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LONDON

W7898
The Decline of Capitalism
By
E. Varga

Published for the Co.-D.munist International

By the Communist Par :y of Great Britain
16 King Street, Covent Garden, London,
W.C.2.
 PREFACE
The time when this brochure was written was a very uilfavour-
able one for determjping both the more remote and the immediate
perspectives of the world situation. Several factors that are
important for gauging developments cannot be determined at
this time. They are :
The American boom is at an end. But it is impossible at this
time to say whether the sharp decline of the boom during the
month of April is only a passing phenomenon or the beginning
of a crisis. If the latter were the case, a new proof would thereby
be furnished to demonstrate our contention that capitalism is,
on the whole, on the decline.
The Report of the Experts' Commission (Dawes) has been
published ; likewise the acceptance in principle both of the Powers
of the Entente and of Germany. But will an understanding really
be arrived at on the basis of this report ? Will not the militaristic-
imperialistic policy of Poincare gain the upper hand, which faCt
would lead to a new catastrophe of the mark, since the Renten-
mark, an artificial creation, would by no means be able' to with-
stand such a blow ?
The outcome of the harvest is of very great importance for
shaping the course of the market during the ensuing business
year. For the moment the prospects for the harvest are pretty
poor in Middle Europe, especially in Germany. A decidedly
poor harvest would put an end to the sparse beginnings of a
recovery of business in Middle Europe.
Itisalsonotclear what the relation of Russia toward the capital-
istic states will be in the immediate future.
These and many other factors cannot be estimated at this
moment with reference to the influence they will exert.
But it is doubtful whether a later moment would show less
fluid conditions. The only stable thing in this period of crises is
the uncertainty; the chaos !
Berlin, May 5, 1924.
E. VARGA,
 The Decline of Capitalism
I.-l'HE PERIOD OF DECLINE OF "NORMAL"
CAPITALISM.
The Communist International adopted its last theses concerning
the economic position of the world on the occasion of the Third
Congress.
Three years have passed since then. During these thre.e years
the proletariat has suffered big defeats in several countries
that are very important from the viewpoint of the revolution,
viz., in Italy, Bulgaria, and Germany. The bourgeoisie has suc-
ceeded throughout the world-barring, of course, ·Russfa_:,_iri.
establishing its hegemony anew. Under these circumstances
the question must be raised whether the position taken by the
Communist International in its theses has proven to be sound
or unsound.
The fundamental idea of the theses was this, that the crisis
which followed the short, speculative post-war "boom" was
no ordinary crisis of " normal " capitalism, but rather the begin-
ning of a period of crises for capitalism. 'Vithin this period of
crises the course of business progresses in cycles, just as it did
under the normal capitalism of pre-war days : periods of booms
alternate with periods of crises. The principal question is that of
placing an estimate· upon the whole period, and not upon the phases
of which it is made up. 1
In the brochure 2 written for the Fourth Congress of the Com-
munist International we made an attempt to sketch the difference
1 During the Third Congress there was a rather strong opposition, sup-

po:rted by the German delegation, which at that time was very "left," and
by the Italian and Hungarian delegations, which took exception to Comrade
Trotzky's and my prediction, made in the theses, to the effect that there was a
possibility that the boom-period might enter upon a new phase. " The
revolutionary character of the period of crises, in the midst of which we find
ourselve& .... is not expressed sharply enough . . . in the theses," Comrade
Thalheimer declared (Minutes of the Third Congress, page 113). Comrade
Pogany's criticism went even farther. "Within the great economic crisis ...
the theses . . . give too much emphasis to the phase of prosperity and tOo
little to the period of crises within the crisis which obtains to-day. . . . We
cannot and must not make prosperity and the future second world war our
Leitmotiv, but, quite the reverse, we must talk about the crisis and the new
civil wars " (Minutes, page 116). And Comrade Pogany was anxious to have
the reference to a coming boom-phase eliminated entirely. Actual economic
developments have, however, proven the correctness of the theses. Yes, it has
even become evident that we oill'selves underestimated the duration and inten-
sity of the boom in the United States, the first signs of which were apparent
at the time of the Third Congress.
2 E. Varga: The Decline of Capitalism.

( 5)
 bet~ee~ the " norn~al " capitalism of pre-war times and the
capitalism of th~ period of decline more sharply. We wrote there
(page 8) concernmg pre-war capitalism :
" The c~pitalist !orm o~ production expanded geographically :
new countries were mcreasingly opened up to capitalism.
" c.apitalism extended its sphere of operation in the capitalist
coi:ntrie~ th~mselves by drawing the pre-capitalist strata of·
soc~~ty mto its vortex. The gold standard, which considerably
facihtat:s the ex.change of goods on a capitalist basis, found
favour m a growmg degree. Foreign trade increased in weight
and value.
" Large accumulations of capital formed the basis of these
dev:Io:rments, si~ce the falling rate of profit in the highly developed
cap1t3:hst count~i~s-the effect of the steadily growing higher
orgamc compo.sit10n of capital-was compensated for by the
e-:'port of capital to less developed capitalist countries, with
higher rates of surplus value and profit. The centralisation of
capital _into monopolist forms of production, covering the whole
economic field of a country, reduced the cost of capitalist manage-
ment.
"The _result was that, apart from the periodic crises. the
~evel of pro~uction rose steadily in the world at large as w~ll as
m each particular country. The standard of life of the proletariat
rose ~lowly. The ?redit system and the small company shares
permitt~d the -:orkm~ men .and the lower middle class to partici-
pate, with their savmgs, m the appropriation of the surplus
value. The number of people who had an interest, or who believed
to have. an interest, in maintaining the capitalist system, was
on ~he mcrease. . The proletariat of the imperialist countries
received from Capital a small share of the surprofits which it
got ~ut of col~nial exploitation. The upper stratum of the pro-
letariat, the .aristocracy of Labour, got separated from the mass
of the worki?g people and became subservient to Capital. All
classes submitted to the leadership of Capital. The. great land-
owners. turned into capitalists, and the capitalists invested
money m land ; the tendency of financial capital was to amalga-
mate all possessing sections of the nation with one another.
The crises were transitory phases within an upward development
-the effects of the anarchy of the capitalist form of production,
an? caused but superficial disturbances in the structure of capi-
talism. The system as a whole, however lost nothing of its
equilibrium." '
The whole system of capitalist world economics formed a dynamic
7;1!hole I The alternatmg phases of booms and of crises recurred
m all capitalistic countries at about the same time. The waves of
booms and crises were rapidly transmitted from one capitalistic
state to another.. Even the larger tendencies of the capitalistic
mode of product10n-concentration and centralisation of capital,
(6)
 etc.-were noticeabie in practicaiiy the same manner in ail capi-
talistic states.
On the other hand, capitalistic world business did not form
a component whole geographically. The individual states had
reached very different stages of capitalistic development. (This
is true even to-day, although in a somewhat less degree.) There
was a highly developed centre in Western Europe : England, Germany,
Belgium, and, less important, France, Holland, Czecho-Slovakia,
Italy, etc. This centre, " the industrial workshop of the world,"
was characterised by the following : -
(I) It was COHJt,.ected much more closely than other countries
with the division of Jabour obtaining in the world business,
i.e., a much greater part of the annual values produced
was exported into foreign countries in the form of manu-
factured goods, and large quantities of foodstuffs and raw
materials were imported.
(2) These countries annually sent newly accumulated values
in the form of new investments into countries capitalisti-
cally less developed.
(3) These countries annually received large values in the form
of profits derived from their investments throughout
the world and as the gain of the political extension of wide
colonial areas, without their having to render any service
in return.
Outside of Europe there were two other, fully developed,
capitalistic countries: the United States of America and Japan.
Also, there were numerous countries in Europe and the other
parts of the world that were only just developing along capitalistic
lines ; furthermore, colonies and semi-colonies that served as
sources of food and of raw materials -under the dominion of the
various highly capitalistic countries. ·
The equilibrium of this system was always an unstable one ;
disturbances were overcome by periodically recurring crises.
That an equilibrium nevertheless existed, on the whole, is proven
by the stability of the exchanges.
In the most highly developed countries capital assumed more
and more the form of financial capital, which was intimately
connected with the heavy industries. Internal development and
the tendency toward a decreasing rate of profit forced the capital
in these countries to secure for the e(cport of its investments oppor-
tunities made secure by monopolies.
In the course of technical development the organic concentra-
tion of capital-especially in the heavy industries-becomes
ever higher, the realisation on industrial capital eyer slower,
the rate of profit ever lower. To this must be added another
circumstance of the nineteenth century. Thanks to its stronger
organisation, the proletariat is gaining for itself an improvement
of its standard of living. "The historical moment," which helps
( 7 )
 to determine " the e·xtent of the so-called essential necessities
and the manner of satisfying them" (Capital, I. 134) creates
a tendency in the direction of increasing the wages. In other
words, necessary labour is extended at the expense of overtime
labour. The rate for surplus values decreases. When variable
capital has reached a certain size, there results an acceleration
to the falling tendency of the rate of profit.
Capital employs different means for combating the falling
tendency in the rate of profit. One of these is organic combination,
whereby capital combined in a trust reduces the faux frais of
the sphere of circulation, lays claim to a part of the profit of trade
capital, and raises its own rate of profit by fixing monopoly
prices at the expense of other strata of society. The principal
means, however, is the exportation of capital to countries where
the time involved in labour is shorter and the rate of profit and
for overtime is a higher one. To make possible the exploitation
of these areas, they must be subservient to the .condition imposed
by capital in general ; i.e., they must be subjugated. Capital
in every highly developed, capitalistic country is compelled, in
order to retard the decrease in the rate of profit, to subjugate
larger colonial areas.1
Essentially, the world war was a conflict of the imperialistic
Powers for the control of colonies and spheres of influence, carried
on with the most modern instruments and methods of mass
. murder. It ended by reducing the number of imperialistic world
powers to four: England, France, the United States, and Japan;
with the transformation of the rest of the world-excepting the
Soviet Republics-into dependencies of the imperialistic Great
Powers ; with the new dividing up of the world among them.
The direct economic consequences of the war were the separa-
tion of the world into spheres ·of relative over-production and
absolute under-production. This condition was partly overcome
during the last six years by the " imminent tendency " of capi-
talistic world economics, by its mechanism for " automatic
steering,'' although it still manifests itself by the " dearth of
credit " or of capital in these countries. 2
The general crisis in world business during the years 1920
and 1921 was followed by a phase that is economically difficult
to define and that is not at all uniform. There was a great boom
in the United States ; on the other hand a slow crisis in Europe
with indications that a betterment of conditions was in sight-
a betterment which, however, did not synchronise in the various
countries with that of the rest of the countries and that did not
lead to a general betterment within the whole capitalistic world.
1 We therefore find ourselves in agreement with Rosa Luxemburg with

reference to the fact that highly developed capitalism in the form of im-
perialism leads to warlike conflicts of world dimension. The reason for this,
however, is not the impossibility of accumulation without the existence of
non-capitalistic elements, but the simple desire for higher rates of profit.
2 See the second edition of my Crisis of Capitalistic World Economics.

( 8)
 IL-CHARACTERISTICS OF THE PERIOD OF DECLINE.
The period since the end of the war and especially durin_g the
last three years was characterised above all by t~e confusion of
econo.rnic conditions, through the absence of uniform co'lfrse of
business in the whole capitalistic world, through the existence
of tendencies and counter-tendencies that crossed each others'
paths in the world's business_. For this ve~y _reason it. is ex~eedingly.
difficult to extricate the chief characteristics of this penod .from
this confusion. In an earlier work1 of mine I made an attempt
·to summarise the principal characteristics of the period of decline
as follows : - ~-
" (I) The geographical exten.sion of the ~apitalistic ~e~ho_d
of production becomes narrow~r : bes!des the ?ap1tahst1e
countries there exist and contmue to mcrease m numbers
countries in which the workers are already establishing
their dictatorship.
" (2) Within the various capitalistic countries there is _a t<~~l­
dency toward the return to forms of product10n m
existence in pre-capitalistic times.
" (3) The international division of work is restricted, trade
with foreign countries decreases : . world commerce,
which was previously grouped umformly about t~e
highly industrial centre in western Europe, _loses its
balance and is dissolved into parts that are bmlt econo-
mically upon entirely diverging bases.
"(4) Gold exchange, previously uniform an~ ~iffering only
as to the size of the various monetary umts, is supplanted
by uncertain, waverin~ paper exchange_s : . a tenden~y
is discernible in the d1Tect10n of revertmg to trade m
kind.
" (5) The accumulation ?f capital g~ves place to progressive
impoverishment-d1saccumulation.
"(6) Production decreases.
" (7) The credit system collapses.
"(8) The standard of living of the proletariat declines:
either as a result of the fact that wages do not keep
pace with the rising cost of living or as a result of tremen~
dous unemployment.
" (9) Among the various strata of _the possessii_ig _clas~es
there is an ever-sharpening conflict for the d1str~b_ution
of the decreasing social production of values. Politically
this shows itself by the constant change of governments,
the collapse and new formation. of parties,_ the. absence
of a uniform government party m the parliaments, etc.
"(IO) Ideologically the faith in the eternal a:r:-d unsh~kable
character of the capitalistic order of society begms to
i E. Varga: The Declining Period of Capitalism, page 9.
( 9 )
 wane: _the r~ling class is compelled to arm !tseif for the
protect10n of its dominion.
u - . . . -
This cond1ti~n of capital~sm, :ivhich has been incompletely
and hast!l:zr characterised m the above, may be called
the . declimng: stage of capitalism or the period of
continuous crises."
.. dN~t two years have passed since the above lines were written
an a though they are still true in the main, yet the im ~ortanc;
~! several of the ten points has been greatly reduced, ~.g., the
t" ndenc?'·toward a reversal to economic forms of pre-capitalistic
~mes omt 2). Whether the accumulation gave place to decumula-
~10nb throughout the whole of capitalistic business I set down as
Sou tful ~ven then.I In the light of the boom' in the United
k tates which_ has taken place since then, this sentence can be
~~t down as mcor~e~t. This does not mean, however, that it is
. h"tbhe regarded as m~o.rrect for the European.countries that were
t ardest by the crisis.
On the other. hand, several very important characteristics
of t~e present per10d of world economics are missino- in the above
i. ':£'he lack of uniformity in the development ~f booms as ~
sure. sign for the absence of a uniform capitalistic form of pro-
d uct10n.
ii: The agrarian. crisis, interwoven with the general phase
of c~~~es and extending over the whole world.
iii .. The social crisis in Europe and in the leading industrial
countries of E_urope as a result of a decline in :the division of
word 1 economic labour.
t . iv .. The tendency on the part of European imperialistic coun-
ries, mstead of extend~ng their markets, to hinder production
on the part of a competitor and to turn capitalistic development
h ackward. .
* **
The result of the entire three * *
years' development seems to
us to be the following :'--- ·
':£'HE ACUT~ SOCIAL CRISIS of capitalism. the instinctive unor-
gamsed rebellion of the working class against capitalistic s~ciety
seems on the whole to have been overcome. On the other h d'
thed " norm a 1 " con ffrct of capita
m · 1istic society seem to have been
an ·
a e :ver:y much more acute by fargoing concentration and
centrahsat10n
. on the one
. .hand ' and by the bi"rth of conscious
· .1 v,
revo1u t 10nary, commumstic mass parties on the other. ·
1:HE ECONOMIC CRISIS of capitalism has become less acute
but IS not yet overcome. Production has scarcely reached pre~
:'l'~r levels ;_ Euro~e's productio~ has ~iminished, that of capital-
istic countries outside of Europe mcreased I Owing to th
ful ,/+. · if · l · e success-
oJJ e~isiye o capita against the proletariat, owing to the
expropriation of the middle class through inflation and owino-
. ' b
1
.E. Varga: The Declining Period of Capitalism, page I>;;.
(IO)
to the progressive impoverishment of the farmers as a result or the
low prices of agricultural products compared with industrial
goods ("shears"), the distribution of income has been shifted
in fa_y0ur of capital. In this manner capitalistic accumulation
was made possible, in many cases at the same time that industry
as a whole declined. Corresponding to the antagonistic character
of capitalist society, the tendencies that are favourable toward
overcoming the crisis have the imminent faculty of changing
over into the very opposite ; through 'the reduction of income
the buying power of the classes affected is in a like manner reduced.
which fact becom~-a source of new wars. ·
The CRISIS OF ECONOMIC POLICY continues unabated. None
of the great economic problems-Reparations question, inter-
national debts, relation of the capitalistic states toward Russia,
protective tariffs versus free trade, inflation or return to a gold
basis-could be solved during the last three years. Economic
chaos continues unchanged.
We shall justly be reproached with the charge that our pre-
sentation of the situation is not clear. But we must repeat that the
lack of clearness, the existence of contradictorv tendencies is
a characteristic of the present period. As far, however, as the
prospects for a revolution are concerned, we should like to say
the following, anticipating the results of our later observations : -
The present position of capitalism, although the general feeling
of rebellion on the part of the proletariat, observable immediately
after the end of the war, no longer exists, is one giving good
prospects for a successful revolution in Europe. Whether this
possibility becomes a reality, depends upon the attitude of the
proletariat and of its revolutionary advance-guard, the Communist
Party. There is no such thing as an economic situation which
ensures a victory of the proletariat without long continued, enduring
fights calling for numerous sacrifices. And there is no such thing
as a situation that offers no way out for the bourgeoisie.
"We now come to the question of the revolutionary crisis
as the basis of our revolutionary action. In this connection we
must, however, mention two wide-spread errors. The bourgeois
economists on their part represent this crisis simply-to use their
elegant English . e:iq)ression-as ' unrest.' On the other hand,
revolutionaries sometimes atteqipt to prove that there is absolu-
tely no way out of the crisis.
"That is an error. There are no absolutely hopeless situations.
The bourgeoisie acts like an impudent robber who has lost his
head. It commits one folly after another, increases the difficulties
of the situation thereby, and hastens its own destruction. All this
is true, but one cannot ' prove ' that there is no possibility for
the bourgeoisie to put to sleep any minority of the exploited
with the aid of some smaU concession, and to suppress the move-
ment or the uprising of, any small section of the oppressed and
exploited. The attempt to ' prove ' the ' absolute hopelessness'.
( 11)
from the start is futile and is fencing with words. A real ' proof '
for this or similar questions can only be. brought by experience.
The bourgeois order ,is now passing through an exceedingly
revolutionary crisis throughout the whole world. We must now
' prove ' by actual practices of the revolutionary parties that
they are sufficiently class conscious, and that they possess an
intimate enough hold upon the masses and sufficient determination
and wisdom, to utilise this crisis for the successful, the triumphant
revolution.
"To prepare this 'proof' we have chiefly gathered here
at the Congress of the Communist International."
The above was said by Lenin in 1920, at a time when the wave
of revolution seemed still to be on the upward trend ; when the
great masses of the workers were on their way to joining the
Communist Party ; when the " notorious " Twenty-one Points
were worked out in order to protect the Communist International
from a :flood of opportunistic elements ; when the Red Army
was. in the midst of a triumphant march upon Warsaw. ·
But if it is true that there are no situations from which there 'i~
no way out for the bourgeoisie, it is also true that there are no
situations in which the revolutionary proletariat cannot wage
successful fights. The honest, earnest struggle of the proletariat
for the improvement of its conditions within the capitalist system
is a factor of prime importance for hindering the successful averting
of the crisis. It it is possible for the Communist Party, as the
leader in the fight of the whole proletariat, to lead into the fight
also the masses of peasants who are exploited by the big land-
owners and the bourgeoisie, the struggle can lead to victory,
even if the " normal " capitalistic system were apparently to be
re-established.

III.-WORLD PRODUCTION AND ACCUMULATION.

In the light of the characteristics of the present period of
decline of the capitalist system mentioned above, we shall try
especially to examine into world production and the accumulation
of wealth.
WoRLD PRODUCTION.-Table I in the Appendix affords
a picture of the world production of the most important goods,
in so far as statistics are available. If we compare the production
of 1913 with that of 1923, we gain the impression that pre-war
production has almost been reached. But in estimating the
importance of this table we must emphasise the following:-
(1) The year 1923-24 was a very favourable one any way
for wheat and grain ; if we were to contrast the average for
1920-23 with that for 1909-13 (this average has unfortunately
not been published as yet by the Institute of Agriculture), it would
be clear that the normal pre-war production had by no means been
reached as yet.
( 12)
 (2) The increase of production appli~s to the non-European
countries. (United States, Canada, Argentrna). Europe still lags
far behind the pre-war period.1 ,

(3)·Production in the heavy industries, which is e~pecially

important to capitalism, has not y~t reached that of pre-war times ! -
In millions of tons the product10n was : -
1913 1923
Coal 1344 .1360 (our estimate)
Iron 73 65
Steel . """'' 75 73
Shipbuilding (1,000 tons) .. 3,330 1,643
In these branches of production, which are so characteristic
of the capitalistic system, the production of 1913 ~as not yet ?eerr
reached, although the year 1923 includes the apex rn the American
boom. . .
(4) Under normal conditions the production of iron and coal
shows a tremendous increase froin decade to decade. (S~e _Table I~I
in the Appendix.) During the decade ~913-23 this. mcrease is
wanting. Whether it will take place durmg the commg de~ade
is doubtful. Considering the fact that the peak of the Amen~an
boom, which before all others furnished the increase of pro~uct~on
during the last few years, has no doubt been passed, and cons1derrng
the fact that European business passed t~rough no such bo~m'.
we deem it unlikely that a similar increase is to take place durrng
the ensuing decade. . . .
Production figures therefore furnish no basis for cla1mmg t~at
the critical period has been passed throl1;gh._ The low producti<;>n
in the heavy industries is all the more s1gmficant as the capacity
for production is much greater than before the war .. A large part
of the· plants is not producing at all. At the other extrem~ ~e
observe. the long continuing unemployment ; we shall recur to it m
another connection. .
AccuMULATION.-In dealing with the que~tion of accumulat10n
we shall differentiate between the accumulah~n. ~f wealth 3:nd the
accumulation of capital, to avoid the poss1b1ht)'.' of mistakes.
Under accumulation of wealth we understand the ~ncrease ?f the
objects of value in the possession of a people, ir:espechve. of
classes ; inother words, the d~fference between a rears pro~ucbon
of values and their consumption, By accumulat10n of c_ap1tal we
nderstand the increase of that part of the wealth that is u~ed as
ua ital and is in the hands of the capitalist. The accumulat10n of
~faith and of capital under normal capitalism run along parallel
i The development of sugar production is characteristic : .
. Millions of Double Hundredweights
1913 1923
Beet sugar (European product) .. 62"7 47
Cane sugar (non-European· product) .. 95·0 127

( 13)
 lines, inasmuch as it is -the capitalist 'Class to whom the newly
created wealth chiefly accrues in obedience to the law of capitalist
production.
There is, however, also the possibility of the very opposite
development in the accumulation of wealth and capital. It is
possible for the wealth that is in the hands of all classes to remain
the same or to become less, while at the same time an accumulation
of capital takes place, in that a part of the wealth of the non-
capitalist classes passes over into the hands of the capitalists and
increases their capital.1 Disaccumulation (decrease) of wealth
and accumulation of capital are not necessarily exclusive one of
the .other.
The question now arises whether at present there is actually an
accumulation of wealth and an accumulation of capital, or not.
The answer to this question would be interesting for this reason :
the comrades who adhere to Rosa Luxemburg's theory of accumu-
lation consider this question as of vital importance in determining
the prospects of a revolution. In general they are of the opinion
that the capitalistic order of society cannot be maintained without
accumulation; some of them draw from the premise that capi-
talism is still accumulating the conclusion that there is no crisis
whatever of capitalism2; and that therefore the prospects for a
revolution are very slight.
I do not share any of these views, at least not when expressed
so dogmatically.
The .want of possibility for accumulation means reduced
production and therefore a more bitter s.truggle of the classes for
the division of the annual product ; hence .also better prospects for
a revolutionary movement of the proletariat. The cessation of
increase in the means of production means-under capitalist
conditions-that new generations on reaching the age when they
can work are unable to find work even during the height of a
boom; this fact tending to aggravat~ the situation. But the
absence of accumulation or even disaccumulation is by no means a
guarantee for the breakdown of capitalism. Capitalism can move in a
retrogressive direction ; a partial return to pre-capitalistic forms
of economy can take place ; untold millions can die of hunger
or be seized by plagues; one or several capitalist countries can
accumulate at the expense of the capitalistic countries that are
" decapitalizing " themselves ; but the. domination of capitalism
can nevertheless remain if the proletariat does not wrest power
from it by revolutionary means. It seems to us that speculation
1 In this connection one must distinguish still further between the actual
transfer of wealth from non-capitalist into capitalist hands and the fictitious
sham accumulation of war times, during which the capitalist class received,
instead of previous actual values, state obligations and claims upon the returns
from the production of later years.; in other words, when in many cases it
enriched itself on paper only. ·
- 2 For a classic example, see the series of articles by Comrade Ollivier in the

Vie Ouvriere, beginning with No. 208, 1923. . .

( 14)
 upon the impossibility of accumulation as a premise to the
revolution represents considerable opportunism.
On the other hand the existence of accumulation by no means
prov~s_ that a pl'oletarian revolution is hopeless. The accumulation
-of capital may have been forced by reducing the real wages of the
-.ivorkers and by the successive expropriation of the middle class
and the peasantry ; it therefore by no means precludes the
existence of revolutionary situations ; in which connection it may
be admitted that a real accumulation of wealth as the result of the
:r:aising of. the standard of life for all classes creates a situation
unfavourable to the revolution. The latter situation would,
however, develop only in case capitalism throughout the world
were to take a new lease of life.
It would certainly be useful to determine by means of figures ·
whether or not an accumulation-in both forms, accumulation of
wealth and accumulation of capital-took place during the last
years.
The answer to this question is exceedingly difficult.
The question of actual accumulation of wealth is perhaps most
easily determined by certain signs ; by building activity in the
. broadest sense ; by the size of visible stocks of wares ; by the con -
dition of the means of communication and of the cattle, &c.
The most important sign is certainly the bililding activity,
since every extension of the establishments in which production
takes place also means the extension of building operations,
and since, on the other hand, building activity signifies the conversion
of present productive forces into a natural form, the amortisation of
which will probably take place in 30-100 years, and which therefore
is the typical form of accumulation.
Now, we observe that in the United States, during the past
two years, and presumably also during the year 1924, there is a
tremendous building boom in the United States. Several billions
of dollars are set aside annually for building purposes-for factory
buildings, houses, warehouses, schools, &c. This means real
accumulation ; as does also the investment activity of the railways,
the rapid increase in the number of automobiles, &c. This accumu,
lation of wealth certainly also means the accumulation of capital
in most cases !
A different situation obtains in Europe. Building activity
everywhere is only a fraction of that of pre-war times. In all the
large cities there is an appalling dearth of houses. Railway construc-
tion and other large operations likewise take place in only a reduced
manner. From this one can draw but one conclusion, namely, that
the accumulation of wealth proceeds, if at all, at a much slower
pace than before the W ~r.
An exception. seems to be furnished by France, which during the
last few years almost completely rebuilt its devastated areas.
However, in evaluating this. fact one must take account the
further fact that operations in other parts of France were ex-
( 15)
 ceedingly limite_d; that France received payments of considerable,
size from Germany, and that it was supplied with credits from other
countries ; also, that a part of these investments was paid for
at the expense of the middle classes through inflation.
As concerns the accumulation of capital, its progress is much
more difficult to judge. The estimates of national wealth usually
put forth by bourgeois writers, the inclusion of capital in stock
companies, the deposits in banks, &c., cannot serve as an accept-
able basis. Under national wealth are included sham items, such
as land values (capitalistic ground rent) ; through the system of
rp.utual participation and holding companies the same actual
item of wealth appears several times ; through the depreciation of
gold (the purchasing power of which is at present about one-third
less than before the war) all estimates seem exaggerated. In
countries :with unstable exchange these estimates are encumbered
with the further factor of unreliabilitv.
For this reason we can do nothing with estimates of this
kind. 1 We must rely upon the general observation of economic
facts. These reveal the following : -
An accumulation of capital running parallel with the accumulation
of wealth in the United States, in the English colonial settlem.ents,
and in general in the capitalistic areas outside of Europe.
_ An accumulation of capital upon the basis, for the most part
or entirely, not of the increase of wealth, but above all as a result of
the transfer, brought about by concentration and inflation, of wealth
formerly in the hands of non-capitalist strata of society into the hands
of capitalists in the countries of Europe.
Assuming that the sources of errors are about the same,
certain interesting deductions may be made : if we eliminate
government loa11s as not real accumulation, .new emissions totaf
186.8 and 14Lj, millions respectively for 1912 and 1913, and 131.l
and 97.9' millions respectively for 1922 and 1923. When we con-
sider the reduced purchasing power of gold and its depreciation,
a marked decrease of actual accumulation results. And as the
economic position of England, despite the heavy crisis in the
export industry, is by no means less favourable with reference
to the possibilities of accumulating than that of the other European
countries, we may conjecture from this that but limited accumula-
tion is taking place in all of Europe.

IV.-THE LACK OF UNIFORMITY IN CAPITALISTIC

WORLD ECONOMY.
One of the most striking signs of the period of crisis is the lack of
uniformity in capitalistic world economy. Wo:d<;l business is con-
stituted of loosely connected areas, in each of which the progress
of the turn of the market is a different one, with currencies of
1 See the ·Appendix for Tables VA. and VB,. containing dat~ about the

emission of capital fo the United_ States and England. _

( 16)

~
' \_.
__

r/'
r
I
~- u~stable valu~ ~ubstitute? _for gold as world money, with entirely

!I
different conditions obtammg with reference to credits, &c.
THE CONTRADICTORY PROGRESS OF THE COURSE OF BUSINESS.
W~ile m:der " normal " capitalism the progress of the cours e
[ of busmess is. t~e same for all capitalistic countries, we note the
unusual condition of late that the different capitalistic countries
I have b?oms at ~ifferent times, a?d that the progress of these
I booms is :contradictory an.d opp<?s1~e. This is hard to express in
I figures, smce the economic statistics of most countries are not
adeq~ate for this p~rpose. (In the Appendix, Table IV, a, b, c,
we give the most"!mportant economic figures for the United
States, France, and England.) On the basis of our observations
of the turn of the market we can point out the followina develop-
ment on a quarterly basis : - "'
Quarter Czecho-
l 922 U.S.A. England France Germany Slovakia Poland
1st improved poor good poor improved
2nd good poor, but improving very good poor improved
improving
3rd. good ditto. improving gd., declng. poor improved
4th good improving ditto. poor improved
1923
1st boom improving worse poor improving poor
2nd boom improving worse poor poor
3rd boom declng. worse better crisis declining better
4th ditto. improving better crisis uncertain better
1924
1st boom, imp. improving better improving poor
2nd boom improving better improving poor
strongly
declining
This characterisatiOn of the course of the market is of course
inadequate and vulnerable as to details, since within th; individual
countries, too, there is not uniform trend of business in all branches
of production. (Even during the peak of the boom in the United
States there were branches of industry that remained below the
standard of 1919.) Hence, in estimating the course of the market
one can arrive at different results depending upon the importance
that one attaches to every branch of production. In any case
the table demonstrates that the course of business is not a uniform
one.
Also, it ~ay be asserted that the improvement in business in
one country is bought at the expense of that in another. Thus
th~ improvement in the English heavy industry was attained ·at the
price. of the cessation of production in the Ruhr Valley and in part
also in France. It would seem that capitalism is unable to bring
about a general boom·!
THE. IsoLATED AMERICAN BooM.
The most important event of the last three years is the American
boom. !t reached its peak in April, 1923. (See Table IVa in the
Appendix.) Of fundamental importance is the following : -
( 17) B
 (1) That the American bo,om happene~ 3:s · an isolated fact.
and remained isolated, and failed to draw m its wake a boom of
European capitalism. . . . .
(2) That it could take place although the cr1s1s contmued m
Europe. . .
(3) The American boom depended entuely upon t?e ~urchas~ng
power of the home market and had nothing to do wit? mcreasmg
export. This is manifest from the figures for the foreign trade of
the United States. In millions of dollars, the trade figures were : -
Excess of Imports
Imports Exports over Expo1ts
1921 2,509 4,485 1,976
1922 3,113 3,832 719
1923 .; 3,950 . .. 4,025 .. 75
·we see : the export of goods did not increase during tl:e peri?d
of greatest boom. If we take into account .the very high price
of cotton in 1923, the export of goods of all kmds must have b~en
less than in 1921. More characteristic even is the fact that durmg
the highest peak~of the ?oom, during the mont~s of March, April,
and May, 1923, the Umted States had a passive trade balance-
a very exceptional case. The capacity of the home market to
abr;orb the product was so great that, although production had
been increased to the utmost, it was not adequate to the needs :
Dutch tiles, French iron, English coal-everything f?und ~ts way
to America and was bought there. As the boom subsided, imports
decreased rapidly, while exports inc_reased. . .
This change means that a boom m the Umted States no l~mger
had a stimulating effect upon the Euro~e~n coi:rse ~f bu_smess.
European capitalism was unable to P3:rtic1pate m this phase of
business improvement ; so over:vh~li:img was_ the _effect of the
period of crisis that the phase of md1v1dual busmess improvement
was suppressed by it. . . .
Soine are of the opinion that a boom will come m Euro~e
only after the Reparations Problem has been solved on the b~s1s
of the Experts' Report. We consider ~his an e~roneous standpomt,
as we shall develop later. But even if the pomt were well ~a~e,
the deduction would have to be made that the economic life
of the United States had been completely severed from that of
Europe and that boom and crisis do not coincide. .
For, nobody can doubt to-day that the A_merica'I'!' b?om has reached
its end. All newspaper reports (the official statistics appea~ only
two or three months later) agree in saying_ that the declme _oL
business has extended to the entire heavy mdustry. The pnce
of iron was reduced. Of 15 smelters of the Carnegie Company
in Feddell, six were extinguished at one time. Tin_ wor].zs are
employed at only 50 per cent. capacitY:. Produc~10n m the
steel trust decreased 6-7 per cent. in April, that o~ m~ependent
steel companies 8-10 per cent. during March.I Ford is said to have
1 f]sine, April .19. Boersen Courier, April 29, &c.
( 18 )
; !
one million cars on hand.I 'i\'e will not presume to predict with
certaintv that a sharp crisis will soon ensue. But the capitalists
of the United States will try to postpone the crisis by forced
exportation of industrial product, and thereby greatly detract
from~ -the possibility of a European boom that is expected by
optimists.
Let us briefly touch upon the special reason for the ·~:mom.
In our opinion it was largely due to the circumstance that u1 the
United States also accumulation was insufficient during the war;
There was too little building, and the railway material was not
renewed sufficiently. The gigantic boom in the building industry
and the enormou~~orders of the railways were, .aside from the
automobile industry, the most important factors of the boom
which has just come to an end. This urgent call for orders to
replace the gaps of the war period has already been satisfied ;
agriculture, on account of the " shear,." is less able to absorb
orders ; Europe cannot buy, because it has no goods with which
to pay America. For this reason the boom period, which, by the
way, lasted very long-for three years-had needs to come to
an end.
The relation of the United States to Europe is one of the
weightiest problems of the crisis. Even before the war the trade
balance of the United States with Europe was decidedly an active
one-average annual export, 1910-14, 63·3 per cent., imports,
49·6 per cent. (See Appendix, Table IV.) The difference was
covered by the money sent by immigrants, expenses of Americans
in Europe, and interest on American securities in the hands of
Europeans. The trade balance became even more favourable. to
America and against Europe during the post-war period: export to
Europe, 1923, 54·4 per cent., import 31 ·8 per cent. And as American-
securities had during the war been bought back by Americans,
the difference had to be made up by the exportation of gold.
from Europe to America. In point of fact the gold supply of the
United States is growing from month to month. The notes of
the central bank of issue are actually covered more than 80 per
cent. by gold. The time is not distant when they will be covered
100 per cent., in which case the problem of " gold inflation "
will become acute. The continued accumulation of gold in the
United States is a characteristic sign for the shift in the economic
importance of Europe and America. At the same time it demon-
strates how divided up the world's economy and business has
become.
UNEMPLOYMENT.
Somewhat like the boom, unemployment is of an irregular,
zigzag-like character, but the opposite of the boom. In this
connection it is important to remember that the number of unem-
ployed in the most important capitalistic countries is at present,
1
New York Herald, April 16. Times, April 25, reports a general movement
downw11rds.
( 19)
 at the beginning of 1924, at least as high as three years ago,
as the following figures show : -
Beginning U.S.A. England Germany Italy Czecho- Poland Together
(in thousands) Slovakia
1921 3,4001 977 300 112 95 74 4,958
1922- 2,000 1 1,926 120 606 113 221 5,086
1923 1,493 300 391 441 120 2,745
1924 1,0001 1,371 2,200 2 270 220 3 200 3 5,261
These figures are, of course, only approximately correct.
The number of unemployed is surely greater everywhere than
has here beeIJ- given on the basis of official statistics. The unem-
ployed are estimated differently in the different countries. But
we may assume that the sources of errors are on the whole the
same, so that the comparison is not upset thereby. The 'total
number remains unchanged, taken by and large. (The figure
300 for Germany, 1923, is actually much too low for Germany,
inasmuch as there was great unemployment in the Ruhr as a
result of the Occupation, which, however, was not registered
as such.) While in some countries, -as for instance in England
and Germany at this moment (end of April, 1924), the figures
are on the decline, they rise in the United States and Poland.
There is variation, but no absorption of unemployment, no
reduction to "normal" status of the industrial reserve army.
This is proof of the fact that the period of crisis in the phase
of booms has not yet passed. (See Appendix, Table VII.).
THE EXCHANGE CRISIS.
Now as before there are no stable exchange conditions. Only
in two countries, the United States and Sweden, is the money
actually backed by gold. All other states are on a paper basis.
During the last three years the exchange of Germany, Poland,
and Austria collapsed completely, and stabilisation took place
artificially on a new basis. We shall speak of the effects of this
process upon income and fortunes later. The attempt of England
to place the pound sterling back on a par with the dollar was
_ 1 Unofficial estimates, which, however, coincide with the estimates
of the Federal Reserve Bulletin. The latter takes employment in 1919 as the
index figure 100, and then states : - ·
Monthly av_erage 1921 83
Monthly average 1922 90
April, 1923, peak of boom 103
January, 1924 98
There were in 1919: factory workers, 9·1 millions
railway workers, 2·0 millions
!: office employees, 3·1 millions.
Adding the workers in petty industries, in commerce, &c., this means twenty
million workers. Accordingly, the number of unemployed must be : -
1921 25 % = 4 millions
1922 13 % = 2·6 millions
1923
1924 5 % = l ·O million
2 Estimated.
i. a December, 1923.
( 20)
unsuccessful. Nor can one claim that the exchange chaos may be
considered as having been ended by the stabilisation of the German
and Polish exchanges. The last few months witnessed the collapse
of the French franc : down to 130 to the pound sterling and then
a rise -to 65 to the pound. Several exchanges that were considered
quite stable-those of Japan, Denmark and Spain-have depre-
ciated considerably recently. The Japanese already shows a
disagio of 20 per cent.
It would seem superfluous here to discuss in detail the catas-
trophic effect of fluctuating exchanges upon capitalistic business.
These are generally known : instead of calculation and production
-speculation; thYt_advancement of trade-and-speculation capital _
at the expense of solid industrial capital ; general insecurity, _..,
of which the big capitalists take advantage for the systematic -
despoiling of the little fellows. On the other hand, parasitic
strata who busy themselves in the circulation field and who
draw to themsel;,,es a part of the surplus capital. (See Appendix,
Table VIII.)
DEARTH OF CREDIT AND CAPITAT.. .
An interesting phenomenon of the period of crisis is the enor-
mous difference in the interest charged in the different countries
for money loaned. While in the United States and England
money is plentiful and interests rate are low-3 to 5 per cent.-
the interest charged at this time in Germany for gilt-edged credits
is 24 to 96 per cent. First class industrial undertakings pay 2 per
cent. per month. A similar situation obtains in Finland, Poland,
and in general in the states formerly designated as the " territory
of underproduction." The term "credit crisis "is used. In reality
it is a question of the dearth of capital as a result of the impoverish-
ment of this territory. Under normal circumstances such a
~iverg:ence in interest rates could not be maintained for a long
trme, m fact, could not come to pass at all, since capital available
for loans is very mobile and in the briefest possible time flows
from one country over into another and evens up the rates of
interest. (There is a constant difference within each country,
depending upon the security of the investment.) ·
For the present, however, the political situation in continental
Euro~e is so unce~tain that Englis~ and American capital, despite
the high rate of mterest, makes its way there in only a limited
quantity.
On the contrary, capital fled from impoverished Europe
to the United States, where, to be sure, the interest was low,
but where it seemed to be in_ves:ted safely. According to the
reports of the Department of Commerc{i,1 there were bought in
the course of the year 1923 : -
Foreign securities by Americans .. $410,000,000
American securities by foreigners .. 394,000,000
American currency by foreigners 50,000,000
1 The Times, April 7, 1924.
( 21)
 In_ other words, more capital was brought by foreigners to
America than was exported from the United States.
_Say~ the offic~a~ report : " If it proved impossible for us to
ma~ntam our posit10n as th~ first loaning country in the world
which we were last year, this not due to lack of capital on our
part, but rather to the unsettled conditions abroad that made
the investment in foreign countries less attractive for the
Americans." ·
To sum up : there is no uniform world economv, since the
course of the business, the position of the labour ~1arket. the
~xch3:nge situa~ion, the in~erest ra~es do not move along pa~allel
Imes m the var10us countries. but m contradiction to each other.

V.-THE DECLINE IN THE WORLD-ECONOMIC DIVISION

OF LABOUR AND THE CRISIS OF THE EUROPEAN
INDUSTRIAL COUNTRIES.
The crisis in the European industrial countries is set off in
sharp relief from the general crisis. During the war the s-pecial
advantag~ of . wester:n . European in~ustry-a skilled working
class, trame~ m specialised work, which produced at very little
cost per umt of product-was partly eliminated. The normal
process of industrialising the colonial lands received a severe
bl?w through the ~nte~rupte~ emigra~ion of the European indus-
trial masses. A native mdustrial workmg class, capable of working
and native industrial capital developed as a result.1 '
Upon the ending of the world war sharp competition set in
on the part of European industry for regaining these markets.
But these newly industralised countries are defending themselves,
some by cheap labour power, others by tariffs ! India demands
a tariff not alone upon twine, but even upon iron. Canada declined
the_ idea of a united B~itish world empire and of preferential
tariffs for the raw materials of the colonies, because it wants to
1
, _A gBneral summary of the results of this development is not yet available.
'" e give a few examples, however:-
CANADA'S industry has grown 300 per cent. during the last century.
_(M.G. Comn., October 11, 1923.)
AUSTRALIA: Number of factories Number of workers
1911 14,445 312,000
1921 18,018 395,000
INDIA: . Commerpe Reports, September 23, 1923.
Number of textile factories Number of spindles -
1910-11 -226 6·0 million
1921 284 7·8 million
Production (million yards) Import
1913-14 1,164 3,197
1922-23 1,725 1,578
Rep:;rt of Ovirseas Trade, 1922.
Of 109 modern textile factories,
77 belm1g to Cl)inese
5 belong to Englislfmeq
25 belong to Japanese
Statist, April 16, 1923.
( 22)
carry out its own policy of p:otective tari_ffs. All this leads _to
increasing greatly the difficulties of exportmg to these countries
from Europe. .
Parallel with this situation there is the phenomen<?n of ~he
Unite-d States taking up ever closer economic conne~t10ns w~th
extra-European countries .. These countrie_s need capital, which
they can obtain more easily from the Umted States than fr~m
Europe. The British colonie~, especially Canada, but also Ai:straha,
lean heavily upon the Umte~ States. . In South_ ~menca thi
United States have tried to gam economic and political control.
The result of this. development is : -
( l) The decrease of foreign trade in the world in general. (See
Appendix, Table VIII.) . .
(2) The decreeise in foreign trade for European industry in
particular.
Let us try to compare the export of the most typical E11;ropean
industrial countries in 1913 with that of 1923 by reducmg the
data of 1923 concerning the index figures for wholesale t~ade
to those of 1913. This is a rough method and one t~at gives
only approximate results, all the more so since the _foreign trade
data of France and Germany very rightly are considered as not
very reliable.
Exports -in millions of monetary units
Transposed __ _
Wholesale in terms
1913 1923 Index of 1913 Minus Plus
England . . . 634 886 162 (Econom.) 547 87.
France . . . . 6,880 30,400 419 7,250 370
Germany . . 10,097 6,079 (In terms of 1913) 6,079 4,018
Belgium . . . 3,716 8,993 497 1,810 l,:i~
Switzerland 1,376 1,760 181 908 -

Thus we see that the exports from the '' Industrial W ork~hop,':
with the .exception of France, where there :was an accession. or
territory and an inflation boom, ~ag far behmd those of pre-war
times : Belgium 52 per cent., Switzerland 30 per cent., G~rmany
40 per cent.,· England 13 _per cent. (in the case of England the
severance of Ireland plays a part).
,_..>;/:~ (3) The decrease of exports hits particularly t~o~e branches of
industry that are mainly dependent upo~ export. _This is shown most
clearly in the distribution of unemp10yment m England among
the various branches of industry. - .
In a special Free Trade Supplemer~t of t~e Econ01:iist. for
November 17, 1923, the following very _mter~stmg ~ata is given
concerning unemployment_ in the v~nous md:i~trial. bran;hes
of England. The various- Imes of busmess ar_e divided mto tnree
groups ; one group iµ which exports ex13eed _nnports ; one group
i InterestinCY details concerning this are contaii:ied i~ _: Heln:er Key
Der Bankrott de<;; Rekonstruktionspolit-ik nnd die Kolomalpolitik, Berlin, 1924,
u~em. - ·
( 23)
 in which imports predominate ; and one, the so-called home
industries, such as building trades, hotels, railways, water works,
&c. The groups that in England show a surplus of imports are :
fine metals,~ woodworking, silk goods, oil, leather goods, and
paper.
The number of unemployed at the end of September, 1923,
may be divided as follows among these groups : -
Export Industry 698,337
Local Industries 395,018
Import Industry 83,762
These figures prove that it is not the importation of industrial
goods from abroad that is the cause of unemployment in England,
for unemployment is greatest in the export industries. For this
reason tariffs upon imports would be senseless, all the more so,
since the importation of industrial products is less than before
the war. Nor does the fault lie in the fact that England's share
in the world's trade has grown less. On the contrary: accordina
to McKenna's estimates, England's share of the world's trad~
was as follows : -
1912 13·8 per cent.
1922 17 ·3 per cent.
The English Free Traders are quite right. in their arguments
against protective tariffs. In his free trade speech of November
5, 1923, Asquith was quite right in asserting : -
" The first real cause is the fact that the whole trade of the
world has dwindled .... The remedy lies in the re-establishment
of the productive capacity and exchange power of the world."
In other words, this means : the restoration of England and
Western Europe in general as the "industrial workshop" of the
world. But this seems to be impossible.
" The old markets, that have disappeared, can. for the most
part. never develop again, and that is one of the reasons why
contmental Europe cannot be reconstructed within its own
borders. " 1
The s?ifting in the. int~r~~tional economic relationships, the
de_c:ea~e i~ the e~o~om1c ~1v1s10n of work thus calls forth a special
cr1s1s m mdustnahsed Western Europe. There is a tendency
towar~s establ~shin~ a new equilibrium through the exportatioi1
of capital, emigration, return to agriculture, and limitation of
offspring. But such a rearrangement needs much time and can
only be brought about after severe class struggles. We shall
revert to this when dealing with the perspectives.•
1
H. Key, Der Bcinkratt dJr Rekomtrucktionspolitik, p. 7.
2
In the periodical issued by the Russian Socialist Academy, Vol. IV, 1923,
Comrade Bronski la~ches an extended criticism of my interpr'etati_on of the
cr1s1s. He takes especial exception to a certainarticle published in 1916 under
co~ditions ?f severe ce~sorship, in_ which I demonstrate that the theory of the
social patriots, according to which the proletariat has an interest in the
exportation of industrial products, and therefore in imperialism and war
( 24)
 . Under capitalist conditions, of course, things are quite
different, since production there does not take place for the
purpose of supplying the need. The president of the American
Steel Trust, I. A. Farrel, was right in stating to the Department
of Commerce : : " In every business there is a certain portion of
the produce, roughly figured at 20 per cent., that cannot remain
unsold if the first 80 per cent. of the sales are to net a profit.
If you leave off the last 80 per cent., the whole operation will
cease to .yield a profit." ("Annals of the American Academy of
Political and Social Science, 1922.")
If, therefore, th~jndividual branches of industry in the capital-
istic countries are so organised that they dispose of 80 per cent.
at home, but must export 20 per cent., and if for these 20 per
cent. there is no market, then this simply means that there is
no profit ; in other words, it means crisis, unemployment, which,
corresponding to the structure of capitalism, becomes transferred
to all !:;>ranches of production.
In our own opinion there is, therefore, no contradiction in
my contention on the one hand that the importance of e:iqJort
trade for business " in general " is overestiwated, and on the other
that the limitation of export means a heavy crisis for capitalism.
One must only read my contention aright.

VI.-THE AGRARIAN CRISIS.

Closely connected with the general crisis is the agrarian crisis,
which has been lasting for several years, but has received scant
attention. In my "Crisis " I have already referred to the agrarian
crisis as an important phenomenon, but only in connection with the
United States. The reason for this was the fact that economi-
cally the agrarian crisis remained concealed for a long time because
of the effect of inflation. The harm that came to the farming
business through the low prices for agrarian products-low
as compared with the general level of prices for industrial products
itself, is unsound. I therein cite Germany to prove that even the complete
suppression of exports would be more favourable to the proletariat than
militarism and war, since the importance of exports as compared with the
entire production is much less than the social patriots claim. Comrade
Bronski seems to have misunderstoood the semi-illegal character of this work
of mine. I there speak of the relative qnimportance of industrial export
in general, in other words, ori the assumption, concealed or covered up there,
of a non-capitalistic order of society. In general it is quite true-that a large
modern country, such as Germany, France, Russia, or the United States might
support its population without exports (hence also without imports). The
standard oflife would be lowered, poorer clothes woulq be worn, people would
renounce certain pleasures, and possibly even suffer some hunger ; but no
catastropl).e would result. At least n'.lne that would equal the world war as
far as the proletariat is concerned. Even the English people could by intensive
cultivatioµ of the soil and by fishing sustain themselves at about the standard
of the Irish fifty years ago, provided they got along without meat. The standard
of life of the whole world would be lowered through the renunciation of the
advantages of an international exchange of commodities, but in our opinion
in a much less degree than most people believe.
( 25)
-'-Was compensated for through the automatic depreciation of
mortgages, through the actual exemption of farmers from taxation,
and through the circumstances that the farmers were able during
the inflation period to purchase their industrial products below
reproduction costs.
The agrarian crisis is of special social significance, since it
has a tendency to separate the small and middle-sized farmers
from the capitalist class, and to loosen their identity of interests.
This expresses itself most sharply in the United States in the efforts
to organise a third party.
The "Scissors."-The economic reason for the agrarian
crisis is the so-called "Scissors," i.e., the opposite development
of prices for agricultural and industrial products during the post-
war period. It is exceedingly difficult to express this in figures.
From a purely economic viewpoint it is impossible to establish
a normal relationship between the prices of agricultural and
industrial products, unless one were to assume that the price
for agricultural products must be so high that the cultivation
of the unrented ground, the yield of which is still necessary for
supplying the world market, nets the average profit on the capital I
This is theoretically correct, but it can by no means be estimated I
I-

in figures, since too · many factors, tending to modify, are

brought into play : land hunger, freight rates, varying pro-
ductivity, dependence upon the climate, weather, &c. There is
no other recourse for us save to take the relationship of prices
in a normal year, in other words, a price relationship uninfluenced
by either agrarian or an industrial crisis, as our starting point.
Such a year is 1913, which in most cases was also chosen as the
starting point for estimating the various index figures. Since,
however, inflation has caused confusion in the price relatimiship
and since there are no index figures for prices fixed uniformly
for all capitalistic countries, it is hardly possible to use the index
figure for determining the "scissors." Depending upon the weight
attached to the industrial and agrarian products in estimating
the . various index figures, cohtradictory figures are arrived at
for the different countries. 1
Under these circumstances it seems best to us to use the
figures for wheat, the most important agricultural product,
as our starting point. In Table X are given the market prices of
certain grades of wheat in the most important produce exchanges
l The vadous German index figures are quite contradictory 011 this point.
The index for wholesale trade of the federal statistical office of Germany, for
instance, was fi:x;ed at th,e end of November at 98 9 for grain and potatoes, and
155·8 for indn,strial proqucts, hence a very strong "scissors." During the same
perjoq of till1e th,e index figurE'\ for wh,olesale trl1,de given by the lnd1{strie und
lla4delszeit1mg was fixed at 79 for gra,in, flour, &c., at the same time that the
ge1~eral in,dex figure was 145, hence a, divergence of almost lOO per cent. ·an the
other 11and the >vholes[\le index figure for the Ji'rankf1{rter Zeitung during the
same perfod showed the very opposite tendency : food and articles of con-
sumption., 1,584, total index for ninety-eight classes of goods, 1;565.
( 26)
 of the world, divided into export and import markets, as well as
the notations of such European countries as on the whole produce
their own supply. The price quotations of pre-war t~mes show
that the pric_es )n the. export markets w~re graded qmte evenly,
depending upon the distance from ~ir fre1gh~ charges to_ Western
Europe. With the European countries t~ere is a sharp d1ve_rger_ice
of prices, depending upon whether there is free trade or protec~10n
tariff. Thus the price for inland wheat per quarter was (all pnces
are expressed in gold. francs) : -
Free trade Protection
count'l'ies countries
Average 1913 .
London . 19·86 Berlin 24·56
Antwerp 19·89 Paris 27·82
Rotterdam 20·60 Milan 28·10
If, now, we follow the prices, figured in g~ld francs, in _all
important exchanges of the world, we see that with thE( e:x;cept10n
of France the price of wheat everywhere lags far behmd t~e
general rise of prices. If we compare the present moment, m
other words, the course of prices at the beginning or April, 1924,
with 1913, we find the following : -
- Average 1913 Beginning 1924, April
Chicago . . 17·19 20·37 ·
Karachi (India) 17·26 19·16
Argentina 19·03 18·60
London-Manitoba I 20·90 23·05
Plata . . 20·61 21 ·77
Berlin 24·86 21 ·24
Antwerp 19·89 22·49
Paris 27·82 24·00 (about)
Milan 28·10 25·07
Rotterdam 20·60 24·83
These figures are all reduced to gold francs. If we take into
account that the general purchasing power of gold, as reflected
in the wholesale trade index figures for the United States, is about
one-third less than in 1913, it is evident that the price of wheat
at this moment is far below that of pre-war times in the whole
world. And as wheat may be looked upon as characteristic for
all agricultural products (except textiles), there can be no doubt
but that the position of the farmers in the '."orld'~, m:;irkets ,,h~s
become considerablv worse,. and that there is a scissors m
the world market. " The difference is sharpest in the comitries
where there was a high tariff on grain before the war·, which,
however, during the post-war period was either removed or greatly
reduced : Germany, Fr:wce, Italy.
THE CAusEs oF THE f' Scrns()Rs."
The reason for this difference in the fixing of prices betweel\
agricultural and industrial products is above all the· fact that
. ( 27}
 during the war and after, monopolies were established in industrial
conce!n~ in greatly increasing numbers. We have already referred
to this m a previous chapter. Through the formation of trusts
and monopolistic companies the prices of industrial products
are mor~ and more place~ outside of competition, and the profits
of orgamsed brai~ches _of mdustry a~e increased at the expense of
those not comprised m such combmations. Owing to the fact
tha_t ~here ~re untol~ mi~lions of independent producers, a mono-
polistic ~x~ng o~ prices I~ an impossibility in agriculture. The
monopolistic fixmg of prices can take place only in exporting
countries with the help of the government, as was the coffee
yalorisatio? scheme in Brazil. Attempts of that sort were made
m the Umted States and Canada, but thus far without success.
Wer~ s_uch a:i;i- artificial concentration of surplus export for purposes
of ra1smg prices to come to pass in the most important countries
the "scissors " would in all probability disappear rapidly. It
would be quite sufficient for Argentina and Canada to create
a monopoly for the export of grain, since these two states too-ether
with Russia, which monopolises its whole foreign trad; an'Ywav
control the world's grain market. •'
T~e creation of such monopolies is prevented, however, by
the_ cir?umst::~ces .that t~e cap~city of the European market,
:vh1ch IS declSlve m shapmg prices, for absorbing the product
IS ve~y sm~ll as a r~sult of the decline of European capitalism
that IS takmg place Just now. Thus the agrarian crisis and the
crisis of European capitalism are closely intercconnected. .

. DIFFERENT MANIFESTATIONS OF THE " SCISSORS " IN THE VARIOUS

COUNTRIES.
The reaction of agriculture to the " scissors " was and is
diff.erent in th~ different ~ountries .. In t~is connect.ion the divergent
poh_cy governmg the ~xmg ?f prices m the belligerent countries
durmg the world war IS of importance. In the countries of the
European continent a ~aximum price was fixed for the agricul-
tur~l products, at which the farmers were compelled to yield
t?eir produce. Although these maximum prices were constantly
circumvented by the farmers, this system, taken by and large,
nevertheless led to a decrease of the gold earned from agricultural
products and also to a decrease of production itself. In the Ano-lo-
Saxon countries, however-England, the United States and the
Briti~h ?olonies-:-the very opposite price policy was 'followed.
No maximum prices were fixed and everything left to free com-
petition. But the goyernments bound themselves to purchase
certain agricultural products, above all wheat, for a number of
years at a fixed price which was set rather high. This system
~ended to ~he very opp~site of the fixi~g of maximum prices
m the contmental countries of Europe :. it led to the extension
of production, as this proved very profitable for the producers.
The surplus profit of agricultural producers was, of course, turned
(28)
into capital and led to a sharp increase in the price of land. Then,
when this system was abrogated after the close of the war, the
effect of the collapse in prices that soon followed was felt in the
following manner : -
Ill Eno-land and the United States, where all land is in private
hands, a;d where the rents had been increased, corresponding
with the higher productivity during the war, the crisis was and is
severest. It manifested itself in the United States in this manner:
hundreds of thousands of farmers went bankrupt and left their
farms, streaming into the cities. Other hundreds of thousands
were only held op the farms because their creditors left them
unmolested, their calculation being that if these debtors sell
their land at auction, the creditors will eventually lose everything,
while if they left them on their farms there was at least the hope
that under more favourable business conditions they might be
able to collect. In 1923 the crisis among the wheat farmers in
certain parts of the United States (the Dakotas) became such
that hundreds of financial institutions were driven into bankruptcy.
The reason for this is the fact that the leases and rents went up
during the war, but the farmers, who during the boom bought
land at high prices on credit or leased it, are now, in the face of the
low prices, unable to pay their. interest or rent. In England,
where the farms are in the hands of better situated capitalists,
such a catastrophe did not ensue. ·
· But in both countries the result is a sharp shrinkage of the area
devoted to the raising of grain. The area under cultivation was:-
Average
1909-13 1917-21 1922 1923 1924
!N ENGLAND : - (In 1,000 hectares)
Wheat .......... . 767 854 796 704
Rye ............. . 23 36 34 30
Barley .......... . ·748 611 552 537
Oats ............ . 1,634 973 873 800
IN THE U.S.A.
Wheat . . . . . . . . . . . 19,065 24,670 24,779 23,574 16,263 1
Rye . . . . . . . . . . . . . . 905 2,212 2,513 2,118 1,771
Barley . . . . . . . . . . . 3,084 3,251 2,991 3,228
Oats . . . . . . . . . . . . . 15,118 17,311 16,468 16,498
Corn . . . . . . . . . . . . . 42,181 41,635 41,152 42,152
In England the area under cultivation is far less in extent than
during the pre-war period. In the United States the cultivation
of winter wheat in the fall of 1923 was 13 per cent. less than in
1922. This means that the United States with an equally good
harvest has only half as much wheat to export as in 1922.
In Canada and Argentine the area under cultivation has in-.
creased still further despite the low prices. This is to be ascribed
to the fact that there is still free land to be had 2 and that the
1
Without summer wheat.
Free land in the economic sense, i.e., at prices that from an economic
2

standpoint cannot be regarded as in lieu of rent ; for example, the low tax
in Canada.
( 29)
extension of grain cultivation includes lands that were thus far
not tilled a"!:; all. The original fertility of this land is made use of
and with intensive cultivation and very small expenses harvests ar~
achieved that even during the present time of low prices make the
effort put into production worth while.
The area under cultivation in Canada was : -
. Average
1919-1913 1917-1921 1922 1923
(In thousands of hectares)
'Vheat ...... ·...... . 4,025 7,505 9,074 9,175
Rye ............... . 47 325 852 586
Barley ............ . 637 1,096 1,052 1,127
Oats .............. . 3,884 6,139 5,885 5,372
Corn .............. . 125 108 129 129
In Argentina:-
'Vheat . . . . . . . . . . . . . 6,496 6,572 6,451 6,967
Rye . . . . . . . . . . . . . . . . 34 97 87 128
Barley . . . . . . . . . . . . . 93 253 243 258
Oats ............ ; . . 970 1,024 1,059 J ,112
Corn . . . . . . . . . . . . . . . 3,525 3,285 3,177 3,425
In continental Eiirope, where agriculture is for the most part
con.ducted by peasants_, the '.' scissors " only now begin to show
their full effects. Their detrimental effect upon the position of
the peasants, as already intimated above, was prevented by the
fact t.hat the farmers during the inflation period for the most part
got nd of their mortgages ; that until very recent times, also as
a result of inflation (in Germany, Poland, Hungary, Austria, in
part also in France), they had to pay taxes that were minimal
in comparison wit~ pre-":'ar times ; that they produce but once per
year and by the immediate use of the money realised can escape
the losses due to inflation ; and that, finally, in purchasing goods
th~y profited by the circumstance,,_that industrial products were
bemg sold under production costs.·,.,
The peasants began to feel the full weight of the aararian
crisis the minute stabilisation had taken place. Immediately
they are_ loaded do'."n with taxes in gold. The new mortgages
must b~ made <!ut m ·gold values and the interest paid in gold.
The fixmg of prices now turns very much against the farmers, in
that they must now pay for the industrial products that are
manufactured from raw materials at a much higher advance than
before the war.
The classic exall!-ple for this is furnished by Germany, where
at present the agrarian rests upon the peasants with all its weight.
~he change in the fixing of prices is especially significant. We here
cite several figures from the Borsen Courier of Berlin for December 9,
1923 : - :Middle November Increase
1923 (1913 = 100)
Production costs for rye : - 1913 Per 50 kg. (in gold marks)
Rye bread ................. . 8·22 9·75 119
Retail price of rye : -
Rye flour .................. . 15·00 31·50 210
Rye brea,d . ; ... , .•....• , ... . 14;00 22'50 16Q

{ 30)
 In other words, hand in hand with an increase of 19 per cent.
in the cost of producing rye there goes an increase in retail prices
of 60 and llO per cent. respectively:-
Middle November Increase
1923 (1913 = 100)
1913 Per 50 kg. (in gold marks)
Production costs for oxen (live
weight) ..................... 52·00 115·00 221
'Vholesale price for oxen .. .- . . . . . 73·00 325·00 445
Retail pric~ for beef (meat for
cooking)..................... 87·50 400·00 444
At the same time that there is an increase of 221 per cent. in
the costs of production, there is double the increase in the retail
price. The difference between the cost of production and the
wholesale price has risen from 41 per cent. to 183 per cent., and
that between. wholesale and retail prices from 20 to 23 per cent.
Middle Noi·ember Increase
1913 1923 (1913 = 100)
Production costs for hides,
Munich (i kg.) . . . . . . . . . . . . . 0·61 0·60 98%
"Vholesale price for sole leather
(1 kg.)...................... 2·25 3·36 149%
Retail price for box calf shoes . . 12·50 24·67 197%
A reduction of the cost of raw hides of 2 per cent. is matched by
an increase in the retail prices of 97 per cent.
Conditions have changed but little during the last quarter
of a year. German agriculture is in dire need, and this distress is
heightened by the fact that credits can nowhere be obtained,
inasmuch as all German business suffers from a lack of capital.
The big agrarians are looking for a way out through agricultural
protective tariffs. This might help agriculture, but through the
consequent raising of prices for the necessaries of life would make
the lot of the German proletariat worse, and :would lead to grave
wage conflicts. The raising of wages, on the other hand, would
lessen the ability of German industry to compete and would cause
a still severer crisis in the whole of Germany's economic life.

VII. AGGRAv ATION OF THE CLASS CONFLICT

·During recent years there has taken place, objectively, an
aggravation of the class antagonisms within capitalism. The
distribution of incomes has shifted to the advantage of the very
narrow layer of big capitalists. We can here differentiate between
the following : -
(1) Concentration and the formation of trusts.
(2) The expropriation of the rniddle classes in the cities through
inflation.
(3) The impoverishment of the peasantry through the
" scissors."
( 4) The reduction of the standard of life of the proletariat,
directly through the reduction of wages and the lengthening
Qf working hours, and indirectly through the continuin~

~ 31 '
 period of unemployment, which reduces the income of the
proletariat as a class. Thus the big capitalists enriched
thems~lves at the expense of the non-capitalist strata.
1:he circle of people economically interested in the con-
tmua~1ce . of capitalism thus constantly decreases ; the
expl01tat10n of all classes through the big bourgeoisie
grows constantly :"'orse. This supplies the economic basis
for further rev:olutic:nary struggles, even though the working
class . was driven mto the defensive during .the period
elapsmg between the Fourth and Fifth Congresses and
though it had to give up positions it had already captu;ed.
Concentration and the Formation of Trusts.-The tendency
toward conceftration '.1nd the form=:ition of trusts was present even
be~or~ the ~ ar, but it h_as be~n. mcreased during recent years.
It is 1mpo~s1ble to determme this in e,ract figures, since capitalistic
economy is so tremendously intertwined and interwoven.I But
nobody can doubt the correctness of this fact if he observes
objec~ively th~ manifestations of modern capitali~m.
Still _more important than the concentration of production in
the various branches of production and the centralisation of
fortun~s in the hands of a small number of capitalists is. the
for~at10n ?f ~rusts and co_n~~rns, which give a very small group
of big cap1tahsts the poss1b1hty of controllino- the economic life
of a country. Especially characteristic of the last years is the
grow_th of trusts or combinations that include the whole pro-
ductive process from the raw material to the finished article ;
tha~ . themselves produce the machinery and equipment for
the1! manufactures, and that arrange for transport and distri-
bution, trade _and financing, through their own organs. In this
way there 3:nse new. phenomena, autarchic up to the finished
product, which constitute powerful autonomous units within a
modern economic system that is still called " V olks wirtschaft "
(popular economics).
The heads of these mighty organisations are in ·fact the
rulers ~f the _modern _capitalistic State. They follow their own
do~estic pohcy, their own social policy, their own foreign
pohcy. The trustification process was very much encouraged
by _the sudden drop of prices and, at the end of the post-war
p~r~od of apparent boom, by the sudden change from boom to
cns1s that was accompanied by fluctuations of exchange. The
establishments that were less firmly founded were unable to
withstand these storms and had to save themselves from
destruction_ ~Y: fusing with the big concerns.
The activities of these concerns are not limited to their native
countries. They take root everywhere, due to the exportation
1
Since the war no statistics concerning business establishments were
gathere_d by any European countries, so that no data are available for the con-
centrat10n that has taken pface. The first census is to be taken in England in
1924.

( 32)
of capital and through mutual. interweaving and interlocking.
Thus we see how the two mightiest American concerns, the
Morgan and the Rockefeller interests, branch out more and
more jn almost all European countries ; how under tbe. mask
of French or Austrian capital they gain control of the 011 pro-
duction of Poland and Roumania; how the whole electrical
industry of the world is under their influence.
On the other hand, the formation of such gigantic concerns
is not dependent· upon wealthy America. In impoverished
Germany we see, during the inflation period, the growth of the
Stinnes concern, wla.ich swallows up in an almost planless manner
all sorts of useful undertakings : coal and iron mines, smelters
for the smelting of iron ore, machinery factories for turning out
manufactured products of iron, forests for securing wood for the
mines, paper factories for taking care of the waste wood, ne~s­
papers for using the paper, shipping undertakings for transportmg
the goods, and pure business concerns for securing freight trade
for the steamers. &c. The Stinnes concern, too, is not limited
to Germany, but extends to Austria, Czecho-Slovakia, Poland,
Hungary, South America, South Africa, &c;1 .·
Of fundamental importance in this connection is the tende?-CY
towards bringing into consonance with each other the .v3:r10us
species of capital that previously were often antagomstic_ to
each other : banking capital, industrial capital, trade capital,
transportation capital, agricultural capital. These become so
closely intertwined by the formation of trusts that one can speak
of a unified "concern capital" in the most advanced capitalis~ic
Countries. The further events develop,_ the more does capital
place the proletariats as a unified whole,· and the less hope is there
of inner differences of interests between capitalists.
It is further interesting that, while before the war the
initiative for the formation of trusts and cartels was usually
taken by banking capital, and wh_ile the latter usually play~d .a
leading role in these trusts, durmg the post-war period it is
industrial capital, especially in the countrie.~ of inflation, wh~ch
became the motive power in forming combinations and which
controls the trusts, and in a certain degree also the banks. The
reasons for this shift are to be found in the mechanism of inflation,
as we shall develop later. ,
The trusts constitute so great an economic force that they
make the " unorganised " bourgeoisie dependent upon th_em
economically and financially. As a matter of fact, trust capital
dominates the whole economic life and seeks effectively to enlarge
its profits at the expense of the bourgeoisie that is not yet organised
in trusts. In this way there is a division within the bourgeoisie
1 A concrete description of this deveIOpment would be interesting; but
would demand a whole book. In my consideration of this problem-~. rely
largely upon the col!ection of material in the hands of Comrade Rolf; whi~h _he
has placed at my disposal. ·
c
which does not, however, separate people . as before _according
to the kinds of capital, but into trustified and unorganised
capital.
Two important problems arise in this connection : -
(1) Has the formation of trusts advanced so far that the
head~ of th_ese combin~tions sontrol a sufficiently large part of
th~ mdus!r~a! and busmess hfe to be able to prevent crises ?
This poss1b1hty can be_ denied "'.ith certainty. Trust-forming
has advanced furt~est m t?e U:~uted States. An attempt was
there made to use the credit pohcy of the central bank of issue
to regulate the course of the market. Nevertheless we see that
neither could the big crisis of 1920-21 be prevented, nor the
present sharp downward movement averted. In other countries
th~re san be even less talk of this. Trust forming can merely
brmg 1t about that the burdens of a crisis are shifted from the
capital c;>rg::ni~ed in trusts to the unorganised capital and to the
~10i:i-cap1tahstic classes. 1 Great though the power of the trusts
is, 1t does not extend to agriculture nor to the small or middle-sized
industries, the economic weight of which is after all greater than
that of the trustified capital. ' '
. (2) Is. the fact of. int_eri:ia~ional trust-forming and of mutual
mterioskmg of!he cap1tahstic mterests of the individual capitalistic
cou~tr1es no~ h~ble to overcome the antagonisms of the various
~at10nal cap1tahsms and thereby to prevent new armed conflicts
m future?
T?is pos.sibility, too, can be dei:iied with certainty. The
??nflicts of _mt~r~sts betw~;n the various national capitalisms of
· State-cap1tahstic trusts, as Bucharin calls them are con-
siderably greater t~an the community of interests bro~ght about
by mutual penetrat10n. If one reads the list of concerns in Europe
?ontr~lled by t~e Morgan or Rockefeller trusts, this sounds quite
~posmg ; but if one '.l'ttemp!s t? compare their economic weight
with that of the entire cap1tahsm of the respective countries,
one fin_d~ t~at, after all, theirs is . rather small. The sharp
competit10n m armaments on the water under the sea in the air
and in chemical factories, engaged in by the imperialistic World
Powers, proves sufficiently that there can be no thought of a
world peace based upon the mutual community of interests of
the capitalists.

" . 1 The followi~g news item. (Borsen-Courier for May I) is characteristic:

]!):om the American Steel Industry. According to a report in the Iron Age,
thr prod~cers ?f.ste~l are adopti~g the same policy as last year, namely, they
brmg their activity in~o accord with the. demand. There is nothing to indicate
that ~ttempts. ~e. bemg made to obtam orders. by reducing prices greatly."
That I~, the cr~s1s is overcome, not at the expense of the capitalists through
reductio.n of prices, but at the expense of the proletaiiat through restriction of
production.
( 34)
THE EXPROPRIATION OF THE CITY MIDDLE CLASS THROUGH
. INFLATION
The petty bourgeoisie, including the smaller capitalists, h::s
been ~adically expropriated in the countries that have ha~ ~1g
inflation, and has been partly reduced to the level of the riff-
raff " proletariat. The mechanism is as. follows :~ .
The fortunes or incomes that were mvested m nommal money
units were expropriated in prop?rtion to t~e de:r;>reci::i-tion that
took pla,ce. · All rentiers who had mvested ~heir savn~gs m state or
communal bonds or industrial shares bearmg fixed mterest, grew
poorer in proporti9p to the dep_recia~ion of the _money. Simila:ly
all those who had aeposited their savmgs as savmgs accounts w1~h
financial institutions. Likewise those who had taken out life
insurance or had turned over their savings to them in return for a
fixed annuity. The expropriation amounts in France to two-thirds,
in Austria, Germany, Hungary, Poland to more than 99 per cent.
of the former fortunes.
Those who gained from this process were: financial institu-
tions, insurance companies, industrial undertakings, and the
state as common organ of the capitalists.
The expropriation of tradesmen, little merchants and lesser
productive capitalists took place in a different manner : these
strata were unable to fit their business practices and methods of
calculation to the shrinking exchange in time. Instead of selling at
a figure based upon a re-purchasing price plus profit, they_ sold_ at
the purchasing price (t~e pi;ice at which they bou&ht 1t) plus
profit. Under normal circumst~nces, where purch'.l'smg '.3-nd re-
purchasing price (production pnce and re-production pnce) are
equal, yes, where the tendency exists tha~ goods may become
cheaper due to technical improvemen!s,. this method 1s c<?rrect.
During the period of money_ ?epreciat10n, h?wever~ this led
to the ruin of the petty bourgeo1s1e. For, ;figured m nommal money
units, they made a good profit under this system.. But at every
turnover of their capital they become poorer, smce they were
able with the money realised from the sale o_f their g?ods to r~­
purchase only a part of them. Their stock, which constituted their
fortune in this way became smaller and smaller, and they them-
selves became poorer and poorer. Many did not realise their
mistake until they had to go out of business because of a dearth of
capital. Without going bankrupt (n<? credits wer~ g:iven during t~e
inflation period) they went to pieces, the v1ctrms of the big
capitalists. . . .
For a long time, the state itself I?revented the httle f~llo:vs
from calculating on a basis correspondmg to th~ rules of cap1t'.1hst
economy, when it determined that, on the basis of the prmc1ple,
mark equals mark, franc equals frans, everybody must be. con-
sidered as a profiteer and must be pumshe~ who _demands a h1gh~r
price than one based upon the purchasmg pnce plus profit rn
nominal money units.
( 35)
 In so doing the state protected the interests of the big capitalists,
especially of those in the heavy industries. The principle of
purchasing price plus profit in paper money units was not applicable
to the heavy industries and to the large industries combined in
trusts which conduct their own production from the raw material
to the finished product. These concerns immediately raised their
prices to correspond with and even exceed the depreciation of the
money. They profiteered systematically at the expense of the small
capitalists, the dealers and tradesmen, in that as a class these
capitalists bought all goods that they needed for production from
these strata, as well as all objects of private consumption, always
far below the price which the big capitalistic purveyors received
from these strata for the same goods. They profiteered indirectly
at the expense of these strata in that the system of selling below
the cost of reproduction made it possible for the capitalists to
pay very low wages, since the workers received the goods below
cost from the petty bourgeoisie. The capitalists sustained the.
proletariat in part at the expense of the petty bourgeoisie.1
In this way it was possible for the big capitalists to accumulate
capital through the expropriation of the fortunes of the middle
class. at a time when the accumulated wealth was not increasing, yes,
when even decreasing, and at the expense of the petty bourgeoisie.
It is no wonder, therefore, that capital in all countries sabotaged
the stabilisation of the exchange until the moment that the ex-
propriation of the petty bourgeoisie had been completed or the
change over to a calculation based upon the re-purchasing price
could. no longer be prevented.
This process at the same time meant a shifting in the position
of the various kinds of big capital. During the inflation period the
path toward getting rich was an easy one : take up credits,
invest the money in goods or in production, sell the goods at repro-
duction prices, but pay back the credits in nominal monetary units.
The heavy industries were best able to do this, while the banks, to
be sure, as debtors obtained great profits from the inflation, yet
at the same time also sustained losses as creditors, so that, as
compared with the heavy industries, they issued forth from the
inflation period in a weakened condition. The deciding influence
therefore passed from the banks over to the heavy industries.
Through the inflation the class antagonism between the petty
bourgeoisie and capital was objectively heightened greatly.
Unfortunately capital succeeded overwhelmingly;in diverting the
subjective dissatisfaction from itself to Nationalism and Anti-
Semitism. The Fascisti Movement, the movement of the ex-
propriated, impoverished petty bourgeoisie is apparently directed
1 The very fluctuations of exchange furnish the big capitalists, who are in

a position not only to foresee but even to cause them the possibility to rob the
uninitiated. A classical example for this is the support given to the French
franc in the spring of 1924, an action which brought tremendous profits to the
'initiated, but to the uninitiated-the whole Vienna and Berlin financial
world-the greatest possible losses.
( 36)
 " b t .
. " un roductive trade and banking capital, u .m
agai_nst. t~e p d" idin the proletariat and for avertmg
reality it is. a weapon for i~ Tlis movement is in many respects
the revolut10nary movemh en .. t ce of the social democracy as a
made unnecessary by t e ex1s en
counter-revolutio11:ary fa~tort .. • have already spoken of the
(3) !n a pr_evh1ous t c ~f e~h:epeasantry by means of the
1mpoveris men
(4) ;h~i~ff:~;;ve ag~inst the working class for the reduction of
its stan_dards of life. lt of the last three years is the offen-
The mo~t ir:iporj:.ant resu I th whole against those points
sive of cap1tahsm, ~ucc1ssfu ~~ ~ch durinO' the war capitalism
gained by the workmg c ass w11 t w. t and at"'the end of the war
bo1:1ght the supp1r of }h:h~r~~r~~:S: higher wages, eight-hour
quieted the rebe .ion o 11 throu hout Europe there has taken
day, works co1:1-nc1~s, &c. A d ds ~f life of the proletariat. In
r~~~i~ar=~~~~~ ~~o~~a~~:~s:lms to have succeeded in approxi-
mately holding its position. . .n part those of peaceful
The methods .
of the offensive were I
. l en military or fascist terror.
ecor o:nic confl:cts, m. phar~: so o~nornic confli'ct capital, profited
In connect10n w1~ . e ec de unions besides the sub·
by the weakened pos1t10~ of Jhe trr~tic and t;ade union leaders .
jective treason of the social emoc t workers at the time of the
(e.g., the open treas.on of the transpor ork of the English miners
English miners' strike;_ the b~ackl;gt;Ike &c) The British trade
at the time of the An~encan mmer~e~ loyme~t doles. The unions
unions had sp_ent th~ir fu?-ds ont utheirpfortunes through the infla-
in the co~n~nes of mflat10n los ll that thev were not even sufficient
tion ; their mcomes_were so s~a Under "'these circumstances the
for keeping up their appara us. . 1 fiO'ht-viz. to stick to
1
traditional methods 0~ th~. ~:d~a=~~~ arising to the capitalists
peaceful refusal.to wor u~ It" e b comes greater than the differ-
from ~he cessat10n of pro ~c l~~u ele is fought-were utterly in-
ence m wages for which t e s bfgto hold out in a peaceful fight
applicable. The workers we~e. aft~1 e The capitalists however,
without suppo~t fo~ but a nend ~0 ~el -knit employ~rs' federa-
organised in gigantic trhsts, a han/ in a peaceful economic
tions, absolutely held t e upper :flicts usually ended with the
st rugg1e. Thus the economic
. t d l dcon
to the reduction oft h e st and ards
defeat of the prolet~ia ~n e The workers lost faith in the trade
of living of ~he wor ng c as~~e tions (Hungary) the number of
unions. With_ bdut. few. ~ shows a great decrease during the
workers organise in un10
years 1921-24. . . h. h the proletariat attempted to resort
In the countries Ill "". IC .l°k ise ended with the defeat
to p:liticat arm~~ ~~~f;c~·.::se~~e i F:cisti, an organised, ar~e~
~~r~e e ~o~h:rs~apitalist class existing outside the state, w ic
( 37)
 'vanquis~ed_ the pn;iletariat ; in Bulgaria and Spain it was a
bourgeois d1cta~?rsh1p set 1:1-P,?Y an officers' rev:oit; in ~ermany it
w'.l's the fo:mer democratic government which-as m Bulgaria
with the_ aid of the social democracy-step by step became trans-
formed mto. a real, undiluted, military dictatorship, which com-
pelled the revolutionary proletariat to retreat.
'!~e result is everywhere a sharp decline in the actual standards
of hvmg of the proletariat. It would lead us too far afield to
produce figures: It is ~enerally kn_own that the real wages of the
German, Austrian, Italian, Hungarian proletariat to-~ay not more
than 60 to 70 per cent. of the pre-war period; that t1re eight-hour
day and the rights of the workers in the industrial concerns have
for the most part gone by the board.
In England and the states where the conflict was fought with
peaceful weapons, the democratic appearance was kept up.
There, too, the standard of life of the workers is much lower than
befor~ the war.. The special crisis of western Europe shows itself
here m. a verY: mte~es.ting man1:1er. The wages of the workers in the
export industries (mmmg, machmery construction, textile industry)
were forced down far more than those of workers in local industries
(building, tailoring, shoemaking). And even within the same
b!anch of :production, as f?r instance coal mining, there are big
d1ff~rer;tces m wages dependmg upon the districts. In addition the
cap1tahsts everywhere try to separate the wage scales, in that they
at~empt to force the wages of unskilled workers, of women and of
children down further in proportion to those of male skilled
workers, so as to divide the proletariat and weaken its ability to
strike a blow.
· Summ_ing. up, then, we can assert : the class antagonisms
hav~, ?bJectively, become aggravated during the last years;
subJe?tively, however. the onslaught of the proletarian, re-
volut10nary forces ~as been weakened. The working class move-
ment has. ~een gom15 through the trough of the revolutionary
wave : t!:11s IS also eVIdent from_ the successes of the social patriots.
Not until 1924 are the first s10-ns 0 of a new revolutionary wave
discernible. .

VIII.-THE CRISIS OF ECONOMIC POLICY

~hen we survey the economic policy of the capitalistic powers
during. re~ent yea!s, we find therce a reflection of the instability
of ?~p1tahsm d_urmg its period of decline. None of the great
pohtico-econom1c problems could thus far be solved. In most
cas~s bourgeois economic polic~ was not even able to adopt an
attitude, much less offer a solut10n. We shall try quite briefly to
sketch the most important problems.
. AUTA~CI!Y OR WoRLn-EcoNOMic INTERLOCKING
w~ have' ;epeatedly referred to the fact that the economic
developmen~ of the war period and in part also of the post-war
( 38)
 period tended in the direction of aut'.l'rchy, i.e., of the greatest
possible self-supplying with all necessaries on the part of each state.
This tendency was especially marked in. th~ developme~t !?f the
colonies, whic]i developed a powerful native m?ustry, while.m the
capitalistic countries. an improver:ient of agricultur~ ~ook place
(extension of the cultivated ar~as m England, the ra1sm~ of beet
sugar, the production of hemp m many European countries, &c.).
The bourgeoisie had to face the problem of whether to encourage
or hinder this development. . . .
The pr_oblem is most intimately. connected with a .Political
one-the possibility of new wars commg soon. The experiences _of
the last war have shown that modern war is not on~y a con~1ct
between two armies : people fight against people, busmess ag'.l'mst
business, technical skill against technical skill.. Therefore nat10nal
economy should be so built up that all the thmgs necess~ry for a .
war can be produced. at home. Thi~ is, of course, an u~op1a. Only
such gigantic countries as the U~1~~d ~tat~s or Russia ~an make
their arrangements with the poss1b1lity m view of su:pplymg them-
selves. But the preparation for future w~rs, the desire to produce
as many of the things necessary for ;yagmg w'.l'r. upon the horn~
soi1 as possible, is an important factor m the strivmg for autarchy ·
FREE TRADE OR PROTECTIVE TARIFF
Closely connected with the proble1!1 of se~f-supply or economic
interlocking is the question; protective tariff or free trade. We
_ shall deal with both simultaneously. .
Bourgeois economi? policy _has thus _far found no umfied answer
to this question. But. m prac~1~e. there is a st:ong tendency toward
encouraging the declme of d1v1s10n of work m world economy by
positive measure. . . . . .
In the United States a policy tendmg m the directio~ of auta:rchy
has thus far held the upper hand. The protective tariff _(McKinley
bill) came into force in the autumn of 1922. In the sprmg of 1~24
the President made use of his right to increase the .already high
tariffs still further at his own discretion, in that he mcreased the
dury on wheat 40 per cent. That importation was not prevent~d
by the high. duty is explained by the fact that there was a ~1g
boom and that the dollar was estimated abroa? at _more.than its
real value. The " American " tendency has likewise ~rmmphed
thus far in the question of taking part in the solution of the
Reparations Question. . . .
Almost all European states try to develop their. native m.dus-
tries through protective tariffs, embar~oes, subve.nt10ns, &c., a_nd
to aim as far as possible at .self-sufficiency. Ditto the English
colonies and the independent extra-European s_tates. . .
The situation of the Western European mdustrial countries
is much more complicated. There ca_n be n~ questiofol of.autarchy
on their own soil, although there is contmued ag1tat10n f~r a
"back-to-the-farm" movement. They attempt to achieve
{39)
 autarchy by including their Colonies in the scheme. In this con-
nection France has. the advant3:ge that there is no industry de-
developed as yet m her Colomes and that there is no native
bourgeoisie. France can therefore attempt without hindrance to
build_ up its ." .100 million country" on the principle of self-
~ufficiency, and it i:ttempts to do this by creating a tariff area that
mcludes the colomes, and by adopting special politico-economic
measures. From a military point of view this " Greater France "
su~e:s from the dear~h of petroleum. It is trying to secure this by
political and economic penetration of Poland and Roumania.
The problem of Great Britain is a more difficult one. The
Briti~h Impe:i::iI Conference of 1923 was an abortive attempt at
creatmg a British world empire that was sufficient unto itself and
that constituted a si;i~Ie_ customs ar~a. The plan came to naught
because the _bourgeoisie m the Colomes was unwilling to renounce
custom~ .duties against English industry, and to be relegated to
the posit10n of merely supplying foodstuffs and raw materials. The
plan .further came to na_ught owing to the circumstances that the
creation of a customs umon would only then have been worth while
for the Colonies · if fo:eign articles .of food, coming from placei;
other than the Colomes, had been loaded down with tariffs-a
thing that nobocfy dared expect of the English consumers. The
def~at . of the Conservatives put ail end to even the meagre
begmi:mgs of a protective tariff policy decided upon by the
Imperial Conference. The plan for the creation of a self-sufficient
B:itish world empire .has failed for the present: England will
~tick to _free .trade, whrle tJ:ie Colonies are heading more and more
m the direction of protective tariffs.
· T~e interests of the. bourg~oisie are contradictory in this
9uest:on. As purveyor of mdustrial products they have an interest
m bei;ng permitted_ to import i;ito another ci;mntry free of duty.
As export_ers of capital, who desire to produce m the Colonies or in
~ny foreign c~untry for the market the~e, they are interested
m c_ustoms dut~e~. In another respect the mterests of the colonial
natiye bourgeo~s1e are ?ontradictory. As a native bourgeoisie they
are mt~r~sted m fightmg f?reign, expl_oiting imperialism ; as a
bourgeoisie. beset by a native proletariat that is awakening to
class coi::s.c10usness they a_re dependent _upon the aid of the foreign
~ourge.msie, who are their natural alhes. Hence the contradic-
tions m the " national " movement in India, and in similar
colonial states. ·

RUSSIAN RELATIONS
The bourgeiosie was likewise unable to solve the Russian
problem. After the '.1ttempts to dethrone proletarian rule by
force of arms had failed ; the united bourgeoisie attempted at
Genoa and the H_ague to win out by diplomacy. Likewise without
s_uccess. The umted front of the bourgeoisie broke ,down in due
trme ; although the European bourgeoisie feared connection with
( 40)
the bolsheviki for inner-political reasons, the W ~st~r~ Europ~an
commercial crisis compelled it to comes to terms md1v1duall)'." with
Russia and to make economic arrangement~. '!h~ aggrav3:t10n of
international antagonism comp~ls the ~ap1t::l~stic countries one
after the other to recognise Soviet Russia politically also. . .
But that is not a solution of the problem. The bourgeoisie
cannot attain an honest relationship with th~ workers' state.
While for political reasons it proclaims.' especially th~ough tJ:ie
mouths ·of social democrats, that commumsm is at an end m Russia,
that capitalism has been_ re-established ther~, it proves the v~ry
opposite by its reo?erve with referen?e to the ii: vestment of _capital
and credits. It is utterly unable, either by fair meai::s or fo\11, to
make Russia a part of the capitalist system. Russia. remams a
thorn in the flesh. The growing prosperity of th~ Russiai:: people,
the raising of the standards of life of the Russian workmg cl::iss
has stronger influence with the oppressed Europea~ proletariat
than all agitation. Thus the Russian problem remams unsolved
despite recognition until it s~all have been solv:ed by the ~eneral
extension of the dictatorship of the pro~etaria!: In this con-
nection a new attempt at armed intervent10n on the. r3:r~ of the
capitalistic powers is entirely within the realm of poss1bihties.
INFLATION, DEFLATION OR STABILIZATION
The bourgeoisie has not succeeded in solving the probl~m. ~f
exchange. Yes, the view concerning the method of solvmg it
are in sharp .contrast to each other. . . .
After the conclusion of the war the opm10n prevailed that the
exchanges were to be brought back to the gold standi:rd b;r
energetic deflation. England made successful att~mpts m. t~1s
direction and had already approached gold parity to with1;i
3 to 4 per cent. But the heavy industries of Englal!-d opposed this
policy more and more, and openly or half-furtively def~nded
inflation. (See the celebrated memorandum o~ ~he Federaho~ of
British Industries, &c. ). In point of fact !he. British exc~ange smce
then evinces a falling tendency. Infiatiomst .tendencies are also
conflicting very much with the efforts at securmg ~ good_ fran?.
In the previous chapter we showed t~e mechamsm of m_fiat_10n,
-how it expropriates the middle classes m fav?ur of t~e cap1tahst~,
and how it compels certain strata that prev10u~ly hved on. their
incomes (interest, profit) to go to work. Inflation automahc3:lly
forced wages down. It practically means freedom from t'.1~at10n
for the ruling classes, in that directtaxe~ are reduced !o _a m1mm1:m
through the delays in fixing and col~e~tmg th~m. T~1s IS of spe?1::il
advantage to the industrial bourgemsie .. The mdustrial bourgeo1s1e
of the countries having inflation are gwen a grea~, even tho1:gh
temporary, advantage in the struggle for conquermg the fore1_gn
markets. It is therefore but natural that there are_ strong m-
flationistic tendencies in every country ; th::t even m England
there is hardly any talk of regaining the nommal gold standard ;
( 41)
tha~ in the best case stabilisation is attempted only upon a very low
basis (Germany, Poland). ·
THE REPARATIONS PROBLEM
The most diffic;u!t _Politico-.economic problem with which the
Eu:o~ean b~urgeo~s1e is wrestlmg is the question of Reparations.
I~ is impossible within the space of this brochure to trace the
history of the complicated Reparations negotiations. We must
assume that the r~ader is familiar with them. We shall merely try
to. ~how the relation ~f the Reparations Question to the general
cr1s1~ of_ the European mdust:ry and to the contraditorv methods of
solvmg1t. •
The original i~ea w3:s this: Ge~many was to restore all damage
done to. the Alhes, without takmg into consideration whether
~er~an mdustry can bear such burden and whether under capital-
1s~ circumstanc~s the_ tra~sfer of such huge sums was possible
without somethmg bemg given or done in exchano-e.
The result of thi~ system is well-known, Ger~any, which was
to I?ay the reparat10ns bills in foreign exchange, had to buv
f?re1gn money at every price .. As long as there were people out-
side of Germany who believed m t?e economic future of Germany,
and therefore....purchased marks with the hope of seeing them rise
la~er, the pla~ was somehow kept in operation. When, however,
with th~ contmued catastrophic depreciation of the mark the
sale of it was made impossible abroad, when the marks already
sold_ abroad began to pour back, the impossibility of this method of
paymg ~eparati?ns became evident. Germany had to plead for a
mor~tormm, wfoch was partly granted in 1922. The correct con-
c~us10n 'Yas ar~1ved at that Germany could pay reparations
dire_ctly m foreign ex.change o~l;Y if she exported more than
durmg the pre-war period (10 m1ll1ards of goldmarks p~r annum).
If the attempt were made, ho':"ever, to compel Germany to
conduct such enormous export, this would mean fatal competition
~pon the world's markets for the industrial countries of Europe-
m a market that without this was already unable to absorb the
products of Western Europe. In other words, unemployment in
England would be aggravated and perpetuated.
The . problem became still more complicated through the
antagomsms between France and Eno-land that were becoming
constantly aggravated in t~eir struggl~ for power. The strugglt:
ass~med more and more this form: to the sphere of influence ·of
which of ~he three imperialistic Great Powers-France, England,
or ~he Umt~d States-was the country which had become impotent
of itself, viz., Germany, to be attached ? To put it in slogan
form : whose colony was Germany to become ?I It was out of the
. -~ When in t~s connection we speak of a colony, we naturally do not think
of it i~ the sense m which Marx used the term : not a country that supplies raw
materials and boug_ht industrial products. Germany could be made into such a
country only then if, as Clemenceau desired, it were to lose twenty millions of
( 42)
question for France with its limited population and its dearth -of
capital to rule over all of Germany. Th~ F~ench plan, t~erefore,
was : to occupy the Rhine and Ruhr territories and to umte these
with French industry; to separate southern Germany from
north~rn Germany ; and then to lord it politically over a Germany
thus divided up.
England had no real interest in adding Germany to her sph~re,
for the re-construction of Germany would mean the resurrect10n
of the most dangerous rival of Grea~ Britain upon the world's
markets just as before the war. The victory of the war would thus
be nullifled for England. On the other hand; the solution attempted
by France was politically and e??nom1cally unacceptable . for
England. Politically, because the military_ ~ower of France hereby
would have become still greater, her pos1t10n of hegemony_ upon
the European continent st~ll mor~ confirmed. . Economically,
because the union of the entire contmental heavy mdustry would
have meant an unbearable threat to English heavy industry.
The only country that could diges! ~ermany economical~y
is the United States. The United States is the only country m
which in times of favourable business there is a dearth of in-
dustrial workers. Until the world war the United States made up
this dearth by extended immigration. At present, ho:wever,
Anerican public opinion decidedly favours the preven~1~n of
further immigration, partly out of ~ear <;>f the commumstically
infested immigrants, partly out of nationalism, out of fear. that ~he
English character of th~ country ~ay. be lost through mtens1ve
immigration ; socially, m that capitalism by_ the embargo upon
immigration .purchases the support of the a1'.stocracy. of labour.
The " colonisation " of Germany by American capital would
therefore mean that the workers who were lacking in boom
periods would not have to em!grate to America, but would be p~t
to work in Germany for America ; and that the cheap wages paid
to German workers would be used to force down American wages.
Meanwhile, however, partly on account of th~ business boom, the
enthusiasm for meddling with European affaus was not yet very
great. In fact, in the three countries, France, England and the
United States, very different interests are ·?ppo~ed to each other
on the Reparations issue and make a solut10n difficult.
The struggle for power between France and England prevented
the success of all Reparations Conferences held until t~e end of
1922. At the beginning of 1923, there came the occupation of the
Ruhr. As one surveys the period historically one can _assert that
the occupation of the Ruhr was prov:oked by Engl:;ind m the 1:ope
of involvino- France and Germany m an economic and possibly
even in a rrrilitary conflict, and thereby to tie the hands of France,
its inhabitants. But one can also speak of a colony in another sense: haml".ly,
of a country that is economically controlled an_d exploited by othe~ countries.
This will actually be the case with Germany if the recommendat10ns of the
Experts are carried out. ·
( 43)
 which "'.as getting more dangerous all the time and to weaken it
militarily and economically. We therefore n'ote that Engla~d
with~raws after. the oc?11'patiori of the Ruhr has taken place, and
that it contents 1tselfav:1th strengthening t~e ba~kbone of Germany
secretlJ: and ope;nly ':through utterances m which the legality of
o~cupymg the Ruhr is_ challenged. The English plan was crowned
with success,: 1'o he~U.re; Germany could not in the long run with-
stand a France , armed ,to the teeth. Passive resistance was
abandoned and . the, big industrialists of the Ruhr Valley were
compelled to .. sign the " Micum " agreements and to undertake
enormous deliyeries to France. But France was weakened very
much economically by the struggle and the catastrophical drop
of th~ franc ;.compelled France to :;i-ccept the help of English-
Amencan cap1~al and-,---at least seemmgly-to agree to a solution
of the Reparat10ns problem such as is outlined in the Report of the
Experts. · ___
Before we _deal with the latter, let us point out that there has
always .b~en. agreement betwee~ t~e French .and the English
!JOurgeo1s1e ,_111 _one respect : VIZ., Ill the behef that German
mdustry, thanlfs to inflation, .bY: which the state itself and industry
were cleared, of t~eir debts, ~s m a much better position than its
. I French and English competitors. Lloyd Georae said this quite
cle~~ly in his s~eech in _Parliament on August 3,5 1922 : -

! . G:ermany .1s. suffermg from the world crisis. This is not the
!1ght ~rme for estimating her full capacity. Let us suppose that it
i is estimated too fow___;_at £1,000 or £1,500. What will happen?
: Germany has actually got rid of her internal debts. The collapse
of the n:;i.ar~ may really ha ye had dire consequences for Germany's
economic life. But there is no doubt but that she got rid of her
state debts . . . _ Germany would then be in this position · She
would have n? internal debt and only £1,000 to £1,500 f~reign
debts; not a smgle factory dan:aged, som~ ~fthem newly equipped
. . . . . Germany has a populat10n of 60 millions, of able and highly
q_uahfied workers. A - time of recovery will come. When this
t~me coi;nes; JYe.shall h'.'Lve a well equipped Germany with a popula-
t10n of 60 millions; w:1thout any state. debts, with a foreign debt
that was.fixed when times were exceedmgly bad-and an England
loaded down with - .£7,000 million internal and £1 000 million
foreign·d_e~ts; lfh~ch would have to enter into competition ~ith
two grea;t mdustrial powers, her industrial rivals."-(The Times
London, August 4.). _ '
T.he same .train of thoug:ht is foun~ in Poincare's reply to the
English proposal at the Pans Reparat10ns Conference at the close
of 1922 .---:--
" At present Germany has no foreign debt whatever ; as a
resu!t_ of the collapse of the mark she has proportionally reduced
her m.te:rnal debts, so that these would not exceed a few milliards
of gold m;:trks and at the next collapse of the German exchange
woul drop to zero. If Germany were then faced by but a single
( 44)
debt, its Reparations obligation, and if this w~re to be red~ced ~o (I
about 20 milliards through the system of discounts outlmed m
the British plan-a debt that could be amortised in about fifteen
years -~nd that amounts to less than one-third of the French
national debt-Germany would after a few ye'.l'rs _be. the oi;ily
country in Europe that 1:ad ~ot a foreig~ deb~ ; wit~ its mcreasmg
ponulation its industries mtact-wh1ch mdustnes would not
ce~se to profit by the excep~ional si~uation-with its untouched
reservoirs of coal wood and mtrates, 1t would become the master of
Europe as comp~red with a France the population of which would
be half as large and that would continually have to bear the burden
of reconstructing the devastated areas.
" The German hegemony over Europe, which the War was to
destroy, would be re-established and strengthened through the
Allies." .
This thought is repeated again and again. by the. English
capitalists who point out that they must figure m the high taxes
that abov~ all are necessary for paying the interest on state debt~,
in calculating their production costs, while their German competi-
tors have to pay very low. taxe~ because the. state debts have
been wiped out through the mflat10n. The English and French are
agree that the taxes to be paid by C?-erman producers must under
no circumstances be lower than their own, so that they may not
be at a disadvantage over against their competitors.

THE REPORT OF THE COMMISSION OF EXPERTS

The above are the economic and world-political circumstances

-under which the unanimous report of the Commission of Expe~ts
was framed. \Ve shall now attempt to bring ou~ the n:;i.<;>st es~ential
parts of it, whereby we assume that the reader is fam1_har "'.1th the
report itself. The fo1lowing seem to us to be t~e essential pomts : -
Repar_ations Payments to be made onl'!! .with stable exchange.-
The Experts' Commission takes the po_s1t10n that Germany ca:i
make regular reparations payments o:'-113'.' if the German e:i::change is
stable, since in the event of a deprec1atmg exchange the mcome of
the state automatically shrinks so much that payments. become
an impossibility. The stability of the Ger~an ex?hal!ge is there-
fore to be guaranteed despite the Reparat10ns dehvenes. .
. Reparations Payments in Gerr;ian Excha1:ge.-From the above it
follows logically that Germany s ~eparat10ns payments-except-
ing those in kind-are to be made m .German exchange_ only. The
prescribed payments are to be deposited by. G~rm~ny m Germa~
money to the credit of the Reparat10ns Com~1ss10n m the new bank
of issue that is to be erected, the Reparat10ns bank. After the
stipulated sum has been <lep.osited, Ger1!1any has ful?-lled her
obligations ; it ~s ul? to the ~lhes to see to it how they will get the
Reparati:ons dehvenes made m German money <;>u~ of the c?untry.
This is to be the business of the Entente Comm1ss1on that IS to be
- ( 45)
 appointed. The old question arises : in what naluraJ form can
Germany make its reparations deliveries, or, what payments in
kind can be accepted as reparations payments by the Allies without
heavy damage to the industries of France, England and the rest of
the capitalistic world? The experts' report, of course, dG-es not solve
this problem, since this problem is by its very nature unsolvable.
Provision has been made that the payments of Germany may be
accumulated in money up to two milliards of goldmarks. The
sums that exceed two milliards are to be invested in German
bonds, the maximum being five milliards of gold marks. Jn case
it should develop that no form can be devised by which the
Reparations payments can be taken over, then Germany's pay-
ments are to be reduced until such time as the Allies are able to
manage the transfer to foreign countries.
The Experts' Report condemns all plans by which the Repara-
tions problem was to be solved at one blow by an internaliona] loan
of milliards of marks ; e.g., the proposal of the Cuno government
for a loan of 20 milliard gold marks. The whole idea that by
America's broadmindedly placing at Germany's disposal the riches
heaped up in America, and in part not put to use the tremendous
gold reserves of the Federal REServe Bank, the Reparations
problem could be solved and with it at the same time a prime
reason for the crisis be removed, has vanished into thin air. The
Experts' Report provides for one single, modest loan of 800 million
gold marks, to be used for meeting the payments of the first
year.
From a world-political point of view the proposed solution means
the defeat of France's policy of might, and a victory for England.
The policy of France which _aimed at the final separation of the
Rhine and Ruhr regions from Germany, separatism in Bavaria
and the secession of southern Germany from northern Germany,
the division of Germany in this manner into three or ·four parts,
may be looked upon· as having failed. The report demands that
. Germany form a unified economic whole. The solution at the same
time· prevents the union of continental iron and coal in the hands
of France, a thing that is of the greatest importance for France's
economic and political position toward England.
Germany becomes an International Colony.-The Experts' Report
provides for a strict and systematic control of Germany by the
Allies. In carrying out the measures provided for, German industry
is put under Entente control. This control will extend to the rail-
ways, to the finances of the country, to the whole monetary policy
through the control of the central bank of issue that is to be
established, with which all existing banks of issue are to be merged,
and to the German taxes, the size of which is to be prescribed by the
Allies.
Payments and Germany's Capacity to Pay.-The Report
provides for the following payments : -
( 46)
 1,000 million gold marks.
1st year
2nd .. 1,220
" ",, "
3rd " 1,200
" "
4th " 1,750
" ':-
--5th " 2,500
" " "
"
Total for the first five
years . . 7,670 ,, ,, ,,

Of this sum, as is known, 800 millions are to be realised by

1 th t for the first five years, payments of less than seven
~i~lt~;l~olda marks are provided for. From ~h~ fifth lear, -i~e
a ents are to amount annually to 2,500 m1ll~ons an poss1 y
~v~more. For, a prosperity index has heen provide~ for, made up
of different. rather heterogeneo~s elements (railway traffic,
lation ~x ort trade consumption of tobacco, budget expen~es,
popdu · ' tl?on of coa,l) If these factors, calculated accordmg
an consump I · · h · th
to a certain system (the means of percentually c angmg ese
six factors) later show a raising beyond the st:;indard of 1926-29,
the obligati~ns of Germany are to raised accordmgly. .
The Report provides from which sources the Repc:ratwns are
to be secured : in other ""111'.ords, several forms of mcome are
se uestered for the Reparations payments.
q (1) The railways have ridded themselves through the dq~r\
ciation of the money of all their debts ; they repre~nt-: ~ap1tat
account of 26 milliard gold marks. B~fore the war t ey a a n~
income of 600 million gold marks, which sum,_ figur~t at to-d~;y 5
mone values means about 1,000 gold marks, rn whic con~ec ion
it is ~m hasized, however, that during t4.e. pre-war period. the
G~rman ~ailways were not looked upon as profitable enterprises,
b t above all as means for the economic development of Germany.
I;the olic overning rates and fares is direct~d :;ibove. all tow~rd
the rerlisatlo~ of the highest possible income, It IS e~s1ly p~SSl:~e
11 to gain 600 million gold marks out of the railways rn e
~nnu~f~nterest on bonds and on the amortisation of t~ese bonds ;
a1~~ to gain 290 millions ,a:~mually in the form of railway trans-
ortation taxes for Reparations purposes. . .
p (2 ) German industry has likewise unburdened itself of its debts
throu h the depreciation of the German money .. I~ can, therefore,
take !pon itself a Reparations payment of five millions. gol~ m~rk:,
which at 5 per cent interest, and 1 per cent. amor~~~~,1~n is o
ield 300 million gold marks annually. · ,- · · .
y (3) In the Versailles Treaty it is stipulated th~t taxes i:i
German· shall not be lower than in the Entente countries. O:r: this
basis it 1s estimated that until 1928-29 Ge~many _can pro~essr~ly
d r 1 250 million gold marks from its ordrnary bu ge or
;e~:~:ti~ns purposes. To secure these deliveries, the income from
duties u on tobacco, beer, alcoho_l and sugar, as well as the customs
are to le paid into the reparations account of the new bank of
( 47)
 issue (the Reparations Bank). If these taxes and customs duties
yield more than has been estimated, the surplus will be placed at
the disposal of the Reich.
Two questions present themselves in this connection :-
(1) Can the sums here estimated be taken out of the proceeds of
German business and industry, out of the annual production of a
Germany diminished in size ?
As far as the first five years are concerned, this question can
be. answered in the affirmative. In our opinion these sums can be
realised because of the disappearance of the state debt and the
reduction of military expenses, provided, however, that the
political control of the bourgeoisie is a firm one and that the
productive processes are not disturbed by heavy social conflicts-
a pre-supposition that will hardly obtain. As far as concerns the
full payments after five years, however, we must doubt whether
German industry can stand the withdrawal of such sums. However,
considering the extremely uncertain condition of capitalism very
little that is definite can be said about what will happen five
years from now !
(2) Can a form of delivery in kind be found that will make it
possible to export out of Germany the payments provided for ?
For the first five years thi" question can be answered in the
affirmative, for when: we substract the deliveries of coal and coke
which France is not only glad to accept, but which she absolutely
needs for· her economic life, there will remain only a relatively
small balance that must be exported either as exchange or in the
form of goods. This balance can, it seems, be taken care of through
the sale of German goods in the world's markets, unless a heavy
and acute economic crisis crosses these plans. A different situation
will arise when after five years the payments are to be made in
their full sums. Annual payments of 2i milliard gold marks can be
made only if Germany's export of goods exceeds that of pre-war
times by many milliards. We say "by many milliards" because
Germany cannot merely export goods, the . raw and auxiliary
materials for which are to be found in Germany, but she must
naturally also import raw and auxiliary materials from abroad. So
extensive an export of German goods would, however, lead to
grave disadvantages for French and English industry, con-
sidering the present limited capacity of the world market to absorb
goods, and considering the continuous inability, in our opinion, of
· all of Western Europe to produce at full industrial capacity because
of the want of markets. We are therefore of the opinion that the
full payments demanded can neither be supplied by Germany nor
accepted by the Entente.

THE MEANING OF THE EXPERTS' REPORT : HOLDING DOWN

. GERMAN INDUSTRY .
The Report was unanimously adopted by the experts. As we
may assume with certainty that the experts acted in agreement
( .48)
 th" merely. means that the Entente
with their go!ern~~~~ten~~ bourgeoisi~, considers the solution
governments, i.~., Q t" bmitted to be correct. The
of the Reparations u.e~ mn ~s su be in art election
1
difficultjes th~t.Pio~c:~~e~c~~s~~g:~ ~1fn!o :; i~e oth~rs, so as to
manceuvres, in.pa of t h e m
compel a solution .Pter-a ll'ed
i
debt question that shall be
favourable for France. . f th ort? In our
Then what is the economic meanmg o e rep .
opinion it the followin~ .=- Ii
is that it is impossible to secure
The Entente bourge01s1e rea ses . h sums as were
. nts from Germany m sue . . .
Reparations _Payme · . It' t ms The Entente bourgeo1s1e
provided for m t?e various u Im~ u r~tions but at the price of
must choose =. _e1ther to sec:~e u e6: the w~rld market, and as. a
sharp compeht10n byt~ermf
ence deprec1a 10n o tyhe !ark social unrest, dictatotsh1p
' · t. f the
consequ , 1 t . t · 1 Germany contmua 10n o
of the right or of the prote _an~ n land and' later after re-con-
crisis and unemployment ~n I ngin France . or else to renounce
structio~ has. been comple e '. ~e~ofor but in ;eturn to have decisi~e
Reparations m the sums proVl G rma~ industry and to exploit it in
influence upon the processe~~h be h ld down as an industrial rival.
such
I a way that Gerrr;any s Ra er {ions but no resurrection of
th words . iewer epa a ' k t f the
n o er . . .t th t . dangerous in the mar e s o
Germany as a comp;~eorort ~e~ns that the Entente bourgeoisie has
world. The Experts l t .P When we take this for granted, the
accepted theoflatter
provisions so ution.
the repor , some of w hich seem queer ' become under-
standable. h .1 sand the control of the German
The mortgage up~n t e ra1 way er rates of German railways
railways means.= ~reig~t a~~:~~e:; industry may be prevente~
must be kept ~ng ' so ta . ce times by cheap rates and.
from encouragmg expo~ ' as m pea ' .
exceptional e:xp<;>rtd tariff~. on German industry means that
The five-m1lliar mor gage . d are increased accord-
the costs o~ pr~du~ion t ~i?a,~r~~: ~:p~~i? have declined to lay
0

i1{tY· t It J! ~~~1 a;fculture as Cuno himself had suggested at

~n~~i~e~ F:r them it was important only to impose burdens upon
induTshtry. t 1 of the bank of issue means that the
e con ro . . . .
di~count
polihcy
'll b determmed by t e
of the central ~a;nkmg mstitui10n s"7z~ ofe the credits extended
Entente bourgeo1s1e andththat te h~f interest will be determined
to ind~stry, ~ welld as ft;e ~~ench and Enghsh bourgeoisis; s~ as
~cc~rdmgrt~~e e:e~:l~p~ent of German industry through Jjm1ta·
? ampe . d th h high interest rates.
hon of c~ed1ts an rfoufig ·ir ds of gold marks in German
The mvestment o ve mi iar · · which alreadv
securities means that the ~i;itente s~~~;;ei~s~~rman industri~l
possesses consid~rab~e quant~hels of the most important branches
undertakings, gams direct con ro over
( 49) D
 of German industry Th" . . . .
Rep~rations Commis~ion s~o:i~ufdt espe?ially be the case if the
provided for. . : . a er undertake to raise the sum
Altogether this means that Ger .
under the control of the Enten:::a::y is to?~ placed economically
above all, to reduce Germa ' . ou~geo1sie. This control is
~ degr_ee that is bearable fo~~:a~ndustnal ability to compete t~
and mdustry is not to b c~ and England ; on the other
Redarations burdens as to b~i;; a~~1;hted down with over-large
an the danger of a nationalisti u a ne'Y collapse of the mark
Germany is to be treat d r c or proletarian dictatorshi
to be pe:mitted to live, but ~ot ~keb a valuable draught-hors!; it is
proletariat is to be enslaved tho ecome dangerous .. The German
wage~, so as to furnish a good e~~ugh long hours of work and low
~educm&' ~3:ges and lengthening t~1 to thefEntente countries for
_ou:geo1s1e is to be given the . b ours_ ~ work. The German
s1gm~~ant that the Entente ~i of ~:X:plo1tmg the workers. It is
us re::hsed only so much is t
::f
~~ ra1sm&' the taxes on articles geo1sie e:m_phasises the necessity
co:r:sumpt10n. But of the sums
com:petitor of the Entente ~orema1~ _as not to raise a dangerous
contmues to be a difficult one o~rgeolS1e, the position of which
;restern European capitalism Thuaccount o~ the special crisis of
o overcome the crisis th;o ah s we se_e, mstead of an attempt
endeavour to hold do u.,,_ extens10n of the market th
dd t d . wn economically th ' e
ea e m the war, to lessen _e_opponent who has been
development of capitalism by po{~!Il)etition, and to hinder the
The problem of the inter-allied I ~ca means.
b! th~ English-American agreem":~ deb~~ashonlyyartially solved
ev~n o~ England, whose state fi . u t ere is evidence that
qmte d_ifficult to fulfil obli at· nances ~re well founded, it is
economists are of the . . g IOns of this sort and " -- .
h f op1mon that the t ' r.uuencan
arm u1 to the United States.1 accep ance of these sums is
The essence of the . . ·
are these debts to be 9-uest10n Is this : in what form of
t~e fact that the marife~ t~~~~celt~ by the creditor ? Inpv~~~~;
1

t r?ugh the war the acce tanc:~s n products ?as become smaller
delivery.. Hence there ifa stron often more d1sas~rous than their ,..
~rade capital circles, which favou~s t:~dency, esp~c1ally in English
c ebts. . But the industrialists fear th\c~~cellation of inter-allied
o:m_p~titor may be reduced and h" ~. ereby the taxes of the
Their mterests would be best s is ~b1hty to compete heightened
were indeed collected, but if t~ved I~the ~ebts or interest thereon:
were somehow to disa ear f e goo s with which they are aid
?r "~hrown into a ho~~' as R~the world ;market-either bufned
~~o~~nd. ~hhus the. ~ourgeoisie 1:abr~: I~ c~~cehrning deliveries
em w1 out arnvmg at a solut.lOll. n,,, I ead over this

1
See Varga : Th p · ·
e enod of Decline, page 52 .
{ 50)
 EMIGRATION, IMMIGRATION, MALTHUSIANISM
Just as in economic policy, so also in the policy regarding popu-
lation there is real chaos. The French bourgeoisie is complaining
of the standstill of population without finding a way out. The
English bourgeoisie has already abandoned the hope of supporting
the gigantic army of unemployed and the young generation of coming
workers on industrial labour within their own country. Hence the
continuous agitation for regulated emigration into the colonies and
for the limitation of population. Malthusia11ism, which during the
ascendency of capitalism seemed disposed of, is being resurrected
in England.1 "'~
The question is even more complicated in the United States.
Immigration was recently limited for every country to 2 per cent.
of the number from that country living in the United States in 1890.
This means that the possibilities for persons from southern and
eastern Europ€ are restricted to a mere fraction, while northern
Europeans-Englishmen, Scandinavians, and Germans-are
afforded greater possibilities. This policy seems to be in crass
contradiction to the interests of the capitalists as employers. As a
matter of fact, this policy is the result of conflicting interests. It
means above all that the semi-fascist aristocracy of labour under
the leadership of Gompers, the still more fascist American Legion,
and the wholly fascist-nationalist Ku-Klux-Klan have agreed with
the capitalists to keep away from America the cheap foreign labour
that is not interested in American nationalism, but is difficult to
assimilate .and is imbued with revolutionary theories. Through
the bar upon immigration the American bourgeoisie purchases the
support of the aristocracy of labour in the fight against a revolu-
tionary movement.
But while this policy seems calculated to retard the revolu-
tionary movement in the United States, it works in the very
opposite way in Europe. It compels the energetic and dissatisfied
elements, which previously solved the problem of their well-being
individually by emigration, to remain in Europe and to solve their
. problem through collective methods, i.e., through taking part in the
revolutionary movement. The restriction of immigration stops
up a safety valve that is quite necessary for the European
bourgeoisie ! ·
Thus, in the question of population, too, we note th.e same
uncertainty, the same helplessness as in all the other politico-
economic problems.
IX. THE PERSPECTIVE OF DEVELOPMENT
From the argument developed thus far the reader will see that
we stick to the opinion held thus far : the period of decline of
· 1 See, for instance, The Problem of Population, by H. Cox, Editor of the

Edinburgh Review, 1922. The advantages by which England was thus far able to
support a dense and growing population have disappeared, he contends, and will
never retmn (pp. 38-39). Keynes, too, subscribes to this Malthusianism.
( 51)
 capitalism continues. This does not mean that single sections of
the earth, which were only recently encompassed within capitalism,
will not pass through a strong economic ascendency on a capital-
istic basis. Nor does it mean that there can be no more business
booms for. Europe.
It does mean, however, that capitalism as a whole is proceeding
along a downward curve. Considered in big periods, the total
of production is decreasing, the crises last long and are intensive,
the periods of boom are of short duration and not big. Unity of
capitalistic world economy _is not achieved of late : industrial
cycles cross each other's paths, the i:p.terlocking of world-economic
interests becomes less and less. The position of western Europe,
especially, remains shaken, the condition of crisis continues almost
permanently because of the tendency toward decreasing the division
of world work. The end of the reconstruction period in France and
the resumption of production in Germany after the stabilisation
of the mark and after the solution of the Reparations problem will
aggravate this crisis. Heavy internal class struggles forthe division
of what has been produced and wars to hinder the opponent
forcibly from competing, characterise this period.
The immediate future is characterised by the ending of the
American boom, increased competition of America on the world
markets, and a crisis in Europe that may be expected soon.
It cannot be decided purely from an economic standpoint
whether the end of the period of decline will mean the collapse of
capitalism or the construction of a new world-economic equili-
brium, a new entrenchment of capitalism. In our " Crisis " three
years ago we pointed out that within capitalism there are
" imminent tendencies " for regaining the equilibrium and that
conscious efforts are under way for overcoming the crisis. Un-
questionably the last three, years have witnessed the. social en-
trenchment of capitalism. We recall the words of Lenin which we
cited in the first chapter : " There is no sitiiation for which there is
absolutely no way out for the bourgeoisie." Whether capitalism will
work its way out.of the period of decline or whether it will collapse
depends decisively ~upon the attitude and actions of the
proletariat.
* * * * .*
It goes without saying that the question of the future of
capitalist economy is much discussed to-day. The general opinion
·is a more optimistic one than we hold. The capitalists are always
inclined to look ·upon the present course of business as a permanent
thing. It would lead too far to disprove all opposing theories. We
shall cull a few representative opinions.
Hilferding's Optimism.-That the Social-Democrats look
optimistically upon the future of capitalism is the logical conse-
quence of their whole political attitude, their treaty with the
bourgeoisie and their enmity toward a proletarian revolution.
For, they can temporarily keep the workers away from the revolu-
( 52)
 "f the romise them a betterme~t
tionary moy~ment rlfy t 1 withi: the capitalist system. That lS
of their condition fort f ~t~h ssume that in the near future
possible_, however' on y 1 tr:Kd aof ca italism. . .
there will be a n_ew up~ardth . . n opf Hilferding, the recogmsed
· ] we cite e opm10
As an-examp ~'. the Second International :1 .
economic theore~1c~an o~ . d t that the economic crisis has m
" Ev:en now it is quite ev10~~ can also discern that the re-
the ~am been overl~me.duction will not, as there was reas~n to
estabhshmei:t of wor r~e on a narrower scale, but on a ~1de;.
fear for a time, take p ~the reconstitution of politic:'ll secun~y m
As soon as the p~oblem? and in China is solved, a big boom is to
central Europe, m Russ1t, l'k ly which boom will fully employ
be expected as. extreme y \ ta~e meanwhile been developed."
all the productive ~orces tha 1 f for his interpretation, unless
Hilferding furmshes no rea proo f . 2
we take the following se~~ences a:ifer~~oductive forces have grown
" During and after e wa; as not uniform-above all
tremendously. T~is expansi~nin;eased that were necessary for
those branches of mdustryhwer_ . of raw materials in the widest
the conduct of the war : tde rt~lSlng d workmanship on metals,
extent poss1'ble, the proh; uc. rnn. an . havmg
while the industries . to
the chemical industry, s ippmg ' t. in so far as they were
do with the means of cm:;i.s~mfa rn~d behind. This dispro-
not necessary for the arm1e 'f 1te world crisis. But in the
portion is ?ne of the r~aso~; p~~ductive capacity means, after
last analysis the extens10n . sed roduction and a new boom.
the crisis ~as been ov~rcome,t~ec~:3'me tfme means the extension of
The agrarian r~volutl~nl at d ts Thus capitalist economy seems
the market for mdustria .P~ot u~a~e been materially expanded and

This theory whic ' Y ff

:a:
as a result of the war peno 0 a to or anised economy."
qualitatively chan~eg ~n ~~= coincfdes with that of Comrade
'f m the error that it takes for
Ollivier mentioned above, su ter~ ro roven namely, that we are
granted something that mus. de :pth an'" equilibrium of world
· the present per10 w1 . · · b d"
concern~d m . 1 . that has been temporarily d1stur e •
production and circu atlonb of democracy, of peace, of
which is to be followe~ Y ah1:1 he~~the sovereignty of individual
· · pac1;1osm,
" reali_stic ;.;; " ·1during
d . f wvour
ic of a super-state orgamsat10n.
· · "
states is to b~ curtai e m a t' n mark after this sentence,
Hilferding himself . p~ts ~ lu~s t~ the foolish and lying homage
which has been entire y a ap e 1t the Entente League of Nations.
paid by the Second ~ter;a~~~nt~o~ght is : ascending capitalism,
But the wh?le tren o oisie democracy, world peace.
agreement with the bourge ' see a business depression not only
For the present, however' we . . . . . -~·

1 Die Gesellschaft, No. 2,_page ns.

2 Die GeseUschaft, No. 1, page 9 ·

( 53)
in the U~ited States, but also in Genna i
prophesied. And instead of" realistic ny.. fiNot,~ trace of the boom
?n sea and land and under the se . lac1. SI? we see a?llaments
Ill the bacteriological institutes a, Ill he air, Ill the chemical works,

We see as one of the most iirt. . t

crisis the industrialisation of o for ant reaso_ns for the present
Western Europe, with its over-d:v~~~as countries, through which
and the necessity of exchanging art. fed ~~pa~atus for production
for industrial products, is losin itsI~~~noo ?o a~d raw materials
held. The American statistici~n M"ll 1 er, m1c basis as heretofore
follows : 2. ' expresses this idea as

through technical and mec~11 . r~u&" t the_ conquest of the world

While the nineteenth cent · r b h
division of work between thamci: .1~vent10ns, and thereby a
raw materials and the more d:vpf1m1t1v~ coun~ries that supply
twentieth century signifies a ne; ~~~d 0 rndu~trial countries, the
ment : the turning aside of the t . PP?s1te phase of develop-
the principle of division of wor~oa~nd r;~s _with. r::w materials from
economic autarchy. This, he hold . e1r str1vn~g to get back to
most fundamental importance ~ is an econc;>m1c problem of the
are themselves advancing this ' w er~y the i~dustrial countries
equipment. process Y supplymg machinery and
The editor of the German fin . 1 . .
Lansburgh, offers the following objec~~ciat ~~-10d1cal, Die Bank,
'.f'he present " agrarian countries ~n o ~s trend_ of thought :
durmg the period of manual t d ;ere mdustnal countries
goods for Europe. ra es, an supplied fine industrial
" The concentrated producti d . -
so-called cultured nations forceJn ::n
"t" applied science of the
out, brought about the gradual rp~~m:_ 1ve overseas production
ra~ materia~s, and thus brandeJm:h~:n to the production. of
This process is to-day revised backwards . ~ ~gr,~ria1:1 countries.
~upply . t~e. agrarian countries with t '~e \ndustnal cou1:1tries
rndustnahse themselves and th t t ec. ca means agam to
however, in order to re~ounce t~ : OQ, m. modern form. Not,
~ith manufactured goods and t e~ supply_mg the W?rld market
mdustrially, over to starvation ~ut ur~htheir pop~la~ion, trained
to transform .their works so 'a ra er to specialise anew and
correspond to the tremendous ts ~ ~adufacture articles that
of exporting cotton thread, the ~~n ca evelopm~nts_. Instead
to the countries that were fo . I ufact~re of which is now left
export artificial silk ; instea~m~~ ~ilagra~ian, one. now begins to
exports electric bulbs and ap t an. petroleum lamps, one
guns, modern machine guns. ~~~ u~; f~stedad of old-fashioned
, - -.1 See "'Die Whtschaft k .' k ea .o ar ware made of iron,
courier; - .~y-2-;---·''·Einer·--neueR· Inflatien--Eat ng "ar.' . Berliner Borsen-
· M s ODJun tur Anfa , M · ,,
May 3 : German business and indu t ~egen;- Ber.liner Borsenc01.~rier
the signs not of recovery but of a rel s ry _durmg
barely recovered."
th~ last six weeks shows
apse mto the sickness from which it has
aii
z The Bank, 1924, second number, page 63. .· .

( 54)
articles made of ai~inium ; · instead of a number of articles that
one can now do without, chemicals, especially dyes and medicinal
articles. And if the accumulation of capital, which follows this
advantageous export for the countries s~pplyi~g these goo.ds, in
due time· 1eads to a new phase of the mdustrial penetrat10n of
countries overwhelmingly ·agrarian, and trains these to produce
electrical equipment, chemical preparations, and perhaps even
dirigible airships, then progress will again even up the decrease
of export_ of the industrial countries ; and other articles, thus far
only dreamed of (radio app~rat~s? accumulators from the ene:gy
of the sea?) will be supplied Ill exchange for the raw materials
that may still be needed. Without envy technical inventions :::nd .
the experience of yeste~d1:Y are turne~ over to .the agrani:n
States, and just as unenvymgly the achievements of to-day will
be turned over to them to-morrow, since one is in possession of
data that mean• progress to-morrow. Thus the transition from
one stage in the division of work to another is accomplished without
pain, without a shock, and without any possibility of proclaiming
a catastrophe." · · .
This trend of thought has much more content than that of
Hilferding. Only we do not believe that this transfer will take
place " without pain and without a shock." We recall the famo~s
report of the Indian Viceroy at the time when the English textile
industry conquered India, " The bones of weavers cover the
plains of.India." 1 It is open 'to question whether the Eurc;>pean
proletariat will take such a fate upon itself. Of course, if the
proletariat is eliminate.d as a revolu~i.onary. for,ce, then every
crisis can be overcome by. the bourgemsie.
We shall now briefly quote the opinions of several English
economic authorities as reflected in a series of articles in the
Nation.2..
In an introductory article Lloyd George points out that the
population of England has increased by 2,000,000 since before the
war. Hence production ought to be 5 per cent. higher than th~n.
Actually, however, it was only 87 per cent. of the pre-~ar period
during 1923 (the best of the last three years) accordmg to the
estimates of the celebrated Professor Bowley, or 98 per cent.
according to the estimates of the Economist. In any case there
is a discrepancy of 10 to 18 per cent.! Lloyd George looks to the
re-establishment of pre-war conditions in a pretty remote future.
He has no better advice to give than to prepare for a later boom
by improving the productive apparatus. .
W. Beveridge, the celebrated expert on the problem of English
unemployment, figures on unemployment on a large scale for
ten years. "The modest state of comfortable riches _of the
Victorian period will never return. We had great prosperity and
became a great people during the reign of Queen Victori~- simp1:!
i Cited in Capital.
z The Nation : April 12, April 19, April 26, 1924.
( 55)
 because we were the first to be able to exploit. our coal and iron
folly. But we have lost this passing advantage of a first exploita-
tion of our natural resources. Prosperity can in future be vouch-
safed only through harder collective labour that will at least be
more effective, more scientific, and more harmonious than that
of others . . . . It will not fall into our laps as of yore.•.• "
Professor Bowley estimates that from 1930 on the decline of
the birth-rate during the war will ease the labour market. At
present, he says, unemployment is not greater than in 1909. It
will gradually diminish.
Lord Weir emphasises the necessity of advancing English
industry, &c.
In general we see in the case of the leading English economists
that there is helplessness and pessimism. Not a trace of
Hilferding's optimism of glagly affirming a better future for
capitalism ! Only, the Social Democrats must see the future of
capitalism in a rosy light, for their whole policy is built upon
the continuance of capitalism.
The crisis of capitalism continues. No optimistic theories
can deceive us. Whether it will lead to the recovery of capitalism
or its collapse, depends upon the revolutionary proletariat and
its party, the Communist World Party. Capitalism has entrenched
itself dur_ing the last years. But likewise the Communist Movement.
In Russia through the economic reconstruction, through the
final winning over of the majority ·of the working class, which is
now accepted, into the party organisation ; in the bourgeois
countries through the rearing and development of a determined
advance guard and great mass parties. The power of capitalism
has grown, but we, too, have gained strength. The. struggle
continues on a higher plane.

( 56)
 TABLE I
Th table ·shows that production has scarcely reached the leve~· of the
pre-w~ period. Coal, iron and steel lag especially behind pre-war tunes.
FIGURES FOR WORLD PRODUCTION (without Ru~sia)1 •
Plant products in millions of double hundredweights.
Average Average Average
1909-13 1914-18 1921-22 1923
Wheat . . .. .. 799 791 800 942
Barley .. .. .. 265 251 253 247
Rye .. .. .. .. 214 167 191 234
Oats .. .. .. .. 494 487 479 1555
Corn'.. .. .. .. 971 974 1,057 . 900
Rice .. .. .. .. 693 764 - 695
Potatoes .. .. .. 1,134 982 993 1,161
Beet sugar .. .. .. 63 46 43 47
Cane sugar .. .. .. 96 120 129 127
Coffee .. .. .. 12 12 10 -
Cocoa .. .. .. 2 3 4 -
Tea .. .. .. .. 3 3 3 -
Cotton . . .. .. 41 39 37 34
Jute .. .. .. .. 15 15 11 -
MINING PRODUCTS
(in million tons)
1913 1916 1917 1918 1919 1920 1921 1922 1923
Anthracite 1,344 1,390 1,345 1,331 1,158 1,300 1,100 1,207 1,360 2
Petroleum 52 62 67 67 80 90 109 122 145
Pig iron .. 78 71 67 - - 61 40 51 65
Steel .. 75 68 41 62 73
(in 1 000 tons)
'
I
1913 1916 11917 1918 1919 1920 1921
---
Copper ore .. .. 103 144 147 147 96 98 53
Tin .. .. .. 133 125 130 114 124 122 -
Zinc .. .. .. 1,000 965 990· 822 645 719 458
Lead .. .. .. 1,187 1,169 1,190 1,196 864 849 888
I
(in 1,000 kilograms)

Gold .. ..
kl3 I683
692
191611917
637 568 549
1918
542
1919. 1920
468 457
1921 ~
Silver .. .. ,960 15,000 [ 5,100 5,600 5,500 5,020 4,850 [ 7,141

(in 1,000 tons)

191311916 I 1917 191811919 1920 .11921 1922 ] 1923

Ship buildg. 3,330\ 1,690.12,940 5,440 f.140 5,860 4,340 2,467 1,643

i Plant product~ aus Annuaire Statistique A!Sri<Jok 1909-21, S. 261 f,

~ J?rellmi.IJ.ai:y !'>$timate.
( 57)
 World supply of live stock (including Russia), millions of heads, according
to the census of live s;ock closest to the years 1911 and 19213 : - ·

1911 1921

Horses 111 100

Cattle 483 511
Sheep 618 532
Pigs .. 260 210

3 Figures concerning live stock aus Annuaire Statistique Agricole 1909-21,

s. 234 f.
TABLE IJl
SHIFT IN MINE PRODUCTION
The table shows the shift ill mine production iii favour of the United States

BEFORE THE WAR AFTER THE WAR

World U.S.A. % of World U.S.A. %of
-· mill. mill. world
year tons tons prod.
I mill. I mill. world
year tons tons prod.
~~--~~~~--~~

Anthracite .. 1913 1,344 517 38·4 1922 1,207 418 34·6

Petroleum .. .. 1913 52 34 65·3 1923 145 105 72·4
Pig iron .. .. 1913 78 31 39·7 1923 65 40 61·6
Steel '•• .. 1913 76 32 42·1 1923 73 45 61·6

North North
Europe America Europe America
Percent. of world Percent. of world
production production
Copper 1912-14 2 11 67 1919-20 2 7 64
Lead ,, 46 43 30 57
Zinc · 65 34 36 61
Aluminium "
1913 58 42 "
1921 48·. 52

., M.G.C., W.u.St. Economist. - 2 Average.

TABLE Ill'
DEVELOPMENT OF.COAL A_~ IRON PRODUCTION IN THE MOST IMPORTANT
COUNTRIES

·U.S.A. England Germany France

·fr~~· · fr~8J ·,.-~oal I ~~~~ Cast

Coal ·· Coal Coal Iron

1870 17·3 1·6 112·0 6·0. 33·9 1·4 13·3 l·l

1880 42·8 3·8 ..-146·.9 ·n- __ .5.9·1. _ .2·7 . .19·.3 .. - .1 ·7
rs90 ·ni:3 9-2 181·6 7·9 89·2 4·6 26·0 1·9
1900 · 212·3 . .1.3·7 .: 225·1: . 8·-9~: 149·4 ·-8·5 33·4 2·7
191.&--.. -- _.•..:. - ---4!78·4-··30·9 -- 287-4- ---10-z--- --190-0- -- 9-2 2 40·8 5·2
1923 •.· .:.5.9).·2: .4.0:6. ·'-'.281·4. ·_, 7'6. _-: 8()-:03 ,'.5;0 47:g 5-:3':
1M. Brelet;I.,a-Crise_ de la-lfl;iia(lurgie; s:.~~5,;··.
2 IncIUding i:;!Pi~mkiom:g.- -- - -
z Estimated,
( ~s)
 TABLE IVA
UNITED STATES (1913 :=100)'
ECONOMIC STATISTICS OF THE
Monthly Average
1923 1924
1919 1920 1921 1922 1923 Jari. Apl.July 0 ct . J an.
Production of-
100 119 54 87 130 126 139 144 123 118
151 156 139 141 143
Pig iron · · ·· 111 135 64 114 143 110 116 123 130 130
Steel .. .. 105 99 39 81 121
. 126 107 .113 123 127
Copper .. .. 96 116 87 85 114
Soft coal · · ·· 97 99 58 104 114 106 '109 114 104
1;~ 251 283 315 323 272
Anthracite ·· 178 189 224 292 144 i28 105 117 122
Crude oil · · ·· _ - 124 121 131 124 - 99 1~6 124
Consump. ofwool2 . ·~· 108 105 97 109 117
of cotton··
Forei'o-n trade
I
(acco~ding to value) 218 294 140 177 2 1 220 244 192 206 198
62 157 146 194 191
1~~~l :: :: \ 181 154 201
319 \ 331 59 151 153 151
Wholesale trade 226 147 149 154 15<
Index for. all fl:oods.. 212
334 243 382 327 3(}5 316
Automobiles m \ 183 139 214
l,OOO's per month3 164
General Index
(F.R.B. 1919 100). · 1 0~a 80 98 I 120 121 i24 121 ll8 120

1 Survey of Cru;r · Bus.

21921=100 .
a 1913 Monthly Average=40,000.

( 59)
I TABLEIVB

C?ali million tons ----

1913 1920 19,;-----~----- J ~--1~-
1Yi9~2l33:-----~--
. . ~- - - , __ _ _ ,_ 1922 1923
Pig iron, 1,000 tons
Steel, 1,000 tons
p
..
..
..
.. ..
869
19·4
680 ""~' 81
------
2 1·1
an. April
23·4· - - - - - - y
-o------
Jul
· ct.
1924

Jan
ercentage of unem '1' .. .. 649 768 3'",.1·4- 415 630 22·4 22·4 ~---..:__ _ _ _ .
D' trade union membef.s oyed among 494 577 663 25·7 23 -
itto, among all . .. 719 644 761 666 60,5 ·8
Wholesale trade i' insured .. .. 634 713 642
£ in d II ndex, Economist ·· 701
"'"'E o ars .. 100 13·7 11·3
xports in millio°d £ •· •• .. 283 181 13·1 11·1
160 11·4
8 Imports in million £
..__,-- ..
.... .. .. 4·87
43·8
3·66
111·3
3·85 4·43 161 165
11·5
155
•• I 58·6 60·0 4·65 4·66
5.5·0 142·9 4·58
81·5 75·0 66·8 62·9
89·9 59·5
74·0 68·0
-
 TABLE IVc
THE MOST IMPORTANT DATA CONCERNING FRENCH IlUSINESS 1

Monthly average 1923 I 1924

'
1913 1920 1921 1922 1923 Jan. April 'July oci. Jan.

Coal production, 1,000 tons .. .. 3,404 2,890 3,213 3,.596 3,986 4,109 3,063 4,312 4,862 3,762 2
Coal importation, 1,000 tons .. .. 1,558 2,005 1,472 1,861 - 1,888 1,927 2,473 2,272 2,247
Iron production, 1,000 tons .. .. 434 3 276 280 427 443 486 350 436 51zt. 586
Steel production, 1,000 tons .. .. 396 3 246 255 373 415 408 355 400 477 541
Unemployed per 1,000 .. .. .. - - 64·0 4 9·7 4 2·4 4 2·4 1-4 1·6 0·5 1·2
Exports, 1,000 tons . . .. .. 1,840 1,071 1,333 '1,885 - 1,896 1,513 1,921 2,170 1,170
Imports, 1,000 tons .
. .. .. 3,685 4,211 3,165 4,281 - 4,111 4,175 4,864 4,360 3,933
Exports, million francs .. . . .. 573 2,241 '1,648 1,720 2,536 1,696 2,508 2,424 2,814 2,361
Imports, million francs.. .. .. 702 4,159 1,839 1,992 2,718 ·2,144 2,560 2,616 3,069 2,644
Wholesale trade index .. . . 100 509 345 327 410 387 415 407 421 495
..
-
Ol
...... Exchange rate of franc in New York 19·3 7·0 7·5 8·2 6·1 6·7 7·0 5·9 6·0 4·67
Banknote circulation, milliard francs .. 5·7 37·9 36·4· 36·4· 39·1 37·1 36·9 37·3 37·8 38·8
1 Economist Monthly Supplement, Federal Reserve Bulletin.
2 Excluding the Saar territory .
• 3 Excluding Lorraine.

4 January,
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( 62)
 TABLE VA . .
The table shows that the exportation of capital decreased greatly jn ·1923,
especially the capital loaned
E1f11SSION OFto Europe.
CAPITAL IN TllE UNITED': STATE~
I . 1913 \ 1920 \. 1921, } · 1922 I 1923

(Milli\on$ of nollars)
1,27'9·2 1· 1,112·4
408·0 7'7'4·0 1,420·8 3,424·8 .3,640·8
UNITED STATES- 2,635·2
1,645·2 3,106·8
Joint businesses ..
Corporate undertakings ..-1-1________-'---1-1~
.. I 2,053"2 3,880·8 4,056·Q · 4,7'04·0 4;7'53·2
1
Total 312·8
414·4 495·7'
261·7' 131·7' 7'0·0
FOREIGN CouNTRIES:__ 138·3 50·0
To Governments .•.,,. . . 17'7'·3. 110·7'
· 12·0 67'·5
of these : Europe .. 188·2 148·3
Far East .. 105·0 26·3
Latin America 84·4 ;7'5·9 89·8
161·6 203·9
North America 17'0·7' 97'·3 18·5
15·7 3·3 ~19·9
To Undertakings .. 1·3
of these : Europe .. 5·9 57'·3 11·3
Far East .. 52·7' 53·4 34·1
104·9 48·0
Latin America
North America
96·4
_\-------\~ 576·0
__.:---1~·
699·0 303·8 -
Foreign Countries Total' .-1-----1--i--::-:-\~\~
4,313·2 I 4,632·0 5,403·0 -5;056·8

GRAND TOTt\L .. i. ·.
Journal of Commerce. Fed. Res. Bul. from survey of Curr. Bus.
2
1
TABLE Vs
The table shows that, if we except the government loans, which signify. no
real acclllllulation of capital, acclllllulation is demonstrated to have been mucb
less than before theEMJ:SSlON
war. OF CAPlTl>L lN ENGLA:ND'
1921 I 1922 I 1923
1913 1920
1912
(In Mi\llion £)1

GREAT BRJTA.rN'-
Government
Others ..
.. nothing nothing
.. 45·3

45·3
35·9

35·9 \
---:-----
37·5
290·5

328·0
202·9 \ 3G9·6
73·2 73·9

276·1 443·5 133·9

77·5
56·4

Total
BR1T1Sll E:MJ?lRE-
(Exclusive of Great Britain)\ 26·3 ~1·9 ~,3.7 58·6 I 69-4
_c..--------
a-
49·8 19·7. 16·9 16·3 23·3
Governments . . . . L14·7
- . - - 1- .
Others . . .. .. 57' ·9 76· 1 I 31·6 90·6 74·9 92·1
72·6
Total

26·1 uotblng 14·3 26·5

FoliEIGN CoUNTR1ES- 7·8 16·3 40·9 18·2
Governments ..
.. 9·6
58·3
.. .. 83·2
Others .. 84·4
7·8 22·2 55·2 44·7

'fotal .. .. 92·8
367'·4 388·9 573·6 271·3
.. .. 196·4
GRAND TOTAL 210·7
The Economist, No. 4192 (29, XII., 1923).
1
( 63)
 TABLE VI.r

(Direction in which the Foreign Trade of the United States moves)

The Table shows he>w the Foreign Trade of the United States has been diverted from Europe, and how trade with Asia ;s growing
in importance. It also shows the tremendous excess of exports to Europe. This was covered in part through the exportation of gold,
in part through credits.

~---
EXPORT IMPORT
Average Average
I

1910-14 1920 1921

I 1922 I 1923 1910-14 1920 1921 1923

Million Dollars Million Doll11

EUROPE .. .. .. 1,350 4,466 2,364 2,083 2,276 837 1,228 765 991 1,240
France .. .. .. 139 676 225 267 280 130 166 142 143 172
Germany .. .. 304 311 372 316 313 177 89 80 118 166
Italy .. .. .. 66 372 216 151 186 51 75 62 64 103
England .. .. 568 1,825 942 856 1,003 279 514 239 257 403
NORTH AMERICA .. .. 501 1,929 1,130 916 940 347 1,663 755 822 864
Canada ..
SOUTH AMERICA
..
..
..
..
315
121
972
624
594
273
577
226
577
255
117
207
612
761
335
296
364 367
359 496
Argentina .. .. 47 214 111 96 110 33 208 60 86 140
ASIA AND OCEANIA .. .. 165 1,044 646 541 500 276 1,397 653 875 1,140
Japan 2 •• .. .. 45 381 238 222 161 85 415 251 354 372
.. .. .. , 31 179 132 127 - -

~
China 39 113 152
AFRICA .. .. .. ! 25 166 73 56 54 22 0 40 65 210
I
Total .. ..I 2,166 8,228 4,485
I
3,832 4,025 1,689 8 2,509 3,113 -
PERCENTAGE
Of the Tofal Export Of the Total Import
Europe .. .. .. 62·3 54·3 ,52·7 54·4 - 49·6 23·3 30·5 31·8 -
North America .. .. 23·1 23·4 : 25·2 23·9 - 20·5 31·5 30·1 26·4 -
South America .. .. 5·6 7·6 6·1 5·9 - 12·3 14·3 ll·8 ll·5 -
Asia and Oceania .. .. 7·8 12·7 14·4 14·4 - 16·3 28·0 26·0 28·1 -
Africa .. .. .. 1·2 2·0 1·6 1·5 - 1·3 2·8 1·6 2·1 -
1 Commerce Year Book ; for 1923 Federal Reserve Bulletin. 2 Including Corea.
..
TABLE VII

UNEMPLOYMENT
United
Fr;tuce Italy
Switzer- States
Canada \Germany land
. d Norway '
Nether- \ Denmark\ Swe en in

------
England Belgium lands I U l i o\ n Me m b c r s . in
in millions
in thsands. thousands
( all who
are
Trade
.
.
1
I
\ in
·
111
.
in
in
cent. per cen .
t thousands
-- ---
insured) in Ill t per cent.per cent.per -----\ 112
in in er cent. per cen · l l _ _ _ --- 64
per cen" t l) er cent.
_ _ _ - · - - _ l' . 4·5 35
85 250
13 1 49 435
-- ---- 20·1 11·7 l(j·3 3·9 34
56 492
---· 16·5 19·7 24·2 17·7 9·1 2·6 14
1,921 8·2 19·3 11·9 21·7 27·9 17·9 7·4 1·2 74
,January · · 15 .0 31·2 .6 16·7 . 17·1 10 607
7 27 1 97 432
April 14 . 8 21·4 . 18·3 3 .3
70 81
7
304
July . . . . . 12·8 13•6 43 23·9 13·9 0·9 4
October · · 2 8·9 3 ·· 10-4 52 321
11·2 20·3 24·0 28·3 23·4 4·1 0·6 1
48
1922 17·2 11·6 5 18·2 12·5 3·9 1·4

u t~
January · · 15 .4 8·9 5 12· 11 3 2 392

~ t~fib~r" . "· i;"~ ~"~ :~:3 \ ~:: ;:;, wt ~~

1
270

I 2 183

19~~nuary j_~'.~ ~'.~ ii'.~ 1~'.!

200
.. 9·1 6·9 6·2 \\ 19·1 24
April · · · · 9·2 6
July .. .. . 11 ·5 3 ~ 7·6 8·2 8·

I: .: I
(ll·l) 11·0 281

I
l

19~:tober ~::)"\ ~
2
5 59
21 0 13 6 2
"\ :.: 22 .7 . , :. 8 : \ 2
,January .. \\ (8·9)3 17·3 21·3 12·8 16·6 21
3·6 I
February..
l • •'
1(~9".l)3 11 15·1 I - - --~f
th Labour Mi:.forNo;-
]\1al'Cl ( 7 ·8)3 I - - ~- --- ·F1'gUleSO e
~-
't •
- I· d Union Members.
-
1
1 ---------- _~ ~~·it of Tra e
_

AIJl'il .. · · --------- . t d a. Per ce1 ·

-------------- 2 Est1ma e ·
---~ Reichsa7'beitsblatt.
t'l
 'fABLE VIII
The Tables.hows how man . DOLLAR-CENTS PER UNIT OF ExcHANGE :
exchi:nge. 'l'he countries are .J
:mencan ce~1ts were paid per hundred t . .
certain exchanges that were tife1~ f~;~t~bf:'?x}r:;telyDaccording to the o;de~o~;~~~ir~~~~o:~ia~1.d bill~nrespectively, of a ~iven unit of
. ' an, enmark, Brazil, Spain. a ion ote especially the depreciaton vf
Annual Average
1023
Par. 1919 1920 1924
1921
S ~-- 1922 1923 Jan. A ·1 J ~1----'---
weden . . . . 26·8 "5 5---;-~-0·-5 ----------~ pn uly October Jan. F --------
Holland ~ " - 22·5 26·2 1----1- eb. 14·4 18·4
Switzerland.:: 40·2 39·1 34·4 33·6 3s.,5 ~g:~ 26·9 2f:Vi 26·5 -1--2_6_·_3-1----1-___ · 1 _______ _
Enghnd 19·3 19·0 16·!J 17:4 HJ.I 18·1. 39·5 39·2 39·2 38·0 26·2 26·2 26·3 26·4
< • • • • 48() 43 36() 385 18·8 18 9 37·4 "7 4 37
- Japan ...... 49·8 51·2 5 ·4 443 457 466 466.. 17·6 17·5 17·3 ~7:4 ·l 37·2

= =
0) Argentina 96·5 9fl 48·2 47·8 48·6 48·7 458 44 426 43 17·3 17·6
~ Spain .. : : : : 19·3 ·~O !J ·7 73·0 81·8 78·6 84·7 48·7 48·8 - - 428 436
Denmark . . . . 2 (). 8
Norway . . . . 26 . 8
Brazil .. .. ..
=- -
-
13·3
16·1
5

5
14·5 5
16·2 5 II.HJ•
15·5 •
1 2 .8
1 8 .4
1 6 .7
15 .7
19 . 8
~~:!
l8·9
77·7
14·9
18·0
73·7
13·1
17·2
_
12 . 8
16 9 12·7 12·9
41·8

13·8
France ..... , t~:i2 26·7 22·5 13·1 - 1 18·7 17·8 16·7 14·7 16·0 15·3 16·6
Belgium...... 19 .3 :~:~ 7·0 7·5 3. 2 ~:; 11·4 10·5 10·4 9 .5
14 1
' 13·3 13·5 13·8
Italy . .
Czecho- '' ·' '·
19·8 11·4 7·4
5·0
7·4
4·8
7·4
4·3
5·2
.
g:i 6·7
5·8.
5'.9
5·4
5·5
4.7
4·7 4·4 4·5
11·3
6·3

=
4 6 4 ·9 4·2 3·82
SJ .5·0 4.3 3·9 5·4
ovakia . , . 20. 26 _ l ·B 5 4·4 4·3 4·3
Austria . . . . . . _ _ l ·73 5 2·96 2. 85 4·3 4.4
Hungary . . . . 20·20 - - 0·25• 0·03• 0'0014' 0·0014• 0·0014• 2·98 3·0 2·9 2·9 2·9
Poland · · .... 1 23·8 ~ _ ~ - 0·00017 0·0004 0·0002
0.0014•
4
0·0014• 0·0014• 0·0014• . 2·9. 2·94
•Germany ... ,I. 23:8 3·0 1·8 - -- 0·0141 0·0042• 0·0023 4 0·014 1 0·00544 0·00404 4 0 0014 0·0014•
- ~-02 1 0·00734 0·0042 4
0·007 0·000531 O·OOOl 21 g:ggg~11 g·OOl5\ 0·0015•
0·00351 0·37 3 0·23 3 ·00012 0·00012
1
For 1,000 mai·ks. 0·23 3 - 0·23. 0·23 3
•Fm 100 kronen 01 marks.
For 1 -~Ilhon marks ..
2
5
3 January.
For· 1 billion marks.
 TABLE 1x1
THE FOREIGN TRADE OF IMPORTANT COUNTRJES .
(The Table shows that, if we cqmpare the figures for exports and imports wit-6' the index figure! for wholes ale trade for the respective
years, the foreign trade is much less than before the war.)

__
. rm-----
~91~ Hl20
Import

192_1_ 1922 1923 1913 1920

~----------!
Export
r--------·--------+-
1921 1922 19~3 1913
Wholesale trade index•
~---~---.....------

l.920
- ---------------
1921
'
.1922 1923

Millions of !
Great Britain Pounds .... ,768 1,932 1,087 1,004 l,O!J8 634 1,557 810 824 88() 100 283 181 160 162

Germany .... Gold marks 10,770 3,947 5,751 6,312 6,081 10,097 3,724 - 6,199 6,079 100 - - - -
France ...... Francs ·- -·
8,421 49,905 ,22,068 23,901 32,600 6,880 26,894 19,773 30,642 30,400 100 509 345 327 419

Italy ........ Lire ....... 3,645 26,821 17,266 15,727 17,225 2,312 11,774 8,275 9,297 11,059 100 624 578 562 575.

Switzerland .. Francs .\\ .. l,!Jl9 4,200 2,248 1,915 2,245 1,376 3,277 2,140 1,690 1,760 ioo• - 191 168 181

Belgium ..... Francs .... 5,050 12,942 10,055 9,377 12,538 3,716 8,86~ 7,147 6,110 8,993 100 3
- 366 367 497

Denmark .... Crowns .... 855 2,943 1,635 1,467 1,975 721 1,9()2 1,505 1,242 1,243 100 341 178 181 204

United States Dollars .... 1,749 5,279 2,587 3,116 3,792 2,446 8,228 4,485 3,832 4,168 100 226 147 149 154

Canada ...... Dollars .... 670 1,337 800 762 908 3771 1,303 803 898 1,002 100 241 170 150 154

Argentina ... Gold pesos . 496 881 635 686 - 5191 1,031 672 673 - 100 - - - -
British India . Pounds .... 122 336 178 155 - 166 262 164 210 - 100 3
204 181 180 176

China ....... Amer. dollars 416 - 599 775 - 294 - 457 537 - 100 152 150 146 156

.Japan ....... Yen ........ 729 2,335 1,614 1,859· 1,984 632 1,947 1,253 1,595 1,447 100 260 201 196 -
1 Stat. Jahrbuchf.d. Deutsche Reich, Commerce Yearbook for 1923, Business and Statistics .
. • Ecr,momist Monthly Supplement, March, 22, 1924. • llll4
 TABLE X
. PRICE oF WHEAT PER QUARTER IN GoLI) l<'RANCS (at the beginning of each month or the end of the preceding month).
According to the Bulletin of the International Institute of Agriculture, Rome, figures for 1921 are in. round numbers and transposed
into gold francs.
'l'he Table shows the movement of wheat prices during the post-war period in gold francs, and the index figures for wholesale· trade
of the Federal Reserve Board, brought to a gold basis. The statistics show that prices in gold francs have risen far less than the wholesale
tr.ade index for all commodities. Prices in Germany, France, and Italy are absolutely lower than those obtaining before the war, since
high protection tariffs obtained then. '
Wheat prices of the Average 1919 1921 1922 1923 1924
exporting countries 1913 XI v II VIII II VIII II VIII II IV
Canada:
Winnipeg (Manitoba 1) ... 16·76 15·91 17·44 30 31 22·12 25·00 20·34 19·93 18·30 18·08
United States :
Chicago (Winter 2) ...... 17·19 16·85 17·73 32 23 23·21 21·30 22·28 18·66 21·52 20·37
Minneapolis (Northern 1) .. 16·90 16·39 17·32 31 28 26·85 24·75 23·04 21·33 22·66 21·52.
New York (Winter 2) .... 18·52I 23·59 20·02 37 27 26·04 24·66 24·61 21·39 24•47 22·80
India; Karachi (White) .... 17•26 16·74 - - - - 24·14 22·09 18·19 19·65 19·16
Argentina:
Buenos Aires (Barletta) .. 19·03 20·47 18·47 30 30 21·70 23·37 22·88 19·21 18·51 18°60
Grain imported to London :
Manitoba 1 ............ ' 20·90 - - - - 28·28 29·52 24·96 23·24 24·75 23·05
Winter 2 ............... 20·71 - - - - 26·88 26·21 25·10 21·48 - -
Plata .................. 20·61 - - - - 26·88 27·14 24·96 21·88 23·21 21·77
Karachi ................ 20·90 - - - - - - 26·62 22·16 - 22·54
Home-grown wheat :
Germany,Berlin (from the mk.) 24·56 21·00 24·00 18 14< 21·39 21·13 15·67 22·17 18·33 21·24
Belgium, Antwerp ....... 19·89 18·75 - 31 34 25·26 27·86 21·89 22·19 22·50 22·44
France, Paris ........... 27·82 25·50 27·25 36 40 29·36 31·33 27·46 25·55 23·93 -
'England, London ........ 19·86 - - - - 24·68 27·81 22·58 28·55 23·27 22·68
.......
Italy, Milan (Soft) 28·10 25·75 26·12 20 26 30·43 29·08 26·94 20·58 22·76 25·07
Holland, Rotterdam ..... 20·60 - - - - 23'47 28·25 22·97 29·04 23·61 24·83
(All prices are final
quotations for goods that
can be disposed of)
Wholesale trade index of the
Fe(Jeral Reserve Board Annual .average Annual average Annual average Annual average
'/
figured on a gold basis : \b --·
Canada ................. 100 198 150 14'i' 147
United States ........... 100 211 149 158 164
England ................ 100 214 156 150 1.59
France ................. 100 - 133 136 124----....,
Germany (Fed. Stat. Office) 100 - - - 139 (No~ mber)
-'-'--· --- Jj,j
 TABLE X 11 ' · cl)
. f grain in the various parts of the world dutlng the post-war per10
cl t
'ft . the pro uc wn o f R . )
(The Table shows the s h I m W PRODUCTION (exclusive o ussia
FIGURES F~~09-~:~~909-102 1913-142) 100
()ats
Barley
Wheat Rye \
--.----.--1-1_9_2_2 _1_9_1_2__ 19_2_0~-1-9_2_1,-1_9_2_2
29_1_9__ 1_9_2~
__:9_2_1_ _=_92:__ 1919 92=--=-92:__ -=-92~-=-
1919 1920 1921 ---------
-~--------1--- - - - - - - - - - - - - 84 ' 5 70·6 76·8 77·4 79·2
75·7 61·8 54·0 76·9 71·3 68·8 78·0 79·7 97·2 135·8 100·9 114·5
69·6 89·2 334·8 77·5 109·8 93·3 112·1
Em·ope · • · · · · · · · · · 69 ' 1 123·6 125·7 141·2 225·7 188·0 217·7
North America .... 128·2 124·9 101 ·0. 109·6. 96·5. 106 ' 9 .} 72·1 90·3 76·8 89·0
129·5
South America .... 138·6 108·9 106·5 75·1 110·4 129·9 { 71·6 60·3 107·1 6~·5
83 9 109·6 76·0 }66·3
Asia .. · · · · · · · · · · · ' 70·7 114·1
Africa· ... ········· 7 9 ·3 156·8 143·4 118·8
77·9 ------
Oceania . · · · · · · · · · 5l· 9 -8_2_·_2__8_1_·_3_77.3~;;-~7·7 92.;-1 81 ·;;-- 102·;- 97'3 94-5
67·9 59·1
95·9 103·4 103·5
'fotal , ..... · · 92·5
VARIOUS CONTINENTS IN •rIIE TOTAL PRODUCTION
PERCENTAGE OF THE
Oats
Barley
Rye
Wheat
------.--,-------,--111!1~:-i----r--i--r--~· 1909-
\_-~--~-,--i--
- 1909-
1909-
1921 1922 1913 1919 1920 1921
1922 1913 1919 1920 1921 1922
------
1909 1 1922 1913 1919 1920 - . -------
1913 1919 1920 192 - - - · - - - - - - - - - - · - - - - --.- 49·1 ---;w.5 54·2 46·7 40·7 48·0 45·4
- - - - - - - - - - 32·7~ 33·0 96·1 87·4 87:9 8~"~ ~!·.~ ~i:~ i~:~ ~i.i 18·7 21·3 42·2 50·1 56·1 48·8 51-2
Europe ..... 45·1 33·7 6 2 40·6 3·7 12·4 11 8 3}
N. America .. 29·8 4~:~ 3~:~ 3 7:4 7. ·2 } {20·9 "27·43 .25·8 • 23·1" 24·2 3·6 3·2 3 ·2 3·2 3·4"
S. America .. l~:~ ll·5 14·5 9·3 13·0 0·2 0·2 0·3 0·3 0·4 7·5 6·9 5·1 9·1 5·0
Asia . . . . . . . 3·3 2·8 2·4 3·7 2·5 ~\ -----------
Africa · · · · · ·
Oceania .... 3·2 1·8 5·3
4 5 37
. - . I ___\___ --
00·0100·0 -;-~~ 100·0 100·0100·0 100·0100·0100·0100·0100·0'
'l'otal 100·0 100·0 100·0 100·0 100·0 100·0 100·0 100·0 100·0 1
·· l · • Oceania included.
z For the Southern Hemisp iere.
i Annuaire Int. de Stat. Af!,ricole, 1922.