A. Reithinger / The Economic Face of Europe
Anton Reithinger
The economic face of Europe
_____________________________________________________________________
Deutsche Verlags Anstalt Stuttgart Berlin
All rights reserved. Prlnted in Germany Copyright IS36 by Deutsche Verlags-Anstalt Stuttgart Printed by Deutsche Verlags-Anstalt Stuttgart Paper from Papierfabrik Salach in Salach, Württemberg
Foreword
The realization that a reasonable balance of the vital interests of the European peoples is necessary if Europe's world standing is to be maintained in this general change of times is now common knowledge in public opinion. The knowledge of the driving forces of European development, on the other hand, which is the prerequisite for the realization of a peaceful living community of the Europe an nations, is still scarcely present in a very thin upper class of the European people. The field of economics is one of the most important, because in the present state of European civilization the political energies either spring directly from the economic sphere or are discharged indirectly through economic and social concomitants. This fact has been an integral part of the external and internal development of the European peoples in the past, and it must be reckoned with even more strongly in the futur e. The privileged position of Europe in the world and its high economic prosperity are not a law of nature, but the result of the special power development of the White Wet and uniquely favorable circumstances in the 19th century, and their assertion for t he coming generations is by no means assured without further ado. Such thoughts have given rise to the attempt to outline the economic face of Europe and the changes to be expected in its characteristic features in the course of our generation by the juxta position of image and mirror image. The most important results have already been published in the course of the last two years in a series of essays under the same title in the "Euro pean Revue". The author can only ask, but no longer answer, the question w hether the realization and the will to make use of it are faster than the development of reality, which is in a state of flux.
Berlin, End of 1935
A. Reithinger
Introduction
The small peninsula of Europe, off the Asian continent, is only a n insignificant 1
fraction of the earth's surface with its nearly 11 2 million square kilometers. Nevertheless, with its population of 500 million, its highly cultivated agricultural and industrial production apparatus, and the sum of its intellectual knowledge and technical skill, it is the heart of the world and can remain so for a long time to come. This heart of the world, however, breaks up into 35 states, speaks almost as many languages, and embraces the most diverse forms of political and economic organization. Nevertheless, it forms a unity in an overarching sense. No where else in the world is the connecting traffic network as tight as here, the exchange of goods and ideas flows so intensively across all dividing borders, and the basic forms of life are so similar. But it is not only the externalities of the technical traffic connections and the economic exchange of goods that form this unity, but also the spiritual content of European existence, its scientific and technical objectives, its attitude to life and its taste originate from a common root. It is the commonali ty of more than a thousand years of history and its political, economic and cultural fallout that breaks through again and again in the consciousness of the European peoples when the acute tensions resulting from their living together in a space that has b ecome too confined begin to subside. Leadership in Europe has undergone multiple changes in the course of its history with the change of biological, technical and economic conditions. It moved in accordance with the biological development from the southern land bridges of the Mediterranean to the Orient - maritime dominion of Greece, Nom and Byzantium to the populous Central European areas - continental power and cultural center of the Holy Roman Empire of the German Nation - and shifted with the discover y of the New World to the western coasts of our continent - global maritime power position of Spain, Portugal, Lolland and finally England. It was only around this time that the constant threat to Europe from non -European conquering peoples - Mongols, Turks, Arabs - finally ceased .1 The technical development of the 19th century tied the claim to political and economic leadership closely to the possession of the two basic materials coal and iron; the development of the 20th century has allowed numerous new basic materials to rise to decisive importance - petroleum, non -ferrous and light metals, spinning materials, rubber, nitrogen - and will thus bring about new shifts in development. Will this finally shift the secular heavyweight pendulum completely out of Europe to the Atlantic and Pacific regions? With the exception of coal and iron, almost all the basic material resources of world politics and the world economy 1 In fact, the nests were only pushed out of Europe during the World War with the dissolution of European Turkey.
6
Introduction
lie outside the European living space. In Europe, as a heritage of centuries of achievement, lies only the spiritual raw material of an unimaginable sum of knowledge, experience and creative energy. Provided that t his heritage is not squandered in a war of mutual annihilation, it should be sufficient to maintain Europe's special position in the world for another century. The beginning of our century saw two -thirds of the habitable surface of the earth and its population in immediate or dominion and colonial possession, the nest in more or less great financial and economic dependence on Europe. Under European leadership, world agricultural production has increased fivefold in a hundred years, world industrial product ion is estimated to have increased twentyfold, and world trade has increased more than fiftyfold. In addition to the human labor force, the world economy today has machine work armies with a total output of ^ billion horsepower in operation, more than half of which serves to handle the hugely increased traffic. The result of this development is a considerable increase in the general prosperity of the world and of Europe, which in this period has achieved about a fivefold increase in the real income of its i ndustrial labor force. However, the last world war was also fought under European leadership, leaving behind more than 10 million dead and the astronomical figure of almost 1 trillion marks in war debts 1. As a result of this war, Europe's previous supremac y on two continents, the American and the Asian, was seriously shaken. The roots of the instability of the European situation as a whole, which is a result of the development within Europe and the changes in the non -European world, also go back to the war. The fact that the industrial production of the world without Europe has already far exceeded the hole economy level of the years 1927/1929 and its foreign trade volume that of the pre -war period, while continental Europe is still substantially below it, should give every European pause for thought. The political antagonisms between the European peoples, which have again become particularly evident in recent years, have largely destroyed the ideology of a pan Europe as a union of European nations, even amon g its former supporters, but have not been able to change the necessity and the goal of a political and economic consolidation of Europe. On the contrary, the idea of a community of destiny among the European peoples is steadily gaining in importance as a result of the rapidly progressing events in the Far East and the increasing segregation of the North American continent. The prerequisite for this, however, is the greatest possible harmonization of the vital interests of the peoples settled in the Europea n area,
1 Total external debt and internal war bonds of the powers involved in the war. This sum has shrunk accordingly as a result of postwar inflation.
7
Introduction
without which consolidation is not possible in the long run. For this purpose it is necessary that Europe and the European peoples learn to know and understand each other and the basic forces of their development better and, on the basis of this knowledge, also initiate a reasonable reconciliation of their interests.
A. The basic problems of the European economic structure I. The European Population Problem
The solution of the great political and economic problems in the European area and the future position of Europe in the world will depend decisively on whether the great tensions arising from the diverse structure and development of the European peoples are bridged. These tensions are in their ultimate essence an expression of the profound population shifts which have been taking place since the beginning of industrialization among all the ethnic groups and peoples who populate the European area. The importance of the population problem for the great questions of the future of our continent and the fate of the individual nations in the European area become s apparent when we realize that the European population has grown in the course of the last century from 200 million to 400 million and will have increased by another 200 million to almost 600 million by the middle of our century. This population densification has taken place under continued shifts of emphasis and an internal resettlement, the extent of which far eclipses that of the historical migration of peoples. At the same time, the doubling of the European population in the last century went hand in h and with an unheard -of technical development and the colonial expansion of the white race over the entire globe, which also made possible a doubling of the average standard of living from one generation to the next .1 Despite these uniquely favorable condit ions, population growth has led to a continued charging of national tensions in Europe, which have erupted in numerous clashes and finally found their first general explosion in the World War. Notwithstanding the decline in the birth rate, which is at pres ent in the foreground of public interest in the European industrialized countries, according to the present birth and death ratios in Europe an increase in population can still be expected for the next three decades which is hardly less than in the first t hird of this century. The impulses of the European multiplication rate, which came about under uniquely favorable political and economic conditions of expansion, will thus still have an effect in a period in which the majority of the European peoples will no longer find remotely similar favorable conditions for a further increase in their standard of living. The increase of the European population by 200 million in the first half of our century will force all European economies to make the transition from t he previous
1 With this development, after centuries of stagnation, the great population wave of the 19th century in Europe is triggered and the birth surplus is increased to three
9
The basic problems of the European economic structure
times the figure of the 17th and 18th centuries. expansion to compression and internal reorganization, in which the problem of the social integration of the urban industrial labor force will take first place. This problem can be solved only under the condition of a reasonable balance of the vital interests of the individual European powers, without which the date of the second European world war can be almost statistically calculated.
Population Growth in Europe from 1810 to 1960 Generation gap 1810 1840 1870 1900 1930 1960
Europe Stock Mil. 199 251 308 393 496 596
including USS R Growth Mil. percent + 52 + 26,1 + 57 + 22,7 + 85 + 27,6 + 103 + 26,2 + 100 + 20,2
Europe excluding USSR Stock Growth Mil. Mil. percent 166 206 + 40 + 24,1 246 + 40 + 19,4 305 + 59 + 24,0 373 + 68 + 22,3 425 + 52 + 13,9
The population of the whole of Europe, including European Russia, will increase in the course of our generation by 100 million people, i.e. by about 20 per cent of its present level. The necessity of feeding and employing an additional 100 million people in Europe in the course of a generation will present our continent with one of the greatest tasks of its economic history to date, which can only be solved by fundamental changes in i ts political and economic structure. Even for sparsely populated Russia, an increase of 50 million people, despite its immense space, is not an easy task to accomplish. However, creating jobs for 50 million people in the rest of Europe will be far more dif ficult. For in the east and south of our continent, where the main mass of the growing population is to be expected, agriculture must already be regarded as overpopulated.1 The increase in population here means intensified pressure for urbanization and ind ustrialization and thus the spread of urban and industrial forms of life to the still agrarian northeast belt of Europe. It is obvious that this development will not only have profound repercussions on the industrial heartlands of Central and Western Europ e, but will also have a decisive influence on the entire political and economic situation of our continent.
The European population problem
10
The growth of individual ethnic groups in Europe from 1800 to 1960
Group of Nations
1800
1900
1930
1960
Mil.
In %
Mil.
In %
Mil.
In %
Mil.
In %
Germanic Country group
57
31
124
32
149
30
160
27
Romance Country group
64
34
103
26
121
24
133
22
Slavic Country Group
66
35
166
42
226
46
303
51
30
16
88
22
123
25
171
29
187
100
393
100
496
100
596
100
thereof USSR All of Europe
Of the expected total increase of 100 million people, 75 million will be accounted for by the Slavic East and not quite 15 million by the Romance Mediterranean countries, while the population of Central Europe will show only weak growth tendencies and the populations of Northern and Western Europe will stagnate almost completely. It is to be expected with certainty that not only the population migration, which took place during the whole of the last century in the east -west direction, will receive new impulses by this different growth intensity, but also that the closed folkish expansion urge will again re ceive increased impetus. The purely numerical center of Europe's population will shift further and further to the East by the middle of our century, and will reach the Warsaw -Belgrade line east of the 20th degree of longitude before the present generation of school-age children has reached middle manhood.
1 Cf. the section on "The European agricultural problem."
11
The basic problems of the European economic structure
At the beginning of the 19th century, the population of Europe was distributed fairly evenly among the Germanic, Romance and Slavic groups of peoples, one third each. By the middle of the 20th century, the Slavic group will already account for more than half of the total European population, while the share of the Romance group will have fallen to about one -fifth. The Germanic group, which has been able to maintain its position to some extent throughout the past century, is also likely to lose more ground if the current birth rate does not increase significantly. Although the number of heads alone is not decisive for the importance of the individual groups of peoples, there can be no doubt that the economic, political and cultural picture of Europe will be decisively influenced by these shifts in the population balance. The probable development of the population figures of the individual European countries can be calculated, under the condition of a peaceful further development, from the unequal lion of the birth and death rates. In general, both the birth rate and the death rate in Eur ope are decreasing in the east -west and south-north directions, which means that the age structure of the individual peoples is shifting in the same direction toward the middle and higher age groups. The northern and western European peoples are biological ly in an already advanced stage of aging, while the southern and eastern peoples show strong new impulses of biological rejuvenation after centuries of stagnation. The birth surplus and annual reproduction rate in the eastern European agricultural zone and the southern European Mediterranean zone are on average twice as high as in the central European inland zone and the northern European maritime zone, and reach more than three times the reproduction rate of the western European continental zone. As the dispersions of the individual groups of peoples show, it is not so much a matter of racial peculiarity as probably much more of the effects of the historical consumption of forces of the existing economic forms and cultural peculiarities.
Excess Births and Population Density in Europe Averaged 1930 -1934
Country group
Births
Deaths
Surplus Population births density Population stagnation in Northern, Western and Central Europe
North European Sea Zone Great Britain Scandinavia Baltic Sea States
15,8 16,6 21,7
12,2 11,7 14,6
3,6 4,9 7,1
192,0 13,8 32,8
The European population problem
Country group
Births
Deaths
West European Zone France Belgium/Switzerland Netherlands
17,0 17,1 21,8
12,2 11,7 14,6
Central European Region Germany Successor states
12
Surplus Population births density Population stagnation in Northern, Western and Central Europe 3,6 4,9 7,1
76,1 172,9 243,8
16,3 11,0 5,3 141,5 20,1 14,4 5,7 95,6 High population growth in Eastern and Southern Europe
Eastern Europe Group Poland Southeastern Europe
29,0 33,2
15,0 19,3
14,0 13,9
85,7 60,5
Mediterranean Zone Italy Iberian Peninsula Greek
24,3 28,5 29,5
13,9 17,0 17,1
10,4 11,5 12,4
137,3 51,9 50,9
Soviet Russia
43,9
18,9
25,0
26,9
Under these conditions, the population of the Northern and Western European group of countries is expected to increase only slightly. In the Central European region, too, the population will increase only moderately, despite the current particularly favorable ag e structure - broad middle strata of the population and therefore increased birth rate and reduced mortality - even if, as a result of the new population policy measures in Germany, a return of the birth rate to the pre -war level is assumed.
13
The basic problems of the European economic structure
Country group
1800
1900
1930
1960
Mil
In %
Mil
In %
Mil
In %
Mil
In %
16,8 10,5 4,9 1,4
10,7 6,7 3,1 0,9
52,7 37,0 12,5 3,2
14,0 8,9 4,1 1,0
65,8 44,7 16,2 4,9
17,6 12,0 4,3 1,3
69,6 46,5 17,6 5,53
16,3 10,9 4,1 1,3
35,1 28,2
22,4 18,0
55,8 40,7
18,3 13,3
61,9 41,8
16,6 11,2
62,1 40,0
14,6 9,4
4,8 2,1
3,1 1,3
10,0 5,1
3,3 1,7
12,2 7,9
3,3 2,1
12,5 9,6
2,9 2,3
38,1 22,1 16,0
24,3 14,1 10,2
79,8 50,7 29,1
26,1 16,6 9,5
94,5 64,4 30,1
25,4 17,3 8,1
101,7 68,0 33,7
23,9 16,0 7,9
27,5 12,0
17,5 7,6
49,6 23,0
16,2 7,5
68,7 30,9
18,4 8,3
92,5 42,8
21,8 10,1
15,5
9,9
26,6
8,7
37,8
10,1
49,7
11,7
Mediterranean Zone Italy Iberian Peninsula Greek
32,1 18,1 13,5 0,5
20,4 11,5 8,6 0,3
60,5 34,0 24,0 2,5
19,8 11,1 7,9 0,8
78,4 41,6 30,6 6,2
21,1 11,2 8,2 1,7
93,9 50,3 35,6 8,0
22,1 11,8 8,4 1,9
Europe without USSR1
157,0
100,0
305,0
100,0
373,0
100,0
425,0
100,0
Soviet Russia
30,0
19,1
88,0
28,9
123,0
33,0
171,0
40,2
North European Zone Great Britain Scandinavia Baltic Sea States West European Zone France Belgium and Switzerland Netherlands Central European Region Germany Successor States Eastern Europe Group Poland Southeastern Europe
1 Einschließlich der oben nicht genannten kleinen Länder (Albanien, Andorra, Irland, Island, Liechtenstein, Monako, San Marino).
The European population problem
14
15
The basic problems of the European economic structure
In contrast to the almost stagnant population development in Northern and Western Europe, where only the Netherlands is an exception, all countries in Eastern, Southeastern and Southern Europe still have to expe ct enormous population increases. Italy has reached the population level of France in these years, the Southeast European group will surpass the French population level in the next decade, and Poland around the middle of the century. As the following overv iew shows, the population growth in the Western European continental zone, which in itself has never been particularly strong, has already ended by the end of the 19th century, with the exception of Lolland. In the northern European maritime zone and in th e central European inland area, it still reaches into the first third of the 20th century with a steady slowdown, but then rapidly loses strength. The growth of the southern Mediterranean zone had its lion's peak in the first third of our century with clea r signs of slowing down in the second third, while the eastern European agricultural group is only approaching its greatest growth intensity in this period. The period of population stagnation during the period of foreign domination and the rapidly swellin g intensity of biological energy after the formation of independent nation -states is particularly noticeable in the Eastern European agricultural group. To a lesser extent, this phenomenon can also be observed in the Mediterranean countries of southern Eur ope.
The shift over time in the growth intensity of the individual country groups in Europe
Country Group
Increase in population in % during generation spans 1810/40 1840/70 1870/1900 1900/30 1930/60
Western European Mainland Zone
19,5
11,9
13,9
19,9
0,9
North European Sea Zone
50,6
40,1
39,0
24,8
5,8
Central European Economic Area
49,4
20,6
14,6
18,4
7,6
Southern European Mediterranean Zone
28,9
16,1
21,1
29,6
19,8
The European population problem
Country Group
16
Increase in population in % during generation spans 1810/40 1840/70 1870/1900 1900/30 1930/60
Eastern European Agricultural Group
0,0 ¹
15,3
49,8
35,5²
182,7
Soviet Russia
30,0
51,0
33,9
39,8
39,0
1 Period of the wars of liberation from Turkish rule. 2 Weakening as a result of the World War.
Country Group
North European Sea Zone Great Britain Scandinavia Denmark Sweden Norway Finland Baltic Sea States Latvia Lithuania Estonia West European Mainland zone France Switzerland Belgium Holland
Inhabitants per sq. km
Increase in population density 1900 1930 1960 1900/30 1930/60 Weak compression pressure with the exception of Denmark
157,7 10,6 62,9 11,4 6,9 7,3 -
189,9 13,5 82,7 13,7 8,7 9,5 29,9 36,4 28,9 23,7
197,3 14,5 97,0 13,8 9,5 10,4 32,9 40,1 31,8 26,1
+ + + + + + -
20,4 27,2 31,6 19,6 26,7 30,2
+ + + + + + + + + +
3,9 8,0 17,2 1,2 8,5 9,8 10,0 10,1 10,0 10,1
Unpressurized space with the exception of Holland
72,6 80,3 227,3 149,3
75,9 98,5 265,8 232,2
68,5 100,9 272,4 280,2
+ + + +
4,5 22,7 17,0 55,0
- 9,9 + 2,5 + 2,5 + 20,7
Weak to moderate compaction pressure
Central European Economic Area Germany Succession States Austria
104,2 69,5 87,2
140,3 95,0 80,2
148,2 107,6 84,1
+ 34,6 + 36,7 - 8,0
+ 5,6 + 13,3 + 4,9
17
The basic problems of the European economic structure
Country Group
Hungary Czechoslovakia
Inhabitants per sq. km
Increase in population density 1900 1930 1960 1900/30 1930/60 Weak compression pressure with the exception of Denmark 59,3 93,4 107,7 + 57,5 + 15,4 90,2 104,9 121,5 + 16,3 + 15,8 Excessive compaction pressure
Eastern European Agricultural Group Poland Southeastern Europe Yugoslavia Bulgaria Romania
74,0 44,4 51,6 38,9 45,8
82,4 58,8 56,3 57,6 61,2
109,7 77,6 74,6 75,7 80,9
+ + + + +
11,3 32,9 9,0 48,3 33,7
+ + + + +
32,2 31,7 32,5 31,3 32,2
+ + + + +
22,3 16,3 16,7 14,6 29,1
Still strong compaction pressure
Southern European Mediterranean Zone Italy Iberian Peninsula Spain Portugal Greek
113,3 40,3 36,9 59,0 39,6
132,6 50,9 46,7 74,2 47,7
162,1 59,2 54,5 85,1 61,5
+ + + + +
17,0 26,3 26,7 25,9 20,3
A comparison of population density shows the major differences that exist within the individual European country groups. Thus, Great Britain is many times more densely populated than the Scandinavian -Baltic area, the small Western European countries twice to three times as densely populated as France, Germany one and a half times as densely populated as the successor states, and Italy more than twice as densely populated as Spain and Portugal. In Great Britain in particular, as a result of its central posit ion within the world empire, and in Lolland and Belgium, because of their intensive interdependence with neighboring larger -scale economies, a settlement density has developed which, at 200 to 270 people per square kilometer, is far above the European aver age. Germany and Italy, with their current population density of about 140 people per square kilometer, can also already be considered overpopulated. Taking the agricultural structure into account, the same applies to almost all Eastern European countries, while France and the Scandinavian -Baltic region are only sparsely populated in absolute and relative terms. The overpopulation latent in almost all of Europe has so far been neutralized economically by the fact that colonial expansion in the last century made the food
The European population problem
18
and raw material sources of almost the entire earth available to Europe. Any change in this state of affairs, however, was bound to cause the latent overpopulation to appear immediately, with the most serious disturbances of the social sphere. The above survey also shows the rapidly increasing biological tensions within Europe between the agrarian East and South and the largely industrialized Center and West and North. The pressure of compression within a generation span is at present over 30 per cent in the entire eastern area, between 15 -25 per cent in the Mediterranean zone, and declines to 5 -l per cent toward the central European interior and the Scandinavian-Baltic zone. In the French core area of t he Western European continental zone, a negative pressure area even develops, which is only countered by slight pressure increases of 3 -4 v. H. at the edges. A special zone of intensive densification within the population stagnation of the Western European mainland zone and the Scandinavian area is formed by the small agricultural states of Lolland with a densification pressure of 21% and Denmark with 17%. The repercussions of the different biological state of tension and the different pressure of densifica tion are expressed not only in the many -sided gradations of industrialization and urbanization in the individual zones of Europe, but are also visible in the falling interest rate differential from east to west and from south to north and in the wage curve rising in the same direction. From west to east and from north to south, the supply of capital to the economy and the average standard of living of the population generally decline sharply; to the same extent that the supply of material goods declines, th e surplus of human labor and biological energy increases. These developmental contrasts between the eastern and southern agricultural belts and the northern and western industrial zones have been substantially exacerbated by the disruption of the interstat e movement of land and capital since the crisis. The necessary balancing of these contrasts will pose a host of problems for Europe, the solution of which will confront our generation with serious decisions in the course of the next decades.
II The European agricultural problem
The European agricultural crisis, which is a consequence of the overseas agricultural situation and which, with the increased protection of agriculture in the Central and Western European industrial areas, has also been transferred to the peripheral European agricultural zone, is at the moment obscuring the much more serious European agricultural problem, which is not a market problem, but the double -sided problem of the agricultural overpopulation of the entire eastern half and the over
19
The basic problems of the European economic structure
inflation of the agricultural price level in the western half of our continent. These two problems of agricultural overpopulation and the over inflation of the agricultural price level a re so largely connected with the historical development, the general political conditions and the social situation in Europe that they cannot be solved by agricultural means alone. In the countries of Western, Central and Northern Europe, the surplus of th e population which, under the condition of a slowly growing standard of living of the peasant population, could no longer be excluded from agriculture, has migrated in the course of the last century to urban industry or to overseas colonial areas. In this way, a surprisingly uniform density of agricultural population per square kilometer of agricultural land has developed throughout Western, Central, and Northern Europe, varying from 40 to 60 heads, depending on the nature of the climate and soil. In contrast, this figure has doubled in the agricultural zone of Central and Southeastern Europe, where until the beginning of our century the population was still largely tied to the clods and the political conditions for urban industrial development or emigration were lacking, and currently ranges between 70 and 100 heads per square kilometer of agricultural land. In the Eastern European agricultural group, the climatic and geological preconditions are much less favorable than in Central and Western Europe. The intensity and technology of land cultivation is also still relatively low here, and the yield of agricultural production is therefore relatively low, so that agricultural overpopulation is all the more noticeable. When cereal, lacquer fruit and animal produc tion are converted into food units, the value of agricultural output per unit area in the Eastern European agricultural group was only about half to one third of the corresponding output in the Central and Western European zone. Conversely, since the agrar ian population per unit area is twice as large, the agricultural output per capita in the Eastern European agricultural group, and thus the standard of living and purchasing power of the peasant population, reaches only one -quarter to one-sixth of the corresponding figures for Central and Western Europe. Similar conditions, but not nearly so oppressive because of more favorable climatic conditions, develop in the south ern European Mediterranean zone. 1 The above-average agricultural settlement density in Be lgium and Lolland, which fall outside the framework of the Western and Central European agricultural structure, does not imply agricultural overpopulation, as is the case with the Eastern European group, since these are particularly fertile soils with inte nsive cultivatio n of partly commercial logging, made possible by the immediate proximity of densely po pulated industrial areas.
The European population problem
20
Ratio of agricultural population to agricultural land in Europe around 1935
Country Group
Agricultural population on 1sqkm usable area
Utilized area per 1000 agricultural population
Nor mal l e v el 40 - 50
Nor mal l e v el o ve r 2 0 sq . km
19
52,6
38 46 53
26,3 21,7 18,9
26 31 48
38,5 32,3 20,8
Northern, Western and Central Europe North European Sea Zone Great Britain Scandinavia Denmark Sweden Norway Baltic States Estonia Latvia Lithuania Western European Mainland Zone France Switzerland Belgium Holland
45 42 71¹ 72¹
22,2 23,8 14,1¹ 13,9¹
Central European region Germany Austria 48 47
20,8 21,3
21
The basic problems of the European economic structure
Country Group
Agricultural population on 1sqkm usable area
Utilized area per 1000 agricultural population
Nor mal l e v el 40 - 50
Nor mal l e v el o ve r 2 0 sq . km
62 66
16,1 15,2
91
11,0
74 77 98
13,5 13,0 10,2
54 80 90 85
18,5 12,5 11,1 11,8
Eastern, Southeastern, and Southern Europe Transition to the Group Hungary Czechoslovakia
East
Eastern European Agricultural Group Poland Southeastern Europe Romania Yugoslavia Bulgaria Southern European Mediterranean Zone Spain Portugal Italy Greek
Agricultural Soil Yields in Europe on Average 1930 -1934
Country Group
Cereals Normal yield 15-20 dz per ha
Potatoes Normal yield 150-180 dz per ha
Northern, Western, and Central Europe# North European Sea Zone Great Britain Scandinavia
20,8
164,7
The European population problem
Country Group
22
Cereals Normal yield 15-20 dz per ha 25,6 18,9 18,5
Potatoes Normal yield 150-180 dz per ha 163,2 133,5 179,8
Western European Mainland Zone Belgium Netherland Switzerland France
24,4 23,2 20,6 14,6
213,5 188,4 154,9 109,0
Central European area Germany Czechoslovakia Austria Hungary
18,9 17,4 15,5 13,5
160,0 127,4 132,9 62,2
11,8 11,5 11,5
124,2 126,5 116,6
11,0
111,4
12,7 11,7 9,8
56,9 56,1 82,9
Denmark Sweden Norway
Eastern, Southeastern and Southern Europe Baltic States Latvia Estonia Lithuania Eastern European Agricultural Group Poland Southeastern Europe Yugoslavia Bulgaria Romania
23
The basic problems of the European economic structure
Country Group
Cereals Normal yield 15-20 dz per ha
Potatoes Normal yield 150-180 dz per ha
Southern European Mediterranean Zone Italy Spain Portugal Greek
14,7 10,5 8,2 8,3
59,9 118,8 200,4 54,8
Soviet Russia
8,1
82,2
If one also takes into account that agricultural revenues in the Central, Western and Northern European zones are on average considerably higher than in the Eastern European agricultural group and that, conversely, industrial products in these areas are not insignificantly more expensive than in the Central and Western European industrial zones, then one gets an idea of the enormous difference in agricultural purchasing power and standard of living in the Eastern and Western halves of our continent. In the entire eastern part of Europe, under these circumstances, there is, for the most part, extraordinary poverty and an unimaginably low purchasing power of the agricultural population, which, in turn , is the cause of the fact that industry has been able to develop only weakly here without capital aid from abroad. As long as the purchasing power of agriculture is not increased by more intensive land cultivation, efforts at industrialization will not be successful in the long term. For the entire eastern half of Europe, therefore, the most important agricultural problem is the need, on the one hand, to increase agricultural land yields and, on the other hand, to catch up with the development that has tak en place in the western and central European regions in the past century and to reduce agricultural overpopulation to a level adapted to climatic and geological conditions by migration to urban employment opportunities. Now, however, according to your subs tantially lower agricultural price level in the entire eastern half of Europe, despite the existing agricultural overpopulation, the necessary intensification of agriculture through the use of machinery and fertilizers encounters almost insurmountable diff iculties, because, quite apart from the capital poverty and indebtedness of the farmers, substantially different costs and profitability conditions exist as in Central and Western Europe. Fertilizer use in Eastern and Southeastern Europe, as well as in Sou thern and Southwestern Europe, is only a fraction of the corresponding
The European population problem
24
expenditure in the rest of Europe, and even in the bordering areas of the Central European interior it is only a tenth or less of the expenditur e in the highly intensified areas of the Western European continental zone. The countries of Central and Southeastern Europe have largely recognized this problem and are making great efforts to remedy it. However, while they are severely hampered in their freedom of movement by the spillover effects of the overseas agricultural crisis and the unresolved conditions in Central Europe, their population development is already threatening to overtake the measures that are only slowly getting under way. As mentio ned in the previous section, Eastern Europe is expected to gain 75 million people in the course of this generation, of which 50 million will come from European Russia and 25 million from Poland and the Balkan states. If it were not possible to create oppor tunities for these new masses of people to migrate to industrial employment at home or abroad, the density of agricultural settlements in the eastern half of Europe would be three times greater than in the western half shortly after the middle of the centu ry. The number of agrarian inhabitants living on 1 square kilometer of agricultural land would grow, for example, to over 100 in southeastern Europe and to 130 in Poland. Population in this zone is currently growing faster than agricultural production and, as we will see in the next section, faster than the industrial supply of goods. The fact that Italy, under much better climatic conditions, would reach the same density of agricultural settlements as Poland and is also very limited in its possibilities fo r industrialization, gives an idea of the problems of the agricultural situation in the Mediterranean zone as well.
25
The basic problems of the European economic structure
Fertilizer application in Europe in kilograms per hectare Useful area
Country Group
Western, Central and Northern Europe Holland Belgium Germany Demark
Total fertilizers
of which: Nitrogen Kali Phosphorus N K₂O P₂O₅ High Intensity Zone of Western and Northern Europe over 35 kg per ha
90,7 78,2 48,5 34,9
27,2 26,2 13,0 9,2
35,0 22,2 21,7 6,4
28,5 29,8 13,8 19,3
Northern, Western and Southern Europe Norway Sweden France Switzerland Great Britain Italy Spain Portugal
Well intensified zone northern, western and southern Europe 10-20 kg per ha
Central and Southern Europe Czechoslovakia Austria Greek
Moderately intensified zone of Central and Southern Europe 3-9 kg per ha 9,5 2,3 2,3 4,9 5,6 1,4 1,5 2,7 2,6 0,7 0,6 1,3
Central and Eastern Europe Poland Hungary Yugoslavia Romania Bulgaria
Non-intensified zone Central and Eastern Europe under 2 kg per ha 0,6 0,5 0,8 0,1 0,0 0,5 0,1 0,0 0,1 0,0 0,0 0,0 0,0 0,0 0,0
21,4 17,5 19,4 12,7 10,9 12,0 11,4 9,5
1,9 0,6 0,2 0,1 0,0
6,5 4,3 4,2 0,8 2,9 3,1 3,9 2,2
5,3 4,8 5,3 3,5 2,6 0,6 0,7 0,3
9,6 8,4 9,9 8,4 5,4 8,3 6,8 7,0
The European population problem
26
Agricultural population per square kilometer of usable land in Eastern and Southern Europe around 1930 and 1960¹ Countries Poland Bulgaria Yugoslavia Romania Italy
1930 91 98 77 74 90
1960 133 124 96 93 131
¹Calculated o n the assumption that there would be no migration from the countryside.
Since such an agrarian densification in the East and South of Europe would have to lead to a further lowering of the standard of living of the peasant population even under the condition of a strong intensification of agriculture there, it is possible to estimate the tremendous pressure for urbanization and industrialization or for a closed folkish expansion, which will be the problem of the European East and a part of the Mediterranean zone for our generation. The warlike conflicts in the Balkans, repeated at short intervals before the World War, were alread y direct consequences of this state of affairs, in which the conditions for the extraction of the surplus population by industrialization were not yet in place. Similar conditions are currently developing in the Mediterranean zone. Here the agricultural su b-problem of Eastern Europe merges into an overall European problem, namely that for the continuing population growth of the eastern and southern halves of our continent in this century, the favorable conditions of political and economic expansion through emigration or industrialization which were decisive for the development of the western and northern halves in the past century are no longer present. The East European agricultural countries and parts of the South European zone are entering the European development with the main mass of their population growth at a time when the possibilities of expansion to the non -European world are essentially over. The prospect of achieving a standard of living even somewhat approaching that of Western Europe in the for eseeable future without political expansion or strong economic aid from Western and Central Europe is therefore only slight for this group.
27
The basic problems of the European economic structure
The European population problem
28
While in the eastern and southern half of Europe agricultural overpopulation is a serious concern for the future, in central and western Europe the artificial exaggeration of the agricultural price level and the peasant standard of living is becoming an increasingl y dangerous factor in disturbing the economic equilibrium. The costs of the highly inflated agricultural price level vis -à-vis the world market, caused by artificially sealing off European agriculture from the cheaper producing overseas agricultural econom ies, have so far been passed on to the non -European colonial regions through more expensive purchases of finished goods and have therefore not appeared as pressure on the inner -European standard of living. The extent to which this increase in the European agricultural price level has taken place is shown in the following overview.
Price differential for agricultural products in Europe compared with the world market in 1934 Country Group Central European region Germany Czechoslovakia Austria Mediterranean Zone Italy West European Zone France Netherlands Switzerland East European Zone Poland Hungary Romania Bulgaria
Price overcharge against world market = 1 for Cereals Meat Dairy products Very strong agricultural high protection 3 3 1 22
2 1 12
1
12
12 3 1 22
1
1
1
1 2 3 2 3 Strong to moderate agricultural protection 3 1 12 1
12
Low 2 13 -
Low None 1 32
Moderate to mild agricultural protection 3 Low 12 14 None 1 2 12 None None 1 12 Low Low 1 12 1
29
The basic problems of the European economic structure
Country Group Yugoslavia North European Sea Zone Great Britain Denmark
Price overcharge against world market = 1 for Cereals Meat Dairy products None
None None
Low None No or only little partial protection 1
12 None
None None
What is decisive is that before the war, under much more favorable conditions for the European industrial and raw material economy, this overinflation of the agricultural price level compared to the world market did not exist to the same extent, but mainly occurred during the last crisis as a result of the price collapse overseas and the support measures in Europe. This is true for the entire Central and Western European continental zone, where the ag ricultural boom has led to a multiple increase of the internal price level compared to the world market, but also, to a lesser extent, for the Eastern European agricultural group, where state monopolies and support measures did not exist before. The rapid implementation of this increase in the agricultural price level can be clearly seen from the above overview. This increase in the level of agricultural prices in large parts of continental Europe can only be maintained temporarily and at great sacrifice. T he fact that the three strongest industrial export powers - Great Britain, the United States of America and Japan - including all colonial territories that have entered the industrialization process, are starting from a much cheaper agricultural price leve l, means that the excessive cost of living in continental Europe can only be passed on to exports of finished goods outside Europe in the limited future. Thus, the pressure of the European agricultural price exaggeration will be shifted back to the intra European cost of living. Under these circumstances, the economic policy of the whole of Central and Western Europe will be constantly dominated in the near future by the dilemma of price protection for intra -European agriculture and the need to maintain ind ustrial exports to outside Europe, i.e. by the social problem of burden sharing between the rural and urban population. The vital importance of industrial exports and the supply of raw materials will be discussed in greater detail in the following sections . The European agricultural problem has a double face. While in the Eastern European agricultural group and to some extent in the southern Mediterranean zone the problem of the agricultural population and the question of its relaxation through political ex pansion, industrialization or emigration is in the foreground, in the Western European continental zone and in the Central European
The European population problem
30
economic area the social problem of the correct balance of burdens between agriculture and industry will be at the center of economic policy decisions in the near future. It is of decisive importance for the future of Europe that both problems remain confined exclusively to continental Europe, which has in any case lost its former capital position vis-à-vis non-Europe as a result of the world war.
Country Group 1913 Central European Region Germany Czechoslovakia Austria Mediterranean Zone Italy West European Zone France Netherlands Switzerland Eastern European Group Poland Romania Bulgaria Hungary Yugoslavia Northern European Sea Zone Great Britain Denmark Sweden
Lo w N on e N on e
1
Price overcharge against world market = 1 for Cereals Meat Dairy Products 1928 1934 1913 1928 1934 1913 1928 Very strong agricultural high protection In s ig n i fi can t 1 1 2 In s ig n i fi can t
1 3
1
1 3
3 3 1 2 2
3
3
1 4 Non e Non e
Non e
1 1 1
1 5 1
2 1 1
2 1
1
6
2 2
Non e Non e Non e
Lo w Non e Non e
Non e
Lo w
1934
3 3 1 2 2
5
1 3
1 10
1
1 3
Strong to moderate agricultural protection 1
13 None 2 17
1
13 None 1 13
3 1 1 2 1 1 2
3
None None -
None None -
14 1
12 -
None None None
None None None
None None 1 32
Non e Non e Non e
Non e Non e Non e
1 4 2 Non e
Non e Non e Non e
Non e Non e Non e
Non e Lo w 2
Moderate to mild agricultural protection None None None None None
1
1 10
N on e N on e N on e N on e
1 1 1
1 2 1 2 2 3 1
1 2 Non e
Non e Non e Non e
Non e Non e Non e
Non e Non e Non e
3
No or only little partial protection
N on e N on e N on e
N on e N on e N on e
Non e Non e 1
1 3
Non e Non e Non e
Non e Non e Non e
Lo w Lo w Non e
31
The European industrial Problem
The capital-rich northern European maritime zone is not affected by these difficulties because agricultural price protection does not exist here to any appreciable extent and, apart from Denmark and the United States, the importance of agriculture is also greatly diminished compared with mining and industry, forestry, shipping and fishing.
III The European Industrial Problem
The rise of Europe to the political, economic and cultural center of the globe is essentially a consequence of the mechanical and chemical engineering developed here, which forged for the European peoples the weapons for their expansion over the whole world. It was only with the development of industrial technology that the supremacy of the white wetlands and of Europe, which had pre viously been the constant invasion territory of the conquering peoples of the neighboring continents, was finally secured. The rise of the European industrial nations to their present density of settlement, their privileged position in the world and their incomparably high standard of living is ultimately based on the monopolistic position of technical advantage, which, however, is beginning more and more to become a legacy of the past. All the more urgent for the future of our continent is the question of what other possibilities Europe will be able to use to maintain its world standing and to compensate for the better preconditions of nature and incomparably more spacious national and economic areas in the other continents.
The occupational breakdown of the European population Around 1930
Europe including th e USSR
Europe excluding the USSR Mil. % 373 100,0
Mil. 496
% 100,0
Deciduous and forestry
250
50,4
150
40,2
Commercial production
125
25,2
110
29,5
90
18,1
80
21,4
Total population of which attributable to
Industry
The basic problems of the European economic structure
Around 1930
Europe including the USSR
32
Europe excluding the USSR Mil. % 30 8,1
Mil. 35
% 7,1
Trade and transport
55
11,1
50
13,4
Public administration
28
5,6
25
6,7
Craft
Europe as a whole is still a predominantly agrarian region with a relatively narrow industrial core, broad commercial middle classes and an almost purely agrarian population. Of the 500 million people who populate Europe, about 250 million, i.e. half, live from agriculture, 125 million or a quarter from industry and agriculture, another 55 million from agriculture and transport and about 30 million from public administration and private s ervices. Even if Soviet Russia is excluded, the proportion of the industrial population does not rise above 30 per cent, the proportion of the purely industrial population not above 20 per cent. As in England, the mother country of industrial production, s o in continental Europe industry has developed largely in areas which from time immemorial have been leaders in commercial activity, and which have had in their center or on their fringes the most important coal deposits and ore deposits as supports of ind ustrial production in the age of the steam engine. The one, in the south -north direction, of European industry originated along the medieval Landels roads that led from Upper Italy over the Alps and thence through the Rhenish towns or Champagne to the Flanders towns. The second industrial zone, running in the west -east direction, extending from the Rhine through central Germany to the edge of the Carpathian Mountains, is marked by the direction of German colonization in the Middle Ages. In addition, in rece nt times only the development of new sources of power and raw materials - lignite, hydroelectric power, mining deposits - has brought about industrial settlements on a larger scale. Outside these areas, little industrial activity has developed in Europe. A ll countries that do not participate in these historically developed workplaces - including Italy and Poland, where these industrial districts make up a small part of the total area - have remained predominantly agricultural countries up to the present. Be fore the war, a comparison of industrial and agricultural countries showed the following picture.
33
The European industrial Problem
Population and industrial production in Europe before the war
Population
Industrial production ¹
Production per capita M 370 565 145
Europe without USSR Industrialized countries Agricultural Countries
Mil. 343 184 159
% 20,2 10,8 9,4
Mrb. M 127 104 23
% 49,8 40,8 9,0
Rest of the world without USSR USA Rest of the countries
1217 97 1120
71,6 5,7 65,9
117 72 45
45,9 28,2 17,7
96 742 40
Russia (USSR) World
140 1700
8,2 100,0
11 255
4,3 100,0
150 150
¹ At 1928 prices. Since the war, the conditions for the establishment of new industries have changed considerably. Partly still concealed by the residues of the last world economic crisis and therefore not always clearly recognizable in its effects, a structural change is currently taking place in the European industrial economy which has a parallel in the history of industrial development only in the stormy shift of the industrial center of gravity from Great Britain to the continental European and North American industrial zone in the second half of the last century. The industrialization tendencies triggered by the world war in the entire Europea n peripheral belt and in the non-European agricultural and raw material areas gained considerable strength during the economic crisis and are an important reason why the overcoming of the depression in the old industrialized countries is proceeding only sl owly and under simultaneous structural cultivation. The reasons for this development are both political and economic. The profound disruptions in the international monetary and credit systems, the intensified agricultural protection efforts of the old indu strialized countries and the changes in political views on the position of the state in the economy have resulted in fundamental changes in the system of international trade relations and thus also in the industrial economies.
The basic problems of the European economic structure
34
The development of European industrial production since 1913 = 100
1913
1928
1934
Europe without USSR Industrialized Countries Agricultural Countries
100 100
111 126
99 152
Rest of the World without USSR USA Rest of the Countries
100 100
159 160
114 280
Soviet Russia (USSR)
100
143
423
World
100
137
130
In addition, as a result of the sharp drop in the price of raw materials and agricultural products compared with finished goods, the margin between wages and the cost of living in the old industrialized countries compared with the agricultural countries has widened to such an extent that, despite a lack of capital, technical backwardness and other difficulties, industrial productio n has become economically worthwhile. Under these conditions, the peripheral European zone, which previously had no prospect of industrial development, has also begun to build up its own industries, despite a narrow raw material base and highly fragmented sales areas. In addition, there is the agrarian overpopulation of the entire eastern half of our continent, discussed in the previous section, under whose pressure the Slavic group of peoples is being forced to industrialize and urbanize. The difficulties which stand in the way of rapid industrialization here have already been indicated. In terms of figures, the extent of the industrialization of the agricultural countries to date is not yet fully reflected in a comparison of industrial production values pe r capita, because especially in the case of the Eastern European agricultural group, the population is increasing more rapidly than industrial production. In addition, various basic industries with predominantly foreign sales had developed in these countries before the war as a result of mining and forestry raw material deposits, whose sales markets were partially lost due to the shifting of borders as a result of the post -war treaties or which had to restrict their production under the influence of the cri sis.
35
The European industrial Problem
Industrial production and consumption in Europe in RM per capita Country Group North Sea Zone Great Britain Central European region Germany¹
RM per capita at 1928 price level Generation Consumption Balance² 1913 1928 1933 1913 1928 1933 1913 1928 1933 Highly industrialized surplus zone with declining industrial production 816 711 651 635 609 602 + 181 + 102 + 49
+ 82 +78 declining industrial
North Sea Zone Denmark Sweden Norway Finland Lithuania Latvia Estonia
600 635 428 553 350 Medium and weakly industrialized surplus zone with production 340 343 375 437 495 516 - 133 400 492 419 399 510 442 +1 208 323 326 302 434 365 - 94 72 147 129 109 205 142 - 37 124 109 144 139 168 280 187 258 229 284 145 152 178 188 205 -
-
152 18 111 58 30³ 42³ 36³
-
141 23 39 13³ 24³ 26 27³
Mediterranean Zone Italy Spain Portugal Greek
195 184 109 45
-
8 20 52 47
-
7 8 40 20
Western European Zone France Switzerland Belgium Holland
Medium-industrialized zone with stagnating or declining industrial production 465 597 494 408 547 501 + 57 + 50 -7 660 702 533 611 662 630 + 49 + 40 - 97 367 490 340 314 394 292 + 53 + 96 + 48 348 456 301 440 581 400 - 92 - 125 - 99
Central European Room Czechoslovakia Austria Hungary
301 265 150
274 187 134 145
386 314 153
212 191 130 153
234 209 122
182 189 147 57
-
282 207 186 192
343 322 192
219 199 170 173
217 217 129
+ 13 +5 - 38 - 12³
-
+ 43 -8 - 39
+ 17 -8 - 7³
The basic problems of the European economic structure
Country Group Eastern European Agricultural Group Poland Yugoslavia¹ Romania
36
RM per capita at 1928 price level Generation Consumption Balance² 1913 1928 1933 1913 1928 1933 1913 1928 1933 Weakly industrialized zone with rapidly increasing population than industrial production 106 85 44 94 40 -9 +4 104 120 106 141 134 - 21 - 28 70 63 64 44 79 55 + 26 - 18 +9
¹ Post-war area. - ² Increased production (+), increased consumption ( -). - ³ The balance per capita of the population has been calculated from figures computed to decimal places, hence values appear here, while in the absolute figures the balance is given as +- 0.0.
Nevertheless, the fact that, despite these constraints, industrial production in 1934 was substantially higher in absolute terms than in 1913 in all of Central and Southeastern Europe, with the exception of Poland, shows the rapid pace at which industrial reconstruction is taking place and compensating for the decline in production in the old industrialized countries. Under these circumstances, the European industrial problem is divided into two problems. First, there is the problem of the industrialization of non -European regions, which has already been briefly discussed, and which entails a strong shift of raw material supplies and finished goods sales to overseas. Second, there is the problem of intra-European industrialization and thus the shift in the previous equilibrium and division of labor among the individual European countries. In both cases, Great Britain occupies a special position becau se it is subject to different conditions than the industrialized countries of continental Europe due to its financial creditor position and its ties to its non -European world empire. Industrial development in Europe to date has been characterized by the fa ct that, apart from Great Britain, only Germany and, to a certain extent, France and Belgium had developed mainly production goods industries - mining, iron and metal industry, mechanical engineering, electrical engineering and chemistry - as export indust ries on the basis of their coal and iron deposits. Since the end of the war, Poland and Czechoslovakia have joined as new competitors on the same basic material basis . Italy, which according to its structure should mainly develop finer processing industrie s, has recently been pushed by the expansion of consumer goods production in the entire European periphery to the production of technical goods, for which it lacks the natural prerequisites.
37
The European industrial Problem
The basic problems of the European economic structure Country Group
North Sea Zone Great Britain Central European Room Germany²
Industrial production and use in Europe Generation Consumption 1913 1928 1933 1913 1928 1933 Highly industrialized surplus zone with declining 34,7 32,4 30,3 27,0 27,8 28,0
38
in RM billion Balance ¹ 1913 1928 1933 industrial production + 7,7 + 4,6 + 2,3
North Sea Zone Denmark Sweden Norway Finland Lithuania Latvia Estonia
36,0 40,4 27,9 35,2 22,8 + 5,2 + 5,1 Medium- and low-industrialized surplus zone with increasing industrial production 0,9 1,2 1,4 1,2 1,7 1,9 - 0,3 - 0,5 - 0,5 2,3 3,0 2,6 2,2 3,1 2,7 + 0,1 - 0,1 - 0,1 0,5 0,9 0,9 0,7 1,2 1,0 - 0,2 - 0,3 - 0,1 0,2 0,5 0,5 0,4 0,7 0,5 - 0,2 - 0,2 0,00 0,2 0,3 0,4 0,3 0,4 0,00 0,00 0,5 0,4 0,4 0,4 0,6 0,00 - 0,2 0,2 0,2 0,2 0,2 0,2 0,00 0,00
Mediterranean Zone Italy Spain Portugal Greek
6,9 3,7 0,7 0,3
Western European Zone France Switzerland Belgium Netherlands
Medium-industrialized zone with stagnating or declining industrial production 19,4 24,5 20,7 17,0 22,5 21,0 + 2,4 + 2,0 - 0,3 2,6 2,8 1,9 2,4 2,6 2,6 + 0,2 + 0,2 - 0,7 2,8 3,9 2,8 2,4 3,1 2,4 + 0,4 + 0,8 + 0,4 2,1 3,5 2,5 3,2 4,5 3,4 - 1,1 - 1,0 - 0,9
Central European Room Czechoslovakia Austria Hungary
4,1 1,8 1,2
11,0 4,2 0,9 0,9
5,6 2,1 1,3
8,9 4,6 0,9 1,0
3,5 1,4 1,1
6,7 3,8 0,9 0,3
-
11,3 4,7 1,3 1,2
5,0 2,2 1,6
9,2 4,8 1,1 1,1
3,3 1,5 1,1
+ 0,2 - 0,1 - 0,2 0,00
-
- 0,3 - 0, 5 - 0,4 - 0,3
+ 0,6 - 0,1 - 0,3
-
0,3 0,2 0,2 0,1
+ 0,2 - 0,1 0,00
Weakly industrialized zone with rapidly increasing population than Eastern European industrial production Agricultural Group 2,9 2,6 1,4 2,9 1,3 - 0,3 + 0,1 Poland 1,4 1,6 1,5 1,9 1,9 0,3 - 0,4 Yugoslavia² 1,1 1,1 1,2 0,7 1,4 1,0 + 0,4 - 0,3 + 0,2 Romania ¹ Increased production (+), increased consumption ( -). - ² Post-war area
39
The European industrial Problem
The consequence of this development is that the supply of raw materials to the young industrialized countries and their involvement in the shrunken export markets will increasingly occupy European attention in the future. The importance of the ongoing industrialization of the non -European world for the industrial production of the old European industrial powers can be seen from the fact that so far two thirds of the total European export production has been sold to the agricultural and raw material countries, while only one third is accounted for by the exchange of the industrial countries among themselves. For the means -ofproduction industries of the European industrial powers, the industrial expansion of the world's agri cultural and raw-material countries can still create additional sales opportunities in the longer term, while for the export of consumer goods a far reaching adjustment of production will probably be necessary. In view of the general industrialization in t he world and the double to triple exorbitant level of agricultural prices throughout Central and Western Europe, European exports of consumer goods in particular will hardly be sustainable in the long term. A far -sighted continental European policy would t herefore have to set itself the task of gradually balancing costs and prices between the agricultural and industrial differentials on the world market and of steering industrial expansion in the European agricultural belt with the aid of capital exports, t rade compensation or other contractual ties in such a way that no unnecessary intensification of competition with the old industrialized countries occurs later on. An important means of achieving this will be to increase the production and purchasing power of the agricultural countries and to strengthen them for the additional consumption of industrial products. Agricultural science and agricultural engineering have a vital task to solve here, also for European industry. The following overview of the consumption of industrial products in the individual regions shows which possibilities for increasing consumption in the agricultural countries could theoretically still be tapped. Even a moderate increase in the per capita consumption of industrial product s, if it were to benefit the old industrialized countries even to a small extent, would be able to increase their foreign sales considerably. More than in the European agricultural countries, however, would mean an increase in purchasing power overseas amo ng the enormous populations of these areas. Here, however, European industry will have to fight increased competition from the United States of America in the South American markets and increased Japanese competition in the Asian markets. So far we have singled out the European region of Soviet Russia because its connection with the vast Asian hinterland and the peculiarity of its economic form make it a world apart. However, it must be pointed out that the future supply of these regions with industrial goo ds still contains an economic reserve for the European industrialized countries, which will steadily increase in importance as the purchasing power of these regions
The basic problems of the European economic structure
40
increases. Although the economic development of Soviet Russia under the various five-year plans has led to a sharp increase in the country's own industrial production, the preceding almost complete destruction of artisanal production, on which the supply of consumer goods in the former tsarist empire was mainly based, still leaves a demand for consumer goods of a magnitude that can hardly be overestimated. It will become all the more noticeable as the increasing production of gold and raw materials in Soviet Russia st rengthens its balance of payments and increases its purchasing power for European industrial products. The following table shows the development of Soviet industrial production according to national statistics.
Consumption of industrial products in 1928
Billion RM
RM per capita
Europe (without USSR) Industrialized countries Agricultural countries
103 35
534 207
The rest of the world USA Other countries
109 103
908 72
Soviet Russia (USSR)
16
135
The Development of Soviet Russian Industrial Production since 1926
Unit Gross production value¹ of which: Production goods Consumables Important individual industries
1926
1927
1928
1929
1930
1931
1932
1933
1934
Bil. Rbl 11,1
12,7
15,8
19,9
25,8
32,3
36,8
40,1
47,6
Bil. Rbl 5,0 Bil. Rbl 6,1
5,7 6,9
7,0 8,8
9,3 10,6
13,1 12,7
17,4 14,8
20,5 16,3
22,9 17,2
27,9 19,7
41
Of which Coal Petroleum Iron ore Lumber Machines Textile fabric Power generation Gold production
The European industrial Problem
Unit
1926
1927
1928
1929
1930
1931
1932
1933
1934
Mill. t Mill. t Mill. t Mill. cbm Bil. Rbl Bil. qm Bil. kWh K. kg
26,0 8,8 4,3 10,8 0,6 2,5 3,5 27,8
32,3 11,0 6,6 12,3 0,8 2,8 4,2 25,2
35,8 12,3 7,7 13,6 1,1 3,0 5,0 28,0
41,7 14,5 8,9 16,6 1,6 3,5 6,2 33,8
47,1 18,8 12,0 21,9 2,4 2,8 8,4 44,6
58,0 23,1 11,4 23,6 2,8 10,7 52,9
64,3 22,5 12,9 24,4 7,1 2,9 13,5 57,8
76,3 22,5 15,6 22,6 8,0 2,9 16,3 86,6
92,2 25,5 23,5 24,9 2,9 20,5 120,0
¹ Calculated at 1928/27 prices.
IV. Das europäische Rohstoffproblem
The development of the colonial raw material sources of the whole world, which has gone country by country with the development of the European industrial economy in the last century, has made the greater part of the European processing industries dependent on the supply of non -European raw materials. This dependence on the supply of overseas raw materials is unobjectionable as long as the European industrialized countries, under English leadership, retain political and financial control of the world's raw material sources in the country. With the increasing detachment of the overseas territories and their own industrialization, however, the European supply of raw materials will take on a much differ ent face than before. In considering the European raw materials problem, a distinction must be made between Great Britain and continental Europe, even more so than in the case of the major economic problems already discussed. For Great Britain, which contr ols or at least decisively influences almost all the important raw materials of the world economy within its empire, is in a much more favorable situation than continental Europe, which is poor in raw materials. Although geographically it is incomparably more dependent on the unimpeded supply of overseas raw materials, politically and economically it is incomparably better secured in its supply of raw materials than all continental European countries because it owns the colonial territories richest in raw materials on earth. This difference is already evident in the supply of basic foodstuffs. Here, the industrialized countries of continental Europe are largely independent or can cover their supplementary requirements from the surplus areas of the European peripheral zones. The continental European demand for bread grain, meat, food fats
The basic problems of the European economic structure
42
and sugar can essentially be produced from their own soil. Only in the area of feed grains and especially protein -rich fodder for feeding the continental European livestock are larger supplies necessary, the production of which, however, would be possible from European soil in an emergency. The import of continental Europe in the food sector is thu s limited, except for oil and protein fodder, essentially to the colonial luxury foods coffee, cocoa, tea and overseas tropical fruits. Great Britain, on the other hand, is dependent to the greatest extent on overseas and continental European supplies for its food supply. It imports substantial and almost consistently larger quantities of bread grains, meat, dietary fats, and sugar than all of continental Europe, and has a smaller supply than mainland Europe only in animal feed.
Europe's subsidy requirements for the most important basic foodstuffs in 1933 Continental Europe
Great Britain
Whole of Europe in 1000 tons
in % of world exports
Food economy Cereal Butter ¹ Sugar
4935 + 188 401
6129 444 1739
11064 256 2139
57,8 44,6 20,0
Feed Industry Corn Oilseeds Oil Crops Soy beans
3232 1247 2321 1526
2520 715 386 160
5752 1962 2707 1686
68,4 80,9 74,4 62,3
Luxury industry Cocoa Coffee Tea Tabaco
241 641 35 203
71 17 192 87
312 658 227 291
52,9 40,1 52,9 57,1
¹ += Surplus
food
43
The European raw materials problem
As far as the demand for raw materials of the industrial economy is concerned, continental Europe and Great Britain are dependent on non -European supplies for all vital raw materials for the consumer goods economy, with the exception of the abundantly available basic materials coal, iron, rock and potash salts, building materials and wood. This is particularly true for the fiber industry, the leather and rubber industry, the metal industry and the fuel and lubricant industry, as well as for important minerals such as natural phosphates and other chemical raw materials.
Europe's subsidy requirements for important basic materials for the industrial economy
Continental Europe
Great Britain
Total Europe In 1000 tons
in % of world exports
Fiber Industry Cotton Wool Flax and hemp Jute
1430 553 54 422
612 241 121 160
2042 794 175 582
61,4 61,7 34,9 75,0
Metal industry Copper Lead Zinc Tin Aluminum
352 204 219 91 3
133 282 77 + 27 8
484 486 296 64 11
55,6 73,9 82,7 52,9 19,3
Other basic materials Rubber Crude oil¹ Mineral phosphates
191 99 4073
75 59 347
266 158 4420
23,9 33,9 86,8
¹In millions of barrels
The diversity of the raw material relations linking our continent with the rest of the world can be briefly described if continental Europe, including the British Isles, is regarded as a single unit. Europe is largely self -sufficient in the old foodstuffs and
The basic problems of the European economic structure
44
feedstuffs, wheat, corn, meat, dietary fats and sugar. The same applies to the old basic materials wood, coal, rock and potash salts, iron and sulfur. In addition, the most recent products of the European chemical industry are nitrogen, artificial spinning materials, light metals, and perhaps in the future, on a larger scale, artificial fuels and synthetic rubber, plastic plastics and building materials, and chemical feed protein. For all other essential raw materials, Europe is almost entirely dependent on production outside Europe. This is particularly true for the raw materials of the modern animal feed industry, for all luxury foods, for all natural spinning materials, fo r almost all non -ferrous metals and for some important minerals.
The supply of raw materials to Europe according to their origin from the various continents¹
Products
Food substances Cereal Corn Oilseeds Soy beans Sugar
Europe Total consumption In 1000 t
Of the European raw material consumption in % originates from Europe Africa America Asia Australia
58620 21430 2110 1690 8160
81,1 73,2 7,1 73,8
0,5 18,0 -
15,6 26,3 59,5 21,4
15,4 100,0 4,8
3,3 -
Luxury food Cocoa Coffee Tea Tabaco
310 660 230 550
47,3
87,2 -
12,8 89,8 35,6
10,2 100,0 17,1
-
Textile fibers Cotton Wool Flax Hemp Jute Silk
2050 1010 212 231 580 52
0,5 21,8 58,2² 62,6 96,2
15,7 10,0 -
71,7 23,1 -
12,1 37,4 100,0 3,8
45,1 -
45
The European raw materials problem Products
Europe Total consumption In 1000 t
Minerals Hard coal Kali(C₂O-Content ) Sulphur gravel (S-Content) Mineral phosphates Iron and metals Iron ore Copper Lead Zinc Lead Aluminum Other raw materials Crude oil ³ Rubber
Of the European raw material consumption in % originates from Europe Africa America Asia Australia
433909 1149 2180
106,5 118,5 114,1
-
-
-
-
4540
2,6
89,7
-
7,5
0,2
51521 667 772 611 66 98
97,9 27,4 37,0 51,5 3,2 88,8
2,1 8,9 24,1 -
61,6 23,2 37,6 11,2
0,1 8,8 7,8 70,0 -
2,0 31,0 3,1 2,7 -
218 270
27,4 -
0,2 -
45,6 -
26,8 100,0
-
¹Figures for 1933, which can be considered a normal year. ²"The nest of 41.8 % comes from European Russia. ³"In million barrels.
The basic problems of the European economic structure
46
47
The European raw materials problem
The clearly recognizable allocation of the division of labor in the supply of raw materials to Europe by the rest of the world is not only the result of natural preconditions, but in many cases also of the planned influence of English policy. The relatively sparsely populated but highly capital -intensive areas of America and Australia, which were colonized at the beginning of the modern era, supply the European demand for the old basic foodstuffs wheat, feed grain, sugar, the older luxury foods tobacco and coffee, the most important non -ferrous metals and the main spinning materials of European mass consumption, cotton and wool. The overpopulated and capital -poor areas of Asia produce mostly small -scale tea and the basic agricultural products of the modern animal feed and transport economy, oil fruits and oil seeds, soybeans, jute, rubber and petroleum as monopoly products. Africa, the most recently developed continent, is the main supplier of cocoa and has recently become more important for the supply of wool and cotton, as well as for the supply of copper, tin and phosphates to Europe. In detail, Canada, Argentina, the United States of America, Australia and New Zealand supply wheat, corn, meat and food fats; British India, Siam, Indochina and Korea rice; Cuba and the East Asian islands sugar; Argentina, British India and Egypt linseed, peanuts and cottonseed; Manchuria and North China soybeans. Of the luxury foods, coffee comes mainly from Brazil and Colombia; tea fr om British and Dutch India, Ceylon and China; cocoa from the African Gold Coast and Nigeria. In the supply of cotton are divided the United States of America, British India, Egypt, and South America; wool is supplied by Australia and South Africa; jute and hard fibers British India and the Philippines. Of the principal metals, nickel, copper, lead, and zinc are imported from Canada, the United States, Chile, and Mexico; tin from Bolivia, British Malaya, and Siam. The main mineral phosphates are imported int o Europe from North African areas. For the supply of fuels and lubricants, the whole world is consulted; the United States of America, Mexico, the Netherlands Indies and Iran are the main producing areas. Rubber, on the other hand, is supplied exclusively from Asian areas, the British and Dutch Indies, and Ceylon, where the English transplanted the original South American rubber tree. During the last century, the exploration and exploitation of the whole world by European technology and European capital hav e led to a continuous increase and total accumulation of the standard of living of the European peoples, for the maintenance and continuation of which the securing of the overseas supply of raw materials is one of the most important conditions. The original military domination of the world's raw material areas was broken at an early stage by the detachment of the American continent and, since the war, by the rise of Japanese power in East Asia. In addition, the military -political point of view in the world is increasingly taking a back seat to the modern form of financial and economic domination.
The basic problems of the European economic structure
48
Production of major raw materials by continent 1933 Products World
in % of world production are accounted for by Europe¹ America Asia Africa Australia
Food substances Cereal Corn Oilseeds Soy beans Sugar
100 100 100 100 100
57,5 18,1 12,0 0,6 27,6
24,3 67,1 53,3 1,8 30,4
11,9 7,0 27,3 97,6 31,4
2,5 4,9 7,3 3,8
3,8 2,9 0,1 6,8
Luxury food Cocoa Coffee Tea Tabaco
100 100 100 100
19,3
32,8 85,8 38,4
1,2 8,2 99,2 39,6
65,5 5,6 0,8 2,5
0,5 0,4 0,2
Textile fibers Cotton Wool Flax Hemp Jute Silk
100 100 100 100 100 100
7,3 18,5 98,8 64,7 9,9
56,7 29,0 0,4 0,1 -
27,2 6,8 0,6 35,2 100,0 90,1
8,8 10,4 0,2 -
35,3 -
Minerals Hard coal Kali(C₂O-Content ) Mineral phosphates
100 100 100
53,7 90,5 13,4
35,6 8,6 29,8
8,6 0,9 1,5
1,1 46,8
1,0 8,5
Iron and metals Iron ore Nickel Copper Lead Zinc Tin Aluminum
100 100 100 100 100 100 100
72,2 5,7 17,7 26,0 28,5 2,3 61,4
21,1 80,2 52,8 46,0 53,3 16,7 38,6
3,9 2,2 8,3 7,9 5,3 70,7 -
1,7 19,8 0,4 1,9 7,1 -
0,8 11,9 1,4 19,7 11,0 3,2 -
Other raw materials Crude oil Rubber
100 100
14,3 -
81,0 1,2
4,6 98,8
0,1 -
-
¹Including the USSR
49
The European raw materials problem
But even this form of financial domination of the raw material areas has been greatly weakened by the world war. In place of Europe, which before the war was the sole creditor of the world and absorbed its raw material production as interest and redemption for the invested loan capital, the United States of America has no w become the main creditor alongside Great Britain. The consequence of this restructuring, which has already occurred, is the collapse of the former world trade and the old gold currency system. The effects still in progress can be seen i n the accelerated industrialization of almost all agricultural and raw material areas of the world. As the final link in a chain of consequences, the problem of the European supply of raw materials will emerge in the further future. This problem is firstly a political-economic one, namely the securing of vital supplies of raw materials, and secondly an economic -financial one, namely the balance -ofpayments conditions for the purchase of the necessary raw materials. As long as there is a sufficient supply on the world market as a result of the progressive exclusion of new raw material deposits and falling production costs, and as long as prices show a downward basic direction in the long wave, there is no immediate cause for concern for Europe. However, the s ituation would be completely changed if, as a result of the continuing industrialization of the existing agricultural and raw material areas, the rearmament of the European powers, or new armed conflicts, even a substantial shortage and increase in prices were to occur. A certain precaution against these latent dangers of raw material shortages, which are always present in the unbalanced balance of payments situation of the continental European powers, can be achieved by better exploitation of raw material sources in the peripheral European regions and the development of chemical plastics production. However, when considering the European raw materials problem, it must be borne in mind that some of the raw materials are exported to countries outside Europe, i.e. they are not consumed within Europe. However, the raw material problem is not only a pan -European problem in relation to the non-European "raw material areas", but also an inner -European problem as a result of the unequal distribution of the colonial raw material possessions of the European nations. There is a complete imbalance between Great Britain and continental Europe. Great Britain is not only the world's main creditor, but also the world's main supplier of raw materials, while the nations of con tinental Europe are predominantly debtor countries and at the same time heavily dependent on raw materials. This is already true to some extent for the West European creditor countries France, Belgium, Lolland, although they possess the nest of the world's great colonial empires, but even more so for the Central European economic area as well as for Italy and, in the foreseeable future, for the East and Southeast of Europe, which are particularly hard -pressed by their population development. These areas, all industrialized or in the process of industrialization, have no raw materials
The basic problems of the European economic structure
50
of their own for their industrial economy, except for some minerals - coal, salts, sulfur - as well as building materials, wood and some non -ferrous metals. Within the English Empire, apart from foodstuffs and luxury foods, more than twice England's requirements are produced in fibrous materials and one and a half to two times England's requirements in coal and metals and about two -thirds of its requirements in rubber. France is now well supplied only with coal, iron, and mineral phosphates, while it has neither spinning materials nor metals, rubber, or petroleum in sufficient quantities. The neighbor ing Western European countries with colonial possessions still produce a few raw materials in abundance, Lolland rubber and tin, and Belgium copper. In contrast, the entire bloc of Central, often Southern European countries is completely dependent on raw m aterials. Germany and Poland are adequately supplied only with hard coal and zinc, Italy only with iron ores, sulfur and zinc. Only the southeastern European agricultural group currently has a surplus of copper, zinc and petroleum because of its low level of industrial consumption. A pacification of the European situation from the point of view of safeguarding the common European interest cannot be achieved without a balancing solution of the raw materials question. This is because the problems of agricultu ral overpopulation, industrial self -preservation and social reorganization of the densely populated areas of Central, Eastern and Southern Europe are closely connected with it. In view of developments in the central European interior and in the eastern and southern overpopulated areas of Europe, the raw materials question will develop into a constant source of unrest in Europe if it is not resolved by means of a peaceful reorganization of colonial distribution or contractual economic agreements.
51
The European raw materials problem
Raw material production and consumption of the main European countries Products
Fibers Cotton Wool Jute
In % of the raw material consumption of the mother country produce within its own political borders: Great France Germany Italy Poland Belgium SucSouthBritain Holland cession eastern Swiss States Europe 215,9 251,3 904,6
10,9 -
7,7 -
0,1 11,8 -
18,2 -
4,0 -
16,3 -
12,5 86,7 -
165,5 17,5
139,1 40,7
115,0 18,8
3,7 132,9
149,8 -
89,0 -
76,1 7,7
66,8 141,2
126,9
326,2
-
-
-
17,9
-
-
Iron and Metals Iron Copper Lead Zinc Tin
93,5 179,5 88,1 196,0 193,3
160,1 3,7 8,0 -
36,8 18,5 35,5 72,3 -
162,3 0,8 55,0 106,8 -
52,6 68,3 186,9 -
25,8 194,5 2,9 461,8
78,1 0,4 59,3 7,1 -
161,5 629,6 115,4 663,6 -
Other basic Materials Crude oil Rubber
17,1 72,5
1,5 16,0
13,5 -
1,6 -
205,7 -
287,2 226,2
-
411,3 -
Minerals Hard Coal Sulphur gravel Mineral Phosphates
The basic problems of the European economic structure
52
V. The European Foreign Trade Problem
The rapid disintegration of the system of unrestricted private capitalist foreign trade inherited from the pre-war period and maintained only by artificial means until the outbreak of the crisis has brought the problem of a general reorganization of European trade relations to the fore again. This reorganization, the cracks of which are slowly emerging from the chaos of international restrictions, quotas and clearing ties after the momentary interlude of isolated domestic conjunctures, will change not only the form but also the content of the foreign trade of European nations among themselves and with t he rest of the world. The vital questions of the political and economic consolidation of our continent, of the community of destiny of the European peoples internally and of their relations with the outside world, become particularly apparent in the focus of foreign trade. The European foreign trade problem, like that of the industrial situation and the supply of raw materials, has a double face. It shows, on the one hand, the partial problem of Europe's foreign trade with the rest of the world, which is ma inly a reflection, on the one hand, of its creditor position and, on the other hand, of its dependence on raw materials, and, secondly, the partial problem of intra -European trade, which is mainly a trade exchange among the European industrial nations. In its present structure, almost two -thirds of European trade is intra -European trade and slightly more than one -third is exchange with the rest of the world. The most important outpost of European trade with the rest of the world is Great Britain, whose total trade, contrary to that of continental Europe, is oriented more than two-thirds toward the rest of the world and less than one -third toward continental Europe. Apart from Great Britain, only the leading industrial countries Germany, France and Italy, whi ch not only cover their raw material and partly also their food requirements overseas, but have also become involved in supplying the smaller European industrial and agricultural countries with overseas products, are mediators in this exchange between Euro pe and the rest of the world. In addition, Spain is the only agricultural country which, as a result of its close relations with its colonies and former possessions in Africa and America, is more connected with overseas than with Europe. Despite the struct ural changes in world trade since the war and the sharp shifts in prices, this relationship has remained almost unchanged in exports to the present day; in imports, Europe's dependence on the rest of the world has become even greater. This development is i n direct contrast to the development of the European capital account, through whose asset balance from dividends and interest income a part of the European raw material demand was paid from overseas before the war. As with foreign trade, the capital accoun t also shows a contrasting trend between the UK and continental Europe.
53
The European foreign trade problem
European foreign trade before and after the war
Total exports thereof to: Europe Rest of the world
Europe including Great Britain Europe excluding Great Britain 1913 1928 1934 1913 1928 1934 In Billion. RM 44,7 65,0 23,5 34,9 51,2 18,5 30,4 14,3
42,4 22,6
15,7 7,8
27,4 7,5
38,0 13,2
14,0 4,5
Total exports Of which from: Europe Rest of the world
53,5
81,8
30,1
39,1
58,9
21,5
32,3 21,2
45,4 36,4
16,8 13,3
37,0 21,9
14,0 7,5
Total exports Thereof to: Europe Rest of the world
100,0
100,0
100,0
27,3 11,8 In % 100,0
100,0
100,0
67,9 32,1
65,3 34,7
67,0 33,0
78,5 21,5
74,2 25,8
75,7 24,3
Total exports Of which from: Europe Rest of the world
100,0
100,0
100,0
100,0
100,0
100,0
60,4 39,4
55,5 44,5
55,8 44,2
69,8 30,2
62,8 37,2
65,1 34,9
Europe's dominant creditor position vis -à-vis all other continents before the war now applies only to Great Britain, while the continental European nations have become debtors to that country and to the United States of America. If Great Britain's position in relation to the rest of the world has suffered a weakening, it nevertheless shows an incomparably much stronger position today in relation to continental Europe than it did before the war. In spite of the fact that its possibilities of political intervention in the continental European area are less today, this dominant position in all the economic relations of continental Europe with the rest of the world makes it more than ever the real arbiter of Luroxa. The change in the balance of payments structure that has led to the collapse of the international monetary system and world trade is clearly reflected in the figures below.
The basic problems of the European economic structure
54
Capital account of continental Europe, Great Britain and the United States of America before and after the war in billions of RM . ¹
All of Europe Of which Continental Europe Great Britain USA
With war debts 1913 1930 Change + 122 + 31 - 91
Without war debts 1913 1930 Change + 122 + 64 - 58
+ 45 + 77 -9
+ 45 + 77 -9
- 35 + 66 + 88
- 80 - 11 + 97
-8 +72 +62
- 53 -5 + 71
¹Including monetary gold and foreign exchange holdings, which must be included. The year 1930 is chosen as the last year before international currency devaluations and the cessation of war debt payments.
55
The European foreign trade problem
The basic problems of the European economic structure
56
The commercial intercourse of the European countries with one another constitutes a complicated network of interconnections which covers our entire continent and keeps it closely linked economically despite its political disunity. Superficially, the structure of European foreign trade seems to contradict the view that the most favorable preconditions for the mutual exchange of goods and, accordingly, for the formation of trade policy groups are provided by the reciprocal combination between industrialized countries and agricultural countries. On the contrary, the structure of European foreign trade to date has particularly favored trade between industrialized countries, while trade between industrialized and agricultural countries has been considerably less and trade between European agricultural countries has been insignificant. However, this intra -European land linkage between the industrialized count ries among themselves is only the superstructure over your foundation of the land linkage of industrial Europe with the agricultural and colonial areas of the other continents and is inconceivable without it .¹ Between the European industrialized countries in 1932 per capita 40 RM., between the industrialized and agricultural countries 20 RM. and between the agricultural countries only 5 RM. per capita were exchanged. In billions of RM. the export within Europe amounted to in 1932:
out of the
Industrialized countries Agrarian countries Together
according to the Industrialized Agrarian countries countries 9,7 3,8 3,4 0,7 13,1 4,5
together
13,5 4,4 17,6
The overriding importance of exchanges between the European industrialized countries is due to the diverse structure of the European industrial economies. About half of their trade consists of the mutual exchange of raw and semi -finished goods. This is because, in spite of the increasing landlockedness, industrial production is still strongly tied to th e most favorable locations for further processing, so that the various stages of the industrial production process from raw material to finished product are often not passed through in the same country, but rather the country of the most favorable further processing is often selected several times. The extent to which the new forms of foreign trade will bring about
¹This should provide an unambiguous answer to the frequently raised question of whether industrialization means an increase or decrease in land transport.
57
The European foreign trade problem
permanent changes in this transport structure, which was created by the liberal development of the past under purely profitability aspects, cannot yet be foreseen. Only secondarily does trade among the industrialized countries consist of a mutual exchange of finished goods. Their turnover has fallen particularly sharply in recent times, and here, too, there are probably the fewest prospects of an increase in the future. Trade in foodstuffs naturally tak es a back seat to these two groups. In the trade between the industrialized countries and the agricultural countries, foodstuffs and raw materials are exchanged for finished and semi -finished goods in equal parts. The insignificant trade between the agricu ltural countries consists mainly of an exchange of foodstuffs for raw materials. Since these countries, due to their fairly similar structure, do not complement each other either economically or in terms of capital, attempts at trade bloc formation, such a s the Oslo Conference, the Balkan Pact and the Baltic Clause, are not of great economic significance here. The same can be said of the Italian agreements with Austria and Hungary, although they have more political than economic backgrounds. Within the European community of states, Great Britain occupies a special position thanks to its dominant position in the name of its extensive world empire. The continental European supply and sales area is not nearly as important for England as the overseas Empire mark ets, and this interconnectedness has been further promoted in recent years by the expansion of the Empire customs system. Only about one-third of England's total trade goes to continental Europe. Nevertheless, due to the size of its foreign trade, Great Br itain ranks first as a buyer of continental European goods, ahead of Germany and France. In addition, because of its agricultural price level, which is in line with the world market, Great Britain also has a much more favorable competitive differential wit h the world market than continental Europe. In view of this, all plans for a trade policy reorganization in Europe will always be largely bound by consideration for the large British customer. In continental Europe, Germany, thanks to its geographic positi on, is the center of the network of European land links. In accordance with its favorable central position, its exports radiate in all directions and, conversely, its imports come from all countries of the continent. Germany is the most important European reference country for almost all European nations and the most important market for the smaller countries. However, it is often overlooked that almost half of its European trade goes to Western Europe and one third to Northern Europe, while trade with Central and Eastern Europe is still quite insignificant.
The basic problems of the European economic structure
58
The Foreign Trade of Great Britain by Sales and Reference Countries 1934
To/ from Outside Europe America Asia Africa Australia Europe Scandinavia Holland, Belgium France Germany Italy
Exports as % of total exports 61,6 19,5 18,4 14,1 9,6
Import as % of total import 65,1 32,1 13,9 6,4 12,5
38,4 8,2 5,3 4,2 3,5 2,4
34,9 10,2 4,9 2,6 4,2 1,2
Germany's Foreign Trade by Sales and Reference Countries 1934
To/ from
Exports as % of total exports 67,3 24,4 11,1 8,5 7,1 2,4
Import as % of total import 52,9 12,1 7,8 7,7 6,6 2,9
Great Britain
9,2
4,6
Outside Europe America Asia Africa Australia
23,5 10,8 9,5 2,6 0,6
42,6 20,6 12,5 5,8 3,3
Continental Europe Belgium, Swiss, Netherlands Scandinavia France Succession States Eastern Europe
59
The European foreign trade problem
The other major industrialized countries consistently limit their exchange of goods to parts of Europe. France, apart from its African colonies, is closely linked only with Western Europe, while it maintains hardly any trade links with Northern Europe and, despite its strong political t ies, with Southeastern Europe. Similarly, the Netherlands, Belgium and Switzerland have only a narrowly limited radius of exchange, and even Italy's European trade relations hardly extend beyond its nearest neighbors.
Foreign Trade of the Other Industrialized Countries by Sales and Reference Countries 1934
To/From
Exports as % of total exports
Import as % of total import France
Europe Of which Holland, Belgium, Swiss Germany Great Britain Italy
54,7
41,5
24,7 11,1 8,6 3,1
11,3 9,6 7,1 2,1
Outside Europe Of which Africa America Asia Australia
45,3
58,5
28,0 10,8 5,9 0,5
24,6 15,9 10,2 3,5 Italy
Europe Of which Germany Great Britain Swiss France Succession States Eastern Europe Scandinavia
67,4
41,5
15,9 10,1 8,4 6,7 6,5 5,8 2,2
15,8 9,2 3,8 5,7 5,0 5,9 2,9
Outside Europe
32,6
41,9
The basic problems of the European economic structure
To/From
Europe Of which Germany Great Britain Belgium, Swiss France Scandinavia Czechoslovakia Outside Europe Dutch East Indies
60
Exports as % of total Import as % of total exports import Netherlands 81,8 68,6 24,8 19,1 14,0 8,1 5,2 1,5
28,6 9,4 11,6 4,3 4,3 1,5
18,2 4,3
31,4 5,6 Belgium, Luxemburg
Europe Of which France Great Britain Germany Netherlands Scandinavia Italy
72,0
63,8
17,6 13,5 11,7 11,3 4,6 2,4
16,7 7,8 14,3 10,2 4,0 1,2
Outside Europe
28,0
36,2 Switzerland
Europe Of which Germany France Great Britain Italy Netherlands, Belgium Scandinavia
80,8
81,2
21,6 14,4 10,1 9,0 5,9 3,2
27,1 16,1 6,4 8,1 6,2 2,0
Outside Europe
19,2
18,8
Since Europe's political and financial position in the world has deteriorated sharply as a result of the war and the crisis, and since the industrialization of overseas agricultural and raw material countries is likely to further reduce the sales opportunities for European finished products, continental Europe's importance as a
61
The European foreign trade problem
buyer of raw materials and agricultural products in particular will show a downward trend. In the future, the fate of our continent will t herefore again be determined to a greater extent by the planned development and organization of its own agricultural and raw material bases. In this connection, the most important task of a comprehensive reorganization of trade policy will be to enable the European agricultural zone, whose agriculture can already be regarded as largely overpopulated¹, to produce more intensively the agricultural products which are lacking in Europe, and thereby to increase its purchasing power for industrial finished goods. This necessary development can be promoted according to plan not only by financial but also by long -term commodity credits. As far as organizational and commercial prospects can be indicated today, possibilities of increased oil crop and plant fiber produ ction in the Southeast, animal fiber production here and in the Southwest, and better utilization of the natural resource base in the soil are still available to a greater extent throughout the European border zone.
¹Cf. the section on "The European agric ultural problem".
6. The economic face of the individual zones I. The Northern European Sea Zone
The northern European zone, with Great Britain as its political and economic center, is in a sense Europe's gateway to the rest of the world. Through the connection of the English mother country on the one hand with the European mainland and on the other hand with its overseas empire, the European continent is far more intensively interwoven with the rest of the world than through the direct ec onomic relations of the mainland powers with non -Europe. In interpreting the economic face of our continent and its zones, therefore, Great Britain must be placed first, because it forms a political and economic world of its own which, due to the location of the mother island in the North Sea, overlaps with the European world in many ways, but by no means coincides. These overlaps are particularly pronounced throughout Europe's coastal belt, extending from the Scandinavian -Baltic area to the remote foothills of the southeastern Mediterranean basin. Here, the concentrated economic and financial power of the English Empire radiates across the entire maritime periphery of our continent like a powerful magnet, triggering and attracting the economic forces of the se areas. The English Empire is a non -European world power, even though its mother island is located on the northern border of the European continent. This fact provides the key to numerous peculiarities of English policy, and it is only too easy to err in English attitudes by forgetting this fact. Great Britain commands outside Europe an empire three times as large and comprising a population of about the same strength as Europe, including European Russia. Two -thirds of Britain's foreign trade interests, nine-tenths of its foreign capital investment, and almost all of the world empire's raw material production are overseas. In Europe lies only the lariat of this world empire, which draws its strength from one -fourth of the earth's surface and population, and whose blood and food lines are secured with great care by English policy. The economic rise of the Anglo -Saxon supremacy in the northern European region coincides with the development of industrial technology in the 19th century and came to an end with t he World War. Population growth is now only weak and will no longer trigger any major dynamic forces of development. Industrial expansion is also likely to be over for good, except for a few stragglers in the Scandinavian group. Under these circumstances, economic policy is limited mainly to maintaining the existing situation and adapting to the inevitable changes in the structure of the world economy. It has the advantage that, like continental Europe, it has to adapt to the changes in the world industrial structure, but it is hardly aware of the no less serious problem of continental European agricultural price inflation. On the whole, economic policy in the northern European region will show strong conservative forces of perseverance, similar to those in the western European
63
The Northern European Sea Zone
continental zone. In this respect, the interest of the northern maritime zone coincides completely with that of the western European continental zone, with which there are otherwise many contrast s. The Scandinavian area occupies a middle position between Great Britain and the mainland. Despite the fact that the face of this coastal zone is turned toward the mainland, its ties to Great Britain are at times particularly prominent. However, the inhibitions that arise for Great Britain from a reconciliation of the interests of its overseas members of the empire with the needs of the Scandinavian catchment area then also always become visible. With the Baltic rim states, the circle of the European peripheries begins, in whose economic face the emanations of the English force field slowly fade and the continental European features come to the fore instead. It is to be expected that after a consolidation of the European situation, the influence of the cont inental economy on the Scandinavian -Baltic area will again be considerably stronger than it is at present.
1. Great Britain
The economic face of Great Britain is so comprehensive and, through its connection with its vast, more balanced than organized, dominion and colonial empire, so strongly filled with historical developmental influences and contemporary political concerns that only its basic features can be outlined in the name of a brief sketch. These basic features are a strange mixture of conserva tive forces of persistence and progressive development, which, while generally changing slowly, nevertheless entails constant shifts of emphasis within the individual parts of the Empire. The English mother island in the North Sea is, in contrast to the continental European power France with its closed European -African territory, only the heart of a world empire scattered over the whole globe, which is held together by the most versatile political, economic and cultural long -distance connections. This dif ference between the English and the continental situation appears again and again also in the European policy of Great Britain. The fact that Great Britain is a European great power in name only, but in reality a world empire with its seat in Europe and members scattered over all continents and seas, is shown even by a brief survey of the relationship between the mother country and the dominion, colonial or mandate possessions in the world.
The economic face of the individual zones
64
National territory and population of the English Empire around 1935
Area in 1000 sq. km
Population in million
242 23605 5841 2204 31591 23,7
46,1 382,7 51,4 8,2 488,3 24,1
Motherland Dominial Empire Colonial empire Mandate areas English Empire In % of the world
White In Mill. 46,1 23,4 0,6 0,1 70,2 7,6
Of which: Colored In Mill. 359,3 50,8 8,1 418,2 37,8
The population of the Empire is more than ten times, the national territory far more than a hundred times the population or area of the Mother Islands. One fourth of the earth's surface and its population is in the possession of the English Empire, namely, in terms of population, one twentieth of America, one tenth of Europe, one third of Africa, one third of Asia and nine tenths of Au stralia.
From the area and population of the individual continents are English
Area Population
Europe % 2,7 9,9
Africa % 24,5 34,8
America % 23,9 5,2
Asia % 12,7 32,6
Australia % 98,9 92,3
World % 23,7 24,1
In area, only the Euro -Asian territory of the Soviet Socialist Republics comes close to the English Empire, and in population, only the Chinese Empire. In terms of agricultural and industrial production and foreign trade turnover, it is far superior to all other powers except the United States of America. Of world agricultural production, it is estimated that the English Empire accounts for one -fifth, of world industrial production for not quite one -sixth, and of world trade turnover for more than one-fifth.
65
The Northern European Sea Zone
Comparison of the national territories and population of the world's largest empires around 1935
Area in million sq . km Population in Mill. Industrial production in % of the world Foreign trade turnover in % of the world
English Empire 31,6 488,3 13,9
Soviet Russia 21,3 165,7 13,4
China¹
USA
Japan
7,1 444,6 -
9,7 137,9 35,5
2,1 190,9 3,7
French Empire 12,2 106,6 6,7
30,2
1,5
1,4
10,3
5,5
9,8
In the past there were only two large gaps within the English economic empire, one on the European continent and the second on the American continent; in the future its influence will also be rapidly pushed back in Asia by the Japanese and Soviet Russian rise. On none of these three continents, therefore, can the English policy of security do without th e backing of a strong domestic power group? On the other hand, in the two continents of Africa and Australia -New Zealand, the British preponderance is undisputed.
Of the industrial production and foreign trade sales of the individual continents, the English Empire accounts for
Industrial production Foreign trade sales
Europe %
Africa %
America %
Asia %
Australia %
World %
19,3
99,0
0,4
33,5
100,0
13,9
28,3
54,9
15,7
35,7
100,0
30,2
The most revealing picture of English strength, however, emerges when the economic power of the mother country and its members is measured by the possession of the decisive raw materials of the world economy. The European mother islands possess only the tw o basic materials, coal and iron, the possession of which was a prerequisite for the development of political and economic power in the 19th century. On the other hand, the non -European members of the empire control almost all the raw materials of the worl d economy, which rose to decisive
The economic face of the individual zones
66
importance in the 20th century. They account for half of the world's exports of wheat, one-third of the world's exports of cotton, two -thirds of the world's exports of wool, the entire world's exports of jute, one to three -fifths of the world's exports of nonferrous metals, three -fifths of the world's exports of rubber, and two -thirds of the world's production of gold. Of the less important commodities in the world market, only sugar, coffee, and silk come from non -English producing areas. The only vital commodity whose major deposits lie outside the Empire's borders, but by no means outside its capital interests, is petroleum. For this purpose, England 's first coal hydrogenation plants were ceremonially commissioned at the end of last year with the participation of the government and the population.
From the world export of important raw materials come from the Empire in %
Food substances Cereal Rice Cocoa Tea
50 33 62 66
Textile raw Metals materials Cotton 2 9 Copper Wool 68 Lead Jute 98 Zinc Tin
Other 19 49 44 59
Hard Coal Pig iron Rubber Crude oil*
58 37 58 2
*In terms of capital ownership, about half of the world's exports of petroleum and petroleum derivatives are in English countries.
The European mother island is only the heart of this giant body stretched out over all continents and seas, whose blood circulation it mediates. Unlike all the other great powers of the earth, therefore, the Eng lish vital problem is to secure the connection between the various parts of the empire and the motherland. An idea of the length of these lines of communication is conveyed by the fact that the Dominion of Canada, which is nearest to the European mother co untry, is 2500 nautical miles distant from the mother country, the more important African territories 3000 -6000
¹ The fact that these lines of communication are all maritime and not continental corresponds to the ratio of material strength to national st rength in which the Empire is superior to all other nations - an advantage which can only be brought to bear to its full extent in naval power.
67
The Northern European Sea Zone
nautical miles, the Asiatic members of the Empire 7000 -8000 nautical miles on the average, and remote New Zealand 12500 nautical miles. Even cursory observation shows that Great Britain is continuously building to secure these lines of communication, and recent events in the Mediterranean basin reaffirm the tenacity with wh ich she opposes any possible weakening of them.¹ The idea of the "muro nostro", as soon as it reaches beyond the small riparian states into world politics, and the reality of the main line of communication through the Mediterranean and the Suez Canal to t he Asiatic members of the Empire will always remain irreconcilable opposites. It is clear that the structural transformation of the world economy accelerated by the war must have had a particularly strong impact on the British Empire. What was called the world economy before the war was essentially a world economy of the British Empire, in which the other nations were allowed to participate thanks to the English free trade policy. Since the end of the war, out of the collapse of these old forms of the world economy, new large -scale economies have emerged ever more clearly - in Europe, the continental European economy; in the Atlantic area, the American economy; in the Eurasian area, the Soviet Russian economy; and in the Pacific area, the Japanese economy - with which the British Empire economy exhibits the most varied fault lines and overlaps. Under these circumstances, the British Empire is undergoing a profound structural transformation, despite the economic upswing successfully initiated by the devaluatio n of the pound, which still suggests a far-reaching reconstruction of the entire imperial structure. ¹ If we limit our examination of this structural change to the purely economic, without going into the closely related political processes, then three major basic lines of English development become visible - the industrial transformation in the mother country with strong shifts in weight from export to domestic market production, the progressive contraction of its foreign economy from world trade to empire t rade, and the endangerment of the foreign capital investments on which Britain's economic prosperity depends. The English mother country was the industrial lace of the world during the past century, but it has been displaced from this position by the devel opment of continental European and North American industry, later by the expansion of Japanese industry, and more recently by rapid industrialization in its own dominions and colonies. English industry today is undergoing a fundamental transformation from export production to domestic production, with extensive shifts in industrial locations both in the mother country and in the Empire as a whole. In particular, the three former representatives of the English export economy, the textile industry, ¹ The fact that it is simultaneously demonstrating its willingness to take political action during this reconstruction is a sign of its inner strength.
The economic face of the individual zones
68
the coal and iron industries, and shipbuilding, are receding in importance, leaving priority to large domestic industries such as construction, armaments, and public utilities.¹
69
Main links
Motherland
The Northern European Sea Zone
Distance English from capital motherland investment in nautical in £ miles million
Total popula tion in million s
Main raw materials as % of world production
Hard coal 21%, iron 10% Cotton 8%, Phosphates 5% Wool 8%, Gold 43%
-
-
46,5
Egypt
3053
-
15,1
South Africa
5945
224
8,4
Canada
2541
446
10,7
British East Indies
7445
458
359,4
British Malaya
8107
108
4,4
Ceylon
6539
¹
5,3
Australia
9739
494
6,6
New Zealand
12469
123
1,5
Industry Producti on as % of world producti on 10,2
Foreign trade sales in RM mill.
0,4
2177
0,4
1796
Cereal 6%, Nickel 86%, Metals 10% Rice 30%, Cotton 16%, Jute 100 %, Tea 21 % Rubber 46%, Tin 31% Rubber 8%, Tea 24%
0,2
2959
1,7
2569
-
1490
-
414
Wool 29%, Lead 15%, Zinc 11% Wool 8%, Butter
1,3
2115
0,2
792
¹ Included in British India.
Lancashire's cotton industry, which dominated the world before the war, has already shifted to a decisive extent to the non -European cotton -producing regions of the empire, insofar as it has not migrated to the cheaper ore -producing regions outside England. In the case of coal and iron, too, the self -sufficiency of the overseas members of the empire is making rapid progress; in all other respects, the expansion of the consumer goods industry is under way in all the major dominio ns. The following overview may show the repercussions of this development on a small section of the industry of the mother country. Since the end of the war, structural changes similar to those in the industrial economy have been taking place in the Empire's foreign trade relations. The reversal of the capital and payment balances between Europe and North America caused by the war led in the course of the last crisis to the collapse of free world trade and the international gold currency system, on which a good part of Great Britain's economic supremacy was built. This dissolution of the original state of equilibrium in the world economy has hit the
13678
The economic face of the individual zones
70
English Empire particularly hard, inasm uch as the resulting clogging of the old world trade routes has forced all countries to retreat to a large extent to their own economies and to equalize the balances of capital and goods in bilateral traffic. As a result, the international exchange of good s is tending to abandon the principle of long-distance overseas connections and to switch to shorter continental connections. Global trade in goods, whose financial and commercial center used to be the English mother country, has split into various groups under these circumstances, thus displacing English world trade from its former central position.
The development of employees in the English industry according to the most important industrial branches in 1000
1923
1929
1934
Declining industries Among them Iron and steel foundries Textile industry Shipbuilding Coal mining
4026
3636
2939
Change 1923/24 in % -27
509 671 150 1226
539 675 163 907
447 530 83 650
-12 -21 -44 -47
Rising industries Among them: Construction Metal industry Automotive and aircraft Construction Electro technical industry
5745
7210
7859
+37
586 143
743 176
777 195
+33 +37
170
228
243
+43
121
172
208
+71
71
The Northern European Sea Zone
The breakdown of world trade by continent Export
Development of the proportion of exports to each continent as a % of total exports 1913 1930 1934 1913/34
Continental European African Greater Economic Area Continental Europe increasingly with : Continental Europe-Africa Asia-Australia
63,9 5,7
64,1 5,8
66,4 7,1
+ 2,5 + 1,4
fluctuating with: Great Britain
17,7
18,9
16,5
- 1,2
decreasing with: America
12,7
11,2
10,0
- 2,7
32,0
52,3
60,8
+ 28,8
4,3
9,1
7,4
+ 3,1
63,7
38,6
31,8
- 31,9
21,9 5,8
40,7 9,3
36,5 12,1
+ 14,6 + 6,3
30,9
19,9
23,7
- 7,2
41,4
30,1
27,7
- 13,7
30,0 12,8
40,9 24,6
39,6 21,0
+ 9,6 + 8,2
Africa increasingly with Continental Europe -Africa fluctuating with America-Asia-Australia strongly decreasing with Great Britain Atlantic-Pacific Economic Area
Greater
America increasingly with : America Asia-Australia fluctuating with : Great Britain strongly decreasing with Continental Europe -Africa Asia increasingly with Asia-Australia America
Export
fluctuating with : Great Britain Decreasing with: Continental Europe
Development of the proportion of exports to each continent as a % of total exports 1913 1930 1934 1913/34 17,2
13,9
16,8
- 0,4
40,0
20,6
22,6
- 17,4
46,2 8,4
51,1 8,8
52,5 9,6
+ 6,3 + 1,2
24,8 20,6
18,9 21,2
18,4 19,5
- 6,4 - 1,1
54,5
64,6
63,1
+ 8,6
16,9
17,9
16,0
- 0,9
28,6
17,5
20,9
- 7,7
The position of Great Britain Great Britain increasingly with : Continental Europe -Africa Australia Decreasing with: Asia America Australia increasingly with : Great Britain fluctuating with : Asia-Australia-America Decreasing with: Continental Europe -Africa
Until recently, England has tried to avoid the repercussions of this shift in world trade by gradually but steadily withdrawing from its former involvement in the world economy and trying to reorganize its foreign trade on behalf of the empire as a politically united English space economy. This centripetal endeavor of the mother country, however, was opposed by centrifugal forces in the development of the foreign trade relations of the main dominions, whose interests extended substantially beyond the sphere of the empire. The centrifugal development of the European-African-South Asian members (Egypt, South Afric a) in particular has continued up to the present, while the Atlantic and Pacific members (Canada, British India, Australia, New Zealand) have seen a reversal of this tendency since the devaluation of the pound and Ottawa. The necessary reconciliation of th e manysided contrasts between the agricultural and industrial interests of the mother country and the individual members of the empire will therefore continue to determine British trade and monetary policy for a long time to come, and will in all probability become a prime example of the English art of waiting and constant balancing and patching up in place of a fundamental reorganization. Monetary policy has a key role to play as a means of English imperial policy, and this must not be ignored when assess ing the future of the pound.
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The Northern European Sea Zone
The development of foreign trade relations within the English Empire
1. Centripetal foreign trade development of the motherland in the Empire
1913
1923
1927
1934
Of total imports, % originate from: British countries Foreign countries
24,9 75,1
29,7 70,3
30,1 69,9
37,1 62,9
Of total exports, % go to: British countries Foreign countries
37,2 62,8
39,2 60,8
46,1 53,9
46,9 53,1
2. The centrifugal development of the export of the capital countries of the Empire¹
Export in % Egypt’s To: Great Britain Other countries
1913
1923
1927
1934
42,6 57,4
47,6 52,4
38,7 61,3
31,9 68,1
South Africa’s To: Great Britain Other countries
88,7 11,3
75,5 24,5
63,1 36,9
55,5 44,5
Canada’s To: Great Britain Other countries
49,9 50,1
34,4 65,6
33,4 66,6
41,4 58,6
British-Raj’s To: Great Britain
23,5
25,3
23,7
32,3
The economic face of the individual zones
74
Export in % Other countries
1913 76,5
1923 74,7
1927 76,3
1934 67,7
Australia’s To: Great Britain Other countries
44,3 55,7
44,1 55,9
33,3 66,7
51,7 48,3
New Zealand’s To: Great Britain Other Countries
78,9 21,1
81,2 18,8
76,0 24,0
81,4 18,6
¹ For Canada, British India, Australia and New Zealand, a reversal of this trend since Ottawa.
As far as the situation of foreign capital investments is concerned, Great Britain was initially affected by the reversal of the balance of payments between continental Europe and North America only to the extent that, in its role as world banker, it allowed part of the financial transactions made necessary by the war to pass through its accounts and thus became involved in the risk both in assets and liabilities. Thus England's financial position vis -à-vis North America had become dependent on the solvency of its new continental European debtors, w hose collapse had occurred in the meantime. The political instincts of the British recognized the dangers threatening from this dependency at an early stage and for this reason they repeatedly took a stand against the financial provisions of the Versailles Treaty shortly after the end of the war.¹ However, while this financial predicament for Britain could be hewn through by the cessation of wartime debt service and currency devaluation without the British financial position being likely to suffer substanti al losses, much broader consequences have arisen from the shift of political forces in the Atlantic and Pacific regions, the reversal of the balance -of-payments structure of continental Europe and North America, and the collapse of the international gold currency system, which have repercussions on British capitalization. They are clearly visible in the cinged disharmony of political, financial, and foreign trade interests confronting England today.
¹ Not against the political, as far as they were not dir ectly related to it.
75
The Northern European Sea Zone
Balance of the UK's credit (+) or debt ( -) vis-à-vis foreign countries around 1930 in billions of NM¹
War debts Public debt Private debt Total
Europe
North America
+ 7,5 + 4,0 + 0,9 + 12,4
- 14,3 - 0,7 + 2,3 - 12,7
South America and Canada + 8,7 + 14,2 + 22,9
Rest of the World
Together
+ 31,3 + 11,3 +42,6
- 6,8 + 43,3 + 28,7 +65,2
¹ Excluding gold and foreign exchange holdings. ² Foreign political debt excluding war debt, commercial debt of foreign states and other public corporations.
Indeed, by far the greater part of its capital interests lie in the Atlantic and Pacific areas, where England now shares maritime dominion with her two competitors, the United States of North America and J apan, while at the same time she is having to retreat step by step from these areas with her foreign trade interests. When one considers how closely capital and commercial interests are normally linked, and how crucial the return on foreign capital investm ent is to the English balance of payments, the English economy, and the standard of living of every Englishman, the importance of this problem to the Empire becomes apparent.
The distribution of English capital and trading interests in the European-African area Atlantic Pacific region region of which of which Total America Total Europe Africa Asia Australia % % % % % & % Trading revenues 53 39 14 19 28 18 10 Capital investments
18
7
11
34
48
26
22
The economic face of the individual zones
76
The foreign trade passivity of England at the peak of the last economic period was about RM. 8 billion, of which the main part was covered by the income from interest and dividends amounting to RM. 6.5 bil lion from the foreign capital investments, while the nest was more than compensated by the income from shipping and insurance amounting to about RM. 3 billion. As a result of the contraction in foreign trade volume and prices, the foreign trade liability h as declined to RM. 3.7 billion, interest and dividend income to NM. 2.6 billion, and services income to NM. 1 billion.
Year
Foreign Trade
Services
1925 1928 1930 1932 1934
-384 -353 -381 -287 -295
+139 +145 +120 +85 +80
Interest Political and transmissions dividends +310 -11 +315 +15 +275 +19 +175 -24 +205 +9
Gold movement monetary private +11 -1 -2 +1 -2
-3 -4 -3 -16 -132
Capital movement -62 -117 -23 -66 +135
Apart from its political patronage, the mother country Great Britain is increasingly becoming the financial holding company of the empire, while its former importance in foreign trade can be maintained only under strong organizational changes and its industrial supremacy is rapidly declining. In this development, monetary policy has acquired a key position that will continue for some time to come. The last word, however, is spoken here by the policy which has at all times given the decisive features to the economic face of Great Britain. In all cases, it will be well to remember that this f ace is old, and that it undergoes its changes only over much longer periods than other states of recent past.
2. The Scandinavian group
The economic face of the Nordic states is today more than ever directed toward England, without, however, abandoning its connection with mainland Europe. This growing integration into the English economic empire, which manifests itself in close adherence t o its monetary and financial policy, in the predominant position of trade with Great Britain and in the manifold cultural relations with this country, is the characteristic feature of all Scandinavian countries. For this reason, the union with the pound bloc, which became necessary because of the economic structure of
77
The Northern European Sea Zone
these states, must be judged differently from the union of Holland, Switzerland and, earlier, Belgium with France in the gold bloc, which, with relativel y weak economic ties, can only be explained by an overemphasis on the political and financial side. Measured by the area of the national territory, three of the Scandinavian countries rank directly behind the large European states, but according to the siz e of the population, they all belong to the smallest countries of our continent. Population growth is very low, as in the entire North Sea region, and only Denmark and Finland are slightly above average. A common feature of the Nordic countries is their st rong ties to the world economy, their low population density and the high proportion of non-agricultural population. Their foreign trade per capita is several times that of the major continental powers and also substantially exceeds that of Great Britain (with the exception of Finland).
National territory, population and foreign trade of the Scandinavian countries around 1935
Country:
Denmark Norway Sweden Finland
National territory In thousand qkm. 44,3 322,7 448,4 388,5
Total population In Mil. 3,6 2,8 6,1 3,7
Share of rural population In % 35 36 40 70
Foreign Trade 1934 per Capita in RM 384 289 274 162
Excess births to 1000 of the population¹ 7,0 5,6 2,8 6,1
¹Average 1930/34.
The interdependence of the economic structure and the synchronization of the economic development of the Nordic countries with England, which existed to a certain extent even before the World War, has become much closer in the postwar period and especially since the common currency devaluation. Today, Great Britain is the most important buyer and supplier in the Scandinavian region, and in this position it can compete with all the European continental powers. It currently supplies 50 -75% of coal imports, 35 -50% of textile imports, and 15 -30% of Scandinavia's iron and metal goods imports.
The economic face of the individual zones
78
Nordic exports by market in 1934
To North European Sea Zone Of which England Scandinavia Balkan States Continental Europe ¹ Of which Germany West Europe Outside Europe
Denmark 71,0
in % of total exports went from Norway Sweden 37,5 41,9
Finland 54,4
60,0 10,6 0,4
24,3 12,9 0,3
25,2 16,2 0,5
46,8 6,9 0,7
24,6
37,1
35,7
29,5
15,3 4,6 4,4
13,7 11,8 25,4
13,9 12,2 22,4
10,1 14,6 16,1
¹Excluding Scandinavia and the peripheral states
Conversely, it receives 80 -90% of Denmark's exports of meat and dairy products, 35% of Sweden's exports of wood and wood products, about 45% of Norway's wood production and 20% of its fishery products, and 50% of Finland's wood and wood products production. However, this position is currently overemphasized by the high level of business in Great Britain, in contrast to the depression and foreign exchange difficulties in continental Europe. Apart from this commonality of trade interests with England and the strong interdependence with the world economy, the Nordic countries are extraordinarily different among themselves. Denmark, in its basic structure, is a highly developed farming country that has specialized, partly under a misapprehension of Europe's postwar prosperity, in supplying neighboring industrial markets with high -value livestock and dairy products; Sweden is an industrial -agricultural country that is largely independent in both its f ood and industrial goods supplies; Norway's export dependent raw material and transport economy is determined primarily by the great importance of fishing and shipping and secondarily by the large -scale industrial exploitation of its water forces; finally, the basis of the Finnish economy is livestock and forestry. This diversity of economic structure, which also explains the difference in the economic development of the Nordic countries, is clearly evident from the following overviews.
79
The Northern European Sea Zone
The economic face of the individual zones
80
Denmark Year
1910 1925 1934
Agriculture Useful area as % of total area 60 64 72
Cattle
Chicken
population per thousand inhabitants 771 4031 805 5869 861 7389
Of total exports, % are accounted for by: Meat Dairy Eggs together and products Bacon 29¹ 35 5 69 33 34 7 74 38 24 7 69
Norway Fishing
Year
1910 1925 1934
Ship inventory per 1000 inhabitants
In t
In BRT
244¹ 224 320²
900 1000 1400
Expanded water forces in 1000 HP. 425 1820 2000
Of total exports, the following account for % of total exports: electroWood chemical Fish and and and Together fish wood metallurgical products products products 35¹ 32 10 77 28 38 16 82 23 27 18 68
¹1913.— ²1932.
Sweden
Year
Forest area in % of the country's area
Production value in industry in million kr
52 53 57
1951¹ 4198 4074²
1910 1925 1934 ¹1912.— ²1933.
Of total exports, % are accounted for by: Wood Ores, Machines Together and wood metals products and metal products 48 24 7 79 49 23 11 83 47 23 8 78
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The Northern European Sea Zone
Finland Year
Forest area in % of the country's area
Cattle population per 1000 inhabitants
60¹ 65 74
588 543 472
1910 1925 1934
Of total exports, % are accounted for by:
Wood and wood products 74² 82 85
Dairy products
Skins and leather
Together
9 10 4
3 3 1
86 95 90
¹1920. - ²1914.
The Danish agricultural structure, especially after the war, was consciously developed for a global economy based on the division of labor. It is based almost exclusively on livestock farming, which supplies the main export products of butter, bacon, eggs and milk, while imports of fodder and cereals for human consumption are several times higher than domestic p roduction. This specialization, which in connection with the rural education and cooperative system has developed some standard products of unequaled quality, has secured a certain market for the Danish agricultural economy even in the crisis, despite the increased agricultural protection of the neighboring countries. On the other hand, the decline in agricultural prices has temporarily called into question its profitability. The past year has brought a significant improvement in this regard, but without ye t guaranteeing lasting stability, especially in view of the precipitous industrial development. Finland has become a serious competitor with the same livestock products and on the same markets, but its export activity is still more dependent on the start o f forestry production than on sales of livestock products. Sales of timber and lumber, wood pulp, pulp and paper account for 75% of total foreign trade. The strong increase in the English absorption capacity for these products has also resulted in a lively domestic economy for Finland in the last two years. The Norwegian economy, which is based on the sea and the abundant water resources of its mountains, has a completely opposite structure. Norway has the fourth largest merchant fleet in the world and thir ty times more tonnage per capita than Great Britain. Similar proportions apply to fishing - primarily ling, cod and whaling - in which a quarter, and together with land -based shipping a third, of the working population earn their living. The large -scale electrochemical and electrometallurgical industries - nitrogen, aluminum, ferroalloys - built on domestic
The economic face of the individual zones
82
water resources, partly on domestic raw materials, but often with foreign capital, form, along with the old wood processing industries - sawmilling, wood pulp, cellulose, paper - the industrial base of the country, around which the new consumer goods industries are grouped. The products of the timber, fishing and electrochemical industries account for more than four -fifths of Norway's total exports. However, while fisheries are still in decline as a result of trade restrictions imposed by the former importing countries, shipping has experienced a quite respectable business reviva l; the industry is also undergoing rapid structural expansion. The structure of the Swedish economy is most balanced. Swedish agriculture largely, though not completely, meets the population's own needs and employs about two fifths of the working populatio n. Industry is extremely diversified, ranging from the basic industries - ores, pig iron and steel - to the large mixed industries - metal products, machinery, wood processing - to the distinctly consumer and fine industries of textiles and leather process ing and food and beverages. The most important export products are, as in the case of Finland and Norway, forestry products of various stages of processing and the products of machine and ball bearing factories, most of which go to the other Scandinavian c ountries. Only the matchstick industry, which used to dominate the world market, was unable to recover after the collapse of Kreuger.
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The Northern European Sea Zone
The Economic Development of the Scandinavian Countries since 1932
End of year
Production index 1928 = 100
1932 1933 1934 1935
98,6 113,8 125,6 134,4
1932 1933 1934 1935
102,9 109,2 115,0 122,0
1932 1933 1934 1935
83,7 97,1 109,6 115,5
1932 1933 1934 1935
89,4 93,5 102,4 112,0
Wholesale Share Forfeiture Export Index index 1927/29 = 100 (i. In Mil. RM Gold) Denmark 50,0 48,3 864,3 860,5 46,3 50,2 764,5 731,6 43,2 51,0 730,6 663,9 46,1 50,6 693,9 656,7 Norway 50,4 46,6 497,0 424,8 48,4 56,1 464,5 388,6 44,4 47,7 463,5 362,5 45,4 65,0 498,0 366,0 Sweden 49,8 24,7 897,6 736,4 47,8 26,1 797,4 784,9 44,8 30,1 851,4 849,8 45,9 32,2 922,3 811,0 Finland 52,0 36,7 228,5 297,4 51,1 46,6 241,9 324,3 46,3 48,2 266,6 345,0 46,3 48,3 344,6 400,1
Unemployment In 1000
Gold holdings in Mil. RM
138,2 131,9 114,3 140,0
149,6 149,6 149,6 132,8
41,6 42,6 40,3 40,1
162,3 161,3 151,7 208,1
126,0 106,9 106,0 60,8
232,5 417,3 395,8 459,0
20,3 17,1 10,7 7,4
32,2 34,1 34,1 49,9
All four Scandinavian countries are not only experiencing a structural expansion of industry, but have also been in a state of economic high tension since the beginning of the year, which has probably already reached its peak in Sweden in particular. They are benefiting in the same way from the industrialization trend of the entire European peripheral zone as from th e effects of the British boom in the northern European region. In all countries of the Scandinavian group, the industrial production level of the last boom has been substantially exceeded for several years, foreign trade is at a high level, the standard of living and wage level are among the highest, and money and capital interest rates are among the cheapest in Europe. Under these circumstances, the manifestations of remaining unemployment are by no means oppressive. Similarly, but not nearly as pronounced as in the three small Western creditor countries of Switzerland, Holland and Belgium, part of the increase in prosperity of
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84
the Scandinavian countries is due to their neutral stance in European wars, in which they played a role as coveted suppliers of the most important war metals, high quality foodstuffs and sufficient cargo space. However, Sweden was the main beneficiary, while Denmark and Norway felt the damaging effects of the Great War much more severely. Even in peacetime, however, the Scandinavian states have always known how to exploit their mineral resources and the advantages of the land and their coasts for barter with the great European powers, and in the process have achieved an above-average standard of living for their populations. Linked primarily to the English circle of interests and within the Baltic region, by going along with the devaluation of the pound they have also avoided the dangers now threatening Switzerland and Holland through their participation in the gold bloc, which are slowly depleting the economic reserves of their people. Their problems are first and foremost the difficult balancing problems within the English world empire, with which they are today lin ked more strongly than ever by common economic interests. It is, however, testimony to the sound and cosmopolitan sense of the Scandinavian countries that they do not neglect their continental interests over this. For there can be no doubt that after a fin al adjustment of the continental European economic situation the influence of the continental economy on the Scandinavian area will again be considerably stronger than it is at present.
3. The Baltic Sea States The three small peasant states on the high northeast coast of the European mainland - Lithuania, Latvia, Estonia - have a national territory which, taken together, is not much larger than that of Czechoslovakia, and a population whose head count is about equal to that of Bulgaria. They are purely a grarian states, although due to the excessively high proportion of the capital city population - Riga's 3,800,000 inhabitants represent about 20 %, Reval's 136,000 about 12 % of the total Latvian and Estonian population, respectively - the agrarian share o f the population seems somewhat depressed in the latter two states. It would be completely wrong to equate these new state formations, which came into being as a result of the world war, with the youthful and developmental peoples of Eastern and Southeaste rn Europe, for example because of their short -term existence or their agrarian character. Estonia and Latvia are distinctly old peoples whose biological makeup is dominated by the middle and old age groups. Their birth rates correspond to those of Western Europe, their mortality rates to those of Eastern Europe, so that the final result is a population growth rate that is among the lowest in Europe. Only Lithuania is an exception to this rule and is located in
85
The Northern European Sea Zone
the middle between the Germanic type of Central and Northern Europe and the Slavic type of Eastern and Southeastern Europe. As a result, only Lithuania shows moderate growth, while the populations of Latvia and Estonia are almost completely stagnant.
National territory and population of the three Baltic rim states around 1935 Country
Lithuania¹ Latvia Estonia Together
National territory in thousand sqkm
Total population in millions
Share of rural population in %.
Population density per sq. km
55,7 65,8 47,5 169,0
2,4 2,0 1,1 5,5
72,9 69,5 65,8 70,3
44,5 29,7 23,7 32,9
Agricultural population density per square kilometer of agricultural land 48,4 30,8 26,2 36,1
¹Including Memel
Since the agrarian reforms, which eliminated the previously predominant large landholdings, the basis of the economy has been the small - and medium-scale farm, which is also the primary focus of the state's care. This transformation of the formerly large-scale agricultural structure has been particularly beneficial for the development of livestock farming. But progress has also been made in land management. The average yield in grain farming has increased not insignificantly. The emphasis of agricultural production, however, is on dairy cattle, poultry and pigs, which also sup ply the most important export products, butter, eggs, meat and bacon. In addition to flax fiber and linseed, there are forestry products such as timber, lumber, cellulose and lumber products. The situation of agriculture, which is often in debt, is largely dependent on the possibility of placing these products on the neighboring foreign markets and the prices obtained there. The industry established in the former Russian peripheral regions has held up to some extent and in some cases has developed favorably , but it does not have the long -term prospects of those in the neighboring east or southeast.
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86
Age Structure and Population Growth in the Three Baltic Rim States around 1935
Country
Lithuania Latvia Estonia For comparison: Young Slavic people (Poland) Middle Germanic people (Germany) Ancient Romanic people (France)
out of every 100 of the total population are aged
For every 100 of the tenured population, there are¹ Births Deaths Surplus births 26,4 15,0 11,4 18,5 13,8 4,7 16,7 14,9 1,8
Below 15 30 23 24
15/30
31/60
32 27 27
28 37 37
Over 60 10 13 12
36
29
28
7
29,0
15,0
14,0
26
29
36
9
16,3
11,0
5,3
22
25
39
14
17,0
15,7
1,3
¹Average 1930/34.
Of some importance in Lithuania is the iron and leather industry as well as the tobacco and distilling industry, in Latvia the wood and match, textile and rubber industry and in Estonia the fuel slate, match and textile industry. The extent to which this developme nt will be hindered by the expansion of Polish, Soviet and Scandinavian industries cannot yet be foreseen.
87
The Northern European Sea Zone
The economic face of the individual zones
88
Agricultural Production and Main Exports of the Baltic Rim States in 1934
Agricultural products Rye and wheat in millions dz. Barley and oats in million quintals. potatoes in million dz . Flax and hemp fibers in 1000 dz. Livestock Cattle in 1000 pieces Pigs in 1000 pieces Horses in 1000 pieces Main export goods Butter in 1000 dz. Eggs in 1000 dz. Meat and bacon in 1000 dz . Wood and wood products in millions of local currency Flax and hemp in millions of national currency
Lithuania
Latvia
Estonia
9,5 6,3
6,3 6,1
3,1 2,7
24,9 217,0
14,6 162,0
8,9 71,0
1300 1200 600
1559 586 370
682 277 210
95,8 15,6 271,3 41,4
156,5 1,3 24,6 40,1
92,5 13,7 46,3 13,2
11,2
4,1
-
A far-reaching change has taken place in land relations, which can be characterized as a deliberate tendency to loosen the former mainland ties with Germany and Russia and to strengthen trade relations with England. The English market now accounts for two-fifths, and together with Scandinavia for half, of the Baltic rim states' exports and is also gaining in importance as a supplier of industrial products. Apart from Latvia, the share of exports to Germany has declined sharply, and exports to Russia have almost completely ceased. Trade relations with each other and with neighboring Nordic and Eastern European countries are extremely poorly developed. As a result of last year's good harvest, favorable developments in the timber and textile industries, and increased exports to England and the Scandinavian countries, there has been a strong revival, particularly in Estonia, which has also joined the pound bloc in monetary terms. The pressure of the agricultural crisis has also eased in Latvia and Lithuania. A certain improvement over the previous year can be seen in the easing of financial conditions as well as the labor market situation. However,
89
The Northern European Sea Zone
the economic situation of all three countries remains largely dependent on the Anglo-Scandinavian boom, the revitalizing effects of which are curren tly being felt throughout the Baltic region.
The trade links of the three Baltic Sea rim states
To
England Scandinavia North European Sea Zone Germany West Europe East Europe Continental Europe Without Scandinavia
in % of the total exports of the Baltic Sea rim states went from Lithuania Latvia Estonia 1925 1934 1925 1934 1925 1934 24 43 35 36 25 40 3 5 4 5 15 11 27 48 39 41 40 51 51 22 23 29 31 23 5 11 22 12 10 8 2 5 7 3 11 3 69
47
54
53
58
43
The Economic Development of the Baltic Sea States since 1932 End of Year
Bank discount % per annum
Wholesale index 1927/29=100 (in Gold)
1932 1933 1934 1935
5,5 5,5 5,0 4,5
69,1 51,4 43,3 45,8
1932 1933 1934 1935
6,0 5,5 5,5 5,5
67,5 65,8 69,2 71,7
1932 1933 1934 1935
7,0 7,0 6,0 6,0
52,2 47,9 42,3 38,2
Import Export In Million RM
Estonia 40,8 36,0 38,4 47,0 Latvia 67,2 68,4 75,6 81,9 Lithuania 69,6 60,0 57,6 52,8
Unemployment in 1000
46,8 42,0 48,0 55,0
13,7 9,2 2,7 2,0
76,8 61,2 68,4 80,1
17,3 10,6 7,9 8,1
79,2 67,2 61,2 63,4
-
The economic face of the individual zones
90
This economic dependency of the three Baltic Sea states will probably continue to determine their development in the future. The narrowness of their own market, their low population growth, and their heterogeneous biological structure do not give the three Baltic Sea countries, which became dependent on each other as a result of the World War, any prospect of playing an active role in the future on behalf of the European nations, even in the even t of a closer union. The natural and, to a greater or lesser extent, political dependence on the neighboring continental powers and the commercial aspirations for integration into the Anglo -SaxonScandinavian economic area are opposites that will hardly al low the Baltic rim states to bridge the gap in the long term. In addition, the rapidly increasing pressure on the eastern and southern borders will hardly allow these countries to completely stabilize their state sovereignty in the future, despite all poli tical attempts to secure it.
II. The Western European Continental Zone
The Western European continental area comprises a group of biologically aging countries whose population growth had passed its peak around the middle of the last century and is today essentially stagnant. It is a zone which, as a result of its natural wealth or wealth happily acquired in favorable historical periods, and partly also as a result of its balanced social structure, has an extraordinarily high economic and financial resili ence. Long weaned from greater dynamic growth impulses, it embodies the zone of financial stability, economic conservatism and political security. The union in the gold bloc for the defense of the gold currency, the liberalist-capitalist economic form whic h has been maintained almost unchanged despite the oppressive economic crisis, and the political idea of the collective guarantee of the League of Nations which has its home here all spring from the same root, the desire for the preservation of the existin g. The web of political treaties and guarantees for the maintenance of the status quo which covers our whole continent is woven in the West. It is astonishing how far the wise and tenacious policy of the Western European peoples has succeeded so far in ach ieving this goal. The western half of continental Europe, which at the beginning of the last century comprised 35 million people, nearly one-fourth of the European population, now amounts to 62 million people, barely one-fifth, and by the middle of our cen tury will reach only barely one -sixth of the European population. Nevertheless, its political and economic importance has increased during the last century. Although this zone is currently in the most acute crisis, three quarters of Europe's gold reserves are located here, industrial
91
The Northern European Sea Zone
production reaches almost one third of continental Europe's, and the standard of living and wage levels are among the highest on the European mainland. The countries of mainland Western Eu rope also divide into the non -English-flag remnants of the great colonial empires of the earth -France in Africa, America, and Asia, Belgium in Africa, and Lolland in East Asia -uniting almost all the colonial possessions of continental Europe. But the development in Europe progresses and cannot be pressed into rigid forms. Already a country of the Mediterranean zone, on account of its pressing surplus of population, has laid claim with arms to participation in the African colonial territory. If this isolated outbreak, as a result of a wrong assessment of the pan -European and its own situation, will lead to a lasting setback in the Mediterranean basin, the development in the Eastern European area continues unstoppably. The rapid population growth of the Slavic agricultural group will have fundamentally shifted the balance of strength in Europe within a few decades. Although the Central European economic area will have to deal with this development first and foremost, the Western European zone of stability will not be able to escape the manifold problems of a political, economic and financial nature resulting from this development.
4. France The Latin supremacy in the west of Europe, which in the course of the last centuries has risen with great regularity once in each secular period to become the first military power of our continent, today possesses the largest contiguous national territory among all European peoples. Despite the fact that the advantages of the soil and nature offer the people of the state mor e than sufficient food and settlement space in the motherland and predestine it to be the continental European land power, France has also developed into a colonial power of great style due to its coasts facing the sea on three sides. Its face, like that o f Italy, is directed toward Africa and, via the bridge of the Mediterranean Sea, toward the Near East, but its colonial interests, like those of Great Britain, also radiate across the Atlantic, Indian and Pacific Oceans. The political and cultural dual rol e of a great continental European land power and a world colonial empire is also pronounced in the economic face of France. In addition, a fortunate historical development created a unified state and economic territory here a hundred years earlier than in the rest of Europe, the most important colonial interests are concentrated in immediately neighboring Africa, and, in contrast to Great Britain, the overseas possessions lie
The economic face of the individual zones
92
almost entirely outside the catchment area of the new power centers in the Atlantic and Pacific Oceans.
Territory and population of the French Empire 1935
Country
Total Realm Motherland Colonies and mandates Of which: Africa Asia America
Area in thousand sq. km 12459,1 551,0 11908,1
Population in Million
10889,1 903,2 93,1
39,1 25,1 0,5
106,7 41,9 64,8
Of which: White Colored In Mil. In Mil. 41,9 64,8 41,9 64,8 -
39,1 25,1 0,5
This unique favor of the settlement area and the fact that it is filled by a people that has found its present way of life for more than a hundred years and has not grown for fifty years, must be kept in mind when interpreting the economic face of France. It is a population that meets new political or economic concepts with great distrust, an economy that is unfamiliar with the pressure to expand emanating from population densification and therefore grows less from within than adapts to structural changes outside its borders, and a policy that conserves the favorable conditions of past development with great tenacity and mature experience. How largely France has been able to maintain its historical position of power by these qualities, against the trend of its population growth, is shown by the fact that since the times of Louis XIV its share has fallen from one -third to one-tenth of the European population, but its political and economic influence has if anything increased. As already mentioned, France is the first country in Europe in terms of the size of its territory a nd was also the most populous until the middle of the last century. It is only around 1850 that it is surpassed by Germany, around 1900 by Great Britain, around 1930 by Italy, and around 1960 it will also be surpassed by Poland. France's small population i ncrease, still visible after 1870, is due exclusively to the immigration of foreign parts of the population. The heavy immigration, especially after the war, which at times considerably exceeded that to the United States of America, has created a foreign -ethnic, especially Italian, Flemish, and African, blood-impact that can be estimated at about 6 million, or 15% of the total population. The centuries of great political and economic power in Europe, acquired
93
The Northern European Sea Zone
and defended in wars with heavy losses, and the colonial expansion have thus greatly exhausted the forces of the French people. Under these circumstances, the Western supremacy of Europe can no longer be expected to exert any great dynamic forces of development, bu t it can be expected to exert all the more static energies of preservation of the existing. This conservatism is also strongly promoted by the age composition of the population, the difference of which is shown below by three examples.
Country France
1800 28,2
Total population in Million 1870 1900 1935 37,5 40,7 41,9
1960 40,0
Germany Great Britain¹ Italy Poland
22,1 15,7 18,1 12,0
39,7 31,5 28,1 17,0
68,0 49,5 50,3 42,8
50,7 41,5 34,0 23,0
66,0 48,9 43,4 34,0
¹Including Irish Free State.
Of the total population, age gaps account for age gap Children and teenagers up to 15 years Young citizens from 15 to 30 years older citizens from 30 to 60 years old people over 60 years
young Slavic people (Poland) %
Middle Germanic people (Germany) %
ancient Romanic people (France) %
36
26
22
29
29
25
28 7
36 9
39 14
Apart from the age breakdown, however, the occupational, social and economic makeup of the French population is sound and forms the basis of the balanced development and great political and economic resilience with which the country occasionally surprises the world in times of crisis. The French heartland has a markedly rural and small -scale character, which on the coasts in the south, west and north merges into the fishing, seafaring and rural type, and almost only on the eastern border of the country, wit h modern large-scale industries, does it confront the neighboring industrial regions of Germany and Belgium. Accordingly, the social contrasts in France are smaller than in the neighboring countries and, moreover, are
The economic face of the individual zones
94
mitigated by the savings reserves that exist everywhere in the population, so that the problem of the propertyless industrial proletariat hardly exists. Almost two fifths of the total population live from agriculture, forestry and fishing, one-fifth from handicrafts, trade and transport, another fifth from administration, public and liberal professions, and the last fifth from industrial activity. The country produces bread grain, potatoes, meat, fats, sugar, fruit, wine and vegetables, as w ell as fodder for the maintenance of its livestock in sufficient quantities. In important industrial raw materials, the soil yields coal, iron, potash, lumber, flax fiber, and silk. The development of industrial production is much slower and more balanced than in other countries, due to the fact that the population is no longer growing.
95
The Northern European Sea Zone
Important agricultural production 1934 % of Mil. t European production Cereal 90,0 21,6 Oats 41,5 17,0 Barley 11,4 7,3 Rye 8,3 3,6 Potatoes 153,9 10,5 Sugar 11,7 18,4 Raw silk¹ 77,0 1,8 Wine² 77,0 47,0 Wood³ 45,6 -
Important industrial production 1934 % of Mil. t European production Hard coal 47,6 9,6 Iron ore 32,0 52,5 Pig iron 6,2 19,5 Aluminum 16,0 15,4 Cement 4,4 16,7 Nitrogen⁴ 83,1 8,4 Kali⁴ 379,0 22,0 Artificial silk⁴ 32,1 16,9 Motor vehicles in pieces 176000 27,6
¹In tons. - ²In millions of tailgaters. - ³In millions of solid cubic meters. ⁴In 1000 tons.
In contrast to the British Empire, whose island motherland situated in the North Sea is but the lark of an empire scattered over the globe and held together by a highly sensitive system of long -distance political, military, and economic connections, France is geographically, politically, and economically a complet ely self-contained organism, confining its vital interests to the circle of neighboring frontiersmen and extending its shoe range only outward over the colonial territories of other continents. A large part of the similarities as well as of the contrasts b etween English and French state, economic and monetary policy cannot be understood without this realization that for France alone the situation in continental Europe is decisive and everything else of secondary importance, while for Great Britain the African, Australasian or American members of the world empire are so much in the foreground that at times even the European continent becomes of secondary interest in comparison. This is particularly evident in foreign trade. French exports go almost exclusivel y to the immediately neighboring countries of Belgium, Lolland, Switzerland, Germany, England, Italy, Spain and the North African colonial empire. The same applies to imports, in which only the United States of America, as a non immediate neighbor, has bee n able to gain somewhat greater importance as a supplier of cotton, mineral oil and metals. The development shows that, unlike England, whose foreign trade was based on the principle of the longest transport routes, French land interests are limited to the shortest connecting lines to the immediate neighboring countries. The same applies to the other items of the balance of payments, into which only during the years of prosperity did American
The economic face of the individual zones
96
travel to the f ormer war zones cause a one -time and probably not recurring disturbance.
Reference or sales countries African Colonial Empire Of which: Algiers Morocco Tunis
Import % 20,5
Export % 26,0
12,1 2,0 1,8
17,2 2,6 3,4
European neighboring countries Of which: Belgium, Switzerland, Holland Germany Great Britain Italy
30,1
47,5
11,3 9,6 7,1 2,1
24,7 11,1 8,6 3,1
Overseas Of which: America Asia Australia
29,6
17,2
15,9 10,2 3,5
10,8 5,9 0,5
The granting of credit to foreign countries has continued to follow the political line after the war and, apart from neighboring countries, has extended to the Eastern European allies, with the avoidance of Germany. Capital investment in the overseas colonies has been relatively small. Here, the fundamental contrast between the Anglo-Saxon economic spirit, which reaches into the distance, and the Latin economic ideal, which is limited to an immediately neighboring area, becomes clearly visible. The equilibrium of the political and economic structure is one of the main causes of the resistance to crisis which France demonstrated in the general disintegration of the world economy after 1929 and which made the country appear until 1931 as a happy island in the sea of general crisis, while the collapses in the rest of Europe, in the English Empire and on the American and Asian continents were already approaching their lion's denouement. France found itself in an extremely favorable economic situation as a result of t he outcome of the war, the German payments and the stabilization of the currency by Poincar6 . The reconstruction of the areas destroyed in the war with the help of the German payments had almost imperceptibly been transformed into a general expansion of t he production facilities
97
The Northern European Sea Zone
and the establishment of new industries such as the automobile, radio, chemical and artificial silk industries, and has been continued in recent times with extensive road and fortress construction and other military armament.
Of French and English exports, the following account for %. 1913 1928 1933 Trading sales with France neighboring countries and colonies ¹ 71,6 66,5 66,5 Remaining colonial empire 5,0 6,4 10,4 other non-neighboring countries 23,4 27,1 23,1 Trading sales with Great Britain Neighboring European countries ² 22,5 19,1 26,2 other European countries 11,1 13,2 13,0 overseas dominions and colonies 37,2 40,4 35,5 overseas non-English world 29,2 27,3 25,3 ¹Germany, Belgium-Luxembourg, Lolland, England, Switzerland, Italy, Spain, Algiers, Morocco. ²France, Belgium-Luxembourg, Lolland, Germany, Denmark, Norway, Sweden, Finland, Baltic States
German payments alone from 1927 to 1931 brought a net inflow of 15 billion ff rs.¹ American travel in the same period about 30 billion ffrs. which, together with the other assets of the balance of payments and the foreign capital inflow, increased the gold and foreign exchange reserves of the Bank of France from 20 to 90 billion ffrs. However, the progress of the world crisis also caused difficulties for France, as its exports to the countries affected by it fell rapidly, while the import pressure of these countries on the still unweakened French domestic market increased sharply. Price declines on the world market, while wages and prices in France were still rising, quickly led, exacerbated by Anglo -Saxon currency devaluations, to an excess of the internal price level over the world market and thus to a passivation of the balance of payments that became unsustainable when, as time went on, tourist and interest income also became more meager and German payments ceased.
¹After deduction of 8 billion ffrs. that went out again for interest and redemption payments on the French war debt to England and America
The economic face of the individual zones
Year
1928 1929 1930 1931 1932 1933 1934
Foreign trade deficit - 4480 - 10011 - 12973 - 13214 - 10015 - 9000 - 6750
Tourism revenue + + + + + + +
7500 8500 8500 6000 3000 2000 2500
income from services + 1450 + 1100 + 600 + 900 + 1000 + 1300 + 600
Interest income + + + + + + +
1250 4900 4181 3350 1160 1850 2500
98
Income from war payments + 5180 + 6700 + 6194 + 2600 -
Gold movement - 6140 - 8505 - 11530 - 18533 - 17660 + 2070 - 1500
The general confidence shaken by various financial scandals and the deficit domination of the state budget then led, despite the country's capital wealth, to a financial and credit crisis whose repercussions on the money and capital markets have not yet been overcome today. Although the burden of the crisis was partially passed on to other states through the withdrawal of capital invested abroad and the return of foreign workers, the economic depression resulting from last year's monetary and deflati onary policies took on an extent that made the continuation of these policies no longer advisable.
Economic Development in France since 1930
End of Year
1930 1931 1932 1933 1934 1935
Production index 1928 = 100 105,5 87,4 77,2 83,5 73,2 74,8
Wholesale Stock Index index 1927/29 = 100 84,3 68,9 64,9 63,9 53,9 55,5
86,5 54,8 60,3 55,1 43,2 44,7
Import
Export
Unemployment in 1000
In Mil. Ffrs. 52512 42204 29808 28428 23064 20940
42840 30432 19704 18468 17820 15468
12,0 147,0 277,1 312,9 419,1 439,8
Gold holdings in million ffrs. 53578 68863 83017 77098 82124 66296
At any rate, thanks to the country's balanced economic structure, the course of the crisis in France has been much milder and, as a result of the population's widespread savings reser ves, far less devastating in social terms than in other countries. The domestic market is essentially healthy. Losses in foreign trade are largely offset by closer ties with the colonial empire. The state apparatus and the traditional political order have so far survived all crisis shocks, and the social system of the naturally
99
The Northern European Sea Zone
rich country and the small -capitalist, pensioner -like economic mindset of the population have also remained unchanged. However, the ceiling of financial power has been passed for some years now, and the military, political and economic supremacy in Europe, which was temporarily established after the end of the World War, is already a thing of the past again and will have to undergo fundamental sh ifts in weight by the middle of the century as a result of rapid developments in the south and east of our continent. Whether the French people, with their conservative attitude, will be able to cope as quickly as other peoples with the forthcoming changes in technology, the gold and capital situation and the new economic and political problems in Europe must even be doubted. Nevertheless, it will be well not to underestimate France's astonishing resilience, repeatedly shown in times of crisis, if one does not want to be taken by surprise. The large, uniformly closed territory of the state in Europe and the extensive colonial areas in Africa will continue to secure a standard of living for the people, who are more concerned with political security and carefu l preservation of the existing than with economic progress, which is not available to many European peoples.
5. Belgium, Holland, Switzerland The three small West European creditor countries have in common that they are ethnically and linguistically splinters of the large European nations, possess a unified state people only in a substantially different sense than these and, moreover, disintegrate into different linguistic areas and sharply separated confessional parties. Their unified state conscious ness draws its essential forces from the cultivated tradition of historical greatness, from the commonality of bourgeois democratic ideals and from the experience that within a European world which every few decades is ready to take up arms, the preservati on of statehood is the best, so to speak, cooperative safeguard of bourgeois prosperity. Because of the smallness of the national territory, there are hardly any larger power or state political interests other than the interest in asserting their independe nce. Here, the economy has primacy over politics, and politics is primarily economic and social policy. The dependence on the great European powers is sharply marked in the economic face of Switzerland, Lolland and Belgium. The three countries can be addressed neither as agricultural nor as industrial states, for the former lacks food dependence, the latter its own raw material base, the broad base of industrial development and a sufficiently large absorption capacity of the internal market. They are service countries of the great European powers which, by virtue of their geographical position and the skill of their inhabitants in particularly favorable
The economic face of the individual zones
100
constellations, have attained an economic importance fa r beyond their natural conditions. An essential part of their prosperity is based on the fact that in times of peace they adapt themselves to the special needs of the great neighboring peoples and, by their neutral attitude in European wars, become supplie rs of the fighting states and preferred countries of capital flight. In addition, there are special advantages for Switzerland from the exploitation of its natural beauty for tourism, for Belgium from the exploitation of the iron deposits crisscrossing its territory, for Lolland from the supply of livestock and horticultural products to the neighboring industrial districts, and for both together from the possession of the colonial empires acquired earlier at a favorable price and secured by the great Wester n European powers.
Year
Switzerland Holland Belgium
National territory In 1000 sq. km 41,3 34,2 30,4
Total population In Mil. 4,1 8,3 8,3
Share of rural population in %. 26 21 19
Foreign Trade 1934 per Capita in RM 438 356 370
Excess births to 1000 of the population 4,9 12,8 4,5
The acquisition of wealth in European wars and its increase through commercial and financial services for the great neighboring powers in peacetime determine almost without exception the economic picture of the three countries in the boom as well as in the crisis -ridden decline, despite the diversity in individual cases. This can be clearly demonstrated by statistics. The increase in exports during and immediately after the Franco -Prussian War is three to four times gr eater than the normal development before or after. The same is true of the increase in production, national income, currency reserves and the savings of the population, as well as its overall wage and living standards. This tendency to increase wealth is m ost evident during the World War, in which, however, Belgium is absent because it was involved in the war. In the course of the world war, the monetary gold and foreign exchange reserves of Switzerland and Lolland tripled to quadrupled, the savings deposit s of the population roughly doubled, and the balance sheet figures of the credit banks, the capital issues and the state budget multiplied, while the major European powers became overindebted, lost most of their foreign exchange reserves and suffered more or less severe inflation.
101
The Western European Mainland Zone
The economic face of the individual zones
102
Export development before and after the Franco -German War
Holland Belgium Holland Belgium
in millions of local currency 1870 1875 382 536 690 1102 Increase in % 1870/75 1875/80 +40 + 17 + 60 + 10
1865 334 602 1865/70 + 14 + 15
Holland Gold and foreign currency holdings at the central bank Central bank giro transactions Government revenues Switzerland Gold and foreign currency holdings at the central bank Deposits with private banks Capital issues
1865/80 + 87 + 102
In millions in local currency 1913 1920 1927
1934
52
171
673
609
1917
4917 490
7170 482
11282 1028
14215 1033
16307 490
152
176
688
596
861
277 176
328 227
1905 Switzerland Gold and foreign currency holdings at the central bank Deposits with private banks Capital issues
1880 625 1217
1905/13
21537 40619 917 666 Increase in % 1913/20 1920/27 1927/34
450 1905/34
+229
+ 294
-9
+ 215
+ 3587
+46 -2
+ 57 + 113
+ 26 0
+15 - 53
+ 232 0
103
The Western European Mainland Zone
1905/13 Holland Gold and foreign currency holdings at the central bank Central bank giro transactions Government revenues
Increase in % 1913/20 1920/27 1927/34
1905/34
+ 16
+ 291
-9
+ 44
+ 466
+18 +29
+ 6466 + 304
+26 0
- 32
+ 156
The hunger for goods during the war and first post -war years brought about an almost unnatural increase in agricultural and industrial production in these countries. In the Swiss textile industry, for example, which had declined slightly up to the World War, the number of cotton spindles increased from 1.1 to 1.5 million and the number of cotton loo ms from 13.5 to 26.1 million between 1913 and 1919. In the machinery industry, exports tripled, and in the chemical industry, exports quadrupled. In the same period, Lolland has lively increased the export of agricultural products and approximately doubled the output of the mining, metalworking, chemical, and electric power industries. In Belgium, industry was rebuilt on a larger scale after the war, giving the country a stronger industrial character than in the other two countries. While agricultural and i ndustrial production began to decline again soon after the end of the war, the money and capital markets, already saturated by the influx during the war, experienced a new inflation with the onset of the international currency crisis. Since then, monetary gold holdings have quadrupled again in Switzerland, doubled in Lolland and tripled in Belgium, and by 1932 were fifteen times their prewar level in Switzerland, six times in Lolland and five times in Belgium. While Switzerland and Lolland, in particular, h ave become centers of capital and finance far beyond their natural importance, none of the three countries possesses even nearly enough agricultural materials to feed its population, industrial raw materials to supply an industry, or sufficient domestic sa les for its highly developed commercial activity. In this mismatch between domestic production and domestic needs, imports and exports, even Great Britain is likely to be far surpassed by the three small Western European creditor countries. The share of do mestic production of important foodstuffs is currently in % of demand in:
The economic face of the individual zones
Cereal Other grains Sugar
Switzerland 26 16 4
Holland 36 22 96
104
Belgium 26 49 66
All three countries are also largely dependent on imports for raw materials for their industrial production. Belgium possesses only coal and iron and, in the African colonial empire, copper, Lolland some coal and, in the East Asian possessions, rubber and tin, while Switzerland is completely devoid of raw materials except for water, sun and air. The main import and export items in the balance of trade in 1934 were in millions of national currency in:
Switzerland
Holland
Belgium
Raw material import surplus (-) Coal Iron and Metals Cotton Wool
- 101 - 50 - 34 - 23
-1 - 60 - 21 -9
- 45 + 1613 - 462 - 144
Exports of finished goods (+) Flowers, Vegetables, Seeds Dairy products, Eggs
+ 40
+ 97 + 103
+ 115
Machines and Appliances Textiles Clocks Chemical products
+ + + +
+ 63 + 47 + 19
+ 720 + 1693 + 762
124 208 109 113
On this basis, made uncertain by the collapse of the international monetary system and the progressive regrouping of world trade, of the excessive import requirements for food and materials and the high dependence on exports for finished industrial production, as well as on the earlier capital investments abroad and the domestic savings, there is built up today a population of above -average density with the highest wage and living standards in all Europe. Belgium and Lolland are twice as densely populated a s Germany or Italy, and Switzerland is still one and a half times as dense as France, if the non -inhabitable glacier and lake areas are deducted. Wage
105
The Western European Mainland Zone
levels in Lolland and Switzerland are about twice as high as in Germany and three times as high as in Italy, and are below average only in Belgium as a result of the currency devaluation, which has already been carried out for the second time. But the broad comfort of the standard of living that the traveler admires is only apparently based on one's own strength, and today, even where it is built on the large financial and savings reserves, it is no longer as securely founded as it once was. For almost five years, all three countries have been in a severe deflationar y crisis that is not only cyclical in nature. Their agriculture has become structurally distressed, despite extensive state subsidies, and their export industries are in a process of chronic contraction. This high sensitivity to crises is related to the un usually strong dependence of prosperity and national income on the economic situation of the neighboring major European powers and the functioning of international trade in goods and capital. Neighboring peoples are having to cut back and are making less a nd less use of the formerly high-paying activities of the three service countries. The more this general retreat to Europe's own economic forces continues, the more the previous sources of income from traditional agricultural, industrial or merchant servic es cease to exist, and the greater becomes the importance of previously acquired foreign claims and savings, which are, however, endangered by currency devaluations and the poor financial situation throughout the world. Under these circumstances, the econo mic future of all three countries is not very clear at the moment and is only illuminated by the hope of a settlement of the political and economic differences between the major European powers. A not inconsiderable part of the former prosperity has been eroded by the long crisis, the old sources of tourism and the supply of foreign markets with special products of agricultural or industrial activity have been partially buried, and the development threatens everywhere to burst the former commonality of civi c virtues. Social disputes over the distribution of the burdens of the crisis will continue to grow and may yet lead to surprising internal political formations, especially since they hardly find any lemming from generally recognized overriding state neces sities. The following figures show the continuing process of economic contraction more clearly than textual explanations can. The financial interests that have come to the fore so far have rallied the small Western European creditor countries closely aroun d the French-led gold bloc, even though this gives them the least common ground in terms of trade policy and France can and will do the least to help them in their particular situation. The adherence to price and currency parities, which must be described as excessive after the devaluation of the Anglo -Saxon powers, has only exacerbated the internal crisis since the founding of the gold bloc. For the economic observer, there is little doubt that these falsely constructed ties will not withstand the force of real conditions in the long run.
The economic face of the individual zones
End of Year
Production index 1928 = 100
Wholesale Stock Index index 1927/29 = 100
1930 1931 1932 1933 1934 1935
89,6 85,3 73,9 74,1 75,0 75,0
82,0 72,2 64,5 64,0 62,4 64,5
1930 1931 1932 1933 1934 1935
81,7 75,3 76,6 70,9 72,8 68,0
73,1 58,1 51,9 52,6 52,6 51,0
1930 1931 1932 1933 1934 1935
77,6 68,1 70,7 70,7 69,1 76,0
80,3 67,3 61,2 56,6 54,7 68,0
Import
Export
106
Unemployment in 1000
Gold holdings in millions of RM.
1416 1086 625 664 667 660
23,0 50,6 81,9 95,0 91,2 100,0
578 1901 2002 1618 1547 1134
2898 2223 1438 1231 1204 1140
136,0 246,0 351,0 394,0 414,0 420,0
718 1503 1756 1564 425 1010
3049 2706 1737 1646 1573 1440
63,5 129,4 171,0 194,3 212,7 150,0
1380 1495 1521 1603 1462 1429
In millions RM.
Switzerland¹ 77,8 2051 51,2 1806 55,4 1397 70,0 1262 66,4 1146 71,1 1044 Holland 53,7 4077 31,3 3207 31,3 2209 33,1 2051 25,1 1757 30,4 1584 Belgium 54,0 3623 36,0 2785 37,0 1895 32,0 1739 25,0 1603 31,0 1527
¹In place of the production index at Switzerland rail freight.
The Foreign Trade Interests of Switzerland, Holland and Belgium 1934 After Western Europe France Switzerland/Holland/Belgium Other Neighboring Countries Germany Great Britain Italy
Of total exports in 1934, % went from Switzerland Holland Belgium 20,2 22,1 32,4 14,4 8,1 17,6 5,8 14,0 14,8 40,5 21,6 9,9 9,0
46,2 24,9 19,1 2,2
27,6 11,7 13,5 2,4
107
The Central European Economic Area
In the spring of 1935, the continued contraction of economic activity and the growing pothole tension within the predominantly industrial population led Belgium to break out of the gold bloc and be the first to proclaim currency devaluation. Despite the only very cautious currency devaluation, economic activity in Belgium has already picked up considerably and has also brought about a substantial reduction in unemployment. Since Belgium, which has the closest economic ties to France, has turned to the realm of Ang lo-Saxon monetary policy and, as a result of recent events in the Mediterranean basin, Italy has also practically dropped out of the gold bloc, the latter's weight has diminished considerably. As a result, the two remaining gold bloc countries, Switzerland and Lolland, have increasingly become satellites of the leading power of the gold bloc in the face of continuing gold losses and have become dependent on the decisions of French monetary policy, which in all likelihood will hardly spare them a subsequent currency devaluation.
III. The Central European Economic Area Between the conservative security policy of the West and the dynamic development power of the East, between the North acting from its overseas interests and the South turned towards the inter -European cultural area of the Mediterranean basin, lies the Central European economic area. At times almost completely closed off by the suspicious West, and beset by the rising population tide of the East, the Central European economic area has never ceas ed to act as a mediator in Europe, despite being weakened by the war. Its future European task and at the same time its life problem will be the balance between the static inertia of the Western powers and the dynamic developmental impulses of the Eastern peoples. The central European area with its population of 100 million is at the same time the industrial heart of continental Europe. About 15 million of the total 30 million industrial workers in continental Europe - at the low point of the crisis, howeve r, also 7^ million of the total millions of unemployed - are concentrated here. Almost half of continental Europe's industrial production comes from the Central European factories, whose demand for raw materials and exports of finished goods are the most intensive links between this colony less inland region and the world economy. The growth forces stemming from the population increase of the last two generations are still alive, even if they have been greatly weakened by developments since the war. The tra nsition from industrial expansion to economic compression and social reorganization continues under these circumstances and inevitably leads to new forms of economic system. At the same time, during this transitional development, Central European economic policy must simultaneously confront
The economic face of the individual zones
108
internally and externally the problems of industrial structural transformation in the world and the exaggeration of its agricultural price level in relation to the world market. Under these circumstances, the Central European economic area has few preconditions for its role as a mediator in Europe other than the favor of its natural location, especially since it no longer forms a unified economic area after the destruction of the old Danube monarchy. Since the end of the war, Germany, the largest unified economic bloc, has not yet regained its position of equilibrium. Stripped of a large part of its former economic and financial basis for maintaining the standard of living of its population of 70 million, and accelerated in its development toward overpopulation by the cessions of territory, Germany is at present struggling not only to restore its balance of payments equilibrium externally, but also to reorganize its social conditions internally. The same is true of the successor states to the former Danube monarchy, which from the outset have proved too weak to carry through the task of mediation assigned to them by their own efforts. The already difficult task of mediating between the central European countries is made even more difficult by the fact that the natural economic preconditions are crossed by the political objectives of the European power groups. The various attempts at political and economic reorganization and t he repeated regrouping of the individual antagonists in this area are clear signs of these forces working against each other. Although it is to be expected that developments within the eastern agrarian group and in the southern Mediterranean zone will brea k down some of the ossified forms of European post -war politics, a particularly clear view and a purposeful will will be needed to prevent the crossed threads from becoming inextricably tangled in the Central European area.
6. Germany
The face of by far the most populous European nation is determined by its central position in the heart of Europe, the repercussions of which in the course of history have repeatedly had a decisive influence on German destiny. The consequence of this central position is that no process of some importance can develop in Germany without Europe getting into attentive motion up to its outermost border zone. For depending on whether the central European core area as a closed political and economic unit radiates its forces into the European area, or whether the counterforces of the neighboring states meet in a weak middle area, a completely changed situation arises in continental Europe. This fact has led in Germany to the
109
The Central European Economic Are a
double-sided psychological reaction of often feeling, on the one hand, that it is the center of the European world and, on the other, complaining that European public opinion is so largely concerned with domestic German affairs. The basic structure of t he German economy is shaped by the size of a predominantly urban and industrial population of 70 million, crowded into too small a space and having lost, as a result of the World War, part of its economic and financial resources for maintaining its former standard of living. It is also characterized by the unstable situation between the politically and financially strong West, whose biological development is complete, and the East, whose economic and financial strength is all the weaker because of its rapid ly increasing population growth. In addition, the soil, which is not overly fertile, contains hardly any raw materials in its interior other than coal, salts and building materials. The less than favorable natural conditions must therefore be compensated f or by particularly intensive work and appropriate organization. The transition from expansion to compression and social reorganization in the interior, which is inevitable for the industrial peoples of continental Europe, is particularly acute for Germany under these circumstances and has already led to changes in the economic system which have not yet been completed. The dynamic features of German economic development with its sharp swings, which cause discomfort to Western Europeans, can only be understoo d if one remains aware of the rapid development which Germany has undergone in the course of the last generations. From the founding of the German Empire to the present day, the German population has increased by 25 million, although in the meantime the territory of the Reich has been reduced by almost 15 percent through cessions of territory. This increase in population has been possible only under the condition of general urbanization and industrialization, which have fundamentally changed the economic structure of the central European interior. Whereas the German people of our grandfather's generation were two -thirds peasant people, today they are two thirds urban industrial people who have undergone a change in their entire settlement and social structur e. In addition, the industrial population is not evenly distributed throughout the Reich, but almost half of it is concentrated in the Rhine Nuhr region, in Saxony and in Berlin. There can be no doubt that the basic forces of the economic and social develo pment of the German future will be formed in these urban centers of labor. Germany's economic structure, which had not been balanced as a result of its hasty growth and had therefore become overly dependent on the world market, suffered a decisive setback at the end of the World War, the gradual overcoming of which will continue to characterize German economic development for some time to come.
The economic face of the individual zones
110
The development of the settlement and social structure from 1870 till 1935
Year
National territory in 100 sq. km
Population in millions
Share of urban population in %.
Share of commercial population in %.
1870 1900 1935
541,3 541,3 470,7
41,1 56,4 66,2
35 54 67
40 52 56
Share of Share of blue- and industrial whiteworkers in collar Rhineland, population¹ Westphalia, in %. Saxony and Berlin in %. 50 27 58 35 61 43
¹Excluding family workers who have been included in the self -employed.
In line with its rapid population growth and the general expansion of the world market, Germany had become so intensively involved in international barter that by the outbreak of the war about one -fourth to one-third of its net industrial output was destined for export, and about 3 to 4 million of the approximately 10 million industrial workers were employed by the export industry, while a much larger proportion had become dependent on the import of foreign raw materials needed for the domestic market. During this period, the German economic and social structure had become that of an industrial creditor country with a high need for imports of raw materials and a large surplus of exports of finished goods and a generally passive balance of trade, the balance of which was financed from the earnings of the growing capital investments abro ad. The reversal of the former creditor position into a debtor position as a result of the lost war forces a readjustment of the German economic and social structure in the sense of an activation of the balance of trade and a reduction of the internal stan dard of living, which was repeatedly delayed until the crisis by new borrowing from abroad. The German economy is currently in the midst of this adjustment process, and its individual processes cannot be understood without knowledge of these basic conditions. The repercussions of this predicament, which cannot be solved by economic means alone, but also the efforts to remedy it, are most clearly visible in the field of the food industry, which has always been the main consumer of foreign exchange in the German economy.
111
1908/13 Bill. RM Foreign trade balance on the liabilities side Covered by services rendered and interest income Surplus gold inflow or capital lending
The Central European Economic Area
- 1470
1925/29 Bill. RM Foreign trade balance on the liabilities side bridged by borrowing abroad
- 1190
1934 Bill. RM Foreign trade balance on the liabilities side
0
+ 2810
locked-up capital and interest obligations
- 600
+ 1520
+ 50
Difference excess consumption for political purposes
+ 1620
Difference between gold loss and new debt in the event of foreign exchange difficulties
+ 300 + 300
The import surplus of foodstuffs has been slowly reduced over the last decade, and especially the National Socialist negation after the seizure of power has strongly curtailed the import of foodstuffs, luxury foodstuffs and animal feed. The import of bread cereals, meat, vegetable oils and fats, dairy products and eggs has been reduced most sharply. On the other hand, im ports of fruit and vegetables, and in particular animal feed, oilseeds and oilseeds, have been considerably reduced, mainly as a result of lower prices on the world market. Of Germany's total food requirements, calculated on the basis of calorie consumption and taking into account foreign feed supplies, about 85% are currently covered by domestic production, while the remainder must be imported from abroad. In particular, the share of domestic production in the supply of fats is barely half of the demand. C ompared with the industrial supply of raw materials, however, the food industry has a much higher degree of domestic independence. Given the climatic and soil conditions, however, this extensive self -sufficiency of the total population by almost one -sixth of its labor force was only possible by way of a strong intensification through the use of fertilizers and machinery, i.e., by increasing the cost of production, so that domestic German prices for agricultural products today are substantially above the wor ld market.
The economic face of the individual zones
112
The Development of German Agricultural Production since 1925
Agricultural products Bread cereals, flour meat, livestock Potatoes, Legumes Together
Quantities in 1000t 1925 1930 1934 2191 1058 367 323 247 126 203 293 223 2717 1598 716
Values in RM million 1925 1930 1934 652 239 60 339 140 52 46 47 31 1037 426 143
Fruit, Vegetables, tropical fruits Butter, lard, fats Dairy products, eggs Together
1210 333 322 1865
1538 176 235 1949
1306 158 113 1577
485 672 488 1645
559 451 317 1327
301 111 106 518
159
+ 42
286
336
369
174
325
295
196
128
123
44
Colonial products, sugar, spices Fish, Fish preparations Alcoholic beverages, tobacco Other food and beverages Together
174
97
150
290
252
131
+ 482 176
+ 788 + 438
+ 482 150
49 803
28 772
13 362
Oil fruits, oilseeds Feed grains, oilcake Together
1525 1928 3453
2312 2148 4460
2213 1079 3292
608 364 972
644 295 939
220 72 292
Wood
6082
4135
4971
404
266
171
Total agricultural imports
14293
11704
10706
4861
3730
1486
Of Germany's total food requirements, calculated on the basis of calorie consumption and taking into account foreign feed supplies, about 85% are currently covered by domestic production, while the remainder has to be imported from abroad. Particularly in the case of fat supply, the share of domestic production accounts for barely half of the demand. Compared with the industrial supply of raw materials, however, the food industry has a much higher degree of domestic independence. Given the climatic and soil conditions, however, this extensive self -
113
The Central European Economic Area
sufficiency of the total population by almost one -sixth of its labor force was only possible by way of a strong intensification through the use of fertilizers and machinery, i.e., by increasing the cost of production, so that domestic German prices for agricultural products today are substantially above the world market.
The Development of German Agricultural Production since 1925
Bread cereal Feed grains Potatoes and legumes Fruit, vegetables, sugar Hop, Must, Tobacco Together Meat Milk Eggs Fish Together Wood ¹ Just sugar
Quantities in 1000t Values in RM million 1925 1930 1925 1930 1925 1930 Main products of soil management 11435 11606 12284 1621 1686 1485 8184 9091 9432 455 462 359 41718
47423
47033
596
576
756
1599¹
2547¹
6155
1354
1387
1424
161 4272
254 4278
4304 2197 492 78 7071
3730 2289 479 72 6570
280
460
183 313 488 133 63119 70980 75392 4159 Main products of the livestock industry 2525 3150 3544 4403 21000² 21700 23700 2371 250 364 360 406 218 314 401 56 23993 25528 28005 7236 Main products of forestry 24900 24000 29400 600³ ²1928
³ Quantities in 1000 fm.
Of the total land area of the empire, not quite two -thirds is used for agriculture, a little more than a quarter is covered with forest, and the rest is distributed among human settlements, transport facil ities and wasteland. The main crops grown are wheat, rye, laser, barley, and of the lac crops, potato. Wheat cultivation is most widespread on the heavy loam and clay soils of central Germany, along the Rhine, and in central Silesia; rye and potatoes are g rown almost everywhere, especially on the light sandy soils of eastern and northwestern Germany. Sugar beet thrives mainly in central Germany, central Silesia and the northern Rhineland; tobacco and
The economic face of the individual zones
114
wine are grown almost exclusively along the Rhine and its tributaries and in Baden and the Palatinate. Of particular importance for the nutrition of the urban population is livestock farming, especially pig farming, which flourishes especially in northwestern Germany. The value of annual slaughter livestock production, together with milk and egg production 6 1⁄2 is RM billion against only a little over RM 4 billion of total land production. On this relatively narrow agricultural base stands the superstructure of a vast commercial and industrial production apparatus in which 20 million people are employed and nearly 40 million of the total population find their sustenance. The development of this economic apparatus for the extraction, processing and refining of industrial goods for domestic use and export, as well as for the distribution of goods and the movement of people and communications, has taken place essentially within the last two generations. The migration of the population to the new employment opportuniti es has led to the formation of densely populated industrial provinces and metropolitan economic centers, whose massing extends especially in the west up the Rhine to Baden and from eastern central Germany and Saxony to Upper Silesia. In accordance with the natural preconditions of coal and iron, the manufacturing goods industries in particular have been developed, so that before the war Germany could be considered the leading producer in Europe, especially in the iron and steel industry, in the manufacture of machinery and electrotechnical products, and in the chemical industry. After the war, this predominance of the production of manufactured goods in the overall structure of the individual industries, which are currently undergoing rapid structural change as a result of the transformation of the domestic market and the world, has tended to increase. For the start-up of this industrial production apparatus, however, Germany can provide mainly only the human and mechanical labor, while the necessary raw material bases are to a large extent located outside the national territory, indeed mostly outside Europe. The few raw materials that Germany has in abundance are coal, rock and potash salts and the basic materials for the construction industry. Iron ore is sourced from Sweden. Fuels and lubricants come from America, the Near East, Russia and Romania. Of the metals, copper must be imported from Africa and America, lead from Australia and Mexico, and tin from British India and the Malays. Mineral phosphates and sulfur gravels for the chemical industry come from Africa, Spain, and Cyprus. Of the raw materials for the textile industry, cotton comes from the United States of America, Egypt or British India, wool from Australia or South Africa, jute from British Indi a, flax from the Baltic states, Russia and Belgium, and barrel from the Philippines. Rings and skins for the leather industry are imported from South and Central America, furs from Russia and the United States of America, and rubber from British and Dutch India. Securing the supply of raw materials is
115
The Central European Economic Area
therefore one of Germany's most important economic policy problems, the urgency of which has increased as a result of the unfavorable development of its balance of payments.
The import of raw materials by the main economic groups in mill. RM. in 1934
Food industry Industrial economy Textile and clothing industry Iron and metal industry Leather and rubber industry Wood and paper industry Transport economy (mineral oils)
Import 1461 1968
Export 145 691
Import surplus - 1316 - 1277
680 409
74 62
- 606 - 347
272
38
- 234
214
44
- 170
134
21
- 116
Foreign exchange for the import of raw materials for the food industry and for domestic industrial consumption must be procured mainly through the export of manufactured goods by the export industry. As a result of these conditions, Germany will always be closely interwoven with the rest of the world through international trade relations, despite its efforts to increase self -sufficiency. Before the war, German foreign trade in imports and exports together amounted to 31 billion NM, a figure which was not quite reached in 1929 with a total turnover of 28 billion NM and which had shrunk to about 9 billion NM by 1935. Despite the temporary overemphasis on domestic market interests, Germany's interdependence with the rest of the world can only be loosened in some areas, but not substantially reduced, without entailing a complete adjustment of the entire standard of living of the German population. This is all the more true since the situation on the German labor market will always depend on the development of its foreign trade. Germany's most important imports and exports are shown in the a djacent table.
The economic face of the individual zones
116
Germany's Foreign Trade by Main Imports and Exports in Mill. RM. in 1934
Main import goods Food 1100,2 Of which Fruit and tropical fruits 249,6 Coffee 119,0 Butter 73,7 Eggs 74,0 Cereal 60,9 Raw materials and semi finished goods Of which Wool, Animal hair Cotton Oil fruits, oilseeds Hides, skins Ores Mineral oils Raw tobacco Wood Finished goods Of which Textile products Iron products Chemical products
2600,3 322,6 260,2 219,9 183,4 182,8 136,9 123,8 196,9 750,5 218,3 179,7 174,1
Main export goods Food Raw materials and semi finished goods Of which Coal, Coke Textile raw materials Base metals Skins, Hides Stones and earths Finished goods Of which Chemical products Iron products Textile products Machines Electrical engineering Products Clay, glass and porcelain products Paper and paper Products Leather and leather Goods Copper goods
120,9
790,3 326,3 73,5 27,8 24,3 42,8 3255,7 365,1 642,7 382,5 356,9 199,1 155,5 132,6 85,2 118,1
117
The Central European Economic Area
Germany's foreign trade by main sources and markets in mill. RM. in 1934 Reference and sales areas North European Sea zone Great Britain Scandinavia Baltic Sea States Western European Mainland Zone Netherlands Belgium Switzerland France Central European Economic Area Czechoslovakia Austria Hungary Eastern European agricultural countries South East Europe Poland South European Mediterranean zone Italy Spain Portugal Greek
Import 596,1 205,7 346,0 4,4 718,1 264,1 161,0 116,1 176,9 292,5 162,3 66,3 63,9 183,0 129,1 53,9 359,0 184,7 99,7 19,3 55,3
Export 885,1 382,9 461,4 40,8 1294,7 481,8 235,9 295,3 281,7 294,7 148,4 106,7 39,6 141,0 102,2 38,8 391,9 245,9 87,5 29,2 29,3
USSR
209,7
63,3
America Of which USA Asia Of which British-Indies Dutch-East-Indies China Japan Africa Australia Total
917,5
449,0
372,7 557,8
157,8 393,6
134,7 131,8 121,9 21,7 258,5 144,6 4451,1
94,4 34,8 77,7 79,6 107,1 25,5 4166,9
The economic face of the individual zones
118
The economic policy adopted since National Socialism took power has led to a sharp increase in overall economic activity, which, however, remains mainly confined to the domestic market, while exports have only recently begun to show some signs of recovery. The ler separation of agriculture from the capitalist market economy, the direct and indirect control of the industrial economy in the field of raw material supply, production and price ratios, and foreign trade, as well as the increased public investment for job creation, have already left drastic changes in the structure and organization of the German economy. The basic conditions of the German economy discussed earlier -too narrow an agricultural and raw material base, relative industrial overpopulation, and a passive balance of payments with an outmoded standard of living built on an active balance of payments -are capable of changing it only slowly. The new economic policy, through the use of prefinanced state credit, has initiated a strong employment boom b ased almost exclusively on state orders and public job creation measures. As a result, industrial production has presently been brought above the peak of 1928 and unemployment has been reduced to as low as 2.5 million. The anticipation of future national e conomic savings is likely to be in the order of about RM. 5 billion annually, most of which represents new debt for the Reich.
Economic Development in Germany since 1932
End of the Year
1932 1933 1934 1935
Industrial production level 1928 =100 55,8 68,8 84,3 103,2
Of which Production Consumables goods 1928 = 100 47,0 76,9 60,4 88,8 83,4 86,3 108,1 91,6
Reich debt¹ RM billion 12,0 13,7 16,2 19,2
Of which Domestic Foreign debt RM debt billion RM bn 8,9 3,1 11,5 2,2 14,4 1,8 17,4 1,8
Unemployment in millions
5,8 4,1 2,6 2,5
¹Undeclared debt of the Reich, as quantified by the Reich Minister of Finance at the occasional lecture.
119
The Central European Economic Area
While a limited new indebtedness of the Reich is acceptable in view of the moderate level of domestic indebtedness compared with other great powers and the simultaneous reduction of foreign indebtedness, an increase in the domestic price level and thus a further reduction in exports and foreign exchange receipts co uld not be avoided as a result of the brisk increase in the domestic economy. Under these circumstances, employment and production are likely to have reached their peak, and the main emphasis of public economic policy in the future will be on safeguarding the level of economic activity achieved so far. In addition to the foundation of short - and medium-term prefinancing, the problem of adjusting the internal price level to the price development outside the borders will be in the foreground from the point of view of the foreign exchange and raw materials economy and the necessary preservation of exports.
Development of the Price Level, Foreign Trade Turnover and Gold Holdings in Germany since 1932
End of Year
1932 1933 1934 1935
Wholesale index 1913 = 100 92,4 96,2 101,0 103,4
Wholesale index 1913 = 100¹ Western World Europe market + 2,0 + 19,0 + 7,9 + 46,3 + 20,9 + 64,7 + 23,1 + 60,8
Import
Export
In Mil. RM 4667 4204 4451 4124
5740 4871 4167 4240
Gold holdings in RM mill. 921 395 84 87
¹Calculated over the opposite development of the wholesale indices 1913 = 100
7. The successor states On the southeastern flank of the Central European interior, squeezed between the new great power in the northeast and the emerging power bloc in southeastern Europe, lies the political and economic low -pressure area of the Austrian successor states, where the most dangerous crisis lines of post -war Europe converge. Fundamentally different in their ethnic composition, their economic structure and their political ties and goals, the three successor states that emerged from the disintegration of the old Danube monarchy - Austria, Hungary and Czechoslovakia -
The economic face of the individual zones
120
have in common that this collective term characterizes not only their former origin but also their present and future dependence. One could address them as patronage countries, for the constructions of St. Germain and Trianon created for them the sovereignty under constitutional law, but not the political and economic conditions for the practical enjoyment of their statehood.
Territory, Population and Foreign Trade of the Successor States around 1935
Country
National territory in 1000 sq. km
Population in Mill.
Share of rural population in %.
Excess births per 1000 per population
Austria Hungary Czechoslovakia
83,8 93,1 140,4
6,8 8,9 15,0
31,7 58,2 38,3
1,9 7,1 6,7
Foreign Trade 1934 per Capita per Population in RM 144 43 95
The three successor states are, sociologically and economically, a triangular space of Central Europe projecting eastward, in sharpest contrast to the neighboring spaces to the east and south with which it seeks political and commercial contact. Its most important characteristic is that an anterior pressure area has developed within it as a result of slowed population growth and economic stagnation, which is countered by a rapidly and steadily increasing biological and social overpressure on all borders projecting into the eastern region. The growth of the birth rate and the population correspond to Central and Western European conditions, and the settlement and occupational structure, the economic form and the way of life differ clearly from those on the other side of the eastern border. In addition, the growing difference in the density of a gricultural settlements increases the already existing state of tension from year to year, and the rapidly progressing development of industry in the entire eastern and southern regions continues to narrow the former markets for the industrial production o f these areas. The strength of the overpressure massaged at the borders corresponds to the degree of economic imbalance and weakness inside this space.
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The Central European Economic Area
Country
Birth rate to 1000
Annual growth intensity in %
Agricultural settlement density per sq. km. Useful area
Change in industrial production 1934 vs. 1913 = 100 in %.
North border USSR Poland
43,9 26,5
2,5 1,4
58 91
+ 305 - 43¹
Succession States Austria Hungary Czechoslovakia
15,2 14,3 21,5 18,7
0,6 0,2 0,7 0,7
60 47 62 66
-5 - 15 +7 -4
Southeastern Border Southeastern Europe
32,0
1,4
78
+ 110
South Border Italy
23,4
1,0
90
+ 40
¹First and foremost, the textile industry in the Lodz region, which used to supply the Russian market, is declining. Instead, there was an increase in new industries.
Two successor states unite only a fraction of their nationals within their own state borders, while in the third the ruling state people form a slight majority of the nationalities grouped together in the national territory. Austria consists of a capital and a hinterland with hardly more than twice the population of Vienna, Hungary of three large cities and about six times the number of inhabitants in the country, and Czechoslovakia, whose settlement structure is much more balanced, has inherited the industrial production sites whose former markets have fallen to other countries. The economic structure of the old Austro -Hungarian Empire was particularly remarkable because it was only slightly interwoven with the world economy, but it had developed an all the more varied and intimate division of labor and interdependence among its individual members. Agriculture, which was highly developed in the east and in Bohemia and Moravi a, was contrasted by industry, which was mainly located in the raw material -rich western provinces, while the monetary and credit system and the land economy were based in Vienna. The division of this economic area, which had grown organically and uniforml y over centuries, separated the most valuable agricultural and industrial areas from today's Numpf Austria, leaving it essentially only with the translated administrative, credit
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122
and commercial apparatus o f the capital, including its fine and luxury industries, as well as a few specialized industries in Upper Styria and the tourist areas of Northern Tyrol.
The imbalance of the settlement structure in the interior
Country
Austria Hungary Czechoslovakia
Total Population in Mil. 6,8 8,9 15,0
Of which: Capital other large Together cities In Mil. In Mil. 1,8 0,3 2,1 1,0 0,3 1,3 0,9 0,7 1,6
% 31 15 11
In the predominantly agrarian Blunt Hungary, the new border demarcation has left a lack of forest and lumber areas, a surplus of vineyards and an overcapacity of certain agricultural industries, and has also brought into being a lively substitute industrialization. Czechoslovakia came off best in the partition, taking over the rich arable and forest areas, almost the entire mining industry and the main part of the highly developed semi -manufacturing and manufacturing industries, but without retaining their former markets. The consequence of this is the striking diversity and variety of agricultural and indu strial activity in these three states. The inorganic disintegration of formerly closely interwoven economic areas has led in Austria, and to a lesser extent in Hungary, to an initially almost hopeless passivation of trade and payment balances, but soon als o to an increasing tendency to replace the lost economic bases, which Czechoslovak industry is feeling to an increasing extent from year to year. This development is all the more remarkable given that all three countries are debtor countries and in some ca ses transfer considerable annual interest payments to foreign countries.
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The Central European Economic Area
Important agricultural and industrial production of the successor states 1934
Agricultural and industrial materials Agricultural products Wheat Rye Barley Corn Sugar Wine¹ Tobacco² Walnut³ Cattle Industrial products Hard coal Lignite Iron ore Lead ore Zinc ore Pig iron Crude steel ¹Liter ²Fm ³Piece
Austria
Hungary Czechoslovakia in kg per capita of the population
53 90 44 34 0,9 0,3
192 59 52 242 14 29 3 0,2
92 103 70 43 0,5 0,3
37 423 69 1 20 46
87 713 6 26
733 1039 27 0,1 65
Balance of trade of the successor states from 1920 to 1934 in mill. national currency
Year Foreign trade balance 1920 1925 1934 Interest payments 1928 1930 1933
Austria Mil. S.
Hungary Mil. Pö.
Czechoslovakia Mil. Kö.
- 769 - 934 - 296
- 253 - 17 + 58
+ 4189 + 1182 + 876
- 100 - 125 - 60
- 148 - 187 - 15
- 571 - 572 - 300
The economic face of the individual zones
124
125
The Central European Economic Area
The new borders largely loosened the former close ties between the successor states, each of which hoped to find a way out of economic hardship by aligning itself politically, economically or financially with the powers that had influence in various directions. Thus Austria and Hungary, after thwarted plans in the Central European line, have tried to expand their exports increasingly to Western and Southern Europe, while Czechoslovakia has been able to co mpensate for the loss of its European markets with some success, but only to a small extent, by increased overseas exports. Characteristic of the natural resistance to these attempts, however, is the fact that the result so far has been an increasing disso lution of the former interdependencies among the successor states. Trade relations with Eastern and Southern Europe have also shrunk considerably, and only exports to Western European countries and, in the case of Czechoslovakia, to overseas have increased proportionately. The great natural importance of Germany for the successor states as a procurement and sales market has remained unchanged through all these changes.
The development of export shares of the successor states by main sales markets
Germany
in % of total exports of the successor states went from Austria Hungary Czechoslovakia 1925 1934 1925 1934 1925 1934 15,1 16,6 33,5 21,7 22,5 21,5
West Europe Gold block England
14,2 10,6 3,6
19,8 14,4 5,4
5,0 3,7 1,3
17,8 10,2 7,6
14,4 6,2 8,2
20,4 14,1 6,3
South Europe Italy
10,4
11,0
4,0
8,1
3,7
2,9
Eastern Europe Poland Baltic States
25,5 8,4 17,1
18,0 4,1 13,9
17,2 4,8 12,4
9,1 0,8 8,3
13,5 3,5 10,0
10,2 1,9 8,3
After:
This clearly shows that the successor states, since their breakup, are no longer able on their own to assert themselves as intermediaries of trade in the East and Southeast European area, and that they cannot exist as an advanced economic area
The economic face of the individual zones
126
of the European center without the support of the Central and Western European countries. The recent experiment of Austria and Hungary in closer trade ties with Italy is likely to be subject to the same natural conditions and to remain a short lived intermezzo. Particular emphasis must be placed once again on the extensive and probable dissolution of the close economic ties of the successor states, in contrast to the earlier ties of the old Dual Monarchy, which i s one of the reasons for the internal weakening of their economic structure.
The rupture of trade links among the successor states
Of total exports, % went to the successor states 1920 1925 Austria 23,2 19,4 Hungary 69,4 34,0 Czechoslovakia 30,8 23,6 To:
1934 19,4 29,0 12,7
Since the low point of the crisis, economic activity has picked up somewhat in all three successor states, but the revival has not been significant. This improvement comes only in small part from Austria's own economic strength. In the case of Austria, repeated financial aid from the League of Nations and export and tourism promotion by the great powers, in the case of Austria and Hungary the temporary greater involvement in the Italian economic sector, and in the case of Czechoslovakia international rearmament are the real causes of the recovery. Foreign trade sales show only a weak upward trend, and the slightly declining unemployment rate still exceeds 1 million. Only in Hungary has the ongoing industrial expansion raised produc tion activity substantially above the level of the last boom. The characteristic features of the economic face of the successor states are depressive. Even the occasional financial or trade assistance from politically interested patronage powers or the cyc lical improvements that occur as a result of increased armament harassment, currency devaluations or foreign credit assistance can bring only minor and temporary relief. The contrast between their sociological and economic structure, which is adapted to th e conditions in Central and Western Europe, and the need, arising from their political destiny, to confront the superior growth forces in the often Southeastern and Southern European regions is the real problem of these regions. As long as they are not hel ped in this by the revival of German-Central European economic power, multiple changes are to be expected,
127
The Central European Economic Area
which will make the area of the successor states one of the most dangerous trouble spots in continental Europe for the time being.
The Economic Development of the Successor States since 1932
End of Production Year index
Wholesale Stock Index index 1927/29 = 100
1932 1933 1934 1935
58,9 74,9 78,2 90,9
72,5 67,1 69,9 68,8
1932 1933 1934 1935
76,8 90,9 104,9 116,6
49,2 42,2 42,1 48,0
1932 1933 1934 1935
65,8 64,2 67,9 78,6
69,3 67,5 61,1 66,8
Import
Unemployment in 1000
Gold holdings in RM mill.
393 371 416 438
367,8 335,9 308,1 260,0
88 112 112 112
183 207 204 221
75,3 55,5 53,2 52,2
71 58 58 58
914 730 757 767
746,6 780,0 752,3 794,4
213 212 278 280
Mill. RM
Austria 711 550 556 591 Hungary 36,1 180 30,2 165 28,3 173 33,7 191 Czechoslovakia 55,0 931 59,3 725 53,7 661 67,4 696 40,8 31,0 43,6 55,9
Export
IV. The Eastern European agricultural countries While the European world, still caught up in the focus of the past, is turning its attention to the West, the historical process is taking place before our eyes in which the scales of the continental European balance are slowly tipping to the Ea st. The rise of the young great power Poland in the northeast and the political and economic power field under construction in the southeast of Europe are the conspicuous expression of this development. Behind them, the Janus face of the new Russia emerges from the fog of the European future. The basis of the coming rise of Eastern Europe is the dynamic of the still unbroken biological energy of the Slavic agrarian peoples, which is only in these decades approaching its climax. The eastern half of continent al Europe, including Russia,
The economic face of the individual zones
128
which at the beginning of the 19th century did not yet comprise 60 million , today already numbers about 200 million and will have reached 260 million shortly after the middle of the century, almost half of the total continental European population. Even if Soviet Russia is excluded, the imposing growth of the Eastern European agricultural group remains. It has already been pointed out that this development is possible only because of extensive urbanization and industrialization, which will change the economic face of Eastern Europe in the course of our generation as decisively as industrialization changed the economic structure of Central Europe in the last third of the last century. Today, the Eastern European region is still predominantly an agricultural area, which in large parts is almost hopelessly overpopulated in agricultur al terms and, with its rapid growth in birth rates, will only be able to achieve stable development along Western European lines with great difficulty. The capital aid of Central and Western Europe can ease these difficulties, but not completely overcome t hem. Wage levels and living standards are extraordinarily low under these circumstances, compared with Western European conditions, and the Eastern European countries are also largely financially indebted to Western Europe. Their agricultural economy suffe rs equally from the self -sufficiency efforts of the Central European industrialized countries and from the price pressure emanating from overseas agricultural markets. In addition, industrialization, initiated under heavy tariff pressure, leads to an increase in the industrial price level and, together with the burdens resulting from the securing of independent state leadership, intensifies the pressure on the agricultural economy to the most sensitive extent. Nevertheless, the dynamic energies emanating fr om here will have a more lasting influence on European development in the coming decades than the changes in any other zone of our continent. The dynamic development of the population in Eastern Europe will have an impact on the Central European region, un less its proximity to the Mediterranean basin sends its offshoots there as well. It will be one of the main tasks of a foresighted European economic policy to bind these biological energies by an appropriate assistance in the economic development and not t o let them become effective as political pressure. An average settlement density of 100 heads per square kilometer, which drives to the explosion with unchanged agrarian structure, can be led back with, appropriate transition to the industrial economic for m to a completely normal tension level. In this direction, the well -understood interests of all parties meet on an equal basis.
129
The Central European Economic Area
8. Poland The rise of the young supremacy in the East of Europe must be considered as one of the most important factors of the European post -war development. This rise is not the effortless path of a people blessed with material fortunes, but the claim, fought for with the most varied obstacles and privations, of a nation that has been starving ever since it regained its political independence. In this antagonism between the old and rich supremacy of the West and the young and poor supremacy of the East lies a good part of the real and psychological processes that have led to the detachment of this eastern cornerstone from the system of postwar Western European politics. Poland is the fifth largest country in Europe in terms of the size of its territory. Its population, which was only 27 million after the reestablishment of the state, has grown to 33 million in the meantime and will have reached the population of France at about 40 million by the middle of the century. More important for assessing the future significance of the young great power, however, is the even more rapid growth of its male population of military age between 20 and 40. This politically and militarily most active nucleus of the nation, which in 1920 did not yet number 31/2 million, will in a few years, at 51/2 million, be as strong as that of France, and shortly after the middle of the century, at 7.2 million, will already have reached almost two thirds of the corresponding German figure. Here a people is developing which, from a purely biological point of view, is growing even faster than it is growing, and which has awakened to political and economic independence.
The development of the 20- to 40-year-old male population
Country
1920
Poland
3,3
1940 In millions 5,3
For comparison: Germany France
9,0 5,2
10,9 5,5
1960 7,2
1920-1960 Growth in % + 118
10,9 5,8
+ 21 + 12
But the surplus of biological energy is matched by the lack of material foundations for economic advancement. Poland is an overpopulated agricultural country, whose natural preconditions for industrialization are only slight. Theref ore, like Germany
The economic face of the individual zones
130
in the past and Italy today, it must reckon with strong imbalances in its development and must purchase the economic foundations of its new great power position with even greater efforts than these. An idea of the difficulties of the Polish situation is given by the fact that in Poland at present the population is growing more rapidly than agricultural and industrial production, and at the same time, with political consolidation, the economic standard of living of the population is showing a structural tendency to decline. The problem of Polish policy will be characterized for some time to come by the dilemma that the strengthening of the political position can be achieved only at the expense of the economic supply of goods and the standard of living of the people ¹.
National territory, population and foreign trade of Poland
Year
1925 1935
National territory 1000 sq. km
Population In Mill.
390,0 390,0
29,0 33,4
Excess births per 1000 of the population 18,3 14,0
Settlement density per sq. km 74,4 85,6
Foreign trade per capita in RM 76 25
This rapid and, in its various ages, erratic growth of the Polish people is the key to the most important economic problems of the country. The recently purely peasant features of Poland's economic face are undergoing a rapid process of change, obeying the law of increasing agrarian overpressure. The agricultural settlement density is on average twice and in the eastern and southern Woivodeships three times as high as in Central and Western Europe. The areas of the strongest peasant overpopulation are at th e same time the areas of the highest and still hardly decreasing fertility. Conversely, since crop yields are still relatively low and do not reach anywhere near the average of Central or Western European harvests, the agricultural output per capita of the agricultural population is extraordinarily low, even in normal years, and can be estimated at only about one -third to one-quarter of the corresponding Western European figures. Under these circumstances, the standard of living of the agricultural populati on is unusually low.
¹In this view it has many similarities with the new development in Germany
131
The Central European Economic Area
Agricultural Settlement Density and Land Yields around 1935
Country
Poland In Comparison: Germany France
Rural population per sq. km of usable land 91
48 45
Average yields 1930/34 Cereal Rye Potatoes in dx per ha 11,3
11,0
111,4
21,6 15,4
17,3 11,5
160,0 109,0
Thus, the two most important basic problems for state economic management are, first, to solve or at least prevent a further increase in agricultural overpopulation by developing industrial employment opportunities and diverting the surplus rural population to the cities, and, second, to intensify agricultural production and strengthen peasant purchasing power in the interest of a receptive domestic market for the new industrial production. These two closely related economic problems are in the full flow of development, with the adverse repercussions of industrial policy on agricultural exports being accepted in the light of the hoped -for subsequent strengthening of the domestic market, and with burdens on agriculture that are hardly bearable in our terms? We will see later that Polish economic policy is making significant sacrifices i n the present for the sake of strengthening its future economic power. The exodus of the surplus rural population to urban settlements and industrial job opportunities has been in full swing for years and has been slowed only slightly even by the crisis of recent years. While more than three -quarters of the population lived in the countryside and from agriculture after the reconstruction of the state, the proportion of the rural population today is unlikely to reach more than about two thirds of the total. Most cities have increased their population considerably in the course of the last decade, and some have even multiplied it. The same applies to the increase in commercial and especially industrial employment. According to worker censuses in the larger ent erprises, the number of workers has approximately doubled since the founding of the state, but then dropped again in the course of the crisis to about one and a half times the original level. However, the production of important mining and industrial produ cts could be increased only in part and had to be cut back again sharply after 1930, especially as far as export products were concerned. Unemployment is among the highest in Europe.
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132
The population of major Polish cities
Major cities
1921
1931
Increase in %
1179 605 316 249 221 196 127 118 118 113 109
+ 26 + 34 + 44 + 46 + 21 + 52 + 182 + 48 + 34 + 20 + 27
In 1000 Warsaw Lodz Lemberg Posen Krakow Wilna Kattowitz Czenstochau Bromberg Lublin Cosnowice
936 452 219 170 192 129 45 80 88 94 86
Production of Major Industrial Goods 1922 -1934
1922
1925
1929
1934
46236 64 48 660 706 1377
29200 58 27 244 384 852
In tons Hard coal Potash Nitrogen Iron ores Pig iron Crude steel
23975 16 359 480 996
29081 29 20 214 315 782
1922/1934 Changes in % + 21,8 + 262,5 + 35,0 - 32,0 - 20,0 - 14,5
The intensification of agricultural production has also not progressed sufficiently. Although the acreage and harvests of the most important soil crops have increased not insignificantly, average yields per acre still show little improvement. The former German areas continue to lead by far, with yields up to twice as high as the national average. The most important agricultural production branches are rye, wheat, laser, barley and potato cultivation; in addit ion, linen, rapeseed and land cultivation also play an important role. Horse and cattle breeding is widespread in the eastern voivodeships, pig breeding especially in the western and sheep bree ding in the northeastern areas.
133
The Central European Economic Area
Crop Yields and Livestock in Poland 1925 -1934
1925
1930 In dz. Per ha.
1934
Crop yields Rye Wheat Oats Barley Potatoes
11,7 13,4 10,7 11,8 102,2
11,8 13,6 10,7 11,9 115,7 In 1000 pieces
11,5 11,9 11,6 12,3 121,2
Livestock Cattle Horses Pigs Sheep
8602 4127 6333 1918
9400 4103 6047 2492
8985 3773 5753 2557
The special position of the agricultural state in the process of industrialization is also reflected in the development of its foreign trade. Exports of agricultural products such as cereals, meat and bacon, dairy products, eggs, sugar and wood are still important, but exports of coal, coke, petroleum and petroleum products, iron and steel have become increasingly important. Imports of industria l raw materials such as ores, metals, textile raw materials, bells and leather are of particular importance. On the other hand, in the course of its own industrialization, not only imports of industrial consumer goods such as textiles, iron and steel produ cts, but also of industrial capital goods such as machinery, electrotechnical and chemical products have declined sharply. The low import of luxury goods shows the Spartan restriction of the cost of living, which remains curbed in favor of the import of th e most necessary industrial raw materials. The later actively promoted regrouping in the composition of trade in goods has detached Poland from its former dependence on imports and exports from the Central European economic area. Whereas in 1925 Germany and Austria accounted for more than half of Poland's total exports and, together with Czechoslovakia, for two -thirds, today only about one -fourth goes to these three countries. The same applies to imports, which were originally dominated by imports of Americ an raw materials in addition to those from Germany and the Austrian successor states. Foreign trade, which used to be limited almost exclusively to Central Europe, has expanded in recent years to include almost all European countries and a number of overse as countries. As a result, Poland's foreign trade policy has become more independent, but at the same time it has had to accept a substantial reduction in the internal standard of living. The increased independence
The economic face of the individual zone s
134
of foreign trade is clearly reflected in Poland's trade policy of re cent years. It has already been mentioned that this increased independence has been achieved at the expense of the rural population, which still has very few needs.
Export in million Zloty 1925 1930 1934 Food Grain, flour, live animals, eggs and butter, sugar, etc. Raw materials Coal and coke Petroleum Zinc and zinc dust Iron and steel Finished goods Wood and wood products Textile goods
109 94 51 90
169 188 135 138
109 26 32 13
160 52
343 52
169 22
77 46
58 182
27 72
242 108
346 132
166 38
Import in million Zloty 1925 1930 1934 Raw materials Textile raw materials Hides and leather Ores Finished goods Iron and steel products Textile goods Chemical products Electro technical products Oils and fats Luxury foods Coffee, tea, cocoa Tobacco products
310
398
187
57 15
63 72
68 14
206 217
266 215
34 42
70
161
15
39 26
91 67
22 15
38
55
22
53
61
22
135
The Central European Economic Area
The economic face of the individual zones
136
The shift in Poland's supply and sales markets
to/ from:
Germany, Austria, Czechoslovakia Peripheral States, Rumania, USSR Neighboring states England, Scandinavia Western and Southern Europe Southeastern Europe (without Rumania) non-neighboring countries overseas countries Total trade
from the export went 1925 1930 1934 In % In % In %
from the import went 1925 1930 1934 In % In % In %
63,8
43,9
27,6
45,8
40,2
22,2
11,1 74,9 12,5
11,0 54,9 24,6
5,0 32,6 30,1
3,2 49,0 10,8
3,4 43,6 11,9
3,7 25,9 15,5
7,9
12,4
19,5
15,3
19,6
19,6
2,6
2,5
2,1
3,6
1,9
2,1
23,0 2,1 100,0
39,5 5,6 100,0
51,7 15,7 100,0
29,7 21,3 100,0
33,4 23,0 100,0
37,2 36,9 100,0
After a temporary period of passivity, foreign trade has been active without interruption since 1931, and the balance of payments and public finances are remarkably balanced by Western and Central European standards. Budget surpluses existed until 1929; then, in the course of the crisis, moderate expenditure deficits have emerged as revenues and expenditures have slowly declined. At 4.2 billion zloty, the national debt is about twice as large as annual government revenues and has been steadily reduced since 1931. Let us summarize the main features of the development from the reestablishment of the Polish state until today. An increase of the pop ulation by about 25 % , of the 20-40 year old male population by as much as 66 per cent, a doubling of the industrial employment, however, without a corresponding increase in the production of important basic and finished industries. The former dependence in foreign trade has been reduced by the shift of exports and imports from the immediately neighboring areas to almost all European and overseas countries. The balance of payments is in order, the monetary situation is not unhealthy, and the management of the national budget is one of the most conservative in Europe, hardly shying away from comparison even with that of England. The downside is the unresolved agricultural crisis, the overpopulation of farmers, which can hardly be eased, and the structurally declining standard of living of farmers and industrial workers.
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The Central European Economic Area
Year Income 1931 1932 1933 1934
2262 2002 1869 2136
State budget Expanses Balance 2466 2244 2206 2185
- 204 - 242 - 337 - 49
Inner debt 421 439 450 630
State debt external total debt debt 3993 4414 4570 5009 4514 4964 3544 4175
For the time being, however, the compulsion to iron austerity and the slim prospects for a living are still compensated for by the extraordinary lack of needs among the Polish peasant and working -class population and by the still low importance of the social question - also as a result of the idealistic significance of state independence and religious ties - in comparison with Western and Central Europe? Apart from the co ntinuing difficulties in the newly won western industrial districts and in the Lodz textile district, consolidation has progressed. The recovery from the economic crisis has yielded considerable results in the last year. It is further supported by the plan ned development of new industries such as mechanical and apparatus engineering, electrical engineering and chemical industry. For the uninfluenced observer there can be no doubt that in the 15 years since the reestablishment of the state not only a consoli dation has been achieved, but also the economic basis for the political ambition of the state leadership has been broadened, which today lays claim to the recognition of its great power position in the European eastern region as well as within the framewor k of the European powers.
Economic Development in Poland since 1932
End of the year
1932 1933 1934 1935
Production index 1928 = 100 49,2 60,8 65,0 68,5
Wholesale Stock trade index index 1927/29 59,7 21,6 57,6 21,9 53,5 24,5 54,5 26,2
Import
Export
In million RM 407,2 512,0 390,4 453,0 377,4 460,8 405,7 434,3
Unemployment in 1000
220,2 342,6 413,7 254,7
Gold holdings in millions of RM 236,5 224,0 237,0 208,6
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138
9. Southeastern Europe
As in the northeast, a new political and economic powerhouse is emerging in southeastern Europe that surpasses Poland in growth strength, even if it lags behind Poland in internal cohesion and political significance. On the other hand, the economic conditions in the countries of southeastern Europe are m uch more favorable than in the case of the young superpower of northeastern Europe. The Southeastern European region, which, apart from Albania and the remnants of European Turkey, is filled by two medium -sized states-Yugoslavia and Romania -and a small state-Bulgaria-is about as large as all of Western Europe. Bordered by two seas that connect it with the nearby coasts of three continents, the distinctly continental southeastern region has a strongly developed life of its own, and not only because of its si ze and privileged location, and it is wrong to regard it only as a geographical bridge of the Occident to the Orient, as a political sphere of influence of the great powers, or as a colonial economic area, as is still occasionally done. However, it is nece ssary to point out the numerous contradictions and internal inconsistencies that make Southeastern Europe a conceptual entity only with strong limitations. Neither the geographical division nor the political development corresponds to the favor of the exte rnal situation. The - eastern and southern parts, facing the sea, are separated by impassable mountains from the western and northern areas, whose face is directed upstream toward Central Europe. The same dichotomy is reflected in the historical impact of the invasion of the Turks from the east and the political influence of the old Danube monarchy from the west, which still today gives the image of the flat countryside and the cities their defining character. Despite the diversity of natural conditions and historical development, the sociological structure of Southeastern Europe is of an astonishing uniformity. The basic life phenomena of the population and its relation to space, such as birth rate and mortality, settlement density, urban and rural distribu tion, age and occupational structure, and its way of life, are as largely similar among themselves as they are different from those of Central or Western Europe.
139
The Eastern European agricultural countries
Territory, Population and Foreign Trade of Southeastern Europe around 1935
Country
National territory in 1000 sq. km
Population in Mill.
Share of rural population in %.
Excess births per 1000 per population
247,5 295,0 103,1
14,2 18,8 6,1
57,4 63,7 59,2
74,9 74,2 80,9
Yugoslavia Rumania Bulgaria
Foreign Trade 1934 per Capita per Population in RM 29 35 24
The Uniformity of the Life Phenomena of the South -East European Peoples Country
Yugoslavia Rumania Bulgaria Southeastern Europe In comparison: Germany France
Population density Inhabitants per sq. km 57,3 63,7 59,0 60,5
141,5 76,1
Birth rate Mortality per 1000 of the population
Birth surplus
34,0 33,7 29,9 33,2
19,3 20,3 15,9 19,3
14,7 13,4 14,0 13,9
Share of agricultural population in %. 75 74 75 75
16,3 17,0
11,0 15,7
5,3 1,3
29 38
The most important common feature is the unusually strong population increase as a result of a birth rate that exceeds the European average by a factor of two, which also has certain reserves in the still above-average but slowly declining mortality rate. The annual birth surplus is about five times as large as the average for Central and Western Europe and also considerably exceeds the high -birth-rate neighboring areas of Southern and Eastern Europe. Under these circumstances, the population of the countries of southeastern Europe, which at present is about two -thirds that of the continental zone of western Europe, will be quite close to that of western Europe by the next generation.
The economic face of the individual zones
140
The problem which has already occupied us in our consideration of Poland, the strong agricultural overpopulation and the necessity of urbanization and industrialization, appears here even more conspicuously than there, and becomes apparent even to the casual observer in the outward appearance of the cities. Anyone who strolls through the streets of large or medium -sized cities in southeastern Europe, especially in the late afternoon, will be very clearly aware of the impression that the Homeric phrase about cities full of people does not apply to the metropolises of western Europe, in whose streets people take a back seat to means of transport, but only reveals its conceptual content and richness of imagery in the crowded streets of southeastern European cities. A few figures may suffice.
Population growth in the Southeastern European Countries
Country
1920
1935 1940 In million
1960
Yugoslavia Rumania Bulgaria Southeastern Europe
12,0 16,3 4,9 33,2
14,5 18,8 6,2 39,5
15,4 20,0 6,6 42,0
18,5 23,9 7,8 50,2
Increase 1920 to 1960 in %. + 54,2 + 46,6 + 59,2 + 51,2
In comparison: Germany France
59,9 38,8
66,5 39,6
68,1 39,6
70,0 37,7
+ 16,5 - 2,8
141
The Eastern European agricultural countries
The Growth of Southeastern European Cities from 1910 until 1930
Country
1910
1920 In million
1930
Increase 1910 to 1930 in %.
Yugoslavia Belgrade Other major cities
91 174
115 199
242 286
+ 165,9 + 64,4
Rumania Bukarest Other major cities
338 353
348 -
631 432
+ 86,7 + 22,4
Bulgaria Sofia
103
154
213
+ 106,8
In comparison Berlin Paris London
3730 2888 4522
3804 2906 4485
4243 2891 4379
+ 13,8 + 0,1 - 3,2
¹This growth, however, is not only determined by a surplus of births and immigration, but also by incorporations. ²over 100000 inhabitants
Despite the rapid growth of the cities, however, the already heavily overpopulated agrarian settlement density is still increasing. The agricultural emergency is most severe in Bulgaria, which suffers from general overpopulation d ue to the loss of territory, while in Yugoslavia and Romania it is only beginning to develop. Nevertheless, the Southeastern European region already stands out sharply from its surroundings as an agricultural overpressure area, and if no opportunities for migration to industrial employment opportunities at home or abroad can be created for further population growth, the agricultural settlement density in Southeastern Europe would be two to three times as great as in Central or Western Europe and about twice as great as in the territories of the Austrian successor states soon after the middle of the century.
The economic face of the individual zones
142
Rural population per square kilometer of agricultural land
Country Bulgaria Yugoslavia Rumania Southeastern Europe In comparison: Germany
around 1930 98 77 74 78
around 1960 124 96 93 112
48
56
¹Calculated assuming no outflow of population growth to urban and commercial employment opportunities.
Population growth is outpacing the creation of new savings capital, which has so far been used primarily for housing construction. Under these circumstances, the intensification of agriculture and industrialization are progressing only slowly without foreign capital assistance, while foreign capital has so far been active mainly in promising mining and industrial investm ents. In addition, the agricultural reforms carried out after the war were initially more detrimental than beneficial because of the predominance of arable farming*, and the subsequent agricultural crisis largely shook the structure of Southeastern Europea n agriculture despite moratoria and state aid. Only since last year have there been signs of improvement, and the easing of the financial situation has also strongly stimulated industrialization activity. The predominantly small -scale cultivation of the so il provides much more versatile products that are far better suited to compensation in Central Europe than in Northeastern Europe. Wheat, corn, feed grain, sugar, tobacco, fruit and wine are grown, as well as flax, silk, cotton and wool as textile raw mate rials. In Yugoslavia and Romania, cattle and pig breeding are strongly developed, in Bulgaria sheep breeding, and in all three countries poultry farming. Although mining production is not yet significant in terms of volume, it is quite varied and far riche r than in Poland. In addition to coal and iron ore, copper, lead and zinc ore, bauxite, petroleum, gold and silver are mined. The possibility of increasing agricultural and industrial production of raw materials still exists, provided that it is adapted to the needs of the Central European industrialized countries, and is favored by their balance of payments situation vis -à-vis the overseas raw material countries, even in the long term. This applies in particular to the cultivation of oil crops and protein -rich animal
143
The Eastern European agricultural countries
feeds, the production of textile fiber materials and the exploitation of mining deposits of ores, minerals and petroleum.
Important food and raw material production in Southeastern Europe 1933/34
Yugoslavia
Rumania
Bulgaria
18,3 51,5 0,6 87,5 42,5 2,9
20,8 48,0 1,2 63,0 8,1
11,3 8,2 0,4 149,0 3,0
Textile fibers Hemp and flax in 1000 quintals. Wool in 1000 quintals Cotton in 1000 quintals Silk in 1000 quintals
378,0 140,0 0,7 -
333,0 284,0 4,0 -
32,0 98,0 51,0 13,4
Mining raw materials Hard coal in 1000 t Lignite in 1000 t Crude oil in 1000 t Iron ore in 1000 t Copper, crude, in 1000 t Lead, crude, in 1000 t Zinc, crude, in 1000 t Pig iron in 1000 t Gold extraction in kg Silver recovery in 1000 kg
386 3908 179 44 65 48 58 2219 129
227 1611 8473 11¹ 59 3732¹ 7¹
76 1561 -
Agricultural materials Wheat in mill. quintals Corn in mill. quintals Sugar in mill. quintals Tobacco in 1000 quintals Olive oil in 1000 quintals Wine in mill. hl.
¹1933
However, the common development tendencies in the Southeast European region are hardly contrasted by less serious contradictions. Two of the three countries have
The economic face of the individual zones
144
multiplied their territory and population as a result of the peace treati es and have thus been confronted not only with the problem of controlling strong foreign minorities, but also with the economic task of aligning vast territories that were formerly oriented toward neighboring economies. Thus, the sharp dividing line between the agricultural structure of old Serbia, whose grain farmer still lives almost completely self -sufficiently and essentially only pays taxes, salt and some petroleum in money, and the market -dependent agriculture of the former Austro Hungarian territorie s, which is intertwined with the money economy, as well as vis à-vis the central and southern parts of Macedonia, where the undemanding small farmer "brings" tobacco, opium, cotton, rice, sesame and other landel crops to the soil, has hardly diminished so far. Similar, though not so pronounced, contrasts are found in Romania. The dividing lines are particularly evident in foreign trade. As a result of their largely identical agricultural interests, the Southeastern European countries have little exchange among themselves and, conversely, are mutual competitors on the Central, Western and Southern European sales markets. The same is true for imports, which mainly come from the same countries to which exports go. The Central European region is by far the mos t important sales and supply area.
145
The Eastern European agricultural countries
The Trade of Southeastern Europe by Country 1934
went to Yugoslavia 46,5 15,4 31,1
as % of total exports Rumania 36,4 16,6 19,8
Bulgaria 51,7 42,4 9,3
Western Europe Switzerland, Holland, Belgium France
10,0 8,7 1,3
18,5 8,8 9,7
13,5 11,4 2,1
Italy
20,6
7,7
9,1
England
4,6
10,0
2,1
Southeast Europe came from
1,8
0,9
Yugoslavia 40,8 13,9 26,9
1,8 as % of total imports Rumania 39,4 15,5 23,9
Bulgaria 50,0 40,4 9,6
Western Europe Switzerland, Holland, Belgium France
11,6 6,6 5,0
22,9 11,7 11,2
17,7 14,7 3,0
Italy
15,5
7,3
7,9
England
9,3
16,2
6,4
Southeast Europe
1,9
0,8
4,7
Central Europe Germany Successor states
Central Europe Germany Successor states
Main import products are colonial goods, textile and leather raw materials, hardware, machinery, electrotechnical and chemical products, and to a decreasing extent also finished textile products. The main exports are corn, wheat, fruits, meat, eggs, tobacco, and from Yugoslavia and Romania also brine, mineral oils and other mining products, and from Bulgaria pulses, pulses and rose oil.
The economic face of the individual zones
146
The collapse of the agricultural economies in the entire southeastern region, which occurred with the onset of the crisis in Central Europe and led to extensive debtor moratoria in agriculture, the collapse of the entire money and capital market and severe currency disturbances, has been in rapid decline since the beginning of the year. The amalgamation of trade in the Central European region has brought far reaching benefits to the agricultural countries of Southeastern Europe and has also become a strong support for their agricultural price levels. With the easing of the agricultural situation, the money and capital markets have improved considerably and interest rates have eased considerably. Industrialization has taken off, especially in Yugoslavia and Romania, and the exploitation of raw materials is making rapid progress. Foreign trade is picking up again, prices are slowly rising and stock prices have risen several times, a clear sign of the general improvement in the situation.
The economic development in Southeastern Europe since 1932
End of Year
Whole sale index 1927/29 = 100 (in Gold)
Import Export In million RM
1932 1933 1934 1935
57,0 55,4 58,2 60,7
106,2 67,2 68,5 91,8
1932 1933 1934 1935
47,5 45,0 46,3 52,7
190,9 151,0 197,6 209,5
1932 1933 1934 1935
80,4 71,1 79,1 88,5
288,6 292,3 328,9 258,3
Unemployment in 1000
Bulgaria 103,5 86,8 77,3 99,2 Yugoslavia 206,7 180,1 218,4 228,2 Rumania 421,1 352,7 340,0 409,7
Gold holdings in million RM
Bank discount in % per annum
22,2 25,0 39,1 50,7
46,1 46,9 46,9 48,0
8,0 8,0 7,0 6,0
14,2 17,7 16,5 18,7
130,2 132,7 132,0 105,4
7,5 7,5 6,5 5,0
38,5 25,8 16,5 11,0
239,2 248,5 258,3 269,7
6,0 6,0 4,5 4,5
147
The Eastern European agricultural countries
The summary overview shows that the southeastern region is today driven forward by extremely strong population -political energies and, in contrast to Poland, is also able to keep pace with its economic development. The growing pressure for urbanization and industrialization is likely to bring about strong structural shifts in the course of the next decades, which will be imp ortant from the point of view of trade policy for the countries interested in the exchange of goods with the countries of Southeastern Europe. The shifts in intercontinental trade and the changed balance of payments situation of the Central European countr ies mean a strong promotion of this development, which will bring increased stimuli not only for the agricultural and raw material production of Southeastern Europe, but also for its industrial development and trade relations. It remains to be seen whether the future will strengthen the existing beginnings of a unified development and form in the southeastern region the bloc of a new political and economic great power in Europe, or whether the opposing tendencies will again gain the upper hand, which for a long time in the linguistic usage of Central and Western Europe gave the name of Southeastern Europe, derived from the Balkan Mountains and now too narrow, its secondary meaning.
V. The Southern European Mediterranean Zone The southern Mediterranean zone is even more than the northern maritime zone an intermediate land between Europe and the other continents. Unlike the Scandinavian-Baltic area, which is open to the mainland, it is separated from mainland Europe by impassable mountains, and its face is tu rned toward Africa and the Near East across the Mediterranean Sea. In climate, vegetation and agricultural production, this southern belt of Europe, with its island bridges to North Africa and Asia Minor, is much more similar to the peripheral regions of t hese two continents, with which it has formed a common cultural area for thousands of years. Although the countries of the Mediterranean zone, as a result of their location and historical development on the continent, cannot escape certain ties with the continental powers and at times seek political and economic backing in the most diverse combinations with their northern neighbors, there is hardly any natural interest in such ties. The interest of the Mediterranean countries beyond the Pyrenees, the Alps a nd the Macedonian mountains is only an indirect one, whose real aim is to be sought within the Mediterranean basin. The European continental policy, which again and again overlooks this basic fact and tries to harness the individual Mediterranean powers in to continental combinations, must always make the same disappointing experience anew . ¹ Even where similar forms of the idea of
The economic face of the individual zones
148
the state arise from the same sociological pressure of compression, they do not bridge this antagonism of natural interests. The economic foundations of the Mediterranean rim still lie in the culture of noble agricultural products of the southern climate and their exchange for the manufactured goods of the north based on coal and iron. In spite of the many -sided relations with Great Britain, the mother country of industrialization, mediated by the waterway, the technical age has so far only reached the country in a weak form. Despite the many connections with Great Britain, the mot her country of industrialization, the technical age has so far penetrated here only in weak offshoots. Apart from the exploitation of the only sparsely available mineral resources, mainly finer consumer goods industries have been developed, which could be based on the tradition of the old -established trades. The rapid population development, however, has recently led to an artificial grafting of technical production goods industries also in the Mediterranean basin, in view of the shifted political possibilities of expansion to the natural drainage areas of Africa and Asia Minor. This poses a new economic problem, the solution of which will initially cause numerous difficulties for the countries of the Mediterranean zone, but in the future also for the old in dustrial economies of Central and Western Europe. It seems like a freak of nature that the eastern and western wings of the Mediterranean basin - the Iberian and Greek peninsulas - are relatively well endowed with natural resources, while Italy, located in the center, is denied this favor. Of the three peninsulas of the Mediterranean zone that have dominated the Southern European -African-Small Asian cultural sphere in the course of history, Italy is the first to have re -emerged as a political power after ce nturies of stagnation, while the other two are in a slow but steady upward trend. The outcome, which is not in doubt, of the confrontations between the Mediterranean power Italy and the world power Great Britain will determine whether the setback in the ce nter of the Mediterranean basin will shift the center of gravity of the development for the next future back to the two peripheral powers.
¹Apart from the German imperial policy of the Middle Ages and the French policy at the beginning of the modern era, this fact has been established in the last 50 years in turn by Germany, Austria -Hungary and most recently by France and Great Britain (Stresa Front).
149
The Southern European Mediterranean Zone
10. Italy
A country which, united by the will of a strong leadership and spurred on by the memory of a brilliant historical past, has risen from the pressing adversity of its surplus population to become a great European power, but which, apart from the size and reawakened regenerative power of its populat ion, lacks almost all the material foundations for this, this is how the new Italy presents itself to the eye of the economic observer. The drama in the Mediterranean basin, which can only be explained by a false historical perspective that enlarges the do mestic cultural sphere and greatly diminishes the continental and Atlantic world, has instantly made Italy the focus of European criticism. In reality, hard beside the political error lies the inexorable fate that has placed Italy at the top in time in the development of Europe reawakening from the post -war rigidity. The peninsula in the Mediterranean Sea, separated from the European mainland in the north by the Alps and stretched excessively long towards Africa, does not offer the rapidly growing populatio n sufficient food and settlement space and, despite its favorable geographical position, hardly any possibility of expansion without surrendering valuable parts of the people to other nations. The country has none of the material conditions that have been important for the rise of today's great powers in continental Europe or the Atlantic -Pacific region. In terms of land area, it must be counted among the smaller medium -sized states in Europe, after Sweden, Norway, Finland, Poland, and with a slight lead ov er Romania; in terms of disfavor of extent and location, it can be compared only with Czechoslovakia. It possesses neither coal nor metals in significant quantities, no petroleum, too little wood and, like all European industrial states, not enough textile fibers. The possibility given by its geographical position to become, like the old Nom, the supreme power of the populous South European -North African-Small Asian cultural area, is severely limited by a favor of political conditions not recurring in Europ e. The west of the Mediterranean is dominated by France; on its eastern side, Yugoslavia stands guard as an allied Balkan superpower and suspicious rival. The way south to the settlement areas of Africa is laid by the two strongest great powers of Europe - Great Britain and France - which also have in their hands the exits of the Mediterranean inland sea. The Italian possessions in Africa with their almost million inhabitants, which are not very suitable for a large settlement, do not offer any Ersah here. In addition, the shoed interior of the peninsula is filled by the ribs of the Apennines, while the vulnerable cities and centers of commercial life are mostly on or near the coasts, open to attack from sea or air. Italian interest in events outside the Med iterranean world is almost exclusively determined by this situation, which for the time being points the way for Italian policy.
The economic face of the individual zones
150
Italian territory, population and foreign trade
Year
State territory 1000 sq. km
Population in Million
286,7 310,2 310,2
34,7 39,7 42,6
1910 1925 1934
Excess births per 1000 of the population 13,0¹ 10,9 10,1
Settlement density per sq. km 121,0 128,0 137,3
Foreign trade per capita in RM 142¹ 183 66
¹1913 Country
Births per 1000 of the population
Italy
24,3
Density of population per sq. km 137,3
In comparison: Poland Greek Spain France
29,0 29,5 27,9 17,0
85,7 50,9 47,4 76,1
Agricultural population as % of total population 47
70 55 55 38
The economic face of Italy is shaped by the fact that, at a time when European colonial expansion has been essentially is essentially complete, it is suffering rapidly increasing internal compression as a result of its unchecked population growth. The country, with its high b irth rate, is among the foremost among European peoples, although it is already two to three times more densely populated than those states with comparable occupational or economic structures. This strong increase of an agrarian people on insufficient sett lement space had the consequence that for many decades about half of the annual birth surplus was lost again by the emigration of parts of the people of working age. Without these regular annual blood losses, which are greater than the war losses of all Eu ropean states together, would the Italian people be one of the most populous nations on our continent. ¹ After all, with 431/2 million people, Italy today ranks third in Europe after Germany and England and, if it had continued to develop peacefully, would have caught up with Great Britain shortly after the middle of the century with a population of about 50 million.²
151
The Southern European Mediterranean Zone
Decade
1871-1880 1881-1890 1891-1900 1901-1910 1911-1920 1921-1930 1931-1934 1871-1934
Italy’s Birth surplus million 1,9 3,6 3,4 3,7 2,4 4,5 1,6 21,1
Migration loss million 1,0 1,6 2,3 1,5 1,3 7,7
Europe's¹ war losses million 0,2 6,0 0,2 6,4
¹without Turkey
Until the World War, a change of this condition seemed almost impossible and a binding of the surplus population to a domestically developed industry unattainable due to the superior competition of the old industrialized countries. Therefore, even after the unification of the Italian Kingdom, the biological surplus e nergy was essentially exhausted in emigration, while the population structure and the professional and economic structure at home hardly underwent a shift. The country remained, until the post -war period, a markedly agricultural land with urban settlement character, with agriculture based on the small town, in accordance with its historical development. A comparison of the settlement and occupational structure of Italy, France and Germany clearly highlights these differences. Of the total population, in:
On Agriculture Rural communities¹
Italy 43,4 % 11,8 %
France 38,4 % 52,5 %
Germany 29,0 % 35,6 %
¹Up to 2000 inhabitants.
¹It does not need to be pointed out that, under such circumstances, the decision on war or peace is taken by the Italian leadership from a completely different point of view than, for example, that of the French leadership. ² Mussolini's saying: "For me the nation is above all spirit and not territory" is true for Italy in more than one respect.
The economic face of the individual zon es
152
The attempt made after the war by Fascism to stop this continued loss of valuable parts of the population and to steer the pressure of compression and expansion resulting from the densification of the population into orderly channels led Italy onto the path of industrialization at home and the policy of national expansion, which was no longer welcome in post -war Europe, which was in need of rest. The almost insurmountable difficulties that stand in the way of this policy are due to the fact that the neighboring Slavic peoples in southeastern Europe, as a result of their even greater population growth, are themselves developing considerable forces of expansion and, moreover, have too pronounced a national self -awareness, conditioned by tradition a nd ethnic characteristics, for any economic penetration on the part of Italy to have any chance of success. The same is true of the areas of Central Europe that have recently been favored by Italian policy -makers and which, because of their natural positio n, offer Italy only limited prospects of lasting influence. The second difficulty lies in the fact that any forcible expansion into African areas of settlement is strictly limited by the older occupations of the strongest European powers. Against this doub le constraint of internal compression by population densification and external limitation of the political possibilities of a nation-closed expansion, Italy was the first European country to attempt a reorganization of its entire state, economic and social apparatus through fascism, the outlines of which are well known. The need to provide industrial employment opportunities for the growing population and Fascism's claim to political power in competition with the great powers have, in the course of the last decade, forced strong reductions in Italy's economic foundations, the success of which cannot yet be judged conclusively. The effect of these forces since the curbing of emigration is most clearly visible in the transformation of the occupational structur e, which, after decades of stagnation, has been changing with almost revolutionary rapidity since 1925.
Of the total population, the following accounted in % for
Year
Agriculture
Commerce
1910 1925 1931
56 54 47
35 36 43
Administration and liberal professions 9 10 10
The economic face of the individual zones
154
As already mentioned, Italy, unlike the old great powers, does not possess any of the important raw materials - coal, metals, petroleum - and consequently had developed only insignificantly the great manufacturing industries - mining, metallurgy, engineering, chemistry - whose possession had become a prerequisite for the development of political and economic power in the 19th century. The soil provides only white coal from the Alpine rivers and sulfur ores as industrial raw materials, the sea provides salt and the sea provides nitrogen. Mussolini's ten -year agricultural policy has only with difficulty been able to achieve the self -sufficiency of the predominantly agricultural p opulation with the most important bread grain, wheat. On the other hand, the mild climate allows the refined consumer goods of the Mediterranean world - rice, corn, olive oil, wine, tropical fruits, tobacco, silk, flax and flax fibers - to ripen, and the b eauty of the southern sun and the attraction of the historical and religious sites bring into the country, through tourism, the flow of foreign currency for the purchase of the necessary foreign raw materials, which the country's own soil does not provide.
Important agricultural and industrial production of Italy 1934
Agricultural materials
1000 t
Wheat Corn Rice Sugar beet Tobacco Wine (mil. hl.) Olive oil
6333 3193 617 2652 41 31 225¹
in % of European production 15,2 17,2 67,7 5,8 20,5 18,9 32,7¹
Industrial materials Sulphur gravel Iron ore Crude steel Cement Nitrogen Artificial silk Silk
1000 t
in % of European production
812 502 1932 4076 71¹ 48 3¹
19,6 0,8 4,8 14,1 6,7¹ 25,3 72,7¹
¹1933
The new state, based on the given biological necessities and its political objectives, has developed the rich water resources of the country to the greatest possible extent and, especially in the north, has made them the basis of an iron and metal industry, a highly developed machine and motor vehicle production and a not insignificant chemical production, but it has also not neglected the further development of the textile and artificial silk industry and the other branches of
155
The Southern European Mediterranean Zone
refined consumer goods production. In the course of a decade, the number of employees in the iron and metal smelting and lalbzeug industries has increased almost fourfold, in the chemical industry two and a half times, in the electrici ty industry almost twice, in the paper and printing industry one and a half times, and in the construction and building materials industry and its preliminary stages by more than a third. The rapid rebuilding of these industries has also created major regional shifts in the country's economic structure. Today, Italy's most important industrial basin spreads over the Milanese lowlands, but Italian policy also seeks to develop protected industrial centers in the newly won provinces.
The increase in professional activity in important industries
Industries Large iron and metal smelting industry Chemical industry Gas, water and electricity supply Metal processing, machine and vehicle construction Wood and wood pulp industry Textile industry Paper and printing industry Building materials and construction industry
Employees
Increase in %
1921
1931
24138 76776 61183
82462 178735 110744
+ 241,6 + 132,8 + 81,0
613738 496258 560307 84818
756388 551048 722767 132647
+ + + +
874516
1276530
23,2 11,0 29,0 56,4
+ 46,0
However, where the development of these industries has led to an increased need for imports of raw materials and thus to increased pressure to export finished goods, the difficulties of the Italian situation are already becoming apparent. Fa scist economic policy has changed the internal economic structure of the country with astonishing speed, but it has not yet been able to adapt the structure of foreign trade to these changes. The import of technical goods due to the shortage of raw materials and the export of tropical fruits, wine, olive oil, cheese, rice, barrels, silk and the traditional export of textile goods, including artificial silk, based on the agricultural base of the southern climate, have remained absolutely dominant. The aspired export of the newly started technical production - iron and metal goods, machinery, vehicles, electrotechnical articles and chemical products - meets the superior competition of the old industrial countries, and where the export of consumer products offe rs prospects of success due to cheap wage labor, it can only
The economic face of the individual zones
156
with difficulty hold its own against the competition of the even cheaper production of the new Japanese, Southeast European or A frican-South Asian industr
Italy's Foreign Trade by Main Imports and Exports in 1934
Main imports Cotton, wool, jute Coal and coke Machinery, hardware Iron and metals Mineral oils and derivatives Chemical products Hides and skins Wood Colonial goods Wheat
Million Lire 1291 857 580 450 377 341 307 272 202 185
Main Exports Textile goods Tropical fruits and fruits Artificial silk and silk Machinery and vehicles Cheese Wine Hemp Rice Wheat flour Olive oil
Million Lire 967 760 497 308 152 146 129 119 69 61
For the same reason, Italy has had to endure continuous shifts in the direction of its foreign trade over the past decade. The importance of the individual reference and sales countries for Italy's foreign trade is subject to constant change and is a clear sign of the unbalanced nature of past trends. Thus, Italian foreign trade, which a decade ago was still strongly oriented overseas, has had to retreat again to Europe to a large extent under the impact of the crisis. In trade with the European industrialized countries , however, it is mainly southern agricultural products that are exchanged for coal and technical goods. Here there are strong tensions which, even if they had developed peacefully, would have held out the prospect of further changes in Italy's foreign trad e structure. As it can be said of France that the long political and economic development of power has largely exhausted the biological forces of the people of the state, so Italy's great political and economic power, springing from the biological energies of growth, has strained the country's material and financial sources of aid to the utmost limit of its capacity. The collapse of the financial system and of a large part of industry, which occurred early in the crisis, is not only cyclical but also a consequence of these structural imbalances. Although the rapid intervention of the state initially averted the worst consequences for economic life, the crisis -like tensions remained. Government spending has had to be constantly increased
157
The Southern European Mediterranean Zone
despite sharply declining revenues, the budget has been closing with deficits for years, and public debt, measured as a percentage of national income, is
The imbalance of the Italian foreign trade structure
As a % of Italy's total exports went to 1925 1930 1934 France 11,1 Germany 12,8 Germany 15,9 Germany 11,1 USA 10,9 Great Britain 10,2 USA 10,4 France 10,2 Switzerland 8,4 Great Britain 10,2 Great Britain 9,8 USA 7,4 Switzerland 8,9 Switzerland 7,7 France 6,7 Argentina 6,3 Argentina 6,9 Argentina 4,1 Egypt 3,7 Egypt 3,2 Netherlands 2,6 Austria 3,6 Austria 3,1 Hungary 2,5 British-Indies 1,8 British-Indies 2,1 Austria 2,4 Netherlands 1,0 Netherlands 1,6 USSR 2,4 USSR 0,9 Hungary 0,8 British-Indies 2,3 Hungary 0,5 USSR 0,8 Egypt 2,3 As a % of Italy's total imports went to 1925 1930 1934 USA 23,6 USA 14,6 Germany 15,8 Great Britain 10,4 Germany 12,6 USA 12,5 France 9,0 Great Britain 9,7 Great Britain 9,1 Germany 8,3 France 8,7 France 5,7 British-Indies 6,6 British-Indies 4,2 British-Indies 4,6 Argentina 5,2 Argentina 4,1 Switzerland 3,8 Austria 2,5 Switzerland 3,2 Argentina 3,6 Belgium-Luxemburg 2,2 USSR 3,2 Belgium-Luxemburg 3,0 Switzerland 2,0 Austria 2,4 USSR 2,9 Egypt 1,9 Belgium-Luxemburg 2,1 Austria 2,5 USSR 0,9 Egypt 1,2 Egypt 2,0 considerably greater than in any European or non -European country. Public debt service as a % of national income is at:
Italy 10
Great Britain 8
France 6
USA 5
Germany 3
The economic face of the individual zones
158
Seen as a whole, the economic face of Italy offers a contrast to that of France that could hardly be sharper. There, a population that is no longer growing in a settlement area that almost alone secures a great power position in Europe, and with political and econ omic reserves that, in the crisis, allow a strong stability of the overall organism and, by and large, also the continuation of the traditional democratic-liberal form of government and economy. In this case, a rapidly advancing population density in an ov erly confined and politically unfavorably situated space, which has led to a not always organic reorganization internally and to a great power policy externally for which the material prerequisites are lacking. The result is an increased sensitivity to cri ses in the entire economic organism, which can be mitigated but not eliminated by the basic agrarian structure that still exists, and sooner or later must also come to "bear" as a political factor. In any case, the French economy is much more strongly base d than the Italian economy, despite the presently much more sharply pronounced signs of depression. The state's economic policy was basically deflationary because of the financing of the public credit built on the savings bank deposits of the public until the Abyssinian conflict, and it was supported by repeated wage and price reductions and by salary cuts for public employees. Signs of deflation were therefore visible everywhere in the economic picture, despite high spending on job creation. Nevertheless, neither the balance of payments could be brought into balance nor the continued outflow of gold brought to a halt. The situation of the currency was therefore never very strong and could well use the help of the Bank of France. The increase in industrial p roduction achieved under these circumstances did not mean any relief. ¹ The launch of the Abyssinian campaign of conquest and the conflict with the League of Nations further aggravated the country's already extremely fragile situation. The financial reserv es, which had already been almost exhausted before the start of the African expedition, were exhausted by the time the sanctions took effect. The shortage of raw materials cannot be remotely compensated for by attempts to produce new chemical substances, a nd the rising price level is already showing undisguised inflationary traits. The question posed only a year ago-whether the lack of material foundations or the surplus of political energy will ultimately be decisive for the future of an active people unit ed under a unified leadership -has already been decided against Italy .² However, considering
¹Cf. Europäische Revue, Vol. 1935, No. 3. ²The financial situation after the conclusion of the African war will largely determine the future decisions of Italian policy.
159
The Southern European Mediterranean Zone
the outcome of the Mediterranean conflict, Italian politics, even after the end of the African campaign, will not be able to free itself from this contradiction between the biological growth of the population and the anguish of the material situation, which dictates to it both the law of country one and its borders.
Year
1929 1930 1931 1932 1933 1934 1935²
State budget Expenses Billion Lira
Income Billion Lira
19,8 21,0 23,3 21,9 24,5 20,6 19,6
20,0 20,1 19,0 18,0 18,0 17,7 18,0
Deficit Billion Lira
+ -
0,2 0,9 4,3 3,9 6,5 2,9 1,6
National debt¹ Billion Lira 88,9 89,9 93,0 97,1 100,0 103,2 110,0²
Monetary and economic situation Gold and Foreign Production foreign trade index exchange balance 1923=100 holdings billion Bil. Lira lira 10,3 - 6,4 109,2 9,6 - 5,2 100,3 7,8 - 1,4 84,7 7,2 - 1,5 73,0 7,4 - 1,4 80,5 5,9 - 2,4 87,7 4,6 - 2,6 96,0
¹Without the capital value of the annuities for the economic construction (25 -30 billion lire). ²The war is financed outside the budget and requires about 1 billion lire per month.
11. The Iberian Peninsula The Iberian Peninsula is, geographically and historically, an intermediate land between Europe and Africa on one side and Europe and America o n the other. Like Italy, it is separated from the rest of Europe by an impassable Alpine wall and turns its face toward Africa, but at the same time, across the Atlantic Ocean, toward the New World. Nevertheless, neither Spain nor Portugal are really marit ime countries. The low coastline, the poor connection between the lakes and the hinterland due to the Nand mountains in front of them, and the fact that some of the rivers slope steeply down to the coast make them reluctant to open up to the sea and have n ot given rise to any significant shipping. Both countries are relatively little integrated into the world economy, and their foreign trade per capita is among the lowest in
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160
Europe. The Spanish and Portugue se land fleet is behind that of all European coastal nations except Yugoslavia in proportion to population.
National territory, population and foreign trade of the Iberian Peninsula around 1935
Country
Spain Portugal
State territory 1000 sq. km 512 92
Population Motherland Millions Per sq. km 24,5 7,2
74 47
Colonial Million
Share of rural population in %.
1,0 8,3
57 58
Foreign Trade 1934 per Capita in RM 48 48
Despite given economic and political conditions, the importance of Spain and Portugal in the context of the world economy has been declining for centuries after the excessive use of their popular power at the beginning of the modern era. The stagnation, which lasted until the World War, is already evident in the population movement. The population of the Iberian Peninsula, despite high birth surpluses, has grown only one and a half times since the 16th century, compared to a quadrupling of the total European population. Population density is below the European average, reaching only half to one-third of that in Western Europe and lower than in the countries of Southeastern Europe. Internal civil wars and, above all, emigration are the cause of this relative population decline. At the beginning of our century, about 8,000 emigrants le ft the country annually, and on average in 1909-1913 even three times that number - mainly from the densely populated northwest, which suffered from severe land fragmentation. After the World War, however, emigration declined sharply and in recent years ha s even given way to a return migration surplus. The high birth rate shows only a slight decrease compared to the pre-war period, which is more than compensated by the stronger decrease in mortality, so that, in contrast to the rest of Europe, a considerabl e increase in the natural reproduction rate has occurred. The agricultural settlement density in Portugal in particular is much higher than in Western and Central Europe and corresponds roughly to Eastern European conditions. However, there are still large areas of unused land, because the agricultural area in Spain and Portugal does not yet account for half of the total area. The amount of cultivable but uncultivated land is estimated at more than one -fifth of the currently used area. Even the cultivated land could feed many more people if cultivated more intensively. Imperfect
161
The Southern European Mediterranean Zone
technology and tillage, severe soil fragmentation in some parts, and neglected large scale land ownership in other areas have caused yields per hectare to drop to among the lowest in Europe. Of greatest importance for increasing agricultural yields is the irrigation issue, since two -thirds of the agricultural land is in the arid southeast, where harvests are not yet half of those in ir rigated areas. The cause of the great expansion of the low-yield land is the deforestation that took place during the centuries of wars, which deprived the soil of humus and water.
The population growth of the Iberian Peninsula in the pre- and post-war period.
Year
1913 1934 1913 1934 1913 1934 1913 1934 Southwest Europe
Spain Portugal In Comparison: Italy Greek Germany
Absolute numbers in 1000 On 1000 of the population meet Births Deaths Birth Births Deaths Birth surplus surplus Spain 618 449 168 30 22 8 637 388 249 26 16 10 Portugal 200 125 75 33 21 12 203 119 84 29 17 12 Together 818 574 243 31 22 9 840 507 333 27 16 11 In comparison Germany 1606 885 721 27 15 12 1181 716 465 18 11 7 Share of agricultural area in total area 40 40
Agricultural settlement density
Yields per hectare in 1930/34 in quintals. Cereals Potatoes
54 80
10,5 8,2
119 200
70 30 63
90 85 48
14,7 8,3 18,9
60 55 160
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162
It is only in recent decades that signs of national and economic resurgence have become noticeable. However, the profound domestic political tensions, which at times even threatened the cohesion of the Spanish economic territory, and the sharp social contrasts, even in the flat countryside, exacerbated by the numerous strikes, constitute strong obstacles to the progress of economic reconstruction. A turnaround has also occurred in industrial production after centuries of stagnation. In the wake of the war economy , a respectable manufacturing industry has developed in Spain, which has favorable conditions for its further development thanks to the Iberian Peninsula's wealth of the most important minerals - coal, iron ore, lead, copper, zinc, mercury, sulfur. Metal m ining, which was developed early on in Spain with the help of foreign capital, has declined, but coal mining, iron and steel production and the processing industries have increased. In general, however, both Spain and Portugal are only at the beginning of their industrial development.
Major mining and industrial production of the Iberian Peninsula in 1000 tons
Year
1913 1934
Iron Ore 9862 1970
Lead ore 303 66
Spain Hard Briquettes coal 4016 486 6021 802¹
Crude steel 242 508¹
Cement 512 1407¹
Portugal Hard coal and lignite 25 207
¹1933
Of all the European agricultural countries, Spain and Portugal have the lowest inland trade links with mainland Europe. Whereas, on average, only one -third of imports and one-fourth of exports of continental European countries go outside Europe, the share of overseas trade is much higher in the case of Spain and Portugal. Relations with Great Britain are particularly close, as established in the Anglo -Portuguese trade treaty of 1642, the pattern of the most -favored-nation system that prevailed in world trade until the crisis. Britain absorbs about a quarter of the Iberian Peninsula's exports and also supplies a quarter of Portugal's, but only slightly more than a tenth of Spain's import requirements. In addition, trade with Germany and France is even more im portant. In trade with overseas, the colonies and former possessions in America and Africa take the main share. The feeling of belonging together with the twelve Ibero -American states through common language and
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The Southern European Mediterranean Zone
civilization has maintained a lively exchange of goods up to the present, even though all political interdependence has ceased. The main export products of the Pyrenean Peninsula are fruits, wine, olive oil and sardines, as well as mining and forestr y raw materials such as ores, metals and cork. In terms of manufactured goods, chemical products and textiles are exported to a not inconsiderable extent. Imports are dominated by manufactured goods, especially chemical products, motor vehicles, machinery, textiles, and iron and steel products. Cotton, mineral oils, and coal are imported in large quantities, while food and beverages include colonial goods, eggs, and fish.
Foreign Trade of the Iberian Peninsula by Source and Market in 1934
from
in % of imports or exports came from or went to Europe Oversea Continental Great Britain Total thereof Europe colonies and former possessions
Spain Import Export
45 51
10 23
45 26
11 11
Portugal Import Export
53 40
23 25
24 35
11 11
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164
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The Southern European Mediterranean Zone
Foreign Trade of the Iberian Peninsula by Major Commodity Groups in 1934
Main Exports in Million RM Export Spain Food 323 thereof Fruits 193 Wine 36 Olive oil 37 Canned food 33 Raw materials and semi finished products thereof Ores Metals Cork Finished goods of which Chemical products Textile goods
80 32 21 20 92 37 24
Main Imports in Million RM Portugal Import Spain 52 Food 118 thereof 4 Eggs 29 23 Colonial goods 29 2 Fish 23 16 Raw materials and semi finished goods 245 30 thereof Cotton 75 1 Mineral oils 33 1 Coal 18 12 Finished goods 334 16 of which Chemical products 96 20¹ Motor vehicles 64 8 Machinery 52 Textile goods 42 Iron and steel products 13
Portugal 42
¹1933
The improvement in the economic situation has also spread to Spain and Portugal. In Spain, in contrast to other countries, the export -oriented sectors of the economy are even better employed than the industries working for the domestic market as a result of the recovery in the main consumer countries. In P ortugal, a general upturn has taken hold, supported by the government's economic stimulus program, which has been in place for several years. The government's 15 -year reconstruction plan foresees expenditures totaling 61/2 billion eskudos for public works, irrigation, transportation and armaments. In contrast, exports have not developed as favorably as the domestic market.
0 11 13
108 17 5 15 77 18 9 15 14 4
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166
The Economic Development in Spain and Portugal since 1932
End of Year
Bank discount % per annum
1932 1933 1934 1935
6,0 6,0 5,5 5,0
1932 1933 1934 1935
6,5 5,5 5,0 5,0
Whole Stock sale Index² index¹ In Gold Spain 50,2 74,2 50,1 62,4 50,8 55,6 50,7 65,7 Portugal 53,0 41,3 32,0 54,2 32,2 59,7 29,3 66,7
Import
Export
In Million RM
Gold holdings in million RM
790,1 676,7 692,4 711,4
598,1 541,5 494,9 472,6
1829,5 1831,7 1836,8 1826,0
230,1 245,0 226,3 245,2
106,7 103,2 104,7 98,6
100,1 143,1 167,8 169,0
¹Base year for Spain 1927/29, for Portugal 1929 -100. ² Base year for Spain 1929, for Portugal 1930 - 100.
12. Greek The southeastern spur of the European mainland, washed by seas on three sides, with its extensive island bridges to Africa and the Near East, which in ancient times was the center of the cultural circle extending from southern Europe through North Africa to Asia Minor, is today only of local importance. The Greek triangle, which lies in broad chord to the southeastern European agricultural block and pushes with its apex into the Asia Minor region, is largely exhaus ted by the wear and tear of the natural vodka cranes in the heyday of Hellenism and the centuries -long foreign domination of changing conquering peoples. After the use of force in the Balkan campaigns, the shocks of the World War and the subsequent conflic t with the new Turkey, which resulted in heavy losses, the country is now seeking to develop its economic forces in imitation of Great Britain. Greece has, on the one hand, extensive similarities with the Slavic agrarian area, which it resembles in the bas ic characteristics of birth rate, mortality, age composition and settlement density, and, on the other hand, with the Romance
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The Southern European Mediterranean Zone
neighbors of the Mediterranean zone, with whom it has in common the mode of settlement, the occupational structure and the agrarian production. Due to the repatriation of the Greeks of Asia Minor and the high multiplication rate, the country suffers from a strong overpopulation, insufficiently mitigated by the favor of the climate, wh ich is the source of the riots that break out again and again. Similar to the Iberian Peninsula, before the war a large part of the population increase emigrated to neighboring areas and overseas, while today emigration opportunities are largely blocked. U rbanization and industrialization are therefore progressing even more rapidly here than in neighboring areas.
National territory, population and foreign trade of Greece since 1913
Year
1913 1925 1935
State territory 1000 sq.km
Population Million
63,2 130,2 130,2
2,6 6,0 6,6
Settlement density per sq. km 41,1 46,1 50,7
Foreign trade per capita RM 80 151 22
Like Italy, Greece produces the noble agricultural products of the Mediterranean zone-wine, olive oil, tobacco, commercial crops, silk, wool and, more recently, cotton. Efforts to increase the cultivation of wheat and thus to become more dependent on it for food have been partially successful. In accordance with the natural conditions, sheep breeding in particular is extremely widespread. The exploitation of the not insignificant mineral resources is also making progress; in addition to lignite and iron ores, there are mainly sulfur, lead, zinc, chromium and some nickel ores. The industrialization, which is hampered by the lack of hard coal, is promo ted by the Greek negation mainly in those branches that work on the basis of local raw material deposits. The strongest development in recent times has been in the electricity industry, the textile and paper industry, mechanical engineering and construction. The main economic sector, however, remains shipping, which, together with emigrant returns, must compensate for the passivity of the trade balance. The country is heavily burdened by its high foreign debt, which has grown considerably in the last decade due to the settlement of the Greeks of Asia Minor exchanged with Turkey.
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168
Important agricultural and raw material production of Greece 1934
Agricultural materials
1000 t
Wheat Corn Wine (million hectoliters) Olive oil Tobacco Cotton Wool Silk ( in tons)
784,1 231,3 3,6 112,5 40,0 6,9 6,6 215,0
Industrial materials Lignite Iron ore Sulphur iron Lead Zinc Chromium Magnesite Nickel ores
1000 t 99,1 85,2 184,4 22,0 12,3 14,8 44,7 28,7
The country, which is closely linked to the world economy beyond the Mediterranean circle, has a particularly peculiar trade relationship, in contrast to continental Europe and the other Mediterranean countries. In terms of imports, Great Britain, Germany, Russia, Argentina and Romania lead the way, and in terms of exports, the first two countries plus Italy, the United States of America and France. This strange dispersion is due to the country's specialized production. With the two industrialized countries , Germany and Great Britain, Greece exchanges its needs for coal, machinery and manufactured goods for its mining raw materials and agricultural products. From Russia and Romania it obtains agricultural products, minerals, petroleum and wood, from Argentin a wheat and meat; to the United States of America it supplies flavoring wax and olive oil, to France and Italy wine and silk. After the radical solution of the former antagonisms with Turkey by the repatriation of 21/2 million Greeks, peace has been establ ished with the neighboring Lesser Castes. To the north, the country is covered by the Balkan treaties; to the sea, it is secured by its traditional friendship with England. Under these circumstances, developments in the western Mediterranean basin are unlikely to cause major disruptions to Greece's ongoing economic upswing. The economic situation has improved considerably, and industrialization in particular is making rapid progress.
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The Southern European Mediterranean Zone
Greece's Foreign Trade by Major Import and Export Commodities 1934 Important Imports Textiles Metals and goods Wheat Chemical products Hard coal Timber Sugar Paper and paper products Goats and sheep Raw hides
Million Drachmas 1836 1309 740 490 413 374 299 265 236 201
Important Exports Tobacco Raisins Olives Wood products Minerals Olive oil Wine Dried figs Raw skins Textiles
Million Drachmas 2027 1420 219 187 182 174 154 149 134 93
Economic Development in Greece since 1932
End of Year
1932 1933 1934 1935
Production index 1928=100 102,8 107,1 122,8 153,2
Whole sale index 1927/29=100 (in Gold) 46,0 47,7 47,6 48,7
Import Export In Million RM
280,8 201,4 214,2 251,6
163,7 122,8 133,4 165,5
Bank discount % per annum 9,0 7,0 7,0 7,0
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170
Closing words
In the present book an attempt has been made to expose some of the forces at work1 by which the future of Europe is determined. The rise and fall of the individual peoples and their political and economic group formations, which often appear to the naked eye only as coincidence or arbitrary act of historical personalities, become thereby visible as fate and result of forces, whose strength and direction are measurable and thus also accessible to an influence. Fro m this point of view, the reflection of the actual development and the groping headlights of its spiritual cognition push together to a new perspective, in which the political and economic view of the world gains sharpness and the unavoidable clouds of vis ion, which hitherto gave room to intuition and experiment, are brightened up by the scientific judgment. The tentative attempts at political reorganization in Europe, from the founding of the League of Nations and its multiple transformations to the numero us regroupings of its members-opponents that have since become visible, clearly show that the realization of the driving forces of development in the European area is still present in hardly any of the powers involved. For these reasons, even if one assume s the willingness of the individual powers to cooperate in the consolidation of Europe, all efforts have so far been unsuccessful, because the incipient realization of the necessity of new methods and objectives still lacks the power of proof against the persistent tendencies of traditional principles. The present book can be only a very first beginning in this direction, which at least proves the usefulness of the applied methods. The science of the development of the natural forces of impulse and resistance, which keep incessantly in tension the network of the many -sided relations of nations among themselves, is still in its first beginnings. However, it has as an ideal raw material for its research the statistical material accumulated for many dec ades all over the world, on which it can test its methods and draw its conclusions. The scientific -mathematical way of thinking of this new science will push back the old humanistic -historical way of looking at the political world not only because it is ab le to lift the veil of the future in the most favorable case, but above all because it has the more exact methods and the shorter numerical expression. The attempt to further develop such methods, which allow a more reliable insight into the driving forces of development of peoples and the inevitable effects on their political decisions, seems to me a task which is not without interest for Germany and for Europe. A. Reithinger ¹As far as they originate from the biological and economic sphere.