Europaische WirtschaftsGemeinschaft

BEING in Translation:
EUropean Economic Community

Von:
ReichsWirtschaftMinister u. President der Deutschen ReichsBank Funk;
Professor Dr. Jecht, Berlin; Professor Dr. Woermann, Halle;
Dr. Reithinger, Berlin; MinisterialDirektor Dr. Benning, Berlin;
Gesandter Dr. Clodius, Berlin, und GauWirtschaftsBerater Professor
Dr. Hunke, Berlin

Mit einer EinFuhrung von:
GauWirtschaftsBerater Professor Dr. Heinrich Hunke
President des Vereins Berliner Kaufleute und Industrieller

HerausGeGeben von dem
Verein Berliner Kaufleute        und der        Wirtschafts – HochSchule
Und Industrieller                                                                        Berlin

Published
BERLIN 1942
Second edition 1943
Haude & Spenesche VerlagsBuchHandlung Max Paschke

------------------------------------------------------------------------------------------------------------------------------
To assist non Germans, reading the above, certain letters have been capitalised for convenience ONLY
Pamphlet #04

Europaische WirtschaftsGemeinschaft

BEING in Translation:
EUropean Economic Community

Von:
ReichsWirtschaftMinister u. President der Deutschen ReichsBank Funk;
Professor Dr. Jecht, Berlin; Professor Dr. Woermann, Halle;
Dr. Reithinger, Berlin; MinisterialDirektor Dr. Benning, Berlin;
Gesandter Dr. Clodius, Berlin, und GauWirtschaftsBerater Professor
Dr. Hunke, Berlin

Mit einer EinFuhrung von:
GauWirtschaftsBerater Professor Dr. Heinrich Hunke
President des Vereins Berliner Kaufleute und Industrieller

HerausGeGeben von dem
Verein Berliner Kaufleute        und der        Wirtschafts – HochSchule
Und Industrieller                                                                        Berlin

Published
BERLIN 1942
Second edition
1943
Haude & Spenesche VerlagsBuchHandlung Max Paschke

------------------------------------------------------------------------------------------------------------------------------
To assist non Germans, reading the above, certain letters have been capitalised for convenience ONLY

Pamphlet #04
Being the FOURTH of a series of Pamphlets being published on the internet at: www.SilentMajority.co.UK/EUroRealist/Germany1942
Greg Lance-Watkins, who has overseen this project for SilentMajority over the last few years would like to thank ALL those who have helped in tracking down the original full text in German, and the short term acquisition thereof, for photocopying., Also for the lengthy process of accurate translation and independent checking of the translation work.
The original copy is available for inspection at Glance Back Books in Chepstow.

The final pamphlet in the series will contain ALL the maps and relevant charts, together with a brief summary of the document.
The European Economic Community 

Mr. Funk, the Reich’s Economic Minister and President of the German Reichsbank

Professor Dr. Jecht, Berlin

Professor Dr. Woermann, Halle

Dr. Reithinger, Berlin, Ministerial Director

Dr. Beisiegel, Berlin

Secretary of State Königs, Berlin

Director Dr. Benning, Berlin

Ambassador Dr. Clodius, Berlin and Economics Committee Advisor

Professor Dr. Hunke, Berlin

With an introduction by

Economics Committee Advisor, Professor Dr. Heinrich Hunke, President of the Society of Berlin Industry and Commerce

Issued by

The Society of Berlin Industry and Commerce and the Berlin School of Economics

Second Revised Edition (Berlin 1943)

Haude and Spenersche Publishing House Max Paschke

Preface to the First and Second Edition

This text contains the lectures presented under the title “The European Economic Community” by the Society of Berlin Industry and Commerce at the start of 1942 in conjunction with the Economic Advisor to the Berlin Committee of the NSDAP and The Chamber of Trade and Industry.  The order of lectures was as follows:

•	Walter Funk, Reichs Economic Minister and President of the Reichsbank:
“The Economic Face of the New Europe”

•	Dr. Horst Jecht, Professor at The Berlin School of Economics:
“Developments towards the European Economic Community”

•	Dr. Emil Woermann, Professor at Halle University:  
“European Agriculture”

•	Dr. Anton Reithinger, Director of the Economics Department of I.G. Farbenindustrie A.G., Berlin: 
“The European Industrial Economy”

•	Dr. Philipp Beisiegel, Ministerial Director of the Reich’s Labour Ministry:
 “The Deployment of Labour in Europe”

•	Gustav Koenigs, Secretary of State, Berlin: 
“Questions About European Transport”

•	Dr. Bernhard Benning, Director of the Reich’s Credit Company, Berlin: 
“Questions About Europe’s Currency”

•	Dr. Carl Clodius, Ambassador of the Foreign Office:
 “European Trade and Economic Agreements’’

•	Professor Dr. Heinrich Hunke, Economic Committee Advisor of the NSDAP, President of Germany’s Economic Publicity Agency and the Berlin Society of Industry and Commerce: 
“The Basic Question: Europe - Geographical Concept or Political Fact?”

The lectures met with considerable interest and very strong agreement. On account of this, we feel we should make them available to a wider circle of people.
Berlin, September 1942

The Society of Berlin’s Trade and Industry - The President: Professor Dr. Heinrich Hunke, Advisor to the Economics Committee

The Berlin School of Economics - The Rector: Dr. Edwin Fels, Professor of Geography

	Index	Page	
Preface		  2	
Hunke	Introduction	  8	
	The Discussion So Far and its Results 	  8	
	Economic Practice	  9	
	Problems Related to Economic Community of Continental Europe             	 10	
PAMPHLET #01			
Funk	The Economic Face of the New Europe    	 15	
	Real and False Economic Freedom 	 15	
	Co-operation in Continental Europe	 18	
	Europe’s Resources and Completion 	 20	
	Directing of the Economy by the State and Work 
                     between the States of the Community	 22	
	The Movement of Payments between the States and European Currency Issues	 24	
	Securing the Area and Economy of Europe	 27 	
	The Will for Co-operation in the Economic Community               	 28	
PAMPHLET #02			
Jecht	Developments towards the European Economic Community 	 30	
	The European Economic Community and its Enlargement    	 30	
	The Problem of the European Economic Area in Late Antiquity and 
                                                                                            the Middle Ages	 31	
	Recent Changes to the Problem of the Area of Europe 	 33	
	The Formation of the Nations and Independent Economies  	 33	
	Overseas Expansion and its Consequences for Europe       	 34	
	The Release of England from the Continent and the Formation of the 
                                                                                  “Free Global Economy”	 35	
	Europe’s Economic New Order: The Present Task                             	 37	
	Collapse of the Previous World Economy	 38	
	Means and Objectives of the European Economic Community        	 39	
	Outlook                                                  	 41	
PAMPHLET #03			
Woermann	European Agriculture                           	 42	
	The Development of Agricultural Enterprises and 
                                             the Structure of  Europe’s Food Economy 	 42	
	The Formation of the Division of Labour in World Agriculture                  	 47	
	Production Increase in Germany and Italy                                       	 49	
	The Supply Situation under the Influence of Economic Restrictions and Change                                                                    	 50	
	Political Consequences for Production                                               	 52	
	Possibilities of Increasing Europe’s Food Production 	 53	
PAMPHLET #04			
Reithinger	The European Industrial Economy                                   	 59	
	The Development of Industry in the 19th Century                              	 59	
	Stages of Technical and Economic Development                             	 60	
	Socio-Political Effects                                                                       	 60 	
	The Loss of Europe’s Hegemony in the World War                        	 61	
	The Transition to State Direction and Planning                              	 62	
	New Europe and its Shared Features                                             	 64	
	Regional Differences in Europe                                            	 66	
	The Major Powers at War - A Comparison of their Capabilities                 	 68	
PAMPHLET #05			
Beisiegel	The Deployment of Labour in Europe                           	 71	
	Population Density, Number and Structure of the Employed  	 71	
	People - The Wealth of Europe                                                                       	 72	
	Worker Exchange on the Basis of Inter-State Agreements            	 75	
	Adaptation of the Organisation for Labour Deployment      	 78	
	Employer Action and Order Switching   	 79 	
PAMPHLET #06			
Koenigs	Questions about European Transport                               	 81	
	“Technical Unity” in the Railway System	 82	
	The Magna Carta of Europe’s Internal Riverboat Traffic	 84	
	Motorways’ Contribution to the European Transport Community	 87	
	Community Work in Shipping                                                             	 88	
	Joint Work in Air Traffic                                                                    	 89	
PAMPHLET #07			
Benning	Questions about Europe’s Currency                                   	 91	
	Currency’s Two Sides                                                                         	 91	
	The Internal Economic Situation of Europe’s Currencies  	 92	
	Managing Foreign Exchange and Bilateral Settlements   	 92	
	Development of Multi-Lateral Settlements                                           	 94	
	The Problem of the Clearing Balances                                              	 95	
	Adjustment of Europe’s Exchange Rates                                          	 96	
	Future Formation of the European Currency System    	 97	
	Europe’s Future Currency Relationship to the Currencies of Other Major Nations 	 99 	
	What about Gold?                              	100	
	The European Currency Bloc                                                              	101 	
PAMPHLET #08			
Clodius	European Trade and Economic Treaties                                  	102	
	The Period of the Old Trade Policy                                                        	102	
	German Economic and Trade Policy since 1933                                      	103	
	Changes to Trade Policy Caused by the War                                          	105	
	The Reversal of the Law of Supply and Demand                                   	106	
	The Question of Labour Deployment in Europe                                         	106	
	The Problem of Traffic                                                                             	106	
	Effects of the English Blockade on Europe                                               	106	
	Principles of European Co-operation                                                           	107	
	The European Regional Principle                                                                 	107	
	Europe’s Economic Independence                                                               	107	
	Europe and the Global Economy                                                                	108	
	Internal Preconditions of a European Economic Community                  	109	
	Ways to Achieve European Co-operation                                                     	111	
PAMPHLET #09			
Hunke	The Basic Question: Europe – Geographical Concept or Political Fact?      	113	
	New Learning and Thought                                                                            	113	
	Starting Point for European Task 	114	
	Three Eras                                                                                                        	114	
	The Character of the Global Economy                                                          	114	
	Political Weakness of Continental Europe due to the Idea of 
                                                                         English World Superiority      	116	
	Britain’s Dominant Theory about the Modern National Economy	117	
	The Foundation of the European Economic Community                                     	118	
	Categories within the European Economic Community                                              	119	
	Three Principles                                                                                               	119	
	A New Era                                                                                                        	121	
	Taking a Look Back to the Past and to the Future               	123	
PAMPHLET #11
	The Illustrations – Maps, Charts etc. Summary of the series and Comments
	Request for help locating further FACTS
		Including Reinhard Heydrich’s 1942 Reichs Plan for The Domination
of EUrope – published in Berlin in 1942 believed to have been November.
ALSO – details of the Berlin Conference of 1944 Titled ‘How Will Germany Dominate The 
Peace, When It Loses The War.’ & details of the massive amounts of cash moved 
out of Germany during the war to safeguard the future of German domination against the economic collapse of losing the Second World War against EUropean Union. AND connections with organisations like The Bilderbergers, Council for Foreign relations, Tri Lateral Commission and other arms of the New World Order.

Introduction - by Professor Dr. Heinrich Hunke, Economic Committee Adviser to the NSDAP, President of Germany’s Economic Publicity Agency

Around the end of 1939, most of Europe was either consciously or unconsciously under the influence of the economic concept of England.  Over recent years, however, it has been swept out of European countries, politically, militarily and economically.  Politically the three-power pact has given honour once again to the ancient figures of life, people and room.  It has also established a natural order and a neighbourly way of co-existing as the ideal of the new order.  The foundation of English economics, which is the basis of the balance of powers, has been militarily destroyed.  And economically, a change has come about following the political and military development, the shape of which is easy to describe, but whose final significance is very difficult to evaluate.  I can only repeat, that the changing order that is happening now has to be ranked as one of the greatest economic revolutions in history.  It signifies a reversion of the economy of Europe to a time before the English concept of building an overseas Europe, i.e. an awareness of one’s own country.

The Discussion so far and its Results

Discussions about questions relating to Europe started as the power of the NSADP grew.  At the Congress of Europe in Rome from 14th to 20th November 1932, Alfred Rosenberg developed, for the first time in front of an international forum, thoughts and ideas that have moved us since.  No one, who fights for a new economic order in Europe, can ignore these perceptions and conclusions.  The economic and political wheel was set in motion, when the NSDAP declared the militarisation of the German economy.  It is to the credit of the journal ‘Germany’s Economy’ that it first seized these questions in 1932, kept on bringing them up and stuck doggedly to those original perceptions.  The idea of German economic self- sufficiency in the new political sense and the German economic militarisation are synonymous with this journal.  Besides this, Daitz, the ambassador, has earned the special credit of being the first to have related German economic history to the present time.  Part II of his selected speeches and essays, which appeared in 1938 under the title ‘Germany and the European Economy’, summarizes his concepts formed between 1932 and 1938.  The Italian, Carlo Scarfoglio, delivered with his book ‘England and the Continental Mainland’, a decisive historical contribution to the consciousness of the European continent.  Meanwhile German and Italian economic policy drew the political consequences from the historical lessons that were learnt during the blockade and learnt again during the sanctions.  The speech made in Munich in 1939 by the leader of the Reich’s farmers, R. Walther Darre, at the 6th Great Lecture at the Commission of Economic Policy of the NSDAP, takes a special place in the discussion at that time.  Its theme was “The market order of the National-Socialist agricultural policy - setting the pace for a new foreign trade order.”

While our leader maintained the hope of reaching a peaceful agreement with England, the route for European economic unity remained problematic.  The end of 1939 was a decisive point and it was natural that the years 1940-1941 heralded the new economic and political order.  The writer, in particular, developed and extended in speech and writing the intellectual fund of the new economic policy, which has been translated into most languages, so that today everywhere the great constructive texts are known.  These contexts revolve around the following issues:

1.	Theory about the Reich and the European economy.

2.	The historic, cultural, and economic significance of the German economic order.

3.	The foundations of the future economic relationships between the states.

4.	The nature of the European economic community.

On 25th June 1940 the Reich’s Economic Minister, Funk, publicised in his official capacity his thoughts, which underlined the development so far and thus gave them state sanction.  In October, the journal ‘German Economy’ summarised for the first time the principles of European co-operation, the fundamental principles of German foreign trade, Germany’s export economy and ways and means of promoting export.  It did so in a popular review “About A New Europe”, providing an overview of the important problem of European economic fusion.  Around the end of 1940 the Berlin historian Fritz Rorig finally outlined in his book “Hanseatic Essence” the historical foundations of the greatest economic and political achievement by the Germans.

I am clear in my mind that total clarity is to be found in the principle questions: The necessity is recognised for a political order for the economic co-operation of the people.  The nature of the new order which is: awareness of tradition, using up one’s own economic resources, long term economic agreements and fair relations, is affirmed.  The economic inter-dependence is underlined by fate.  The economic unity of Europe is thus evident.

Economic Practice

Even practical economic life has increasingly allowed entry to new thoughts.  I am able to see the decisive steps in the start and realisation of the following points:

1.	In the increasing payment traffic through Berlin.

2.	In the exchange of experiences in various areas of economic life.   Thereto belong also the statements of ministers and business people, the calls made by special advisers and the collective tackling of important tasks relating to the economy.  Even the specialist is surprised, once he has taken the trouble to put together all the connections.  Today they are already legion.

3.	In the signing of long term economic agreements between the Reich and the other European states, which the public is aware of.  There can be no doubt that such agreements are those of the future.  

Of course, that cannot prevent unclear points and new problems from arising, which become evident at the time when the situation is reviewed.

Problems Related to the Economic Community of Continental Europe

These unclear points primarily relate to the concept of economic direction, the extent of solidarity and neighbourly attitude, the development of one’s own powers, the care to maintain the standard of living and the question of raw material purchase from foreign countries. It is natural that one or another issue will take priority of interest, depending on the set of conditions that prevail.  It should be attempted at this point to give a reply, albeit a summary one.

There can be no doubt that the concept of direction of the economy, or rather its leadership, is as novel as it is revolutionary.  Its classification is all the more important, as the fate and consequence of European co-operation depend principally on a new consistent form of economic understanding.  The Anglo-Saxon view of economics is dead: consequently, even the so-called ‘classical’ national economy is no longer classical, but it has survived.   So what it comes down to is that a new understanding arises to do with ideology and terminology, which represents a sound basis for agreement and co-operation.  Relating to this, one must point out the following in detail:

1.	Economic direction is not a momentary emergency solution, instead it forms the core of new theory and practice.  First of all, it takes the place of individual egotism and the automatic autonomy of the Anglo-Saxon precept.

2.	Economic direction is not identical to the tendencies of a centrally planned economy.  It does not seek to cancel the individual or to administer through the state operators.

3.	Economic direction really means the following: the new instruction of the creative and constructive power of the individual in relation to the whole system; the creation of a consistent economic view and an attitude towards the economy; the selection of important tasks through political leadership and the state’s final decision on all questions about economic power.  Beyond this, the economy is free and responsible to itself.  

The degree of solidarity of the individual economies and their neighbourly attitude is characterised by three guidelines: 

Firstly, it is limited in regard to its own economic development by the recognition that the utilisation of individual resources represents not only a requirement of the new economic precept, but is the very foundation for economic activity.  The European economic community has no interest in leaving any abilities or possibilities unutilised.  

Secondly, it contains the obligation that, because of Europe’s freedom, consideration is given firstly to continental Europe regarding any matter related to economic activity.  Not only should the shared fate of the European people be emphasized, but the fact should also be stressed that the supplementation of the European economies beyond their borders is possible and sought after.

Thirdly, it must be maintained that, above all else, the spirit of the individual economies may not be allowed to go against the spirit of neighbourly co-operation.

The question of developing one’s own powers refers to the problem of monocultures, of industrialisation of the agrarian south-east and the awakening of new needs.

An answer can easily be given to the first question.  Monocultures are the result of the same economic precept that made the world market price the determining factor in the economy.  According to that precept, people and land are the vestiges of some by-gone age.  Europe is well on the way to destroying these monocultures with initiatives ranging from land improvements and growing new crops to discovering new local resources.  All these have the same aim, which is to develop the economy and broaden its basis.  Germany and the whole of Europe can only greet these efforts with gratitude.

The industrialisation of the south-east poses a particular problem regarding these questions.  As I am unable to handle this problem - like all other problems - here in a comprehensive and exhaustive manner, because the industrialisation of economies is theoretically a difficult problem, I can only say as follows:

1.	Just as it is in the nature of things that each country will strive to utilise its available resources for its own production, so will there will be a knock-on effect for other economic partners.

2.	If, as is the case in the South-east European countries, there is heavy 
over-population in the countryside, then there are only three possibilities to solve it: itinerant workers, a permanent emigration and an ‘intensivisation’ of the local economy, a term correctly created by Dr. Ilgner for the problem of industrialisation.  Itinerant workers can only form a part solution.  Besides, it only applies to agricultural and construction workers and gone on for ages.  Permanent emigration from Europe is just as false as impossible.  There just remains the intensivisation of the economies of south-east Europe as the way to self-help.

3.   The economies should make it possible for an independent life according to the modern economic view.  The intensivisation of their economies therefore is right for the time.

4.   The old features of industrialisation, which evolved from the price collapses in countries with agriculture and raw materials, have to now belong to the past.  Europe is a communal living area.  Only through a joint development of economies - and not through independence from one another - can protection against crises be achieved.

5.    The tasks that have to be solved in Europe are so big that the powers needed to do so have to be released by an intensivisation of the individual economies.  This can be easily done by employing the workers that have been liberated in new branches of the economy.

Without affecting the difficult questions of purchasing power, it can be regarded as proven that the joint work to build up Germany’s and the south-eastern states’ in the area of industrialisation lies in the direction of the intensivation of interest of the whole continent.  

One important and until now completely overlooked task in this regard exists and that is the awakening of new needs in the south-eastern countries.  It is because, in those countries, wealth has grown and will gradually continue to grow, as a result of the reliable purchase of agricultural products and available raw materials at adequate price levels.  According to the principle in economics that giving equals taking, peoples’ living habits there will have to change, otherwise one day the process will come to a halt.  Germany’s ability to absorb the products from the south-east is practically infinite, whereas creating a demand for German goods there is not only a matter for economic intensivation but also one of modifying the people so they consume more.  This task is of such importance that it has to be considered from the very outset, so that the south-eastern European economies are elevated after the war.

Equally important as the industrialisation of south-east Europe is the question of the standard of living in the north.  Their economic development and high standard of living, which underpin their lives though all economic conditions, should not be mistaken.  This standard of living has grown considerably during the 19th century and around the time of the world war due to free trade, so that various circles view world economic events with particular concern.  From a German viewpoint, only the following points can be made:

Firstly, a higher standard of living is also the aim of the German government. The German people not only understand this well, but also through its fight wants to ensure European civilisation and culture.  This fight will benefit the whole of Europe, and with it the north.

Secondly, despite being connected successfully to England and its economic system (one should not ignore the countless economic troughs that feature there), the economies of the north whose fate and greatness are very closely linked to Germany.

Thirdly, the northern states’ difficulties are going through a temporary phase of adjustment.  In the long term, this will bring about a lasting advancement, rather than destruction, for their economies’ foundations.

Maintaining a high standard of living is not an insoluble problem.  To finish, I now come to the problem of purchasing raw materials from overseas markets.  A leading south-east European economist once wrote about this principal question: “Unlike the war, we were in the following situation: in order to import raw materials from overseas countries, we bought goods from west European countries with foreign exchange.  In the area of continental Europe there is no gold.  Everything had to pass through the system of clearing - goods sold against goods. We have no product that can be sold to North or South America.  That means that the leading nations are obliged to acquire and distribute to us the raw materials that we need.  The leading nations of Europe can supply, with its capacity, enough products to overseas countries with which to acquire raw materials.  The one question is whether exchange will ever happen… Even before the new order is introduced, and without even joining in with the Axis powers, we stand in solidarity outside Europe with its traffic of goods…”

We can only agree with this view, leaving the matter open, as the Reich’s Economic Minister Funk described, how large the direct sources of help will be and whether raw material acquisition from overseas will take place through the system of clearing or free flow of currency.  With the introduction of the multi-lateral clearing system, on a practical level there is no change from the pre-war time.  As this learned person said, “All the benefits of the method of paying are regained from the system of free currency.”  Nor can it be realised - contrary to him - that this system of clearing through Berlin should function without those countries outside the European system. But the decisive factor is the way in which the continent is bound to Germany and Italy by one fate.

Since 1940, therefore, we are faced with an unparalleled economic and political revolution.  The problems created for us are large but can be solved.  Their solution will give Europe the peace it yearns for and will bring a great era of joint development.  It is worth fighting and working for this. 

 The following discourses should contribute to helping us to broaden and deepen our understanding of the tasks and nature of the European economic community.

The European Industrial Economy by Dr. Anton Reithinger,
Director of the Economics Department of I.G. Farbenindustrie A.G., Berlin

It is the following future-shaping ideas that preoccupy us here: the spiritual and material powers’ desire for recognition, which can be used by industry to construct a European economic community; and the question of its place and task in the context of a future peaceful order.

From the outset we have to be clear that our theme basically is political rather than technical or economic.  Its details are still in flux, which means that they can only be alluded to and its effects only guessed.  At the same time we should not forget, in spite of the requisite courage to create new ideas, that the problem of a European industrial economy is related to quite real interests which materially affect the people of Europe’s nations to a great extent.  In order to solve these problems we have to work closely with the facts and avoid drifting off in to unrealistic fantasies. I hardly need to emphasise that neither the material principles nor the spiritual driving forces should be overlooked, which have created today’s standard of European industry.  And we are not just going to limit ourselves to this continent’s industrial development; we will also look to the relationship with development elsewhere in the world.

The Development of Industry in the 19th Century

Now I want to give a picture of the regional distribution of Europe’s industry, which shows the result of the industrial development from the start of the 19th century up to the start of World War I.  Seen as a whole, the area of Europe’s continent is mainly an agricultural one with a relatively small nucleus of heavy industry, with a broad swathe of medium-sized businesses surrounded by an area of purely agricultural production.  Out of the 300m population of Europe, about 140m make a living from agriculture, 50m from mining and industry and about 40m from manual work and commerce.  Industry, in the modern sense, has only developed in Europe in those areas, which had for centuries been leading lights of commercial activity or which had sufficient available stocks of coal and iron ore to feed the steam machines used in industrial production.  There are therefore two distinct areas of industrialisation: one running south to north which grew along the trade routes of the mediaeval time from north Italy over the Alps to the cities of the upper Rhein and Flanders.  The other, going west to east stretching from Holland to northern France to Belgium, over the Rhein-Ruhr areas and mid-Germany up to the edge of the Carpathians, which holds the most important reserves of coal and iron ore.  All those areas that lacked these two essential ingredients for the technical era - coal and iron ore - did not take part in the industrial development of the 19th century.  The world’s industrial zones concentrated themselves then on the two edges of the Atlantic where coal was produced, that is in England, the USA and in our continent in northern France, Belgium 

and the Rhein-Ruhr area.  Over three-quarters of the population involved in commerce and industry in continental Europe lived in these production areas.  It has only been the discovery of new energy sources - the growth of hydro-power - which has brought about new industrial settlement areas of any size in the south on both sides of the Alps and high up in the north in Norway and Sweden.  Outside these areas, little industrial activity has developed and, for reasons given already, remained predominantly agricultural up to World War I.

Stages of Technical and Economic Development

Against the background given above we can start to look into the actual stages of technical and economic development.  From craft guilds whose technical basis and sales market was the core of the mediaeval town, there then developed manufacturing and factory production equipped with steam-driven machines.  Manual work was suppressed by the cheapness and speed of the machine; two factors that are truly decisive for an industrial organisation and the price of its finished goods.  As we turned from production against order to capitalist market-led production, costs, price considerations, the organisation of sales markets and the question of finance determined all further development.

If we ask ourselves what we learn from this for our deliberations on the question of Europe’s future industrial economy, then first of all it is the fact that there has been little fundamental change in the regional structure of commercial and industrial activity in continental Europe.  This happened despite the previous revolutionising of all technical and economic precepts, except for the marked process of concentration towards the middle of central Europe.  Before we draw any conclusions, we need to look at the socio-political effects.

Socio-Political Effects

It was the civil guild order, which settled all the political and social problems of the mediaeval craft system.  As manufacture and factory production started and considerably increased the wealth and power of the individual countries, national and political interest in its further development grew.  This era started with government measures to promote it with duty protection, precautions against overseas displacement and it ended with serious battles over new raw materials and sales markets, over colonies and new areas of power.  Its revolutionising effect did not only confine itself to the great industrial countries, but also totally transformed the political and social face of the whole world.  On the European continent it led to a doubling of the population figure after it had stagnated during the 19th century and to a quintupling of the standard of living and income of the workforce.  Towards the end of the 19th century, two thirds of the northern hemisphere 

and its population was in the direct possession of Europe, while the rest was very much dependent on Europe economically and financially.  Under the industrial tutelage of Europe, world agricultural production increased five-fold in just one hundred years, industrial production twenty-fold and trade fifty-fold.  All that the result of industrial development, which created capitalist imperialism and which, at the same time, provided means of transport and weapons for its expansion around the globe.

Nevertheless no inner balance was ever achieved, because the social effects were overlooked, observing instead the impressive external signs of success of capitalism’s production technology.  If industry developed somewhere, there was a total revolution in the manner of settlement, in the professional and class structure, in the living and eating habits and of course in the way life was viewed and in the spiritual forces.  All of these consequences were no longer in tune with the traditional order of society.  While the argument between the great industrial powers about new raw material and sales markets reached its peak, internally the additional millions of inhabitants, created by the manufacturing industry over the previous decades were fighting for an improvement of their social situation and latterly for power within the state.  On the one side there stood a coalition of labour forces and on the other were the efforts of entrepreneurs to achieve international economic agreements, raw material cartels and sales agreements.

The second observation we can make is that industrial development had great political and social significance, as its socially destabilising effect had to be appropriately controlled to ensure that unexpected surprises were not encountered.  The technical and private economic part in the factory was spectacularly disengaged by the entrepreneurs of the capitalist era, but the socio-political consequences for the state and society outside the factory were barely perceptible at first.  Carried across Europe, it meant that all industrial plans had to take into consideration both the technological and economic aspects as well as the related socio-political ones.

The Loss of Europe’s Industrial Hegemony in the World War

Nevertheless these political and social signs of disintegration of the social order of the time would not have led to collapse if the world war, and the unfortunate policy of the victorious powers had not destroyed the basis for the maintenance of the old economic system.  What ensued was the well-known crises following the war, the global collapses of the agricultural and economic economies and an international unemployment figure of over 30 million people.  We do not need to dwell on this subject, but we should realise a decisive change.  Whereas up to the end of the 19th century, European industry, under the leadership of the English, practically ruled the whole world, there rose up in just a few decades three new centres of industrial development: the USA, Japan and, under a totally new system in Eurasia, Russia.  Even at the start of this century, more than half of the 
world’s industrial production was concentrated in Europe; today each of the three continents, America, Asia and Europe have a share of about one third each.

The second picture shows the level of industry in Europe and the rest of the world about 15 years after the end of the world war.  It is particularly important to look back at this because it reveals some of the inner forces, which are still having an effect today and should therefore not be overlooked regarding the new order of Europe’s industrial economy.  The world war released industrialising tendencies in the band of territory around Europe and in almost all overseas agricultural and raw material areas, which have become considerably stronger during the subsequent economic crisis.  The reasons for this development are of a political and economic nature.  Fundamental changes to the system of international trade relations and thus to industrial economies were brought about by the following factors: the disturbance to international currency and credit bodies caused by the world war, the reversal of balances of payment of debtor and creditor countries, the stronger efforts to protect agriculture by the old industrial nations and, last but not least, the change in political views about the position of the state in relation to the economy.  Then due to the big drop in prices for raw materials and agricultural products compared to finished goods, the gap between wages and the cost of living in the old industrial nations grew so big in relation to that in the agricultural countries, that despite a lack of capital, technological backwardness and other difficulties, it was possible to start up their own industrial production.

The causes were multifaceted but the result was simple.  Whereas the output of the old European industrial countries like England, Germany, Switzerland and Belgium fell by 20-30%, that of the agricultural countries rose by 50-100%.  The output of overseas agricultural and raw material countries rose by 200-300% and in Soviet Russia by 400-500%.  Overall, Europe had fallen back so far in relation to the development of the vast overseas regions, that a combination of this trend right here endangered its whole standard of living and culture.  As England had ignored its duty to Europe due to its interests overseas, the people of Europe now have to attend to it.

The Transition to State Direction and Planning

In the fight against these signs of general and economic and social disintegration, in which the industrial hegemony of Europe disappeared within our generation’s time, some far-reaching inner changes had taken place first, which soon produced consequences in the economic arena.  Out of Italy and Germany emerged the idea of a new order for the economy, overcoming the system of capitalistic liberalism with the creed of state direction and planning.  However, we have to remain aware that, contrary to the development of the 19th century political, social forces - not technological, economic ones - caused this turn-around.  These forces are found everywhere in Europe, so we have to stop to deal with their fundamental tendencies.  There are three factors that influence the most recent development of Germany’s industrial economy and which will be significant in the framework of a future European industrial economy.

Man should control the machine, not the other way round; the nation should use its economy and technology to achieve its goals rather than technical, economic developments controlling the nation.  The increase in population resulting from industrial development has to be incorporated into society.  This has to be followed by the new order with the social position of work, the coalition of employer and employee at work, the organisation of work in the factory and the change of our whole concept about law, security and the duty to work, labour protection and the beauty of the workplace, whose effects reach ultimately as far as the home and retirement pensions.  The supra-national forces of development, technology and industrial economy will again be placed under national control.  These few references may suffice to describe the complete change from the past.

The second factor is that of living order and planning.  Industrial development in the liberalist capitalist era proceeded almost exclusively according to technological and financial motives.  It selected its production sites, raw material and sales markets both inside and outside Germany according to the principle of cheapest costs and prices, and regarded its land as an open arena for its private economic interests.  At the same time, though, national territory gained its own identity again in the context of the nation’s territory policy.  Even industrial development is brought into line with the requirements of a structural planning of land, with the needs of the population policy, with the economic security and cultural factors.  This development, which has happened in Germany and Italy, will have its effects felt throughout Europe.

The third factor is determined by the need to achieve a solution to the question of raw materials and sales.  The technological position of the 19th century bound industrial development closely to the possession of coal and iron.  In this century numerous new materials of significance for the industrial and political hegemony have come forth - oil, coloured and light metals, India rubber, nitrogen, cellulose, spinning materials - and this development is nowhere near at its end.  Except for coal, iron and light metals, the great reserves of all these raw materials vital to modern industrial economies and world politics lie outside the borders of Europe.  The legacy of the previous centuries’ development in Europe is principally the scientific and practical knowledge required to discover and process these raw materials on an industrial scale. There is also the considerable need for consumer goods for 300 million people with a relatively high standard of living.

Therefore, the question of securing a supply of raw materials for Europe’s industry becomes not only one about the life of its industrial economy, but also one about 

Europe’s economic and political future.  This is true whether it means increasing agricultural and mining produce or producing barter and substitute goods like fuel and India rubber from coal, nitrogen from air, straw or reed, synthetic fatty acids etc.   Or finally, whether it means securing access to the world’s tropical raw material regions.

After the safeguarding of supplies of raw materials, the other important question is how to profitably produce and create markets in the enlarged area, instead of many individual compartments all protected by duties.  However, we now find ourselves in the midst of this problem for our European industrial economy.  We ought to familiarise ourselves with some fundamental ideas regarding the possible new order in Europe so that we do not lose our way early on in this new land of wonderful hopes and dreams.

New Europe and its Shared Features

Let us be clear from the start that the new Europe was a military fact, which was created by the British blockade forced upon the mainland.  Since the war against Soviet Russia, it has assumed a political aspect.  The ‘European Economic Community’ is in no way yet a sure fact, rather a political aim, which has to be supported by carefully considered economic, technical and psychological measures and achieved through effort.  This is also true for trade and currency policy or the agricultural economy in relation to our theme here of the European industrial economy.  We have to differentiate between the present needs under the circumstances of war and those of a future peaceful order, which will look very different from the wartime organisation.

Secondly, we must not overlook the fact that Europe consists of a number of nations that have ‘arrived’ historically.  They have undergone a long political and economic development and now think about a new order in Europe and have clear ideas about industrial development.  Just as our thoughts have crystallised about a better European economic order as a result of our need and plight, so have those of our partners and neighbours.  So if we pool our thoughts with those of other countries about our needs, then we should start to see the differences in economic structure and industrial forces, which are so very different from before this war, on account of the natural conditions across this continent and the historical development and political relations.  Only then can we consider which European interests are shared by all our partners and where individual interests have to suppressed in favour of the greater European common interest.

I will begin with the common factors, which are valid for the economy as a whole, but particularly for industry.  Firstly, though, some general, guiding principles because they are the philosophical basis of the future European economic order.

In first position is the principle of mutual co-operation in place of exclusion and hostile competition.  Three factors affirm this: one technical, one economic, and one social.  Modern technology has overcome the old principle of economic policy, which says, “I am doing well as long as my neighbour isn’t!”  It has created such enormous powers of production that the principle of an ordered economy in a new Europe has to be, “I am only doing well if my neighbours are as well!”  In an enlarged area, production capacities can be utilised much more effectively and sales markets better served than in an area with lots of small regions protected by duties.  As a result, all partners gain from the economic advantages achieved.  In the end, our concern is that purchasing power, standards of living and social conditions improve for all European people now and far into the future.

The second principle is that of full employment i.e. utilisation of the labour force, natural reserves and technological capacities.  Taking account of the comments that I made on the question of raw material supply for Europe’s industry and the loss of its hegemony to overseas countries since the world war, this is a common need relating to all European people.  This is if they want to maintain the economic and political significance of our continent and its high standard of living and culture.  That means that every European country has to work together to mobilise their natural resources, industrial capacities and human reserves to the highest possible degree.  This is a key issue for waging the war and for the subsequent peaceful order and it is also vital for developing the welfare of Europe’s economy and society.

The third principle is related to a regional order of production and sales in Europe.  Alongside the new economic factors of this arena, the old industrial economic precepts of the past will come clearly to light and quite justifiably will remain significant.  Industry has to be developed and directed in the sense of an extremely comprehensive supply of goods for the whole region.  In doing so, one will have to distinguish between the pan-European factors of priority and the legitimate economic needs of employment and consumer goods supply for the individual countries.  Priority will be given to the utilisation of energy sources - coal, natural gas, hydro-power, crude oil - of raw material reserves like bauxite, wood, iron ore, iron pyrites etc.  It will also apply to the supply of valuable technological production equipment, which if used efficiently should ensure good sales markets.  With these points, the planned extension of raw material industries in Norway and south- east Europe are very closely linked.  Against it, the national factors of the individual countries will be mainly concerned with employment, safeguarding equipment needed for agriculture and sufficient supply of consumer goods.  Provided labour, sales and raw materials are available, the previously referred to tendencies of European agricultural countries towards the development of their indigenous consumer 
goods industries are absolutely reconcilable with the new order of Europe’s industrial economy.

A further important problem for the new order lies in the area of foreign trade in industrial goods and the controlling of sales markets.  Here one has to distinguish between markets, which are reserved for indigenous production and those which have to be open to all of Europe’s production.  If the principle, that in the enlarged area only effective industries should be developed, is realised with the corresponding technical and financial help even for the backward agricultural countries, then duties and other obstacles to a healthy foreign trade will lose their importance.  It must, however, be avoided that, after duty protection has gone, inefficient and unprofitable production units develop, which would rather inhibit the supply of goods to the population.

If we consider the future development of the European industrial economy in the light of these three factors described above, then there is no doubt that there will be new developmental impulses not only for the old industrial countries but also for the agricultural areas on the edges of Europe.  This could lead to a higher standard of living for all Europe’s countries.  The number one principle must always be that the individual regions create profitable production units, regardless of whether one thinks about maintaining duty barriers or a duty zone.  These are problems, which are not so important as one would generally believe.  At the moment we are nowhere near that far, and above all, the differences and iniquities of the individual European sub-regions are too large and the economic gaps, which ensued after the war and the blockade, are still too painful for the countries affected.  In order to grasp all this, I want to list some of the most important iniquities, which urgently need to be removed within an economic system, which is aligned to a new central European centre.

Regional Differences in Europe

Europe can be divided up in to five geographical regions of a similar economic structure.

1.  The middle of central Europe (basically the German Reich) with at the moment 900,000km2 and 117 million inhabitants.

2.  West Europe (France, Belgium, Holland and Switzerland) with 640,000km2 and about 60m inhabitants.

3.  South-east Europe (Slovakia, Hungary, Croatia, Serbia, Bulgaria and Romania) with 770,000km2 and 55minhabitants in total.

4.  South Europe (Italy, Spain, Portugal and Greece) with 1m km2 and about 85m inhabitants.

5.  North Europe (Denmark, Norway, Sweden and Finland) with 1.2km2 and 17m inhabitants.

These five regions have completely different economic and social structures and differ from the large regions overseas.  The middle of central Europe is predominantly an industrial area and densely populated, in which concentration of population has led to a high degree of urbanisation.  Here, about two thirds of the population are active in commercial jobs, whereas the rest of Europe is dominated more and more by agriculture as you move out to the edges.  The former has a strong external economy and balance of payments and its industry extends over the whole area of Europe.  Only the eastern part of west Europe joins onto the industrial area of central Europe - the coal and iron reserves in northern France, Belgium and Holland’s bordering area, as well as Switzerland - and the main core of France is predominantly agricultural.  This area does not have a strong external economy or balance of payments and produces less than it consumes i.e. it is living off its capital.  In the near future it will experience difficulties adapting to the European economic community and will lack any great internal developmental impulses.  South-east Europe, though, has undergone a high degree of urbanisation and industrialisation because of the high birth rate, but in its basic structure still retains its over-populated agricultural status.  The same is valid for south Europe.  In the framework of the European economic community, both of these areas will develop strong industrial forces, whereas northern Europe corresponds more closely to west European type.

To get an idea of this difference I have some statistics, which are very important for a new order in Europe in terms of output and sales of its industrial products.  In our enlarged economic area, birth-rates and population density have increased, unlike income levels and spending power, which are rapidly falling.  Right out in the west we have a tax surplus of 0.5-1.0 per thousand of population, whereas that figure goes up to 15-20 per thousand in the furthest areas of the south and east.  100% of the population in the Rhein-Ruhr area is engaged in commerce, falling to 0% in the peripheral regions of Europe.  On the other hand, in the west and north the rural population figure per square kilometre of agricultural land is 40-50, in the south and east that figure doubles.  If one considers that the yields in the east are only about a half of central and western Europe and the prices are way below those of Germany’s agricultural prices, then one is soon led to the conclusion that the purchasing power per capita in the south eastern areas is perhaps only an eighth to a twelfth of that of western Europe.

This is just an introduction to the enormous structural differences between the regions of our enlarged European economy.  I have to add some figures related to the level of consumption so you have an idea of the difference in spending habits.  Textile consumption in the south-east is between one half and one third of that in the north-west; for industrial products the figure is one fifth to one twentieth.  Thus we see the importance of recognising the regional differences.  For instance, if the level of consumption in the south-east were to match that in north-east Europe, then not only would the total food and feed export surpluses of south-east Europe disappear, but then the demand for industrial products would be so great that Europe could easily absorb the entire stock of finished industrial goods intended for overseas export.

In the external economy of the European continent, under normal conditions, the demand for industrial raw materials and the sales of industrial goods are the most important factors, unlike the trade in food and luxury goods.  Out of Europe’s total import figure before the war, about RM 6.5 billion was raw materials and only RM 1.3 billion was for food and luxury goods, whereas the export surplus in finished goods stood at RM 4.2 
billion.  In the new order of the enlarged area of Europe food supply will be the main concern of Europe’s internal production, while the supply of industrial raw materials and the sale of finished goods presupposes a strong economic connection of Europe to the other large areas especially Asia and Africa.

These few statistics reveal some basic facts about the previous economic structure of the European continent, which are of fundamental importance for deliberations on the future industrial co-operation.  Even under peaceful conditions, there are huge difficulties in aligning these individual regions in the framework of a European economic community.  The war has simplified some of these requisites because it cut off the earlier relationships to areas outside Europe, whereas it has made others a lot more difficult because the demands of war are quite different to those of peacetime.

Having dwelt on the differences and different interests of our partners, we should bear in mind our common interests.  Earlier on I summarised the three principles of co-operation, full employment and the regional organisation of production and sales. In order to realise them, we need the belief in the European idea and Germany’s duty towards Europe.  Besides that, the long patient work of the state’s economic policy and also private business initiative are required, as well as a high degree of tact and understanding of the inter-nation construction work with Europe’s social and geographical community.

The Major Powers at War - A Comparison of their Capabilities

Having dealt in some detail with the requirements and ideas of a future European industrial economy, I would like to finish by taking a look at the areas outside Europe and the industrial relationship between the major power coalitions at war with each other today - the European-east Asian pact against the Anglo-American-Russian bloc.  Comparing their relative industrial capacities is of interest, as enemy propaganda tends to exaggerate the capacity of the USA, leading to the perpetuation of false ideas.  This comparison, though, is based on pre-war figures, which will have changed considerably for both sides as a result of the war.  Hence the figures just show the situation of the two coalitions as they entered the war.

Roughly about 65m people were employed in mining and industry within each of those areas under the control of the two coalitions.  Great Britain and the USA equally shared 30m, as did Germany and Japan.  Soviet Russia had about 15m, whereas Italy and the smaller pact partners totalled about 9m.

Despite the addition of the USA, there was also a roughly equal balance in availability of installed machinery.  Excluding electricity plants, the output of primary machinery for both power groups was 40 million b.h.p. (brake horse-power) and that of electrically driven machinery 60m b.h.p.. In Russia and Great Britain, the electricity plants produced 85m b.h.p. compared to 55m b.h.p. in the three pact group.  This shows that in overseas areas a larger part of energy produced was not used by public utilities but was diverted for domestic use.

Now I want to try and illustrate the comparative industrial output figures, which have to be at face value because of the lack of certainty about calculation methods and difficulties in converting to a uniform value basis.  World industrial output in 1938 stood at RM 420 billion of which 240 billion was accounted for by the Anglo-Russian group, 150 billion by the three pact group and the balance came by Russian territories under occupation today and those countries not involved in the war.  America, in the Anglo-Russian bloc, had an output of RM150 billion - about one third of world production against Great Britain’s share of 9%.  The Anglo-Saxon group’s share of world production was about one half.  Germany is easily the biggest partner in the European group, which, like the USA had about one third of world production.  About RM 82 billion for those countries at war, 31 billion for the occupied areas and 10 billion for the neutral countries.  East Asia - roughly on a par with Great Britain - produced about 25 billion, only about 6% of world output.  There was a much more favourable relationship for the tri-partite group concerning output of industrial products, such as iron and steel, cement, construction materials, wood, nitrogen, chemicals etc.

There is unfortunately no time to bring in additional observations relating to these figures.  Only very rough evaluations of each pact’s economic potential can be given without including a whole list of other factors.  The two sides within the three pact group - Europe and East Asia - are to a large extent independent of one another, whereas the Anglo-Saxon-Russian coalition comprises six very unequal partners: USA/Canada, Great Britain, Soviet Russia, South Africa and Australia/New Zealand.  They are spread around the globe and can only be held together militarily and economically through maritime superiority.  The USA with two-thirds of its side’s industrial capacity is separated from its pact partners by two oceans and has to divert a large part of its production to making transport equipment and then transport them huge distances for its development in war zones.

It is of course wrong to underestimate one’s opponents and we should always be aware of the huge output capacity of the USA, as evidenced above.  If we compare Europe’s industrial capacity with that of our Asian comrades, we can look forward to further development and not be intimidated by the waves of propaganda from the other side of the ocean or be put off our duty to Europe.  While the battle rages around the borders and coasts of our continent, the foundations of the future new community of the west have to be put in place.  Industry, too, is faced with a duty to the future in this scheme of things.

THE END OF REITHINGER’S essay.

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