Germany

TEN-MINUTE television film, shown during the campaign, brings alive the main reasons for the result of the September 15 general election in West Germany. It explains why a majority of the voters gave 82-year-old Konrad Adenauer a longer term as chancellor than anyone else in German history except Bismarck.

The picture begins with a showing of the rubble to which Germany had been reduced at the war’s end. It ends with shots of Germans, well nourished and neatly dressed, smugly driving their Volkswagens. By contrast, the camera is flashed on a French filling station where an attendant is politely telling a motorist, “Sorry, sir, no gas.” As in the film, so at the polls; Herr Adenauer became Mr. Prosperity, and the voters approved his slogan of “No experiments.”

The same electioneering picture goes on to show Chancellor Adenauer in the company of President Eisenhower, Secretary Dulles, and leaders of other Allied nations. It thus personifies the idea that, from their position as outcasts, the West Germans have been elevated and readmitted to the civilized community. The viewer was left in no doubt that it is to Chancellor Adenauer that he owes his regained respectability. The combination of well-being and membership in the best club impelled the electorate to give Adenauer an absolute majority of 43 seats in the 497-member parliament.

There are a couple of other reasons for the spectacular success of Adenauer’s Christian Democratic Party at the polls. The Socialists failed to offer a dynamic program and mustered as their leader only an amiable mediocrity named Erich Ollenhauer. They renounced socialism. They spoke fuzzily of some state control over basic industry. They abandoned the demand for nationalization of coal and steel. They embraced private enterprise. They proclaimed their attachment to NATO and to the West.

Finally, the chancellor must credit the Russians with a share in his electoral success. Stumping the country, Adenauer kept telling the people he was crusading for Christianity against Communism. At the same time Nikita Khrushchev was touring East Germany under the auspices of the Red government there and shouting that Adenauer was a warmonger and an American stooge. Many Germans saw in Khrushchev’s behavior a confirmation of Adenauer’s claim that he was defending the faith against the infidels.

How much recovery?

The economic comeback in West Germany is genuine. The construction of 4.2 million dwelling units in the past eight years is phenomenal. About 16 million West Germans, or one of every three inhabitants, have moved into new homes. It is a monument to hard work and capable organization. Together with the abundance of consumer goods, it makes West Germany a capitalist window exhibit, contrasting with the ramshackle conditions in Communist East Germany.

Statistics describing advances in the German Republic are impressive but on close scrutiny perhaps misleading. As an illustration, take wages. From 1950 to 1956 the pay in the West German worker’s envelope grew 57 per cent in cash or, after discounting the rise in prices, 35 per cent in purchasing power. This headway, while noteworthy, falls into truer perspective when one realizes that German wages are below those in Britain and in some continental European countries. Excepting rent — which is important — the cost of living in West Germany is not far below that in the United States. Yet in German industry the average pay is the equivalent of less than $25 per week.

This, in turn, is a factor in the low production costs which enabled the German Republic to push its exports this year to some $9 billion. West Germany has more than doubled its share of world trade in the past seven years. Unemployment has shrunk from 10 per cent of the labor force in 1949 to 2.1 per cent today. The pendulum is even swinging toward a serious shortage of workers. Another plus in the German economy — though it also has disadvantages — is the hoard of $6 billion in foreign currency and gold.

Consumption has risen sharply. West Germans are eating and drinking twice as much beef, milk, beer, and wine as they were eight years ago; thrice the fats, fourfold the pork, eggs, coffee, and tea. They are smoking twice as many cigarettes.

All these and many other figures appear in a different light when one recalls the dismally low level from which the ascent started. If the number of American women wearing stockings were to increase twenty times in seven years, it would be something of an economic miracle because so large a proportion of ladies in the United States already wear them. The actual twentyfold rise of feminine consumption of stockings in West Germany since 1949 means very much less, indeed, because hardly any German women could afford them a few years ago.

The same applies to the increase by two and a half times of West German industrial production in the corresponding period. Stories in the American press have been indicating that the German Republic is already the foremost economic power across the Atlantic. It is being suggested that the West German economy has been showing its heels to Britain. In fact the Germans have passed the British in steel, of which they are manufacturing almost 25 million tons a year, compared to Britain’s 20.6 million. In most other essentials, however, the British are still ahead. With roughly the samesized populations, Britain’s gross national product is about $54 billion a year, West Germany’s $46 billion.

Tight money

There are defects in the economy which may retard growth. The principal weakness is shortage of liquid capital. German industry has been plowing back into plant expansion and modernization about 44 per cent of its profits. Moreover, stiff corporate and individual taxes have enriched the state but limited the capital at the disposal of firms and persons. Finally, people have been putting extra money into savings deposits which the banks are willing to transform into loans only at prohibitive interest rates.

As a result, many German companies have such scant liquid reserves of capital that they could not stand a few months of slack business. Even concerns free of debts can slither to the brink of insolvency, as happened this fall to the big Henschel locomotive and truck firm. It desperately appealed to the banks for help when it had to meet the payroll for its 10,000 employees while $2.5 million worth of trucks remained unsold in its warehouses.

West Germany’s tight money market has so far restricted the export of capital. Considering its high degree of industrialization, this nation is playing a trivial part in the undeveloped countries of Asia, Africa, and the Middle East. Yet that will probably change. Part of the West German Central Bank’s vast foreign exchange hoard may be released for the purpose.

This reserve is a form of insurance, since it could pay for German imports over an eight-month period. But it is not an unmixed blessing. More than half of the recent flow of sterling, dollars, Swiss francs, and other currencies has lately been entering Germany as a gamble on an upward revaluation of the Deutschemark. Foreigners could withdraw their funds as suddenly as they poured them in. Many recollect that withdrawal of alien capital was a major factor in the dreadful business crash in Germany in 1931.

The hoard has caused a major crisis between the Adenauer government and its partners in the European Payments Union. The Germans have become enormous creditors while others have sunk deeply into debt. The debtors could insist that the mark be declared a scarce currency. Under the rules of GATT [General Agreement on Tariffs and Trade), they could then raise their customs duties and throttle imports from Germany.

The lag in science

Another flaw in the economy is West Germany’s lag in developing the atom, radar, aircraft, automation, and standardization. The Germans have lost their lead in scientific education. Professor Leo Brandt, deputy chief of the German Atomic Committee, discusses these deficiencies in his book, The Second Industrial Revolution.

He contrasts the small number of atomic physicists being trained in the German Republic with the 2000 a year being graduated in Russia, and he compares the handful of mechanical engineers being educated in Germany with the 200,000 to be turned out annually at Soviet universities from 1960 on. The German professor remarks that 14 per cent of German students are receiving tuition-free scholarships, compared with 70 per cent in Britain.

Business with Russia

As Adenauer begins his third fouryear term as head of the government, he faces the problem of de-icing West German relations with Russia. He will also stare fixedly in the opposite direction while German business enlarges its stake in the markets of Communist China.

Adenauer does not intend to run after the Russians to book orders for German industry. On the other hand, he cannot ignore the wishes of industrialists and merchants who contributed heavily to his party’s campaign funds and among whom he counts many good friends. German business remembers what happened over a generation ago. Around 1929 to 1930 German exports to the Soviet Union comprised only 3 per cent of the nation’s sales abroad. After the 1931 crash and depression, more than 16 per cent of German foreign business was transacted with Russia. So a good many German manufacturers and traders today would like to keep open the shutters to the East, just in case bad weather comes from the West.

The German Republic’s commerce with the Communist camp is now running in the neighborhood of 4 per cent of the country’s foreign trade. Last April, Moscow proposed to Adenauer a Soviet-West German trade pact. The Russians offered a five-year agreement during which their commercial turnover would be $1750 million, close to the peak level between the two world wars. For their sixth five-year plan, the Soviets want German machine tools, oil pipes, and complete chemical and other factories. Adenauer is thinking in more modest terms of a three-year agreement with a $750 million trade turnover during that period. He does not wish to invite U.S. displeasure by too overt a bid for Communist bloc business.

Relations with the U. S.

Adenauer’s victory means another term for a pro-American government, approval of German membership in NATO, acceptance of a defense burden, and a tightening of ranks against the Soviet challenge.

However, at least three issues await settlement between Washington and Bonn: 1) The sum which the German Republic shall contribute to the maintenance of the American five-plus divisions in Germany; 2) A treaty regulating the legal status of American troops garrisoned on German soil; 3) A decision on whether the U.S. Command or the German government shall determine when and where American (and Allied) forces are to conduct maneuvers in Germany.

Opinions among interested ambassadors on the scene differ as to whether Adenauer’s unassailable majority in parliament will make him more flexible or rigid in negotiation. In American circles, the chancellor is expected to display increased independence. The French think that he will make concessions on secondary problems and will be stiffer on major issues. The British shrug and just wonder.