1939: Germany

The territory of the German Reich was increased considerably during 1939. With the annexation of Austria and the Sudetenland in 1938 Germany expanded her area from 180,689 to 224,950 sq. mi. and her population from 66,000,000 to over 76,000,000. In addition, Germany acquired in March 1939 the Czechoslovak provinces of Bohemia and Moravia, and also Memel. Bohemia and Moravia have an area of 19,058 sq. mi. with a population of about 7,000,000. The Memel territory comprises an area of 1,099 sq. mi. with a population of over 150,000. After the dismemberment of Poland in September Germany annexed about 30,000 sq. mi., consisting of the two Polish provinces of Pomorze and Posnan with their capitals in Danzig and Posen, and Polish Upper Silesia with Katowice, and certain parts of Western Poland, including the important industrial district of Lodz. The territory of the Free City of Danzig, covering an area of 754 sq. mi. and with a population of over 400,000, was incorporated in the new German province of Western Prussia, the former Pomorze. At the end of 1939 the fate of the former Polish territory, now in German occupation, was not yet definitely settled. The frontiers between the territory annexed outright by Germany and that which remained as a Polish reservation or Protectorate, were still fluid. The population underwent a continual process of shift and migration. Therefore it is impossible to give any exact figures as to the area and population of the Greater German Reich at the end of 1939.

Changes in Foreign Policy.

The most remarkable change in Germany's foreign policy during 1939 was the open abandonment of the long advocated thesis that Germany wished to unite all Germans, but only Germans, within the German Reich, and to respect the national existence and independence of other peoples. Even this plan of a racially united Germany was bound to provoke international complications and strife. Many people of Germanic descent, regarded by the Nazis as racially akin to them, like the Swiss and the Dutch, had no desire to become incorporated in the German Reich, and valued their individual liberties and traditions beyond any imposed subjection to racial solidarity. In other states where people of Germanic descent live as minorities, the demands put forward by Chancellor Hitler to incorporate all Germans in the Reich, must necessarily act as a disruptive force. Even in states far distant from Germany, the theory of racial solidarity tends to put loyalty to the race and therefore to Germany above loyalty to the adopted country. This must necessarily endanger the national cohesion of non-Germanic countries.

For a time the theory of racialism seemed to set certain definite limits to German expansion. It was invoked as late as October 1938 in the case of the Sudetenland and again in the case of Danzig and the Memel territory in 1939. But in March 1939, with the incorporation of 7,000,000 Czechs in the Greater German Reich, and with the subjugation in the fall of 20,000,000 Poles to German rule, the earlier theory had to be abandoned. The theories upon which these later actions were based — the theory of the need for Lebensraum, or living space, and the theory of the right of the German race to rule all other races because of its superiority — had been taught before but never with the insistence now given to them. It was declared to be the right of a great nation to subject to its economic control all lands needed for its markets or raw material supplies, so as to create a territory large enough for the prosperous and secure development of the economic life of the 'superior' nation.

These convictions, strongly emphasized in Hitler's 'Mein Kampf' and in Alfred Rosenberg's 'The Myth of the Twentieth Century,' the two basic books of National Socialism, were adapted to the situation created by the war in the fall of 1939. In a speech by Dr. Robert Ley, Reich Organization Director and head of the German Labor Front, delivered in the conquered Polish city of Lodz on Dec. 17, he said, 'The German race, that is our faith! It has higher rights than all others. A German laborer is worth more than an English lord. We have the divine right to rule and we shall assure ourselves of that right.' This theory was applied to Poland, where the German remnant of the Polish nation is supposedly to be maintained in a helot condition, deprived of any intellectual or leader class and of any opportunity for economic progress. An authoritative article in the Berlin Borsenzeitung expounded the general premises of the theory. 'It is not true that the nations of Europe are equal. It is nonsense to maintain that all nations have equal rights. In the life of nations it is not otherwise than in the life of individuals. Not every people is capable of forming a state and not every people has the right to its own state. The theory of general equal rights of peoples and nations is the same liberal fallacy as the twaddle of general human rights. Not every people has a national or imperial mission.'

Another fundamental departure from German policy during 1939, which came as a much greater surprise because it was in direct opposition to all of Chancellor Hitler's former teaching, was the complete about-face of Germany's foreign and internal policy in relation to Communism and to the Soviet Union. Until the summer of 1939 National Socialism had never ceased to proclaim that its real enemy, and therefore the enemy of human civilization and progress, was Communism together with the government and policy of the Soviet Union. National Socialism claimed to have saved the German people from the terrible danger of Communism, and considered itself a bulwark for the rest of Europe against the expansion of Communism. Although democracies and liberalism were regarded as almost in a class with Communism, nevertheless Communism was regarded as the archenemy. Chancellor Hitler had many times emphasized the necessity of a German war against the Soviet Union, of the conquest of large parts of the Soviet Union — especially the Ukraine — and their inclusion in the German living space. Within the last two years Germany had become the initiator and leader of the anti-Comintern pact and had organized Japan, Italy and some minor countries into a common front against the Soviet Union. The German Foreign Minister, Herr von Ribbentrop, after taking office on Feb. 4, 1938, had concentrated upon the building up of this united front. Now in August 1939, Herr von Ribbentrop personally proceeded to Moscow and there in the Kremlin signed a pact of friendship with Stalin, thereby changing completely the direction of Germany's internal and foreign policy. From that moment on all attacks upon Communism and upon the Soviet Union ceased within Germany. The Nazi press repeated again and again Germany's friendship for the Soviet Union. Their common opposition to democracy and liberalism was stressed, and in Germany the socialist and collectivist aspects of National Socialism were accentuated. The arch enemy of National Socialism, and therefore of human civilization and progress, now became Great Britain and Anglo-Saxon democracy, toward the total destruction of which all the forces of German National Socialism were bent. (See also COMMUNISM; FRANCE; ITALY: Polish Question; U.S.S.R.)

Military Preparations.

With these two important exceptions German policy in 1939 remained the same as in 1938. Even the outbreak of the European War in September 1939 did not imply any great change. Germany's economic and cultural life had been completely geared to war conditions since 1933. The vast totalitarian military machine could without any sharp break enter the war. The first months of the year were dedicated to diplomatic and military preparations. On Jan. 5 Chancellor Hitler saw the Polish Foreign Minister, Josef Beck, at a lengthy meeting in Berchtesgaden and discussed with him the German demands on Danzig and proposals for collaboration against the Ukraine. In the same month Foreign Minister von Ribbentrop visited Warsaw as the guest of Josef Beck during the celebration of the fifth anniversary of the Polish-German pact of non-aggression and friendship which had been concluded on Jan. 20, 1934, for a period of ten years. On Jan. 21 Chancellor Hitler created a huge army reserve by a decree which charged the Nazi Storm Troopers with the military education and training of all German men over seventeen who were not in military service or who were not receiving such education through their connection with some other party organization. All the members of the fighting forces are to join in the military sports program of the Storm Troopers when they have completed their military training, and will thus remain under compulsion to participate in military athletics which will keep them physically fit and aware of the latest developments in military technique. This vast 'shadow army' put Germany on the broadest possible war footing in peace time.

The dismissal on Jan. 20 of Dr. Hjalmar Schacht, the leading German economist, from his post as director of the German Reichsbank, and his replacement by a National Socialist economist, seemed an attempt to put the economic life of Germany completely under control of an intensified armament program and to remove the last brake still available to conservative German economic theory. At the same time steps were taken to subject the officers' corps of the army to Nazi control. The inactive and reserve officers, who had heretofore formed their own organization, were obliged to join the existing German soldiers' organizations which had previously included only the non-commissioned officers and the rank and file. Thus the officers were placed on an equal footing with the men and brought completely under National Socialist domination. The former rigid esprit de corps of the officers of the German army had been already broken by the influx of many former non-commissioned officers promoted to officer's rank. Early in February the German air force was reorganized into three air fleet commands for the east, north and west, with Colonel General Milch as Inspector General of the force. The army now consisted of eighteen army corps with thirty-nine divisions, four light divisions, three Alpine divisions and five divisions of armored cars.

British Efforts towards Peace.

The beginning of March witnessed intensified efforts on the part of Great Britain to arrive at an understanding with Germany. Representatives of British industrial interests visited Germany, and with the cooperation of the British Government conducted promising negotiations regarding economic cooperation between the two countries. At the same time a semi-official announcement in London expressed the conviction that the international situation was steadily improving although for a long time the prospects for peace had not been favorable.

Final Absorption of Czechoslovakia.

But only a few days later Germany started an intensified campaign against Czecho-Slovakia, very similar to that undertaken in September 1938. Through Germany's support of the machinations of Slovak extremists for Slovak independence, a step was taken towards the disruption of what had then remained of Czecho-Slovakia. Accusations of alleged mistreatment of Germans in Bohemia and Moravia, and stories of disorders, led to a swift occupation of those sections by German troops. The two provinces were then incorporated into the German Reich as a protectorate. This expansion brought Germany a rich and fertile land with highly developed industry and intensive agriculture. Through seizure of the gold holdings and the foreign securities held by the Czech National Bank and by private individuals, Germany was able to procure foreign exchange, of which she was especially short, and in succeeding months to finance in part her vast trade deficit and her trade war. Czechoslovakia had some of the best armament factories in Europe, among them the famous Skoda works in Pilsen. All these now came under Germany's control.

Slovakia.

Slovakia was declared an independent country, but signed a treaty with Germany for the duration of twenty-five years, according to which Germany promised to guarantee Slovakia's independence and frontiers and was allowed to maintain army establishments on Slovak territory. This protectorate over Slovakia, which subordinated the political and economic life of the country to German interests, was followed by a trade treaty with Rumania which practically put the economic resources of this country at the disposal of Germany.

Memel.

On March 21 the Lithuanian Foreign Minister was ordered to Berlin and there agreed to the cession of the Memel territory under threat of an ultimatum, and to the conclusion of a commercial treaty with Germany. On March 23 Memel was occupied by German troops and Chancellor Hitler went there on board the pocket battleship Deutschland to hail its incorporation in the Reich. With that, however, the unresisted expansion of National Socialist Germany reached its culmination. (See LITHUANIA.)

Change in British and French Policy.

Great Britain and France, who up to that point had followed a policy of appeasement at almost any price, now became fearful lest Germany's further expansion would throw all Europe into chaos. The annexation of Bohemia and Moravia, in undisguised contradiction of Chancellor Hitler's solemn promises of September 1938, convinced Prime Minister Neville Chamberlain — who until then had believed in the possibility of peace with Nazi Germany — that National Socialist Germany had aggressive designs. Great Britain and France resolved to guarantee any countries menaced by Germany and willing to be guaranteed as far as their independence and territorial integrity were concerned. Such a guarantee was offered to Poland.

Poland's Situation.

In his speech to the German Reichstag on April 28, 1939, Chancellor Hitler publicly voiced his demands on the Polish Government. He asked for the incorporation of Danzig in the German Reich and for a strip of land through the Polish Corridor to connect Germany with Eastern Prussia. In view of the existing Polish-British negotiations for a pact of mutual assistance Chancellor Hitler denounced the Polish-German treaty of non-aggression of January 1934, although this treaty had been concluded for a period of ten years. At the same time Chancellor Hitler denounced the British-German naval agreement of 1935 and complained bitterly of Great Britain's encirclement of Germany. The British promise of assistance to Poland, in case of any action which the Poles would consider it necessary to resist with all their national forces, was regarded by Germany as a blank check which gave Poland freedom for any action against Germany. Hitler had been confident since his success at Munich in September 1938 that the Western democracies had detached themselves from the fate of Eastern Europe, and he objected to any interference by the democracies in what he regarded as Germany's 'living space,' where she alone had the right to determine the order to be established.

The European War: Invasion of Poland.

To strengthen Germany's position against Great Britain. Chancellor Hitler declared on May 7 that the Rome-Berlin Axis, was to be converted into an outright military alliance, offensive as well as defensive. This alliance was signed in Berlin, by representatives of Italy and Germany on May 22, and provided for complete coordination of the economic systems of both countries for the purposes of war and for a common fight to the finish in case of war. German pressure was also exercised upon Hungary, Yugoslavia and Bulgaria, to make them completely dependent politically and economically upon the German Reich and to make it impossible for Great Britain to include them among the states to whom promises of protection against German aggression were given. Meanwhile the relations between Germany and Poland steadily grew worse. The German press used the same method of incitement against Poland because of alleged atrocities, which it had used against Czechoslovakia in September 1938 and again in March 1939. Negotiations between the British ambassador in Berlin. Sir Nevile Henderson, and the German Government, for a negotiated settlement between Germany and Poland, proved in vain. Germany's final trump card in the diplomatic game was played at the end of August by the revelation of her successful negotiations with the Soviet Union.

Conquest of Poland.

The treaty of non-aggression and friendship between the Soviet Union and Germany did not, however, as Chancellor Hitler had apparently hoped, influence Great Britain and France towards any weakening in their determination to support Poland against aggression by Germany. Great Britain made it clear through her ambassadors that she felt herself honor-bound to fulfill her obligations towards Poland. In spite of that, German armies began to move in the early morning hours of Sept. 1 and German airplanes started a ruthless and sustained aerial onslaught on Polish towns, railways, roads and flying fields. The very first days of the war made it clear that the Polish army was in no way able to withstand the pressure of the German army, which had prepared every detail of its attack with the minutest care, and was moreover far superior to the Polish army in numbers and, above all, in technical equipment and military strategy. On Sept. 3 England and France, in fulfillment of their pledges to Poland, declared war against Germany. Despite the Axis offensive and defensive military alliance of May 1939 Italy did not join the war actively on the side of Germany. She had informed Germany earlier that her army would need three more years to reach maximum efficiency. Thus for the time being, Italy with Germany's consent and knowledge remained a non-combatant, although not a neutral, because her sympathies were openly declared to be on the side of Germany. (See ITALY: Italo-German Relations.) The Soviet Union remained similarly neutral although the Government repeatedly declared its sympathy with the German cause, and on Sept. 17 helped Germany indirectly by invading the Ukrainian and White Russian parts of Poland, which were subsequently incorporated in the Soviet Union. The superior equipment and skill of the German army achieved the conquest of Poland by a Blitzkrieg (lightning war) within four weeks. About 80,000 additional square miles thus came under German control. (See also FRANCE; GREAT BRITAIN; POLAND.)

The War in the West.

The war in the West for the first four months remained without any major events. During September the French penetrated into German territory along the Saar River, but in October the Germans recaptured most of what was lost and the war on land came to a practical standstill. It was somewhat different in the air, and more especially on the sea where Germany tried to break the English blockade and at the same time establish a blockade of England. In the period from Sept. 3 to Dec. 10 the total loss of British merchant shipping amounted to 456,340 tons, the French loss to 48,038, the German loss to 124,053 and neutral losses to 263,719. As compared with the sinking of ships of all nationalities during the second quarter of the unrestricted German submarine campaign of 1917 the losses were definitely much smaller. In 1917 they amounted on the average to 23,700 tons daily. In this war thus far they amount to only 8,206 tons daily. In the first half of November there were persistent rumors of a German invasion of the Netherlands, and the Dutch were accordingly preparing for such an event. But so far the war in the West has remained confined to the original belligerents. (See also INTERNATIONAL LAW.)

Partition of Poland.

Meanwhile the conquered Polish territory was organized in such a way that large parts of western Poland were joined to Germany directly and the remaining parts were organized as a Government-General with the capital in Cracow and Dr. Hans Frank as Governor General. The German army of occupation was put under the command of Colonel General von Blaskewitz. Poland had suffered heavily by bombardment and destruction. Many cities were in ruins, including Warsaw, and there was widespread misery and starvation. Polish intellectual and social life had come to a complete standstill. In the Government-General the Poles were reduced to a helot class, working under the control and for the benefit of the German master race. In those parts of western Poland which were annexed by Germany the Polish population was to be removed and these parts completely Germanized through repatriation of former German minorities from other lands. The Polish population was to be compressed in the already heavily overpopulated districts of central Poland, and the Jewish population was to be concentrated in a small reservation in south-eastern Poland near the Soviet border.

Repatriation Program.

In mid-October a great program was announced by Germany which would bring about 3,000,000 Germans who had lived in eastern and south-eastern Europe into Germany for settlement. A beginning had already been made in July with the Germans of Italian South Tyrol. The program was now extended to the Baltic states. There, especially in Latvia and Estonia, Germans had been settled for many centuries. They had once formed the ruling class in these countries and had left there deep traces in the cultural and social life. Now these Germans were hurriedly 'repatriated' without being given any time for settlement of their affairs. Considerable pressure was exerted upon them to follow the command of their racial leader and to give up their allegiance to the lands where they had been rooted for many centuries. The former leader of the German minority in Latvia, Dr. Schiemann, in an interview on Nov. 14, summed up the point of view of the few Germans who did not obey the summons of the Reich, but decided to remain loyal to the country of their birth; 'As Germans, as men of honor and as Christians, we do not have to obey the commands of foreign authorities. We do not wish to go into a country upon whose citizens a philosophy has been imposed which is contrary to our concepts of religion, of life and justice.' Most of the Germans in the Baltic States, however, obeyed the summons to Germany. They were to be followed in the near future by many thousands from the Soviet Union, from Rumania, from Yugoslavia and from Hungary. (See BALTIC ENTENTE; ESTONIA; LATVIA.)

Religious Question in Germany.

The intellectual and religious life of Germany continued in 1939 to be as hampered as in 1933. The fight against the Old Testament and its use in instruction was strongly emphasized in connection with the approaching Christmas festival in 1938. Christmas carols in which Bethlehem was mentioned were forbidden in many schools. One of the German States, Anhalt, forbade definitely any teaching of the Old Testament, and of the writings of Saint Paul. The Protestant Bishop of Mecklenburg, Walter Schultz, demanded officially from his pastors the stressing of anti-Semitism in their sermons. The spirit of protest, however, in the Confessional Church was not dead. On Jan. 8, Pastor Wilhelm Niemoller, the brother of Pastor Martin Niemoller who had been held in prison since July 1, 1937, preached in his brother's church in Dahlem near Berlin. He revealed that a number of pastors had been disciplined by the National Socialist régime for calling the faithful to repentance during the war scare in September 1938, and for protesting against the anti-Jewish excesses in November. He said that four members of the Confessional Church governing body were in protective custody, eight more were under arrest, one hundred and thirty had been removed from their posts, and forty had been forbidden to preach. He further revealed that the Government was preparing to achieve the aim which it had steadily pursued since 1933 — to merge all elements within the Church under state compulsion and thus to impose complete state rule. On April 4 the Confessional Church Seminary at Bethel, which was under the direction of Bishop Friedrich von Bodelschwingh, was closed by the authorities. This followed the prohibition of theological instruction at the Catholic University of Munich.

The struggle between the German Government and the Confessional Synod which represented only a small minority of the Protestant Churches in Germany entered its decisive stage in April. Then the Chief of the German Police, Heinrich Himmler, put forward three demands which would force the Confessional Church to relinquish its claims to a share of the Church tax, surrender its status as a corporation of public right and transfer the right of the use of certain cathedrals to the Hitler Elite Guard for its neo-pagan ceremonies. The schools maintained so far by the Confessional Church were turned into community schools where the Weltanschauung principles of Alfred Rosenberg took the place of Christian principles. The head of the Council of the German Evangelic Church, Dr. Friedrich Werner sent to all parishes an official prayer to be read on the occasion of Chancellor Hitler's fiftieth birthday, thanking him for his great deeds, assuring him of unwavering loyalty, and praying for the victories of the German armies on land, on the water and in the air. The majority of the German Protestant Churches published on April 10 a manifesto which had been drafted by their authoritarian leadership, asserting the unbridgeable opposition between Christianity and Judaism, and proclaiming full adherence to the anti-Semitic program. These churches decided to create an 'Institute for Research on and Elimination of the Jewish Influence upon the Church Life of the German People' and a 'Religious Political Seminar for the Study of the Relationship of Politics, Weltanschauung (World Outlook) and Religion.'

Effect of War on Religious Struggle.

In the fall the war brought at least a temporary end to the conflict between the National Socialist State and the Confessional Synod. The whole Protestant Church in Germany participated in the patriotic loyalty of the German people and backed unhesitatingly Germany's conquest of Poland and the ensuing régime there. The proclamations of the German Protestant Church in favor of the war and the army reflected an even greater spirit of complete loyalty and enthusiasm than during the first World War.

In a similar way the German Government succeeded more or less in breaking the resistance of the Catholic Church. The Catholic Bishops, after a long silence, met again in August in Fulda to transmit a message to German Catholics. The Bishops of Austria and the Sudetenland participated, a fact of special interest because some of them, like Cardinal Innitzer of Vienna, and Bishop Weber of Leitmeritz in the Sudetenland, had had great difficulties with the Nazi authorities. Publication of the encyclical of Pope Pius XII against the totalitarian régimes, an encyclical which also expressed the Pope's deep-felt sympathies for the sufferings of the Poles, was forbidden in Germany by order of the Ministry of the Interior. According to information emanating from the Vatican, the German Government in recent months had closed 687 monasteries and convents in the Reich territory alone. The Minister of the Interior has also forbidden requests for alms of a religious nature and the collection of offerings in the churches, since all offerings must be reserved for Germany's Winter Help Campaign.

Persecution of the Jews.

The situation of the Jews in Germany and in all the territories subsequently annexed to the Reich or coming under its influence, grew more and more desperate. In February an agreement was reached between the Inter-Governmental Committee organized to care for Jewish refugees and the German Government. The latter declared its readiness to assist the organized emigration of Jews in an orderly and systematic fashion. This agreement, however, was never executed. (See RELIGION: Jews.)

The conclusion of the pact of friendship with the Soviet Union ended the campaign against Communism in Germany. Now the Jews replaced the Bolsheviks as the only target for the most violent National Socialist attacks.

Economic Situation.

The economic position of Germany grew worse during the year. On Jan. 20 Dr. Hjalmar Schacht was removed from his office as President of the German Reichsbank and Walther Funk was appointed to succeed him. Dr. Schacht fought a losing battle against the over-expansion of German business and finance and against the relentless drive for greater and speedier production, in spite of the growing exhaustion of Germany's material, financial and labor reserves. Whereas Germany in 1937 had an export surplus of 413,000,000 marks, in 1938 according to official figures, the Reich's trade showed a great deficit and the imports exceeded the exports by 432,000,000 marks. This change in the trade balance was reflected in Chancellor Hitler's speech on Jan. 30, 1938, when he said that Germany 'must export or die.' But the figures for January 1939 revealed clearly a continuation of the trend which had manifested itself in 1938. Greater Germany's exports dropped from 500,000,000 marks in December 1938 to 441,000,000 marks in January 1939, and correspondingly the imports had to be reduced from 541,000,000 marks to 472,000,000 marks. This development was all the more notable because world trade had begun at the same time to show signs of improvement. In this connection it was noteworthy that the importation of foodstuffs and raw materials into Germany decreased considerably, and that the drop in German exports to all countries, including those of Asia and South America, was almost entirely in finished goods.

At the beginning of 1939 British commercial circles were very anxious to promote German-British trade relations and thus to ease the difficult trade position of Germany. The head of the economic department of the Foreign Office, Frank T. Ashton-Gwatkin, went to Germany in February 1939 to study the problem. In March, a delegation from the Federation of British Industries visited Germany, together with R. L. Hudson, Secretary of the Department of Overseas Trade. The aim was to make British-German cartel arrangements to develop foreign trade as part of Neville Chamberlain's policy of appeasement, and to show the German people that Great Britain was ready to assist them economically and to help them to find outlets for their trade. A trade pact between the two countries seemed possible when all these efforts were wrecked in March by Germany's military occupation of Bohemia and Moravia. (See INTERNATIONAL BANKING AND FINANCE; WORLD ECONOMICS.)

Labor.

German labor problems showed their seriousness in an increase in the number of hours of work, and in a decree by Marshall Hermann Goering on Feb. 15, 1939, which introduced forced labor for national construction jobs and so put a stop to employer competition for labor through higher wages. This decree permitted the Government to draft men and women for indefinite periods and to pay them according to the jobs to which they were assigned irrespective of the wages previously paid them for their regular jobs. It was further decreed that an employee's notice to quit a job must be approved by the Federal Labor Department, thus making firmer the ties that bind workers to a given place of work. One of the national construction jobs envisaged was the enlargement of the Kiel Canal which connects the Baltic and the North Seas. By doubling its present size this waterway was to become wider than the Panama or the Suez Canals.

Increased Taxation.

The financial needs of the Reich led to a stringent increase in the income tax at the end of February. Already the tax revenues for the current fiscal year were estimated at 29 per cent of the national income (as against 18 per cent in the United States and 19.6 per cent in Great Britain) to which, however, must be added in Germany compulsory social insurance, and 'voluntary' social welfare contributions which bring the total up to 38 per cent of the national income. Dr. Schacht's efforts at curtailment of national expenditure were in vain. The evidence pointed towards rapidly increased expenditures. The income tax in Germany begins at present on incomes of $250 a year. Taxation on single persons and on childless couples is much higher, and deduction of church taxes from tax income has been abolished as incompatible with German interests.

Economic Shortages.

Due to armament and other unproductive work Germany's supply of consumption goods has not kept step with the requirements.

At the end of May a semi-annual report of The Institute for Economic Inquiry emphasized the acute labor shortage in Germany, the pressing need for raw materials, and the very precarious state of the transportation system. The report listed the following accomplishments of German economics: German mines stepped up production to record figures; the supply of zinc and tin almost covered the domestic demand. Iron ore production was increased by two-thirds in two years. Large-scale production of artificial rubber was started. But the immense strain put upon the German railways, and the impossibility of fast replacement of worn-out material, presented a serious danger for German economic life. German reserves of foreign exchange were more and more used exclusively for the importation of materials necessary for war. Therefore a serious food shortage had arisen in Germany before the outbreak of the war. Meat, oil, fat, butter, fruit, vegetables, coffee, eggs and other foodstuffs were already lacking in the early part of 1939. The Government tried to replace some of these foodstuffs by substitutes, which, however, did not always meet with popular approval.

Financial Situation.

In the middle of June the German Reichsbank was reorganized by a decree which placed it directly under the orders of Chancellor Hitler and eliminated foreigners from holding shares. Chancellor Hitler thus took direct control of all decisions affecting the currency and of grants of credit to the Reich itself. The management itself was left in the hands of the bank directory which must conduct the business on Nazi principles. The annual Reichsbank report shattered any hopes which might have been entertained that Germany's barter and currency control system might be relaxed in the near future. The Reich's gold supply was given as 70,000,000 Reichsmarks of which about 10,000,000 were being kept abroad. In spite of the fact that tax collections during the current fiscal year were to be increased by 4,000,000,000 marks (and as compared with 1932 by more than 15,000,000,000 marks) the German Government was borrowing at the rate of from 8,000,000,000 to 10,000,000,000 marks annually to finance its military program.

Effects of European War.

The outbreak of the war did not produce any fundamental changes, because Germany's economic life had been geared to war conditions since the Nazis came to power. The first ration cards for food were given out on Aug. 27. They authorized every person to buy only a certain amount of food, or of textile goods, or linen and shoes over a given period of time. The ration was for instance, one and a half pounds of meat weekly, one pound of soap (including soap for laundry) monthly, and one suit yearly. These rations were later changed, partly by extension to a wider range of products, partly by a reduction of the amount allowed. Workers in heavy industries were allowed more than other workers. The average German was allowed eighty grams of butter, about one quarter of a pound of vegetable fat, sixty-five grams of pork fat and half a pound of sugar weekly. Especially serious was the lack of stockings, linen, underclothes, shoes and dresses. A law promulgated on Sept. 4 provided for a decrease in wages and prices, a 50 per cent increase in income tax assessments on all incomes of more than $1,000 a year, and special war taxes on tobacco and alcoholic beverages. Vacations were cancelled until further notice, regardless of any contracts or agreements. In efforts to increase the productive capacity of Germany under the new war economy, the Government, on Sept. 16, revised the regulations governing the working hours of women and of persons between 16 and 18 years old. These persons may not be required to work more than ten hours daily or fifty-six hours weekly. Children under sixteen may not be required to work more than ten hours daily (including the hours devoted to instruction) or a total of forty-eight hours a week exclusive of instruction. A further step was taken on Nov. 18 when the eight-hour working day in Germany was changed into a ten-hour day without additional compensation. Such compensation must be made, however, if the working time is to be extended as in exceptional cases, to eleven or twelve hours. Simultaneously with issuing this decree Dr. Robert Ley, head of the German Labor Front, reviewed the first weeks of the war and its influence upon German life. The German goal, according to this statement to the workers, was 'victory, victory and still again victory and therewith the complete destruction of England and the domination of her money bags over the rest of the people on the globe. Socialism against capitalism! That is our battle cry.'

The effects of the British blockade made themselves increasingly felt as regards foodstuffs, soaps and fats, clothing and wearing apparel. Most of the industries producing consumer goods or having to do with the amenities of life were forced to close at the beginning of the war, so as to save raw material and labor. On the other hand factories working for the war and for exports were working day and night. The blockade of German exports, introduced by the western democratic powers in December 1939, may yet be of grave importance to German economic life, which has been put under very heavy strain by the war. (See INTERNATIONAL LAW.) Short rations and high pressure have begun to tell on the efficiency of labor and on the output of industry. For years German workers had been driven hard to work longer hours at an increasing pace. At the outbreak of the war the working day was lengthened in war industries to twelve hours, and in special cases even to fourteen and sixteen. In an effort to keep prices down, wages and salaries were reduced. The result of this overstrain upon the physical and nervous resources of the workers was so great during the first four months of the war that on Jan. 1, 1940, the eight-hour day had to be restored as the general standard. Only in war industries can the working day now be extended to ten hours daily. For an extension to twelve hours daily a special permission is required. For work over ten hours, overtime bonuses were reintroduced. The principal reason for this reversal of the policy proclaimed at the beginning of the war was the slackening pace of German industry as a whole.

In the fall of 1939 the leading German industrialist, Fritz Thyssen, the head of the German Steel Trust and originally one of the most active supporters of National Socialism, who had effectively helped Hitler's rise to power, voluntarily went into exile in Switzerland. His own business concern and his holdings in the Steel Trust were confiscated by the German Government.

Curtailment of Outside Information.

The Nazi Government's fear of possible unrest in Germany was seen in its effort to shut off the people from all contact with the outside world and from all possibilities of gaining unbiased information. No German is allowed to listen to any foreign broadcasts. Anyone found listening to a French, British or even a neutral broadcast faces swift and drastic punishment. The German public has no other means at its disposal for information than the strictly controlled Nazi press and the Government-owned radio. Since Jan. 1, 1940, all foreign newspapers, even those of neighboring or distant neutral countries, are strictly banned from the Reich. This prohibition includes also all newspapers appearing in German outside the frontiers of the Reich, and even those which express open sympathy for the National Socialist cause. Only a few copies of some strictly scientific journals are exempted from the ban. With the censorship of all private letters to, as well as from, Germany, no channel for outside contact is left open to the German people. Efforts of the British and French stations to broadcast information to listeners in Germany have been made ineffective by the prohibition on listening to foreign broadcasts.

German Propaganda.

See DENMARK; EGYPT; FASCISM; UNITED STATES.

Relations with Neighboring Countries.

See DENMARK; ESTONIA; LATVIA; LITHUANIA; NORWAY; SWEDEN; also BALTIC ENTENTE.

Claims to Antarctica.

See INTERNATIONAL LAW.

City of Flint.

See INTERNATIONAL LAW; NORWAY.