Germany, the Danube and Rumania (1939)

From the October 1939 issue of the Socialist Standard 

Rumania is in the picture just now and we have been informed that she would like to be our ally, in spite of the pressure Germany is exerting to induce King Carol to link up with the Axis

On January 16th last, according to the Economist (April 29th), M. Gafencu, Rumanian Minister for Foreign Affairs, was present at a meeting held in Galatz by the National Re-generation Society. In his speech he referred to Rumania’s interest in the Danube, for recently this time-honoured river and artery of Europe had attracted the attention of politicians and economists in all the countries through which it flows, and not least Rumania. M. Gafencu said that the Rumanian Danube must serve as a show-window turned towards the East and the Black Sea, and that this fact placed certain duties upon the shoulders of Rumania.

The importance of the Danube has been increased lately by various plans for canals connected with its upper and lower reaches. On May 11th, 1931, the German Government promulgated a law for the construction of the Rhine-Main-Kelheim (Danube) canal. This canal, which is to be finished in 1945, forms a part of the German economic campaign, and the Rumanian Press talks of Baghdad as the goal towards which it is aimed. It will carry vessels up to 1,200 tons.

On November 19th, 1938, a Convention was signed between Germany and Czecho-Slovakia for the construction of another canal from Kosel, on the Oder, through Moravska Ostrana to the Danube above Bratislava. For several years the Rumanian Government has had in its archives plans for the construction of a canal to unite, by a straight line, the Danubian port of Cernavoda with Constantza.

The voyage of cargo steamers would be reduced by nearly 200 miles by loading at Constanza instead of at Braila or Galatz. Below Braila the average depth of the river is about 24 feet, so that it is navigable for sea-going vessels. Higher up the depth decreases.

The Government is at present studying this proposal.

The most far-reaching proposal which, if it were ever carried out, would radically affect the Balkan countries, is for a waterway running from the Timok river, a Danubian tributary below Belgrade, and by the Nishava to Nish, thence down the River Morava to the River Vardar and finally to the Mediterranean at Salonika. This canal would shorten the goods route from Central Europe to Salonika by 900 miles. It would, of course, kill the lower Danube ports of Braila, Galatz and Sulind. It is interesting to recall that when the Czecho-Slovakian business was agitating the public mind, Mr. Walter Runciman was sent by the Government to make certain representations—he is in the shipping business.

Germany is aiming at connecting the Rhine and the Danube by means of a large waterway; this, she calculates, would enable her to tap all the resources of Central Europe, and if she could also succeed in getting control of the proposed canal to Salonika she would, in addition, be in a position to play a strong hand politically in the Mediterranean.

Dr. Schacht, the German Finance Minister, advocated intensive industrialisation as the best means of solving Germany’s post-war economic problems, and this immediately brought him up against Germany’s shortage of raw materials and the question of currency.

A nation faces a difficulty if it launches into intensive industrialisation without sufficient raw materials in its own territory and without adequate reserves of capital. Raw materials must be imported and paid for—in foreign currency. Barbara Ward, in “The International Share-out,” states in this connection, “This is not a difficult transaction if the industrialised country is able to sell goods abroad in large enough quantities to create a favourable balance of trade, or if it has enough capital to invest overseas and receive interest in the shape of raw materials or currency.” The situation for the German capitalists was doubly difficult. The post-war years were years of growing economic nationalism, when every nation was engaged in a bitter struggle to produce and sell goods rather than to buy them, and Germany found it more and more difficult to place her manufactures. And the war of 1914-1918 and the inflation had wiped out Germany’s capital reserves. She was herself a debtor country in a world which refused to take her goods as service on her debt, and demanded that the transaction be carried out in gold. Behind the high tariff barriers of America and France the gold silted up, and Dr. Schacht felt that Germany’s position was extremely precarious. Therefore, in 1926, he began to advocate a colonial policy, not because he believed colonial raw materials to be a solution of Germany’s industrial problems, but because he argued that the return of the Colonies might ease the strain on Germany’s currency. Germany’s difficulty, so his argument might have run, is to find enough foreign currency to buy the essentials, such as iron and tin and zinc, or any other important metal which at present was being bought from foreign countries with foreign currency. If Colonies were returned to us we could buy these primary products with our own money and set free a corresponding amount of our scanty supplies of foreign currency to buy more of the essential raw materials, which are only to be found in the territories of foreign sovereign States.

Germany’s revival of the Colonial question was not due to the traditional policy of supplies and markets, but to Dr. Schacht’s thesis of underpinning the German mark. Germany’s exchange position was rendered much worse by the international slump. 1929 brought an end to American lending and the retreat of panic-stricken nations behind tariff walls. Germany’s export trade was damaged catastrophically. When Hitler came to power in 1933 he was faced with the problem of some eight million unemployed. He sought a way out in a policy of controlled inflation and internal recovery. The men were brought back to work, but the position in regard to foreign currency grew worse. Germany’s internal boom, coming at a time when the rest of the world was still wallowing in the trough of economic depression, cut German industry off still further from the general flow of world trade. Her export trade, nevertheless, was a vital necessity, for without it she could not secure foreign currency, and without foreign currency she could not purchase essential materials.

During the first two years the problem was simplified by conditions in the world market of primary products. There had been a general fall in prices, and for a considerable period the prices of most raw materials were ludicrously low. Germany could obtain supplies at this low rate, and she did not feel the pinch of her currency shortage too severely. In 1935 the position changed. Slowly the markets of the world recovered. Great Britain, France, and the United States had all embarked on vast armament programmes. Their needs came into direct collision with Germany’s, and as the prices of the primary products rose and the scramble for them increased, Germany’s position grew more and more unfavourable. She found it difficult to compete in the open market, and other Powers were not so ready to conclude “clearing” agreements with her. They preferred free multilateral trade.

Germany might at this juncture have inflated her currency. Such a step would have lowered costs and helped the export trade to compete in foreign markets. Or she might have made a determined effort to secure a foreign loan. She did neither. Memories of the 1923 inflation were too vivid for the first step. As for the second, the Nazis claimed to have come to power in order to redeem Germany from “the slavery of foreign Jewish finance capital.”

Their solution of the problem was the “Four Years’ Plan” and the drive for self-sufficiency. The aim of this total mobilization of the country’s resources was said to be to reduce its dependence upon foreign supplies, and it is significant that the Colonial question became a recurrent refrain in German propaganda about the same time as the Four Year Plan was launched.

“If critics protest,” says Miss Ward, “that the game is not worth the candle, because the Colonies do not produce Germany’s basic needs, the Germans reply that, although the Colonies do not produce iron or copper bauxite, or cotton or wool, they do produce, and could be made to produce, more of certain other materials, which Germany must at present buy with foreign exchange. The recovery of the Colonies would thus set free a certain amount of foreign currency, which could be used to buy the really essential metals elsewhere. If after this critics still protest that the sum saved is too small to be weighed against the risks of the transaction, the Germans can reply that if they find it worth while to legislate about waste tooth-paste containers, colonies are not too insignificant to be of interest to them.”

Germany’s moves in Spain can be understood if we take the above into consideration. She was searching for raw materials she could not afford to buy. Every time a crisis has developed she has taken advantage of the stagnation in trade that resulted to bring off a barter agreement. When the Germans were marching into Czecho-Slovakia, Hitler was making a deal with the Argentine, bartering railway material for wheat. Airplanes obtained as a result of the seizure of Czechoslovakia were offered to France in exchange for badly-needed foreign currency.

Enough has been said to show something of what is involved in the struggle.

Charles Lestor