Awkward Miracle

Twelve years ago what remained of Germany's bombed-out cities and factories was littered with more than 500 million cubic yards of rubble, and the German people--some of whom were getting only half as many calories as the average Chinese peasant--stumbled through the ruins of their homeland in dazed hopelessness. Last week the free half of Germany, long since recovered, was embarrassed by its riches. It had so much foreign currency that its hoard was becoming a handicap.

Adenauer's West Germany, with but two-thirds the population of Hitler's Reich, is now Western Europe's richest nation. Thanks to a roaring export trade --this year its exports are expected to exceed imports by about $1 billion -- West Germany's gold and foreign-currency reserves have jumped since the end of 1952 from $1 billion to $4.8 billion. In gold and dollars alone, the West German republic now holds $3.6 billion, half again as much as Great Britain. In the European Payments Union, where France is nearly $2 billion in debt to her Western European trading partners, the West Germans have built up an additional $3.5 billion credit, and it is increasing at the rate of more than $100 million a month.

The Drain. Paradoxically, this ever-mounting wealth is becoming something of a worry to the very man who did the most to bring about "the German miracle"--Economics Minister Ludwig Erhard. By selling them far more than it buys, West Germany has been steadily draining the slender gold and dollar reserves of Britain and France. Should the drain continue unabated, there is danger that Britain and France will declare the Deutsche Mark, like the dollar, a "scarce" currency and will then be able to impose stiff tariffs and import quotas on West German goods. Worse yet, a continuation of Germany's lopsided trade balances threatens the European Payments Union itself, and with it the best mechanism for Europe-wide free trade.

Faced with these threats, Erhard and his colleagues have been doing some unusual maneuvering to get their foreign funds back into circulation. Not long ago the Bonn government agreed to deposit $210 million with the Bank of England as advance payment on loans which will not legally come due for several years. Twice in a year and a half Erhard has slashed tariff rates in an effort to increase West Germany's imports. Wherever possible, weapons for the new German army are being ordered from Germany's debtors (Turkey, Austria, Belgium). Last week Germany announced its intention to reduce tariffs on fruit imports from European neighbors to the lowest level permitted by law.

Bad Behavior. None of this has appeased the debtors. Instead, for months past, French and British economists and pundits have been suggesting that Erhard revalue the Deutsche Mark upward (as France has just revalued the franc downward). Instead of its present 23.8-c- official rate, these economists would like to see the Deutsche Mark worth 26-c-. "Will Germany now concede," asked the London Economist last week, "that to hold the mark's value low . . . amounts to bad creditor behavior?"

So far, Ludwig Erhard's answer to this remarkable proposition has been a resounding no. "Why put a healthy man in the hospital?" demanded one of his subordinates last week. "Why should we, the country that has gone to such pains to make our economy strong, pay the penalty for others who do not produce so efficiently?" Britain and France argue in return that ever since World War II their economies have carried a heavy arms burden, while Germany for years had no army of its own, and now that it has one, has yet to meet its NATO pledges. In a less argumentative way, Erhard points to the fact that West Germany still runs a deficit ($600 million last year) in its trade with the U.S., and blandly suggests that he might be prepared to revalue the Deutsche Mark if the U.S. would take "moral leadership" by revaluing the dollar upward first--a highly unlikely happening.

But if its reserves of wealth are something of an embarrassment externally, the domestic fact of German prosperity is one reason why Germany's election campaign is so listless just a month before the balloting. Socialist Erich Ollenhauer is having a hard time working up indignation against the economic well-being achieved under Chancellor Konrad Adenauer.

This file is automatically generated by a robot program, so reader's discretion is required.