GERMANY: Marks of War

The pudgy fingers of Adolf Hitler one day last week gave a soft, squashyhandshake to this array of luncheon guests: His Majesty Tsar Boris III of Bulgaria; Dictator Mussolini’s sons Bruno and Vittorio; His Royal Highness Crown Prince Umberto of Italy and his youngest sister Maria; Their Royal Highnesses the Crown Prince and Crown Princess of Sweden.

Pretty Maria is to marry Archduke Otto of Habsburg in case the Dictators decide on that young man’s restoration as Austrian Emperor. But the Hitler luncheon last week was too internationally complex to be more than social. The Olympic Games, which had brought so many exalted persons to Berlin, had their own significance (see p. 37), but behind the German scenes last week the Nazis had joined deadly economic war with the U. S.

From the German point of view, President Roosevelt, in trade matters, is a shady coin-clipper who cheapened the value of the U. S. dollar and thus “unfairly” reduced U. S. export prices on the World market. In Washington’s eyes, the German Economics Minister andReichsbank President Dr. Hjalmar Schacht is also shady because he does not similarly and frankly reduce the value of all German marks but, instead, has created an intentionally bewildering list of different kinds of marks. Each has a separate value and all are manipulated to Germany’s trade advantage by Schacht.

In an effort to outwit the Doctor, the U. S. Government, after a study of his methods, concluded that the various kinds of Schacht marks amounted to a German Government subsidy of goods shipped to the U. S. and retaliated with countervailing duties under the Tariff Act of 1930. For the benefit of U. S. customs inspectors German exporters were required to swear to statements of the amount of any German subsidy they received. Whether President Roosevelt knew it or not, under Nazi law it is high treason to divulge such German economic secrets to a foreigner, much less to swear to them in the form of affidavits.

Thus last week Berlin considered that Washington had acted with intolerable presumption, and Dr. Schacht, fighting mad, was reported to have exclaimed, “They mean to kill our trade with them? All right, let’s kill their trade with us! Afterward we can build it up again on a new basis.”

Paradoxically Dr. Schacht chose to kill Germany’s export trade with the U. S. as the easiest way to kill the U. S.’s export trade with Germany. For years these two forms of trade—normally independent of each other within limits—have been rigidly interlocked by the Nazis’ iron rule that Germany buys only where Germany sells and in substantially balancing amounts. Therefore last week Dr. Schacht was not simply cutting off Germany’s nose to spite her face but, in complex fashion, was cutting ultimate U. S. exports to Germany when he abruptly cut German exports to the U. S. by canceling use of the trick marks which he originally devised to boost German exports.

The Schacht trick has been a feat of State bookkeeping, does not involve the printing of marks of different kinds. In the main, Dr. Schacht’s procedure has been simply to hold or “block” in Germany payments owed to a foreigner and refuse to transfer them to him abroad. The foreigner was told that he could use these “blocked marks” to buy goods in Germany or could sell them to someone else in his own country who wished to do so. Obviously the foreign creditor could sell his blocked marks only at a discount and the effect of this was the same as a subsidy enabling the German exporter to boost sales by quoting lower prices. As the system grew it became so complicated that Dr. Schacht’s books now have entries representing some 20 different kinds of marks in actual use in three broad classifications : the Registered Mark, the Securities Blocked Mark and the Credit Blocked Mark.

Of late U. S. citizens selling to Germany have been accepting part payment in so-called “Aski Marks.” “Aski” is composed of the initial letters of Auslander Sonder Konto fur Inlandszahlungen, meaning “Foreign Special Accounts for Domestic Payments.” In practice the “special” feature of Aski Marks has been that they were only released or unblocked for transactions which the Nazis consider”essential.” Last week these were killed, so far as the U. S. is concerned, when Dr. Schacht completely suspended payments in Aski Marks. He also killed “Barter Marks.” In the past more than 50% of all German-U. S. trade has been conducted in Aski Marks for “essentials” and Barter Marks for “nonessentials.” To wipe out these two was to deal deadly blows to trade. Yet Dr. Schacht followed with a third wallop which put out of action even ordinary Registered Marks.

With U. S.-German trade thus apparently due to sink toward zero, U. S. citizens this week could still buy at reduced rates for travel in Germany Tourist Marks. In Washington and in Berlin technical experts believed that surely President Roosevelt and Chancellor Hitler will now find it necessary—as foreseen by foxy Dr. Schacht—to open negotiations and make a brand new deal on U. S.-German trade.