GERMANY: Paper Figures & Fact

Jubilantly the Nazi press announced last week that Germany’s July export figures set a new high for the Hitler regime—530,000,000 marks ($213,219,000), 10% better than last month, 34% better than July 1936. Nearly all exports were finished goods—iron products, machines, chemicals, textiles, automobiles. Imports last month amounted to 499,700,000 marks ($201,029,310), nearly equal to the record high of the preceding month. Germany thus showed an export balance of 30,300,000 marks ($12,189,690).

These paper figures were no index of the true state of Germany’s trade troubles. Faced with the cost of providing Germany with a million fully-equipped troops, faced with the expense of a grandiose public-works scheme, shrewd conservative Dr. Horace Greeley Hjalmar Schacht, Reich Minister of Economics, has long been doing sleight of hand with Germany’s foreign trade. With gold in the Reichsbank dwindling toward zero, Germany, since the rise of raw-material prices in 1935, has had to export finished goods at uneconomical prices in order to get currency to buy abroad such raw materials—copper, tin, oil—as she cannot manufacture synthetically.

Typical of Dr. Schacht’s adroit manipulation is Germany’s coffee trade with Brazil. Germany barters finished goods in exchange for Brazil’s coffee beans. The beans, canned in Germany, are resold to small Central European countries for exchange and at lower prices than Brazil demands. This maneuver involves heavy losses to Germany and damages Brazil’s market. But it puts much-needed foreign exchange into Dr. Schacht’s hands, and incidentally increases the impressiveness of Germany’s export trade.

A good indication of the Third Reich’s economic plight was that about the time the trade figures were given out the Government asked the public for a loan of 700,000,000 marks ($281,610,000) to be raised by the sale of 4% treasury notes with an average maturity of twelve years. This was the third such loan this year, the tenth since Economics Minister Schacht began to monopolize the capital market in 1935. Although only one-seventh was subscribed by week’s end, the loan when completed will bring the Reich’s borrowing during the past two years to a total of 6,518,000,000 marks ($2,622,191,400), a sizable sum for Henry Morgenthau Jr., colossal for Dr. Schacht.