98 WORLD ECONOMIC AFFAIRS Part I
incomplete, that followed the National-Socialist revolution, and the
big decline in German exports to Russia, for political reasons and
because of the Soviet Union's new commercial engagements with the
United States and Great Britain. But perhaps more important than
any such particular incidents was the failure of Germany to adjust
her internal economy to the necessities of her external trade. Given
the economic condition of the world in 1933, there were available to
her two alternative means of maintaining her foreign trade balance.
One was to cut costs and prices; the other was to depreciate her
exchange. The economic policies of the National-Socialist Govern-
ment were calculated rather to raise than to diminish internal costs;
for they included the financing by inflationary methods of public
works, labour camps, and other salves for unemployment, and the
schooling of industry into courses that would involve an increased
use of man-power. During 1933 wholesale prices in Germany rose
by over 5 per cent., whereas in gold standard countries they fell
slightly. As for the depreciation of the reichsmark, it was strenuously
opposed by Dr. Schacht and other authorities, who feared the reac-
tions upon a country that had experienced the horrors of a great
inflation only a decade earlier. They preferred the indirect and dis-
guised method of financing exports with cheap Kcmversionskasse
scrip, and with blocked and registered reichsmarkw. By the beginning
of 1934, however, it was already apparent that such expedients might
not be enough.
(h) JAPAN AND WOKLP TRADE
In the course of the year 1933 the mutterings of Japan's com-
mercial competitors against the expansion of her trade swelled into
clamour. It must not be supposed, however, that in a sudden cam-
paign of commercial aggression she took the World's markets by
storm. The record of her external merchandise trade was as follows:
(xold wdue
of the Yen
Imports Exports Balance (1925 -100)
(In millions of yen)
1925 2487 2242 -243 KM)
1930 1680 1518 -J62 120
1931 1319 1179 -140 IU)
1932 1524 1457 -67 (58
1933 2018 1932 -86 49
It will be seen that both imports and exports increased by about
500,000,000 yen in 1933. In gold values, there was actually a fall of
6 per cent, in Japan's total trade, and the proportion that her exports
bore to total world trade, calculated in gold values, varied little from