Evening star., 1943-04-13
The Nuzi Economy


The increasing pressure applied to
Germany and it's Europen satellites
makes it highly important to esti-
mate how the beleaguered and
heavily bombed European Fort
ress" is standing the siege from the
economic point Of view We know
that, in the last war, Germany's de-
feat was largely due to internal eco
nomic collapse, especially to food
shortages which caused something
like mass starvation The home
front" then broke down first, and
this internal crisis infected the mo-
rale OF the armies in the field.
Is there close parallel today,
when the Reich is again in it's fourth
war year? Exact knowledge is diff
cult to obtain, since Axis-dominated
Europe is extremely isolated and
conditions within it are closely
guarded secrets. Nevertheless, quail
fled specialists here and in Britain
have been analyzing Axis economy
from all available data, and their
findings should have some approx
nation to the truth.
The Third Reich appears to be
much more resistant to economic
strain than was the Imperial Ger
many of generation ago. This is
due to two basic causes. In the first
place, the Nazi regime prepared in
every way for war, striving to avoid
the mistakes of the previous conflict.
Long before the actual outbreak of
hostilities in 1899, the Third Reich
was living under what was frankly
termed a war economy" The very
f1rst day OF the war, a complete sys-
tenn OF equilibrated prices, wages,
and costs was applied which "froze"
the whole economic structure. The
ratloning methods we are now in
PRODUCING gradually were put into
effect in Germany virtually at once
and as a whole. Excess purchasing
power was drained off by drastic
taxation coupled with forced loans
and compulsory savings, while black
marketers were given the death
penalty.
All this held German economy in
balance and kept prices remarkably
stable. In June, 1912, the cost of
living had risen only 79 per cent over
June, 1899. However, this note
worthy feat was probably due in
large part to the widespread con-
quests which placed most Of the
continent under Axis control. Those
conquered countries we're systemat-
ically drained of everything above a
bare subsistence minimum for Ger
many's benefit. Although this proc
ess OF spollation seems to be entering
the period of diminishing returns,
the Reich is better off than it was In
the corresponding stage of the last
war. This is particularly true of the
1000 situation. The latest analysis,
conducted by our Department of
Agriculture, indicates that Germany
Will not crack through lack Of food.
1t likewise indicates that Axis -domi-
mated Europe as whole is not
threatened with downright starva-
ton, despite certain bad spots as in
Greece, Norway and Belgium.
Less favorable is the situation for
the general field of consumers
goods. Concentration upon war pro-
duction has cut manufacture for
civilian uses to the bone, reserves
are used up, while persistent Allied
bombing destroys both goods in ci-
Villain hands and the facilities for
making them. This intensifies
civilian demand for what little is
available and thereby tends to raise
prices, since equivalent purchasing
power Is not destroyed. British
analysts believe that, unless the
Nazi regime counters this situation
by measures of unprecedented ruth
lessness, the inflationary spiral, so
long delayed, may be set in motion.
In any case, civilian hardships are
being intensified, with consequent
discomfort.
The overall picture presented by
those recent surveys here and in
Britain is that of Germany gravely
strained in it's economic life but in
no immediate danger of cracking. In
Italy, things are much worse, due
largely to the inefficiency and cor
ruptlon OF the Fascist regime, cou-
pied with less disciplined and more
recalcitrant people.