THE German without a state is like a Frenchman without a love -- he feels lost and unhappy. And this although experience has taught them both that fervent worship all too often leads to disaster. After a long abstention, the Germans once again have a state, or rather two states. It is just that fact which complicates matters for them so much. Those in the Eastern state -- with the exception of the Communist functionaries -- long for the Western state, and those in the Western state have a painful feeling of helpless responsibility when they think of their brethren living in the East in slavery and economic misery.

But even the Western state does not yet enjoy the full loyalty of its citizens. It is artificial, synthetic so to speak, with a fictitious capital that so far is no more than a small provincial town. The Government lives there, curiously apart from the community; and the Parliament is looked on as really representative of the people by only a few members of the various parties. The population as a whole has become skeptical; it distrusts the very idea of the state which once it so adored. It wants to have nothing further to do with party strife, wants to be left alone, wants to work. Furthermore, every fifth inhabitant of Western Germany today is a refugee whose home was in the East -- either in the separated areas or in Poland, Hungary, Rumania or Jugoslavia where Germans had settled as long ago as the twelfth century in large, purely German and often very rich colonies. All these refugees regard their present hand-to-mouth existence as transitory. They long for their native homesteads and for the quiet life of old, and their restlessness spreads among the whole population.

The attitude of the present-day German is still strongly influenced by the apocalyptic experiences of the past. Without realizing it, everyone lives in a state of suspense -- afraid of the Russians, afraid of a new currency reform, afraid of losing his job, afraid of bankruptcy. Everyone has lost something: his savings, his property, his work, his reputation, his ideals false or real. No one wants to tie himself down. Things must change. It may be for better or it may be for worse -- but in any case they must change. For years now it has been our lot to live in a permanent interregnum.

Notwithstanding all this, the German works with a vitality and eagerness which is still unsurpassed. There has never been a real strike, not even during that severely cold winter when factories and offices were without heat and the weekly fat ration weighed about the same as a small packet of cigarettes. Communist propaganda has never met with any success among the numerous expropriated persons, hundreds of thousands of whom still live in huge camps. An extensive survey conducted at the beginning of the year in Western Germany on latest American lines showed that 65 percent of all persons questioned were in favor of close international coöperation. All the answers -- and there were many thousands of detailed comments -- revealed quite clearly the longing for European coöperation and for peace. This is not the pacifism of the 1920's, which manifested itself mainly in a literary way, but a plain and practical realization that nothing can be gained by anyone in another war.


As the neurotic postwar mood wears off and a gradual process of sobering up takes place, a considered opinion slowly begins to emerge. Citizens of the Western German state are confronted today by vital questions which every one of them has to answer. First and foremost is this: "Is the unity of Germany of more importance to me than the consolidation of the Western state?"

Reunification will always be the goal of all Germans. But they seek it not out of longing for the old German Reich, which represents a degree of nationalism that almost no one is interested in any more, but primarily because the thought that 18,000,000 compatriots are at the mercy of the Soviet terror is unbearable. Once again in Eastern Germany there is growing up a generation which, from the time it enters school and proceeds via youth organizations up to forced recruitment for military service, is subjected to totalitarian indoctrination. Now the "youth organization" is Communist instead of Nazi, and the military service is for "Eastern police." But the fear of denunciation to the authorities, of forced labor and imprisonment is the condition of existence, just as before -- and this time under Russian masters. Added to the natural wish to rescue one's fellow countrymen from this bitter predicament is the question (which will be dealt with in detail later) whether Western Germany can live by herself. In the circumstances, then, the desire of Western Germans to join together the two parts of the whole is of course strong.

But the majority of people in Western Germany realize by now that they cannot have both unity and freedom. For the time being we must choose either the one or the other. Faced with this alternative it seems more opportune to be content with freedom now, and to work for unity later, rather than to begin by striving for a unity which can be gained only under Russian domination, and to renounce freedom forever.

For those who may fear that this analysis credits the German people with more political wisdom than they possess, it must be stressed that the verdict for freedom does not rest on these judgments alone. It rests primarily on almost every German's direct or indirect experience with the horrors of Russian slavery. First there are the refugees from the East and those from the Russian Zone -- together a total of 9,000,000. Then there are the returned prisoners of war and the German soldiers who fought in Russia and formed their own opinion of Russian misery. These groups make up a quarter of the population, and there is scarcely a family in the West which does not include one of them. Then there are the people of Berlin who look directly into the Russian Zone. And apart from the personal stories of all these millions, the spectacle of the prisoners of war, who until recently returned from Russia looking like living corpses, would have sufficed to arouse a sense of horror.

This is the great safeguard against the attraction of the East for Germany which so many foreigners fear -- the fact that the destitute and disinherited who have the most reason to be discontented in the West have the most reason to fear the East. They would like to return to their homes, but only as free men. The flood of refugees, including officials of the Eastern Zone, who continue to come at immense risk; the united resistance of the people of Berlin, at a time when nobody knew whether the airlift could succeed and when every Berliner who defied the Soviets was a marked man; the voting in the West, and even in the Eastern Zone itself -- all these things indicate that most Germans now put freedom ahead of unity.

Apart from the Communists there are today only two groups in Western Germany which have not realized this. They are first of all those who out of some sort of economic mysticism believe that Germany's destiny is wrapped up with the Eastern space. They put forward mainly the powerful argument that the possibility of regaining the separated areas on the other side of the Oder-Neisse line will come true only if the whole of Germany joins the Russian camp. That, of course, means that these persons once and for all renounce their freedom; consequently there are very few of them.

The second group is more numerous because it believes it has found a way out of the dilemma, unity or freedom. It includes pastors with their heads in the clouds and so-called statesmen who ask why Germans should concern themselves with the East-West bickerings of the Allies. "All of us," say these latter, "whether West or East of the Elbe, have only one common interest -- to be left alone to rebuild our country. Germany therefore must be neutralized and put under United Nations supervision." As if East and West were more likely to agree within the United Nations than within the Control Council in Berlin, which after all was supposed to reëstablish and guarantee the economic unity of Germany!

And what does "neutralize" really mean? It means, in effect, that the American troops are to withdraw 5,000 miles, whereas the Russian troops and their Polish puppets will stop on Polish territory behind the Oder, 100 miles from Berlin. Further, Western Germany and the plundered Eastern state (which has its own great quota of refugees) would not be viable together without American supplies. But if the American forces of occupation are withdrawn, the United States will no longer be interested in meeting Germany's needs by supplies from the War Department, which so far have been greater than the supplies received under Marshall aid; there will also be less hope of private foreign investments. Neutrality therefore means increased Russian danger, and, by reason of the termination of American assistance, the collapse of the German economy.


For a long time -- from one foreign ministers' conference to the next -- Germans hoped for an agreement between America and Russia. They do so no longer. The Germans know the Russians and their policy better than anyone else in the world because they are so much nearer to them, and they have stopped wishful thinking on this point. Quite plainly and realistically most Germans have recognized that any compromise with Moscow only serves the advantage of the Russians and increases their potential power. The main concern of the Germans today is whether or not the Americans will agree to a policy of appeasement. Every speech of President Truman and Secretary of State Acheson is analyzed with great anxiety in the German press for signs of it. Meanwhile the American press, on its side, reports with more and more emphasis an immense danger of resurgent German nationalism and even suggests that it will join hands with Communism, delivering the whole of Germany to the Russians. The paradox illuminates the nature of the era in which we are living, driven in a vicious circle by mutual distrust and fear.

This action at cross purposes brings to the front the question of a rearmament of Germany. On the Allied side the advocates as well as the opponents of such a measure base their arguments on security. The opponents insist that Germany offers the greatest of all dangers, if she is armed in any degree at all. The advocates of German rearmament point out that there is only one real danger in the world: Russia -- Russia with her 150 divisions at the ready, with 20,000 tanks and 16,000 bombers -- Russia which in 1939 had a population of 180,000,000, and which has now acquired in Eastern Europe and Eastern Germany alone another 110,000,000 "subjects" (to say nothing of the Far East).

Up to now the defense of Europe has been considered with the Atlantic Pact in mind. According to statements by General Omar N. Bradley, the Atlantic Pact nations intend to hold the west bank of the Rhine with 25 to 30 European divisions, and to prevent a massed crossing of the Russian armies by air attacks on their supply routes. Germany is, therefore, not included in this plan of defense, and it is to be expected that in the case of such a Russian advance the German industrial center of the Ruhr within a very short time could not even serve as grazing land for the renowned goats of Mr. Morgenthau. Meanwhile -- and most likely for this reason -- occasional reference has been made to a defense of Europe on the Elbe, in which case it is obviously necessary to count on the integration of certain German contingents in the European armies.

Quite naturally the question follows how large such a German contingent would have to be if it really makes possible the shifting of the line of defense from the Rhine to the Elbe. Most likely it would have to consist of 20 to 30 motorized divisions. And then it becomes quite clear that from the German point of view such a proposition cannot be entertained. In the Second World War every third German between the ages of 20 and 40 years was killed; a further shedding of blood cannot be borne. Add to this that a minimum of Germans -- whether officers or privates -- would be prepared to don uniform again after the experiences of the war and postwar years. And finally consider that the occupation costs today amount to nearly a third (31.9 percent) of the total income of the German Laender from Reich taxes and customs and excise. In 1949 they amounted to 4.5 billion Deutsche Marks or more than 1 billion dollars -- $23 a year per capita of the population, a large sum in view of the fact that in Western Germany about 6 to 7 million people have to live on a monthly income of 50 marks, equal to $12. To maintain an army on top of the huge social expenditure and the high occupation costs would simply ruin the state finances. Lastly, even a German rearmament such as indicated above would never be sufficient to contain the massed Russian armies, besides most certainly infuriating Russia and increasing the danger of war.

There is only one source of security for Germany, and that is the presence of Allied troops in Germany, even if only a few divisions. The real danger lies not so much in a Third World War -- for the Russians also are afraid of that -- but in a situation where Russian aggression hurts only the West Germans without at the same time hurting the United States. In addition, the West German Government's open and final renunciation of any form of rearmament might have the effect of at last satisfying the need for security felt by the West, and render superfluous the manifold security institutions which are hampering the German economy and endangering West German viability.


The real question, in any case, is the question of the economic viability of the West German state. When considering the economic situation of Western Germany one encounters three extraordinary and characteristic difficulties: the refugee problem; the disruption of the former economic unity; and the necessity of maintaining Berlin.

Although the refugee problem arose mainly during the years 1945 and 1946 it continues to grow. Every day about 1,500 Germans flee from the Russian zone into Western Germany, and there is also an influx of about 1,000 foreigners a week who have fled from the Russian satellite countries. On top of this, 250,000 prisoners of war returned from Russia in the course of last year. Consequently the population of Western Germany increased by 750,000 in 1949. On January 1, 1950, there were 9,000,000 German refugees and 400,000 refugee foreigners and displaced persons in Western Germany. When one remembers that between 1908 and 1949 the net emigration to North America amounted to between 8,000,000 and 9,000,000, and that Germany has lost her principal food surplus region in the East, one understands that Germany cannot find a solution of this problem by herself.

Even before the war, when Germany still had at her disposal those areas which have since been detached, covering nearly a quarter of the total prewar German territory, 20 percent of the total food consumed had to be imported; today the figure is nearer 50 percent because the former population of those territories must now be fed by the West German state. The migration of 9,000,000 refugees into Western Germany has had various economic consequences. First of all, it should not be overlooked that the relationship between national assets and national income is fairly constant. Those 9,000,000 expellees have left behind in their former home territories assets to an estimated value of 25 to 30 billion dollars. Arriving in Western Germany without any belongings whatsoever, they have become a heavy burden for the West German economy. That is to say, they have arrived with huge demands on the consumer goods industries. At the same time, the shortage of capital has prevented the utilization of their potential labor. Under present circumstances, and having due regard to the national economy, about $2,000 must be invested in order to employ one worker productively.

In the case of such a sudden mass immigration, adequate new investments are impossible, especially in a devastated country such as Germany. Moreover, in West Germany an increase of about 20 percent in population has taken place while the national income remained fairly constant. The general standard of living therefore has fallen; and a constant draining away of assets and a progressive pauperization will occur unless capital flows in constantly from abroad.

Before the war, every employed person had to maintain one non-producer; today two employable persons (including the unemployed) have to maintain three non-producers. This will, of course, result in a reduction of consumption and a wastage of capital. The wastage of capital is clearly evidenced by a measure which in Western Germany is called Sofort-Hilfe (spot-cash assistance). This is an effort to arrive at a more equitable distribution between the haves and have-nots of the burden resulting from the war. A property tax of 3 percent is to be levied in order to assist the refugees. But even this property tax and the increase in existing taxes will not suffice to grant the refugees productive credits; they serve consumption needs only. The result is a kind of vicious circle: increased taxation to provide for increased social expenditure, consequently a shrinkage of the economy, dismissal of workers, increasing social expenditure and another increase in taxation. It is only thanks to Marshall aid and "Garioa" (deliveries provided by the U.S. Army apart from Marshall aid) that this process has not been plainly visible. Without American assistance the German economy would have been on the rocks long ago.

It is not only the direct expenditure for the refugees which weighs down the West German economy; the indirect costs, too, are enormously high. One example may be given. In 1949 about 1,200,000 refugee children entered the primary schools in Western Germany. Taking 50 children to a class, an additional 24,000 teachers are therefore needed. At a salary of roughly $1,000 per teacher the expenditure would amount to no less than $24,000,000. There is another point to be considered. The geographical distribution of the refugees bears no relation whatsoever to economic considerations. The majority of the refugees are still living where the big upheaval of 1945 left them stranded, which is not in the industrial districts, but in agrarian territories such as Schleswig-Holstein and Bavaria, where there is very little opportunity of additional employment. A redistribution to other districts has thus far been impossible because housing cannot be found.

At the moment there is a shortage of 4,000,000 dwellings. To fill the need would cost, at 10,000 Deutsche Marks per dwelling, a total of 40 billion Deutsche Marks, equal to almost 10 billion dollars. It is planned to build 250,000 dwellings this year at a capital expenditure of 2.5 billion Deutsche Marks, equal to $600,000,000 -- considerably more than the total sum to be allocated to Germany out of Marshall aid in 1949-1950. Yet no less than ten times that number of dwellings would be required to settle all refugees capable of employment, with their families, at places where they might find work. There is a large productive potential in these refugees which could certainly be turned into an asset. But only after recipients of public assistance become producers are they useful to the economy.


In prewar Germany a large part of the goods produced and consumed within each of the regions into which the country is now divided moved in inter-regional trade. According to 1936 German transport statistics, what is now Western Germany "exported" approximately 20 percent of the total goods produced to the other parts of Germany, and in return received about 20 percent of the total goods consumed in Western Germany. The destruction of the normal German economic unity and the complete separation of large parts of Germany considerably reduced the trade in available goods. Furthermore, the construction of new plants to produce goods previously obtained from other parts of Germany not only involves a wastage of capital investment and probably higher costs of production but also gives rise to the usual concern of producers to protect themselves against the reemergence of competition.

The Economic Bulletin for Europe, published by the United Nations, mentions in the issue for January 1950 that the interregional trade of the various parts of Germany before the war amounted to 11.9 billion Reichsmarks, whereas trade with foreign countries in the same period amounted to only 4.8 billion Reichsmarks. The extent of German intersectional trade was due to the fact that Western, Central and Eastern Germany were very different in economic structure, and as they complemented each other there was a brisk interchange of goods between them. It is for this very reason that the destruction of this economic unity had such catastrophic effects. Eastern Germany, for instance, produced very little steel, but on the other hand it supplied more than half of the total production of soft coal and potash. Berlin and the Eastern zone together produced 60 percent of all precision and optical instruments, as well as 60 percent of all the electrical machinery and appliances. These were important items in German export statistics. The economic interlocking was most noticeable in the textile industry: 80 percent of all cotton spinning and weaving mills were situated in the Western Zones, whereas the Eastern Zone produced 60 percent of all woolen cloth and knitted goods. Between them they supplied the very extensive Berlin clothing trade, which produced 40 percent of the entire German output. All these relations, created over a period of hundreds of years, have been destroyed. It is as if four partners had dismantled a huge, well-running machine and divided the screws and various parts among them, leaving each to try to construct a new machine for himself!

Gallant Berlin is today really a dying city. Like an open wound, it is a constant drain on Western Germany. Since the middle of 1948, $166,000,000 from American Garioa funds and more than $100,000,000 from the budget of the Bizone have been poured into Berlin just to keep it alive. In order to provide a sound new basis for Berlin's destroyed economy, 2.3 billion Deutsche Marks (equal to $550,000,000) must be invested. There is of course not the slightest chance of raising that sum, the less so since the Garioa funds which provided the greater part of the assistance to Berlin have been drastically reduced.

The increasing number of unemployed in Berlin is a clear indication of the decay of the city's economy. At the end of 1947, 11 percent of all employable persons were unemployed; at the end of 1948, 25 percent of all employable persons were unemployed; and at the end of 1949, 33 percent were unemployed. Berlin, a besieged fortress without a hinterland, surrounded for hundred of miles by Russian occupied territory, is not even a whole; it is cut in two. Last year a power station had to be constructed at an expense of $13,000,000 in order to be independent of the Russian sector, although power from that sector could easily meet the demands of the whole city for electricity and always did so in the past. Once again the disastrous effects of the disruption of an economic whole!

No one know how much of the Western currency which is continually being pumped into Berlin drains away into the Russian Zone. No one knows the shape of things to come. One point only is certain: Berlin must, for political reasons, be maintained, no matter what the costs.


In view of the three mortgages weighing down on Western Germany -- the refugees, the sundered economic unity, and the maintenance of Berlin -- one is forced to the conclusion that from an economic point of view Western Germany is an artificial creation, a state which could never have developed historically and naturally. Today it is in exactly the same position as another state -- Britain. But Britain gradually became top-heavy because she was the head and brains of a steadily growing empire. As an isolated entity Britain would never have been viable. She is no larger than Western Germany, has the same agricultural area at her disposal, and must also feed about 50,000,000 people, for whom, like Western Germany, she can produce only half the foodstuffs required and must earn the money to buy the other half from exports. Yet the British exports are six times as high as the German exports. This inescapable obligation to export makes the badly constructed West German state Britain's competitor, and must of necessity reflect on the political relations of the two countries.

The possibility that Western Germany will become viable depends upon the possibility of her being able to increase exports to such an extent that they will pay for the necessary imports. This in its turn does not depend solely upon the willingness of Germans to work and adapt themselves, but far more upon the structural changes of the world economy and the alterations in global trade. Before the war Germany took third place in the world's international trade, following the United States and Britain. At that time inter-European trade took the form of a triangle, the points of which were Germany, the rest of the continent of Europe, and Great Britain. Germany was the nodal point. She supplied industrial products to the other countries of the European continent, which exported their own industrial goods and agricultural produce to Germany, but which chiefly supplied Great Britain; in turn, Britain covered her resultant foreign trade deficit with the income from her foreign investments. Trade between Europe and America likewise took place in a triangle, as follows: export of industrial products from Germany to South America -- flow of goods from South America to the United States -- flow of capital from the United States to Germany. All these well-established trade relations have been destroyed, and because of foreign exchange difficulties they cannot be restored.

The division of Europe into an Eastern and a Western sphere has furthermore resulted in a hectic industrialization of all countries. Great Britain, having lost most of her foreign assets, is obliged to concentrate far more than before the war on exports in order to provide for her imports. Germany, whose foreign trade before the war was the third largest of all exporting countries, must create a far bigger trade than ever merely to be able to exist. At the moment, however, imports are still twice as large as exports, i.e. $2.3 billion compared with $1.2 billion.

Before the war, in 1936, only little more than half of the German exports went to what are now the O.E.E.C. countries, and nearly one-fifth to those European countries which are now behind the Iron Curtain. The loss of foreign trade with these countries has been a severe blow for the West German state. There are, however, two aspects which warrant an optimistic view of the development of exports. First of all, Germany, with its huge import requirements, is a very attractive foreign trade partner for all agricultural and raw material countries -- a partner, furthermore, with the advantage of not being bound, like Britain, to the sterling area. Secondly, the enormous demands for producer goods gives a special opportunity to the German economy because German export trade has always been chiefly concerned with producer goods; consequently Germany's export trade was never so easily upset as Britain's, which was mainly in consumer goods.

In the future, when trade has been liberalized, the mainstay of German exports will be the engineering, mechanical, optical and chemical industries. Normally steel might take first place; but political developments have put a stop to that by increasing steel capacity abroad, especially in France. Germany will, therefore, have to concentrate on processing steel products.

According to the Petersberg agreement, which the Allies concluded with the German Federal Government in November 1949, and which resulted in the almost complete stoppage of dismantling, steel production is still limited to 11,100,000 tons per annum. That is 66 percent of the production in 1928, when Germany had not yet begun to use steel for armament. Since that year her population has increased by 10,000,000.

The long-term program which the American and the British occupying Powers have drawn up for the West German economy provides for the export of one billion dollars' worth of machines in 1952, but it is impossible to see how this can be achieved if the production of steel is restricted. Before the war the export of machinery from the whole of Germany, at present-day prices, amounted to $350,000,000. The planned export to the value of one billion dollars would therefore require a future export of machinery three times greater than before the war. Such a figure, in view of the restriction of steel production to 66 percent of prewar output, cannot be achieved except by a conjuring trick.

In view of Germany's high import requirements, any foreign exchange needlessly spent means further postponing the balancing of the foreign trade -- the final goal. The long-term program at the end of the Marshall Plan provided for the payment of nearly $300,000,000 per annum to foreign countries for the transportation of German imports and exports. If Germany were permitted to construct an adequate merchant fleet she could save huge sums of foreign currency. It likewise would be inopportune to maintain the restriction on the production of synthetic ammonia for any length of time. If, as provided for in the Petersberg agreement, 30 percent of the capacity of the nitrogen factory at Oppau is to be dismantled, this would mean that German home production would supply German agriculture with only 31 kilograms of nitrogen fertilizer per hectare. In view of the fact that the Benelux countries are using today about 50 kilograms per hectare, one can easily see that the necessary increase in German agricultural production will not be achieved by these means. The increase is of great importance, however, for the improvement of the trade balance.

Before attempting to answer the question whether the West German state is, or will be, viable we must be quite clear that the possibility rests solely upon the possibility of considerably increasing exports above the prewar level. The biggest difficulty lies in the fact that the sudden increase in the population, coupled with the loss of the food-surplus region, has not only increased the amount of foodstuffs to be imported but requires an increased import of raw materials in order to produce the goods for an increased export. A study of the German economy for the period from 1870 to 1918 indicates that the volume of foreign trade increases more rapidly than the population.


The outcome of our survey is the realization that the West German state is an artificial creation and not a viable entity. This means first of all that the Allied creators of this state bear a certain responsibility for its economic destiny, as well as for its defense. It also means that Western Germany is especially suited to integration into a European grouping of states. After 12 totalitarian years under Hitler, and after five years of experience with the Russian "liberators," Germany is probably immune from any form of Communism for a long time to come. But in view of her special economic situation, one can easily imagine that West Germany might unwillingly become a prey of the East unless it succeeds in pushing ahead its industrialization and in gaining additional markets for its exports -- unless, in other words, it finds it possible to live within the Western economic sphere.

Not for economic reasons alone will Germany welcome the European solution. After many years of spiritual suppression there is a real desire in Germany for world-wide coöperation. The Germans have always had a hankering after the unattainable; that was their strength and at the same time their handicap and their trial. For many people in Germany the idea of a united Europe is a dream which gives hope in a time of political uncertainty and helps them bear the miseries of the present. And this dream is one which might conceivably come true.

The American press reports every sign of German nationalism so extensively that the impression may be given that only Nazis and reactionaries live in Western Germany today. Granted that there are deputies and party leaders who make enough silly statements to crowd everything else off the front pages! But these are not the only things worth mentioning among present-day happenings in Germany. Should not the reading public be reminded, for instance, of the fact that it was the German Socialists under Schumacher who in 1945 refused to amalgamate their Party with the Communists in the so-called Unity Party, the "SED," which today reigns supreme in the Eastern state? That was a time when many American papers were filled with praise of their Moscow "ally." It was a time, too, when Communists played a major rôle in nearly all the Western European governments. Had the German Socialists decided differently, the Communists would now be standing on the Rhine, or more likely at the Atlantic seaboard. Responsible Germans alone can succeed in combating the radicalism which is bound to exist in their country. In their struggle for both reconstruction and freedom they need not only Marshall aid but also a modicum of American trust and good will.

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