to give Libya Q status as part of the Italian mainland, and JaHam, now in c position to dominate the rich China markets formerly held by Britain and the United States, also bring the totalitarian econOmic system into constantly in- creasing confiictc with the trade in terests of the democracies.
 British Prestige Suffers
 British prestige suffered c blow at Munich that is being echoed on the worlds trade routes and the final outcome of 6eptember's peace may depend more heavily on economic than on political factors.
 So far, the developments since Munich have reflected principally Che Nazi triumph in central Europe but 1t will be the long and less spec tacular economic conflict that counts sn tho end. Among totalitarian gains an preparation for that struggle have been the following:
 l-0ermany, acquiring approxi- xnately 12,000 square miles of ter- ritory at the gateway to middle Europe, almost immediately as- eumed complete economic domi- nance of an area that could sup- port her indefinitely in event of Q war blockade.
 All Obstacles Gone
 More important was the fact that virtually all artificial obstacles to the Reich,s natural geographic trade advantage were eliminated or nainimized. A quick follow-up carn- paign frightened trade relations by loans and advantageous deals un- der the Nazi barter system. In this development, Italy as well as Bri- tain and France suffered loss of central European trade ties.
 2-The way was opened for re- turn of some of the l,l39,000 square miles of colonies lost by the Reich at the end of the world war. No definite official move has yet been made toward restoration but a re- turn of some colonies has been as- sumed to be almost ceratin.
 3-cArmany and Italy expect iIn- portant economic and military re- turns for their aid in helping rebel Genoralissimo Francisco Franco to p0xition from which he probably will triumph in the Spanish civil war. Current international negoti- ations to isolate the conflict are ex- nected to aid Franco and to con- firm for the Fascist powers such gains as Italy's naval base at Ma 3urca, German exploitation of min eral resources and possibly Fascist bases which would threaten vital French and British communication nnes in the Mediterranean.
 1.-The rise of Nazi- Fascist pres lige and of It's ally, Japan, in the Par east has cost the British em- pire dearly in influence over the Moslem world and in China.
 Japan Comes In
 Whatever has been lost in British brestige at least is open to seizure ky the dictatorial powers. Tn view pf past developments, Japan is con- Ndered certain to dominate Chinese hade henceforth even in areas where Britain has been most pow nful. Both German and Italy are leeking to pick up the loose pieces a the mounting Pan-Islam rebel Don against British rule in Pales- hne.
 The extent to which the Democ- ncies can compete with totalitarian bconorny in an emergency remains n be tested, but the results will be h historic importance.