Evening star., 1941-03-09
Reich's 1941 War Bill
Estimated at II PET.
OF National Income
Debt Mounting Rapidly
But Controls Keep
lnfIution in Check
By OLIVER MCKEE.


War expenditures this year will
absorb 70 per cent of Germany's
national income, the Commerce De.
partment estimated yesterday.
The Reich's 1941 war bill wa
placed at 72 billion reichsmarks il
a study of Germany's war finance
made by H. Arnold Quirin of tn,
departments finance division anC
published in the Foreign Commercr
Weekly.
Mr.. Quirin said more than hal
of the Reich's war cost was bein!
financed through borrowing. will
the known national debt standing
at 79 billion reichsmarks at the enC
of 1910, an increase of 19 billion
reichsmarks in six months.
(The official rate for computing
the mark is 20 cents, which woulc
put the disclosed debt at $31 $780,
0O0,000D
Borrowings, Taxes Up.
Germany's wartime expenditure
during the second half of 1910 was
estimated to be at an annual rate
of about 68 billion marks. This
amount does not include the occu-
patton costs imposed on Norway
Denmark, the Netherlands, Belgium
and France. For the latter country
alone occupation costs total 7,200,-
100000 marks annually.
Under National Socialism, COM
bined annual borrowings and tax
revenues have increased from about
7 billion marks in 1888, or Is per
cent of the national income in that
year, to the estimated 70 billion
marks for 1941. According to Mr.
Quirin's figures, war taxes are TAX
ing "a per cent of German national
income, and 38 per cent additional
Is being loaned to the Reich.
Regimented economy has made
It possible for the Nazis to finance
rearmament and the war and hold
imitation, up to date, in check, he
points out Among the controls
used are those over labor, produc-
ton, wages, prices, consumption,
foreign trade and foreign exchange
transactions; prohibition of exports
of capital; control of banking and
interest rates; limitation on with
drawals of savings deposits and on
capital issues and dividends, and
the control of the publication of
economic and financial data.
Controls Prevent Initiation.
"These controls have prevented
the breaking out of imitation by
keeping it latent" Mr.. Quirin said,
Greatly increased production and
employment for war purposes, with
longer hours of labor, have raised
wage earnings and the national in
come generally, but prices have been
held rather stable as rule, and
consumption has been restricted to
minimum essential needs. Thus the
various controls have effectively
kept the national income in har-
ness and the greater share OF the
increased income has been diverted
from spending to taxes, and Relch
loans, or to increased savings de-
posits. insurance or social funds,
and thence to Reich loans"
THE inflationary trend shown in
the public debt, which increased by
575O00,000 reichsmarkS during
the first 16 months of the war, Is
further accentuated by the increase
in currency circulation of 5,840, ,0oo,-
900 reichsmarks during the same
period"
Interest Rates Kept Low.
Through the fiscal year 1937-1938,
tax receipts far exceeded disclosed
borrowings, according to the report.
Borrowings thereafter increased at
a much more rapid rate than tax
receipts. In 1910 Sc per cent Of the
Reich's expenditures were financed
by borrowing.
In financing the war, Germany
has adopted a flexible policy. Avoid
ing the term war loan the govern
ment is leaning heavily on Short
term loans derived from savings.
Every effort is also being made to
ICuuNC "o1 4A14pIlSA4IS SOoSo NA1A SS%SAA
lower interest rates.
In line with this effort was the
announcement on January of a
first series of 312 per cent treasury
notes. Besides lowering the interest
rate by one half of l per cent, the
term of the new issue was shortened
from 20 to Is years, and the issue
price was reduced by l per cent, as
compared with the seventh series
of 1910.
Concurrently with the treasury
note issues. the Reich has continued
the issuance of liquidity loans.
These are not offered to the public,
and are sold only to savings banks,
credit institutions and insurance
companies as a means of absorbing
their liquid funds. At the end of
october treasury short-term bills
and certificates were outstanding in
the amount of 27,913O00,0OO reichs-