Peter Petroff, Labour, March 1939

Totalitarianism – a Total Failure

Source: Labour, March 1939, p. 24-27;
Transcribed: by Ted Crawford.

In Autumn, 1938, the Nazi regime in Germany was in imminent peril of collapse. International capital came to the rescue: Democratic governments capitulated before, the rotten dictatorship; “democratic” statesmen were frightening; the timid and the ignorant with the “grave danger” of war; patting themselves on the back for having saved the peace of the world.

The might of Nazi Germany was ridiculously exaggerated; when Germany had been permitted to devour Austria and the Sudetenland, a chorus of open and secret admirers chanted the praise of the great Fuehrer.

Now it is becoming evident that the internal crisis of the Nazi State has not been healed but only postponed. Having swallowed up the seven fat cows, the gangster State remains as lean as ever.

After six years of robbery – expropriating in succession the German Trade Unions, the Co-operatives, the foreign creditors, the social insurance institutions, the savings banks, the Jews, the Austrian gold fund – the parasitic totalitarian State is faced with financial catastrophe.

Although wages have been reduced, the rate of exploitation increased, the social services depleted, taxation raised, “voluntary” subscriptions imposed on the population, the public debt has been doubled during the six years of Nazi rule and now reaches fifty milliard Reichsmark.

The State has monopolised every possible source of long and short term credit, leaving no scope for self-financing of industrial activity. Since 1934, the State has issued loans to the amount of 16.3 milliard Reichsmark. In Spring, 1938, a system of financing by “delivery certificates” had been introduced, nevertheless the note circulation increased more and more rapidly reaching 8,605 million Rm. In 1938, as against 3,562 millions in 1934.

Germany’s national income in 1937 amounted to 70,972 million Rm. as against 75,949 millions in 1929. The State absorbs almost half of this, ,spending approximately 25 per cent. of the nation’s income on armaments: about 18 milliard Rm. according to Mr. McMillan’s estimates in “Economic Aspects of Defence.”

“Germany is already deep in inflationary finance,” writes the Economist. To hide this fact had hitherto been one of the chief concerns of Germany’s finance magicians.

However, the situation became rather precarious and Schacht, before his dismissal, had to recognise that open inflation could no longer be warded off if the production of goods for exchange would not keep pace with the expansion in the note circulation.

Normally there would be two ways of attaining this object: either an increase in the production of consumption goods in conjunction with the raising of the purchasing power of the people, or the increased production for export.

To the totalitarian Nazi State, that prefers guns to butter, and is chasing after the phantom of self-sufficiency, the first of these roads is closed. On the altar of re-armament and self-sufficiency it sacrifices the standard of life of the German people in order to invest an enormous portion of the national income in the excessive production of armaments and the creation of extravagant plant for the production of costly and uneconomic substitutes. The investments rose from 8.3 milliard Rm. in 1934 (15.7 per cent. of the national income) to 18.5 milliards in 1938 (24.3 per cent. of the national income).

The ratio of consumption goods in the total production is constantly decreasing. According to official Nazi figures (whatever they may worth) the total production had creased in 1938, as against 1928, 25 per cent., the production of “capital goods” by 43.6 per cent. “If there is to be any further expansion of the production of armaments or other ‘capital’ goods” – rightly remarks the Economist – “ it can only be at the expense of a direct reduction in the supply of consumption goods, that is, in the standard of living of the population.”

But the standard of living of the working class has been already reduced below starvation level while the rate of exploitation has been increased almost to the limit of human endurance.

A new decree definitely abolishing the 8-hour day, even in theory, and replacing it by the 10-hour day came into force on January 1 this year.

In reality the 60-hour week is already superseded. Since the new decree fixes only an 11 hour rest for the worker, the 13-hour day is legalised.

It has been generally accepted that under Nazi rule wages had been reduced by 30-40 per cent. In October, 1938, a new drastic reduction took place. Transport workers, earning until then 33 to 36 Reichsmark per week, had their wages reduced to from 27 to 30 Rm. Navvies’ wage rates per hour were lowered from o.6o to 0.56 Rm.; masons’ from 0.90 to 0.85 plumbers’ from o.80 to 0.76 Rm.; engineers’ from 1.10 to 0.85 Rm. The workers in the glass industry, who in the crisis year 1932 had been earning 65 to 85 Rm. per week, now receive only 38 to 45 Rm.

However, this is the “gross wage.” Before it reaches the worker’s pocket it is being reduced by all sorts of “deductions.” A typical example is that of a metal turner who kept his job throughout all these years. Before the Nazi regime he had been earning 62 Rm. per week, now his wage is 40 Rm. Out of this 12.05 is being deducted, so that he actually receives 27.95 Rm.

Thus a further reduction in the standard of living might be difficult to attain and even dangerous to attempt. As a consequence of underfeeding and overwork, as well as of inadequate repair of machinery, the productivity of labour is declining.

The Nazi attempts to attain self-sufficiency have in many spheres proved a dismal failure. The products appeared to be of low quality and high price – from a commercial point of view ruinous, from an economic point of view suicidal.

For instance, the Nazis boast of having increased the production of iron ore from 4,343,200 tons in 1934 to 9,792,000 tons in 1937. While the price of imported pig iron in Germany is 63 Rm. per ton, the net cost of producing iron from certain German ore amounts to 85 Rm. per ton, which would bring its commercial price to approximately 130 Rm.

The price of imported rubber (without customs duty) at Hamburg is 93 Rm. per 100 kg. Synthetic rubber, produced at home, costs 263 Rm. _Therefore a customs duty of 170 Rm. has been imposed.

Similarly, imported benzin (free of duty) is valued at Hamburg at 3.16 Rm. per 100 litre. The net cost of production of synthetic oil amounts to 18 Rm. (Customs duty 20.05 Rm. per 100 litre).

The enormous expenditure on armaments and on crazy self-sufficiency experiments, as well as the general mismanagement of the totalitarian State, has starved the transport system of the country.

Germany’s railways are facing disaster. The debt of the German railways, as extended by the “Anschluss,” is estimated at 2.8 milliard Rm.

Railway tracks are becoming more and more dilapidated, only about one-fourth of the scheduled renewals having been carried out last year. The number of accidents is rising rapidly.

Lack of rolling stock becomes increasingly acute. The shortage of goods wagons was estimated in 1938 at 100,000. Repair workshops are working at breakneck speed, but the absence of materials compels them to break up a number of the wagons sent for repair in order to use them as material for repairing the remainder!

The transport of coal suffered severely. This led to a fuel crisis in certain industrial districts forcing factories to close down for days.

The passenger service has be severely curtailed. The time table cannot be kept up.

The chaos of the German railways is so great that another mobilisation would certainly lead to a complete breakdown.

“We shall not perish economically. The nation will wage the economic battle by all means. We must export or die,” declared Hitler in his speech of January 30.

By subsidies, subterfuge, barter, military threats and dumping, Germany tried to force its exports. In 1937, its trade balance showed an export surplus of 443 million Rm. In 1938, the balance was reversed – import exceeded export by 452.4 million Rm.

The growing financial bankruptcy limits the State’s power of subsidising export.

That the German people should live; Hitler’s totalitarian gangster State must die. German democracy, European democracy, humanity as a whole are vitally interested in the speedy death of this system. “Better an end in terror, than a terror without end,” says a German proverb.

However, the magnates of capital abroad seem to be intent on bolstering up Hitlerism. The recent agreement of the British coal magnates with Nazi Germany is a case in point: In 1929, the ratio of Britain’s coal export to that of Germany was – according to the figures of the Economist – 7:5. In 1938, thanks to Nazi subsidies, the ratio had changed to 4:3.9. Now that Germany is no longer able to keep up its subsidies, the patriotic British exporters have concluded an agreement on this artificially attained basis of equality, thus increasing unemployment in the British mining industry!

It seems the British capitalists prefer German slave labour to the labour of free British workers.

The Prime Minister, it is stated, favours such cartel arrangements. Mr. R.A. Hudson, Secretary of the Department of Overseas Trade is busy organising similar negotiations in other industries.

Together with Mr. Oliver Stanley, President of the Board of Trade, he will be going to Berlin in March, simultaneously with a mission of the Federation of British Industries, to serve this cause. Mr. Ashton-Gwatkin, head of the Economic Department of the Foreign Office may even precede them there.

Their “successes” will soon make themselves felt both in the growing figure of unemployment in Britain and in the increase of German war preparations.