Main NI Index | Main Newspaper Index

Encyclopedia of Trotskyism | Marxists’ Internet Archive

The New International, November 1934



What Schacht Is Heading Towards

From New International, Vol. I No. 4, November 1934, pp. 118–119.
Transcribed & marked up by Einde O’Callaghan for ETOL.


THAT Germany’s foreign trade is ruined was acknowledged with noteworthy candor by Schacht in his last big speech. The paltry remnants of exports, together with redeemed foreign bills, still barely suffice to import the most urgently needed raw materials and thus to keep alive any German economy at all. The universal imports control will not be able to improve the situation. The attempt will of course be made to provide the plants producing vital necessities with raw materials. But the question immediately arises: Which enterprises are to be favored? There is no doubt as to which will emerge triumphant out of the inevitable disputes: in the long run, the strongest and most influential. Accordingly, the monopolistic bourgeoisie and among them, it goes without saying, the armaments magnates.

Schacht himself has already called the bureaucratization intolerable. The more widely ramified the bureaucracy, the stronger grows corruption. Bribe money is as usual reckoned into the selling price, that is, it is paid by the consumers.

Large foreign credits can somewhat moderate the calamity. Yet a country which barely raises a part of the interests on its old debts, has little to hope for. Therefore Schacht prefers to suspend payments altogether, and is putting forward the prospect of a general moratorium.

The economic dictator entertains no illusions as to the future. The “substantial limitation of imports” he has proclaimed signifies that little by little the national-socialist “ideal”‘ of autarchy is now being approached. To carry it through consistently is naturally impossible. Listen to what an expert writes on this score in the London Economist:

“The technical and economic possibilities of such a [substitute] production in no wise correspond to the boastful official propaganda ... The substitution of imported raw materials by synthetic substitute materials – the theme of the most clamorous propaganda – promises nothing. The new textile materials are technically inferior and very dear. They are mainly products of the artificial silk industry which must import wood and is itself hardly able to meet the domestic demand for artificial silk, so that the excess of imports has sharply risen this year. The expansion of this industry would require enormous investments of capital, which would in no way be justified by the production of an inferior material and which would furthermore find no export market. The production of substitute materials would require in general technical reorganizations which would swallow new capital and destroy the old. The high prises of these artificially produced raw materials would raise the general price level, hamper the general export, and reduce the German standard of living.”

In metallurgical production the situation is worse yet by far. Since profits must be maintained, the state, in order to promote the cutting down on native ores, will have to pay extraordinary premiums. With regard to the domestic production of copper, the Frankfurter Zeitung, for example, writes that “the technical productive capacity of German copper mining in its present scope is being fully utilized and could be increased only by new shutdowns, that is, by protracted measures involving an appreciable expenditure which did not appear warranted even during the war”. German industry is today necessarily taking on a war character. Goods that could be cheaply imported from abroad, must be produced at home at an enormous expense. Even thought the individual enterpriser has his profits guaranteed by subsidy and higher prices (that’s the very premise of capitalist industry), the vast losses to the whole of economic life nevertheless remain.

A short time ago, the Paris periodical Lu reports, two Frenchmen who were received among others by Bade, councillor of the Propaganda Ministry, returned from a students’ tour of Germany. They set themselves the task of objectively establishing wage and food conditions by means of direct inquiries made to numerous German workers. The results exceed all expectations. Weekly earnings, for example [the mark is now approximately 40 cents] were as follows:


Before Hitler


Skilled worker



Unskilled worker



Skilled metal worker



Building trades worker
(Private enterprise)



Building trades worker
(Government enterprise)



Food prices have changed as follows:


Before Hitler


1 lb. margarine



1 lb. lard (2nd quality)



1 kg. potatoes



1 kg. sugar



1 liter milk



In the official statistics, of course, these differences are not so crassly expressed ... Nevertheless, the tremendous rise of the cost of living as well as the decline of the average income can no longer be concealed even by official quarters.

Even though the last drop is being squeezed out of the working class, profits remain too slight to bring about a temporary improvement, a natural conjunctural boom. Japan offers the best example in this respect. There the degree of exploitation has attained the very highest imagina-able level. The contradictions, however, have continued to grow. They drove Japanese imperialism to war upon China, to the conquest of Manchuria as the first stage in preparation of an expedition against the Soviet Union.

That is just what Germany is being propelled into, even if the Angel of Peace himself were the Reichsfilhrer of Germany. Just the same, Hitler and Schacht know exactly what they are doing. They speak of peace and are arming for war. Every measure is considered by them exclusively from this angle.

Why, everybody asks, does Schacht tell his foreign creditors the fairy tale that the reparations are the one and only cause of Germany’s poverty? The payments of the first post-war years were, as is known, brought back again in large part by means of the inflation, in which the speculators abroad lost enormous sums in Reichsmarks. Today, everybody knows that the reparations were paid after 1923 with money pumped in from America. Whom does Schacht aim to deceive into thinking that Germany’s need is the main cause of the world economic crisis? It is as well known to him as it is to anyone that the great crash in New York began at a time when the crisis in Germany was barely discernible. At most, this swindle will be believed by his own countrymen, who have been shut off from the outer world for a year and a half. Yet Schacht has attained his aim thereby: Versailles is guilty! Down with Versailles! – This is the ideological preparation for war!

When Schacht decides today upon a coercive economy, he knows quite well that it is impossible to maintain it for any length of time. The outlay which it involves, can be made good again only by means of a victorious war, which will create colonies, outlet markets and reparations.

Coercive economy, which is a logical consequence of the national-socialist economic policy, must be organized right at the present moment in such a manner as to assure it the ability to hold out in a war. No doubt can exist: It is a question of the organisational preparation for war!

The economic dictator has, further, rejected deflation, that is, limitation of credit. The job-creation program, which is synonymous with an armaments program, must accordingly be maintained. Since the state finances are shattered, adjustments have had to be made to limitations, and according to official figures 180,000 emergency workers were dismissed in June and July alone. The armaments industry, however, is working day and night, strategically important roads, underground landing places, etc., are continuously built up, for the credits are being saved for the material preparation for war.

The law dealing with the “Distribution and Exchange of Employment” declares that almost every worker and employee under the age of 25 must be dismissed in favor of older workers. Humanity was never the guiding line of the national-socialists, and would therefore hardly be the motive for this law. If the general practise is today being abandoned, and young, cheap and productive workers are. replaced by older ones, there must be very edgdnt reasons for it. The French press does not err when it reports that young workers ate being given military drill in the labor camps. It is all a part of the military war preparations.

Industry cannot be assisted for any greater length of time by means of purely economic measures. Wage reductions alone can no longer assuage the profit lust .of the bourgeoisie. Without the conquest of foreign markets, Germany will never emerge from its state of lasting unrest. To be sure, it can maintain itself for a certain .period in this precarious equilibrium, but only by means of increasing sacrifices, by staking all its reserves which are small enough as it is. Consequently, it will be ready for any adventure which offers even a half-way promise of success; all the more so because it knows that it will conduct no isolated war, but will join in a bloc which is combatting the Soviet Union. And only because the fronts on this globe have not yet been marked off clearly enough, is our present hour still an hour of peace.


September 1934

Top of page

Main NI Index | Main Newspaper Index

Encyclopedia of Trotskyism | Marxists’ Internet Archive

Last updated on 25 February 2016