Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-06-17
By HERBERT RRATTER

hearing about the miracle" Of
West Germany's recovery. The
traveller, returning to Germany
after q decade, cannot but be
impressed with the remarkable
effort that has cleared away the
rubble, raised many new buildings.
stocked the shops. made money in
stead Of cigarettes the medium Of
exchange and given the crowds in
the streets an air Of prosperity.
True, the reconstruction job in
such cities as Munich, Stuttgart,
Frankfurt, Cologne and Dusseldorf
still is formidable. But the fac
tories have been rebuilt and mod
ernized, with the considerable help
Of the Marshall Plan, and industry
is humming. The Deutsche-mark
L. q hard currency" standing toe
to-toe with the dollar. Germany's
gold and foreign-exchange holdings
are almost as large as Britain's.
which have to serve the whole
sterling area.
Despite all this progress, how
ever, Chancellor Konrad Adenauer
returns to Germany to face q new
set of politico- economic problems.
The cold truth is, the remarkable
prosperity which West Germany
has enjoyed during the past eight
years may not continue with it's
present vigor. This is a matter
which concerns Americans as well
as Germans. since American policy
has been fostering a strong West
Germany as bulwark facing east.
Our government has persuaded
West Germany to create an army
and meanwhile to share the costs
Of keeping United States troops
there. But rearmament is costly
in money, men and resources. 1t
threatens to be especially costly at
this point in Germany's economic
boom. Also, there is a general cleo
ton in the 1857 offing.
The BuiIdup
Unquestionably hard work has
played p big role in Germany's re-
covery The $4.5 billions of foreign
q aid. mostly American, has also
helped. OF prime Importance was
the currency reform of 1948, largely
United States-devised under Joseph
M. Dodge, Detroit banker. No less
important has been the govern
ment's policy of giving free enter
prise full reign. With business I'M
impeded by controls, the Germans
have had not only sound cur
rency but goods to buy. Confidence
in the currency also has promoted
savings, making investment easier.
Nor should we overlook the role of
German labor, which was willing to
accept low wages and forego strikes.
The East-West split proved an
unexpected boon to West Germany.
Despite the hardship involved in
sheltering them, the II million
refugees from the Iron Curtain pro-
vided willing hands to work and
build. While neighboring countries
and the United States provided
West Germanys military defense,
the Germans could devote their
whole attention to rebuilding and
earning living. In the Korean war
Germany got another major
break" While others were busy
with defense production, the Ger
man capital goods industries were
able to meet the swelling foreign
demands for their products prompt
". Hence q favorable balance of
trade gave rise to handsome earn
ings of foreign exchange.
The Rise Begins
In recent months West Germany
has attained brimful employment,
Now workers are commencing to
seek pay increases. Prices have
started to rise. Rearmament, as
most Germans know, will eat into
the SURPRISES which in recent years
have characterized the Federal
budget. The more orthodox officials
will want to raise money by in
creasing taxes. Arms. besides, will
cause a diversion of resources di-
rectly or indirectly, whether made
at home or bought abroad. And
rearn1ament will take about 50O,O
young men away from the civilian
economy, which will make the labor
market even tighter. Overfull en-
ployment, as Britain's experience
Clearly shows, tends to produce in
f1ation; for as wages rise workers
spending increases. Nowhere in the
world is there a nation any more
fearful of imitation than the Ger
mans, who twice since World War 1
have seen their currency lose its
value.
Seeing the above LISTED signs of
change on the economic horizon
the Central Bank in May took some
drastic steps to tighten money and
credit, acting with the full approval
of the Ministers of Finance and
Economics. 1t took those steps at a
time when, with next years cleo
tons approaching, various tax re-
auctions have had to be initiated
and spending increased to help
small business, the farmers, coal
miners and others.
AS one conference.-the to the in
cipient imitation. DR.. w. Woke, Gen.
trail Bank chief; Minister Of Econ
omy Erhard, and Finance Minister
Schaffer advocate a 80 per cent re-
duction in. import tariffs on in
dustrial and agricultural products.
In effect. by reducing the favorable
balance of trade and drawing on
Germany's abundant foreign ex-
change reserves. imitation would be
fought at home with imported
goods and redundant currency