Foreign News: Was 1st Los?

Christian Vogel, pale and tired, climbed the stairs to his fourth-floor flat in Offenbach, an industrial suburb of Frankfurt. Silently he tossed a blue envelope on the table. His seven-year-old daughter looked puzzled. “Was ist los, Mutti?” she asked. Said her mother: “Dein Vater ist entlassen” (Your father is fired).

In Western Germany, the blue dismissal envelopes are going out to workers in factories and shops at the rate of 15,000 a day. Five hundred thousand Germans have been added to the unemployment rolls in the past two months; more than one worker in ten is now jobless. Only a fraction of the unemployment figures can be accounted for by the refugees from the Soviet zone, and ex-P.W.s coming home from Soviet prison camps. With a few exceptions (e.g., coal mines and steel mills), almost every industry has had to let workers go. Businessmen say: “Customers just aren’t buying any more.” People are not buying because prices are too high.

Profit Margins. In the electrical plant where he worked, Christian Vogel made 280 marks ($66) a month, a little more than the average for industrial workers.

A pound of meat cost 3.5 marks, a pack of cigarettes 2 marks, an overcoat 200 marks. The fact that he and other workers could not buy at high prices has gradually halted the trade spurt created in 1947 when Western Germany’s Economic Director Ludwig Erhard removed many governmental price-fixing and other controls. Erhard, however, did not remove private controls exercised by more than 2,000 German trade associations. The associations have kept prices high to get all the profits they can. The associations tell the shopkeeper how much to charge. If he disobeys, the association can put him out of business by refusing to sell him goods.

Bargain Sales. Last week Chancellor Konrad Adenauer’s government at last set up a committee to study means of reducing unemployment. There were two general solutions: pump-priming, and deflation. Pump-primers wanted the government to spend part of the reserve in the Bank Deutscher Länder (similar to the U.S. Federal Reserve) for critically needed housing, and thus re-employ hundreds of thousands of construction workers. The other solution was to let the goods pile up on shelves until prices dropped to the point where customers could buy more. But the trade associations refused to let prices follow the law of supply & demand.

The Bonn government has started encouraging merchants to defy the trade associations; last week many West German stores held their first bargain sales since 1939. The rush was so great that police had to be called to keep order. Results indicated that hope for Christian Vogel and his fellow unemployed might lie in an economy freed of the shackles of government and rapacious private enterprise.