I was in England two
years ago, during the crisis of that time, and I met a friend of mine who had just come
The Budget-Mr. Quelch
back from a six weeks' tour of Germany. That was not a Cook's tour; he and his friends took a car and travelled through the country. He said generally speaking they found contentment in Germany. That was in 1938; since then there has been a big change. The standard of living has been reduced very considerably, and I am going to explain why. When I am dealing with the financial policy of Germany, however, I hope no hon. member will think it necessary to rise in his place and ask me if I am advocating fascism or nazism. Our policy is the very essence of nazism. Nazism believes in centralization of power; we believe in the decentralization of power. Nazism believes in the greatest possible regimentation; we believe in the greatest possible freedom. But I would ask this: Just because Germany uses tanks, would it make us nazis if we used tanks also? Just because Germany uses dive bombers, are we nazis if we use them also? When the Prime Minister asks this parliament to grant him dictatorial powers, does that make him a Hitler? Because we have conscription and Germany has conscription, does that make us nazis. Therefore, if Germany has had a sane monetary system in the past few years, I am not advocating nazism, I am sure, if I advocate that we should have adopted a similar financial policy.
I am going to quote from a speech made by Doctor Schacht formerly president of the Reichsbank. This speech was made on November 29, 1938, to the Deutsche
Akademie. It was entitled "The Financial Miracle," and from it I quote the following:
The public finances of Germany were in a hopeless state in 1932. Every increase in tax rates only caused a decline in revenues.
And I would especially refer that statement to the Minister of Finance. Doctor Schacht continues:
Those symptoms of economic collapse were of necessity reflected in an unexampled social distress. A shocking proof of this are the statistics of unemployment, which in the winter 1932-33 exceeded the six million mark and which together with the invisible unemployed amounted to about seven million.
That is the condition which existed in Germany in 1932. In the article Doctor Schacht points out that Hitler called him and told him he wanted to put into operation a financial system which would make it possible for Germany to expand her production to the maximum. Then he goes on:
All government assistance was from the very beginning used to bring about a rise in production, first in a so-called work creation programme through credit assistance for reconditioning, repairs and similar things, and
afterwards through the great armament programme which was steadily expanded. The extent of this programme and of the autohighway construction which was undertaken soon made it clear that these two tasks alone would be sufficient to overcome the existing unemployment, so that the other work creation measures soon became superfluous.
Naturally this work creation and armament-programme could only be set under way by the state and could only be carried out by financing on a large scale. No capital at all was available for this financing. In fact money creation had to be helped along. . . .
The fact that the newly created money would' be covered by newly created goods was not the only point; the type of goods also had to be considered. Simply expressed, the problem was as follows: The credit money, made available for the armament programme, produced a demand for consumption goods, in so far as it was paid out in the form of wages and salaries. However the armament manufacturers deliver military goods which are indeed produced but not consumed. This leads to two conclusions: First, care must be taken that in addition to armament production, a volume of consumption goods is produced which is sufficient for the needs of the population, including all those working for rearmament and, second, the less consumed, the more workers can be allotted to armaments. [DOT]
The point I bring particularly to the attention of hon. members is that they did not reach maximum production until 1938. Up to 1938 they were expanding their production of war material and consumption goods. Therefore at that time they were able to put forward the maximum war effort, and at the same time maintain a comparatively high standard of living. Then he goes on to say:
Spring 1938 brought a change in our finance policy, because at that time German economy had reached a stage of full employment. As soon as an economy has made use of all available labour and materials, any further credit expansion is not only senseless, but actually harmful. For then newly created money can no longer effect a further increase in goods production but can only bring about competition for the available labour and raw materials; and such a competition must necessarily lead to an increase in prices and wages.
Subtopic: DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE