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E. Varga

Economics

The World Economic Situation
in the Fourth Quarter of 1922

(February 1923)

From International Press Correspondence, Vol. 3 No. 21, 27 February 1923, pp. 160–162.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

VIII. Norway

The economic situation of Norway had improved during the year 1922, but appears to have suffered a decline during recent months The unemployed statistics are as follows:

The unfavorable condition of the freight market strongly effects the economic life of Norway, for seafaring is one of Norway’s chief sources of income.

The Norwegian crown is still much below par, but shows a tendency to improve of late. This improvement is probably due to the circumstance that the Norwegian government has received a loan of 17 million dollars from America; the greater part of this goes for building railways. The food prices have fallen somewhat of late. This gives a good pretext to the employers for an offensive against wages. Recently the bourgeoisie formed a union under the name of the Tax Payers’ Union. This association is alleged to be non-political, but in reality it bears the character of a bourgeois bloc, and is a form of reaction against the successes of the Communist Party at the last municipal elections.
 

Denmark

Denmark’s economic situation has also somewhat improved of late. In March 1922 there were 103,000 unemployed; at the beginning of October this Humber fell to 31,000. It must, however, be recollected that even then 11% of the organized workers were out of work. Unemployment decreased among unskilled and field laborers, as a result of the seasonal work during the summer.

The situation of Danish industry is still very unfavorable. The government has attempted to protect Danish industry by damming the imports, especially of shoes and tobacco. Duties have been increased all along the line. It is a characteristic fact that in August 1922, although the imports were 20 million crowns below those of the preceding year, the customs revenues were 2 millions higher.

The failure of this year’s crops is chiefly to blame for the unfavorable condition of Danish industry. As is well known, Denmark is mostly an agrarian country. For export purposes especially, the products of cattle breeding are of the greatest importance to Denmark. For this reason the foreign trade balance is considerably more adverse this year than in 1921. This has led to a lower rate of exchange of the crown. More than 22 Danish crowns were paid in December for 1 English pound, instead of the parity of 18.16.

Prices snow a tendency to rise accordingly. But in spite of this, a census taken of the wages of 100,000 workers showed these to be 16% lower than they were a year ago. The high cost of living bonuses granted to Civil Service employees have also been considerably reduced. It can be seen from this that the real wage of the worker sank considerably after the defeat of the workers in the general lock-out.
 

Italy

The development of Italy’s economic situation deserves special attention, for the seizure of power by the Fascisti has placed power in the hands of the industrial bourgeoisie – for the first time in the history of Italy! For this reason the capitalist press abroad greeted this seizure of power with great joy. The Exchanges reacted with a higher valuation of the lire.

The Fascisti have been too short a time in power to justify any judgment as to the results; particularly because the Italian economic statistics are miserably kept and published late. It is, however, obvious that Mussolini is trying very energetically, not only to stabilize his own power, but to reconstitute Italy’s economics on a purely capitalist basis.

The general conditions confronting Mussolini at his accession to power are extremely difficult. The corn crop fell nearly a million tons below that of 1921; the rice crops were also poor. It is calculated that it will be necessary to import about 2 million tons of grain involving an expenditure of over 2 milliard lire. The general industrial situation is very bad; the textile industry could report some improvement during the summer, but the crisis remains unaltered in heavy industry, ship-building, and shipping, and in the sulphur industry. The number of unemployed, in thousands, is as follows:

The increase is to be mainly attributed to the decline in agricultural work. In the year 1921–22 nearly 10,000 workers emigrated, one half to the United States.

The statistics showing the investment of capital are still more characteristic for Italy’s economic situation; the diminution of the total capital of the corporations due to bankruptcies, dissolutions etc., is greater than the investment of capital, – an actual dis-accumulation: The data are:

The constantly increasing number of bankruptcies confirms these figures; the monthly average for the first half of 1922 was 279, in October there were 339, in November 336.

State finances are also in a critical condition. The inner debt amounted to over 93 milliards in September 1922; to this must be added the debts owed to France, England, and America. The fiscal year 1921–22 closed with a deficit of 8 milliards. It is characteristic for the distribution of the taxation burden that, during the first 5 months of the current fiscal year, the revenues from direct taxes were 140 millions less than the year before, the revenue from indirect taxes 390 millions higher.

The sole factor showing a somewhat better line of development is the rate of exchange; measured by the English £, the value of the lire has taken the following course:

In the course of the year, the lire followed the whole improvement of the £, even overtook it. The lire has improved 80% since the Fascist coup.
 

Mussolini’s economic policy

Mussolini’s economic policy is based on the typically capitalist fundamental assumption, that the output of the individual worker, and of the collective population, is too small. There is no doubt whatever that production has decreased in Italy since the war, as it has done everywhere else. The following interesting statistics have been compiled regarding the railways:

Increased production is to be attained by reducing the number of employees and lengthening the working hours. On the other hand, state finances are to be balanced by an increased taxation of the non-capitalist strata of the population.

So far the following concrete innovations have been introduced:

1. The wages of the workers and officials employed by the state, the municipalities, the railways and tramways, etc., are taxed to the amount of 10%. The tax is deducted from the wages.
    
2. A new census is being drawn up, in order to estimate (he proceeds of the soil (last estimate 1891). Income tax, hitherto required from tenants only, is now required from those tilling their own land.
    
3. In order to facilitate the reduction of wages on the part of the capitalists, the corn duties have been reduced from 11 gold lire to 4; a reduction to 1½ lire was even mooted. These last two reforms are plainly directed against the agrarians and peasants, and are in the interests of the capitalists.
    
4. Working hours have been lengthened on the railways, and 17,000 workers discharged; further discharges are expected, in part among Civil Service employees.

On the other hand, the political necessity of finding jobs for the Fascisti has thwarted the efforts to restore equilibrium in the state finance. 100,000 Fascisti are to form a militia; the term of obligatory military service has been lengthened from one year to 1½.

When we take a general survey of Mussolini’s economic policy, the line he takes is perfectly clear: for the bourgeoisie, against the workers, against peasants and agrarians.
 

France

The reparations question was dealt with in the general section. Here we shall only touch on the agreements on deliveries in kind. First of all, it must be pointed out that the great hopes set on these agreements, especially on the Stinnes-Lubersac agreement, have turned out entirely deceptive. The quantity of goods received by France under this agreement is ridiculously small. According to the official statements given at a session of the French committee for deliveries in kind, Lubersac, representing the minister of the liberated territory, reported as follows. [1]

The success of the agreements on deliveries in kind can be designated practically at zero, as the total amount of the goods delivered has not reached the value of 15 million francs.

What is the reason for this failure?

According to the periodical mentioned, an organ of French heavy industry, the cause lies on the side of the Germans.

“It must be observed that, if the deliveries in kind have had such poor results up to now, the fault does not lie with the French industry, but with the German, which has demanded much higher prices from the claimants than the German inland prices, thus appropriating the difference between the German and the world market price.” [2]

But that the influence of the French industrial magnates has also played a part, may be seen from the fact that the representative of the minister for commerce was opposed to the extension of the minimum tariff to other articles required for restoration purposes. It appears that German and French capitalists alike have co-operated to prevent the agreements respecting deliveries in kind from being carried out. It is an actual fact that all the combinations connected with the Stinnes agreement – involving deliveries to the value of hundreds of milliards – have come nothing.
 

Real accumulation and growing state debts in France

It is extremely difficult to judge of France’s economic situation. We are confronted by two apparently contradictory facts:

Gigantic increase of the national debt and Real accumulation.

The main data of the French state finances are as follows:

According to the latest official statement [3], the national debt amounted on 31 March 1922, to:

France’s present financial position is as follows – if we abandon that senseless differentiation between ordinary, extraordinary, and other expenditure (expected from Germany):

Though these figures are alarming enough, it must be takes mto consideration that a great pari of the state deficit corresponds to a real accumulation, and that a great part has actually been employed for rebuilding factories, houses, roads, railways,etc. This part of the deficit must be accorded an .entirely different valuation, from the standpoint of political economy, to that of the German deficit. Since the end of the war, about 20,000 factories have been rebuilt, 220,000 new dwelling houses built, and 180,000 temporarily restored, railways, bridges, etc. built. The sum actually expended for restoration purposes is estimated at 60 milliard francs The increase of the national debt corresponding to these 60 milliards is by no means to be regarded as an impoverishment of the French people. It merely signifies that the cost of restoration is advanced to the immediate sufferers by individuals in the state through the intermediation of the state; the state shifts the cost on the whole population by means of taxation. The fact that French political economy has been able, after the war, to accomplish such an extensive real accumulation, substantially out of the surplus of its own production (electrification and canal building also come under the heading of accumulation), shows the soundness of French economics. [5] Although the position of French state finances is very had, it cannot by any means be compared with that of Germany. The German deficit is a result of the real impoverishment of the country, whereas a great part of the French deficit represents an actual accumulation!

It would also seem that French finances are improving. The following is in milliards of francs:

These data have probably been trimmed for presentation to the public – the final results of French financial operations being published only after 4 or 5 years – none the less, we believe them to show the general tendency of the curve correctly. [7] This is further confirmed by the fact that though the French franc tends to depreciate, it does not fall in proportion to the deficit in state finances.
 

The state of the market

has much improved in the last quarter of 1922. Since the disturbance brought about by the great mining strike in America, the competition of English coal in the French coal market has noticeably diminished. This effect is enhanced by the circumstance that the high rate of exchange of the English pound holds English coal more and more from the French market, The total coal output in 1922 was 4 million tons more than in 1921, but was still only 32 million tons as compared with 40 millions pre-war output

The steel and iron industry has gradually improved in the last few months. But the manufacturers constantly complain of a coal shortage. The production of crude iron readied 5.1 million tons in 1922 as compared with 4.1 in 1920. but it has not yet attained the pre-war level of 53 million (without Lorraine).

In the vehicle building industry, and in the manufacture of agricultural machines, aeroplanes, etc. much business has been done, but at unfavorable prices. The textile industry is also working satisfactorily.

The prices show a corresponding upward tendency. In 1922 the wholesale trade index was as follows:

The improvement of the franc must be taken into consideration.

Foreign trade has developed as follows:

Foreign trade is thus passive to the extent of 3 milliard francs as compared with only 1½ milliards in 1921.

Taking all in all, it may be said that the last quarter of 1922 shows a moderate improvement in France’s economic situation, despite the shaken condition of state finances.

The decision of the American Senate, that 4½% interest is to be paid yearly, stands in the way of a final reorganization. The English are anxious for a graduated rate of interest and amortization: first 2%, then rising to 6%. There is scarcely any doubt that the Senate will accede to England’s wishes. And although the old rivalry continued to exist between the two Anglo-Saxon world powers in the petroleum question, in South America, and in China, and although the English capitalists complain that the new high protective duties render it difficult for England to pay her debts to America in goods, it is still probable that in the coming period, close co-operation of the two Anglo-Saxon powers may be excepted [expected ?].

*

Footnotes

1. L’Usine of 6.1.1923: According to the statement of the Economist of 2.12.22, goods to the value of 12 millions only had been ordered up to then, while the goods actually delivered were to the value of 1 million francs only.

2. According to the Economist of 9.12., bricks were offered by Germans, loco St Quentin, in the middle of November, at 150 fr. The French price was at that time 125 fr. “The French observer believes that the German government, which is responsible for these prices, is deliberately seeking to sabotage the Wiesbaden agreement.”

3. The above data are from the Federal Reserve Bulletin of December 1922.

4. Reduced to francs at the rate of exchange then prevailing.

5. We shall endeavor to ascertain how much of the real accumulation falls to the German consignments, how much in foreign loans, and how much to the surplus of French economy itself.

6. All these data are obtained from the Federal Reserve Bulletin.

7. At the same time French capital has been exported abroad. “Hundreds of millions of francs were sent abroad for Royal Dutch Shell and other enterprises ... Small French savers have suffered enormpus losses in German and Polish marks ...” (Economist, 16.3.1922)

 
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Last updated on 9 July 2021