SOVIET DISCIPLINE REGIMENTS EAST GERMAN WORKERS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-02771R000100310004-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 33
• Document Creation Date: November 11, 2016
• Document Release Date: August 3, 1998
• Sequence Number: 4
• Publication Date: March 1, 1959
• Content Type: REPORT

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SOVIET DISCIPLINE REGIMENTS EAST GERMAN WORKERS
March 19`9
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SOVIET DISCIPLINE REGIMENTS EAST GERMAN WORKERS
As in all. countries under Communist domination, the
worker in East Germany has become a mere entity in the indus-
trial production plan of the state. His wishes and political
inclinations are completely disregarded as working conditions
there evolve more and more according to the Soviet pattern.
His sad lot became official by the decree of April 9, 1947,
when the Soviet military administration made the individual
worker responsible for attaining the goals set in the pro-
ductivity drive.
Compulsion to work has been introduced for men and women
between the ages of 15 and 60. The strictest discipline is
maintained and Order No. 323 of November 20, 1946 provided
for various punitive measures including reprimand, with-
drawal of extra rations, cuts in vacations equal to the number
of days absent from work without official justification and
even criminal prosecution under the heading of acts of sabo-
tage and diversion.
The grip of the government on the worker was "legalized"
by the Constitution of the German Democratic Republic (DDR).
Article'31 of that document discusses governmental economic
planning and states explicitly that manpower falls within its
regulations and is consequently treated as any other element
in the production process.
The instrument for this subjugation of the worker is the
so-called Free German Trade Union Federation (Freier Deutscher
Gewerkschaftsbund - FDGB). This association was developed as
early as July 1945, formed by a number of unions which were
organized on an industry basis, covering manual and non-manual
employees. The FDGB is strictly centralized and all officials
are appointed by the Central Council (Bundesvorstand).
The Federation, however, is a misnomer and far from repre-
senting the worker, it is nothing but an instrument for politi-
cal control. With its help, the works councils were abolished
in 1948 after elections had shown the growing disinclination of
the German worker to vote for Communist representatives.
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Political Oppression
The Hitler period trained the German workers along the
lines of regimentation, exploitation and spying on each other,
but the present working conditions in East Germany, with their
terror and quota system, go far beyond the preceding totali-
tarian system. Control of wages, accompanied by the shortage
of goods, has reduced the living standards of the average
worker. Reliable reports have estimated that the buying power
of the workers in the DDR has beers reduced to less than 60
percent of prewar days.
The feeling of political oppression and economic exploi-
tation is further aggravated by the workers' awareness that
their living standards have deteriorated. The Soviet authori-
ties and their German puppet agencies have so far, in spite of
all their promises, done virtually nothing for the civilian
population's supply of consumer goods. In the DDR roughly one-
third of the industries produce goods for the general consumer,
while the corresponding figure for Western Germany is above 60
percent.
The plight of the workers under Communist regimes is a
well-established fact. The German worker, who was frequently
accustomed to higher living standards and possessed greater
skills than his counterpart in some of the captive countries,
was deprived of more and reduced to relatively less. The
worker in the Soviet Zone of Germany expressed his bitterness
against working conditions in the revolt of June 17, 1953.
Denial of Rights
This spontaneous uprising was put down with great ruth-
lessness by the Communist regime. Thousands were arrested and
summarily tried and, according to West German labor sources,
many hundreds are still in prison today.
Although Article i4 of the labor Federation's by-laws
actually says that the right to strike is recognized, it has
in practice no meaning at all in view of the fact that the
worker is required to respect they fulfillment of the work plan.
Any gesture on his part against such fulfillment, such as a
strike, is labeled "sabotage," and punished accordingly.
Despite all the propaganda, the worker in the DDR has noth-
ing to say about the way his plant is run. This was clearly
shown by the April 1950 Labor Law. It said: "The right of co-
determination of the workers and employees regarding the manage-
ment of the economy will be exercised by the organs of the State."
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In this connection, there is. recent evidence from East
German press sources indicating that political work and worker
morale, particularly in the brown coal and construction in-
dustries, have been poor. Hypocritically taking the worker's
side, the press pretends to place the blame for poor production
and morale on officials, particularly the "arrogant attitude"
of managers who do not consult the workers. Other indications
of poor worker morale are to be found in reports in the East
German press complaining about the high number of hours lost
as a result of sickness and accidents.
The Woman Worker
Article 7 of the Constitution of the DDR established
equal rights of women. It means equal status for both sexes as
an.object of oppression and exploitation, but even this state-
ment is not entirely correct because the fate of women in the
DDR is in fact far worse than that of the men.
The Labor Law of April 19, 1950, cancels all existing
legal restrictions for the employment of women and requires all
agencies, federal as well as state, to create working opportuni-
ties for them. In actual operation it amounts to a requirement
for women to work.
The Five Year Plan converted this "right" into an obliga-
tion and has forced women to accept occupations that used to
be reserved for men, as for instance, mining. All legal re-
strictions such as night work or employment in heavy industries
were canceled as being "contradictory to the equal rights of
women." A law "for the protection of mother and child and for
women's rights"(October 1, 1950) makes clear that "marriage
must not interfere with professional education and occupational
performances of a woman...even if it causes a temporary separa-
tion from her husband."
The FDGB
The workers in the East German zone, as already mentioned,
are grouped under an organization with the appealing name of
Free German Labor Union (FDGB), although it does nothing to de-
fend their rights in the manner of western labor unions. The
workers are completely organized, whether they like it or not.
The Party, the government and industrial management all cooperate
to make union membership virtually a prerequisite of employment.
There is an industrial union for each branch of industry
such as metals, chemicals and transportation. These in turn are
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organized and form the FDGB. The individual unions are named
and organized in a manner to suggest a continuity with the
old Social Democratic labor organization tradition. For this
reason the pattern of FDGB organisation closely parallels the
industrial union organization of he West German Federation of
Labor. This superficial similarity was intentional and has
been used as a propaganda weapon or the massive penetration and
subversion of West German labor.
FDGB officials support almost all strike actions in West
Germany. But in their own zone the workers are forbidden to
strike and the organization of a strike is legally a crime.
The FDGB officials not only accept the proposition that it is
illogical for workers to strike against the Worker's State, but
they take stern action to prevent strikes from occurring and
cooperate with the other state authorities in punitive action
in the event a strike is threatened. The height of paradox is
achieved in the matter of wages and hours of work. The offi-
cial argument apparently is that since lower costs and higher
productivity benefit the Worker's State, then lower wages and
longer hours must benefit the worker.
In 1955, the FDGB held a. congress at which it decided to
recognize the policies of the East German Communist Party as
the party of the German working classes. Under the leadership
of the Party, the Federation is to work for the realization of
socialism in East Germany. Another resolution that was adopted
stipulated that all members of the Federation should obey the
dictates of the Party.
The Federation, it was stated at that time, stands for the
strengthening of the DDR "as a base for the fight for a united,
democratic and peace-loving Germany and for the reinforcement
of the worker's confidence in the State." The statement added
that "every member of the Federation is required to defend the
DDR and its accomplishments. It is the duty of every member to
use all his strength for the realization of the economic plan."
In plain language this means that every worker is solely an
instrument to be used to consolidate the power of the Communist
Party.
As in the USSR, the labor to be performed in different
occupational groupings has been broken down into eight wage
groups. The wage group rates we.,-re not established through
collective bargaining, but through government decree without
the right of co-determination by the trade unions. The rating
of workers by management was frequently done, not from a labor
point of view, but from that of SED Party politics.
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The different varieties of the efficiency wage are intended
to offer the most effective incentives for a maximum exertion
of the worker's physical and intellectual strength. For this
purpose the piece wage is the most suitable and is therefore
applied in the majority of cases. The basis for piece wages
in the DDR are the technical labor norms. These norms are
established on the basis of the output of the most outstanding
workers, working with the best machines under the best of con-
ditions. However, these norms become binding for all workers.
The main means of increasing output are contained in the col-
lective contract. In this contract, the workers and employees
undertake to fulfill concrete obligations and in the event of
non-fulfillment, measures can be taken against the worker.
Among the coercive and punitive measures now being applied,
the following deserve special mention: the registration and
channeling of manpower, the binding of the worker to his place
of work, the potential punishment for violations of labor dis-
cipline, the increased authority of foremen and managers and
the establishment of commissions for labor and wages, charged
with inspecting the workers and with urging them to fulfill the
labor plans.
Work Brigades
The creation of so-called "Brigades of Socialist Work" was
announced at the Fourth Plenum of the SED Central Committee in
January 1959. On the basis of early press descriptions, this
program appears to be a renewed attempt, couched in more expan-
sive terms, to deal with the long-standing problems of increas-
ing labor productivity, lowering production costs and improving
work morale through an attempt to harmonize "material self-
interest" and "socialist responsibilities." The movement has
thus far consisted in a number of factory youth brigades com-
peting for the title "Brigade of Socialist Work" by pledging
themselves to the usual goals of Inereasing production. However,
the new features of the competition include pledges involving
brigade activity in other fields such as the educational, mili-
tary, cultural and political. These innovations appear to have
arisen as an attempt to cope with the entire question of worker
motivation which has apparently not improved to the regime's
satisfaction through the methods employed up to now.
Although there are no laws existing that actually sanction
the enslavement of labor, the existing regulations are such that
they are quite adequate to make sure that the worker observes
the requirements for the fulfillment of the work quota and the
regulations concerning his work. One such broad regulation
stipulates that juridical proceedings will be taken against any-
body who "knowingly perpetrates as infringement of labor disci-
pline or who pretends to be sick."
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The power of plant directors and of foremen has been re-
inforced in order to make sure that discipline is maintained
and performance improved. Directors and foremen are fully
responsible for their fields o' operation and to help them
they have been given broad powers. They can, of course, try
to improve production through the use of bonuses, but at the
same time they are empowered to take disciplinary action where
they deem it necessary. Thus, according to the regulations,
the chief of a section decides the employment and the firing
of the worker. He has the right to promote those he thinks
are working satisfactorily and to punish those who do not.
Stakhanov Pressure
The incessant demands for more work for the same amount
of money are not only a source of irritation to the workers, but
also to management which finds itself charged with the responsi-
bility for achieving supplementarr production. As the West Ger-
man labor organ Freies Wort has remarked, "this insane system
can hardly be called a worker paradise and makes life impossible.
The only result is that it kills any incentive to work and even
kills the joy of living."
The East Zone regime has attempted to spur production
through the introduction of a !.lumber of Stakhanov-type competi-
tions. The first Stakhanov in the East Zone was a coal miner
named Adolf Hennecke who, in .1948, produced 380 percent above
the norm on a single occasion. As a result, his admiring fellow
workers smashed all the windows in his house and ostracized him,
while the regime rewarded him with a soft job in a ministry.
There has also been a "100,000 Kilometer Movement," to which
truck drivers may belong who have covered that distance without
requiring a major overhaul of their vehicles.
Then there is the Nina Nasarowa Movement. This movement
is named after a Russian textile worker who promised to keep
her machine in working order on her own time. As a result of
this, the East German regime instituted the movement in their
zone. It means that workers now have to be at their post 15
minutes before shift time to clean their machines.
There have been any number of similar movements in East
Germany. One of the most fascinating, at least from a Western
point of view, is the "50-Watt Bulb Movement." Those who be-
long to this movement undertake not to burn at one time any
more than a single 5-watt bulb in their homes in order to con-
serve power.
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There is also the "3,000-Liter Movement," according to
which each cow is supposed to be induced, so far as is possi-
ble, to produce 3,000 liters of m Ilk a year.
However, these weird aids to stimulate production have not
been too successful and SED leader Walter Ulbricht had to admit
that 59 percent of plants in East Berlin are working at a loss,
while the deficit for all plants throughout the Eastern Zone is
25 percent.
Poor Planning Irks Workers
In East Germany,as in Russia, the Communist government has
tried to "plan" everything and control the output of every
single plant. Every minor decision has to be made in East Ber-
lin. This scourge of bureaucracy is a constant topic for com-
plaint throughout East Germany. Workers prefer to work in
small plants still under private direction, rather than in the
big socialized plants, because p,-ivate enterprises are more
efficient and human relations better. The Communist leaders
recognized this attitude in their, "reforms" which followed the
1953 uprising. For a while, private business was given some
leeway. Private firms up to medium size have been permitted
to continue in some fields. But the squeeze is being put back
on private enterprise this year through stiffer taxes and a
forced draft of privately employed workers.
East Germans also are irked because most of the goods they
manufacture are exported to the East and the German workers see
no equivalent in return. New railroad cars are an example.
Many are built in East Germany, but none has been put into ser-
vice on the railroads there. Details of East Germany's foreign
trade are withheld from the public. The East Germans know, how-
ever, that much of their output goes to Russia and the Satellites.
Workers resent the constant increasing of production quotas
which amount to repeated wage cues. Real wages in East Germany
now are calculated to average only about 60 percent of those in
West Germany.
The Farmer
It is much more difficult; to organize farm populations
than urban groups and it is harder to enforce the delivery of
farm goods than industrial products. The first step taken by
the Soviet authorities in the DDR was a land reform that was
supposed to win friends by giving land to those who were with-
out property. About 20 percent of productive land was taken
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away from some 11,000 landownees and 210,,000 new ownerships,
mainly from the ranks of laborers and refugees, were created.
During this process a complete dependency of the farmer was
established. Machinery had to be loaned from fixed centers,
financing and sale were taken over by combines, and coopera-
tives were absorbed by the state. The allegedly voluntary
pooling in varying degrees of land, animals and equipment in
the form of cooperatives was ruthlessly enforced with the
obvious, objective of introducing a total collectivization of
agricultural production.
The obligatory delivery quotas, particularly for the
larger farms, were intentionally fixed beyond the potential of
the farms and could not be met. Eventually, the choice. for the
peasant was arrest for sabotaging the Five Year Plan or escape
to the West.
. Terror was used against the peasants by brigades of Com-
munist workers, who were sent out to the country searching and
arresting, "legalizing" their criminal behavior by bringing
with them "special mobile courts" for the trial on the spot of
farmers for non-fulfillment of delivery quotas.
These efforts by the DDR regime failed, however, as
proved by its appeal in June 1953 to the farmers who had
escaped to the West, to return, repossess their property and
"live in peace." As experience in the Soviet Union and in the
Satellites has shown, it is hard to convert farmers to Communism.
So far, the Communists have broken the estates, but not the
farmer in the Eastern zone.
The Great Exodus
. . As a result of the Communist pressures on the population,
there has been a huge exodus of people from the Eastern zone over
the years. More than 1,000 doctors have fled East Germany this
year compared with 296 last year. Authorities in West Germany
estimate that there is now one do:;tor for every 1,700 population
in the East against one for 750 in West Germany. Polish and
Czech doctors have been called in to help staff East German hos-
pitals and some institutions have had to close their research
departments for lack of personnel.
Nor are doctors the only group in the new flow of refugees
who have been streaming towards the West. The number of school
teachers, students and other intellectuals has increased by simi-
lar proportions. More than twice as many university professors
fled in the first nine months of 1958 than in all 1957. Grade
school teachers, dentists, veterinarians, students and engineers
have brought the number of professional people among the refugees
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to double what it was a year ago. There were 21,107 in Sept-
ember, an average of 703 people every day. This is not a re-
cord. There was a period in 1953 when 2,000 left their homes
and moved West each day. West German officials estimate that
3,000,000 East Germans have joined their population since the
Bonn government was set up in 1949.
In the early days there was a preponderance of peasants
and businessmen, but now there are more intellectuals. Both
the East German and West German Governments have become in-
creasingly distressed, although not entirely for the same
reasons. Aside from the political and prestige loss, East
Germany now faces a serious threat to its economic plans for
lack of skilled. manpower. When Khrushchev visited East Germany
last July, he lectured at length on the need to pay their intel-
lectuals well and to treat them nicely even if they did not
accept Communism. "Leave political convictions out of the
picture," he urged.
The greatest impetus to the flight of intellectuals seems
to have been the program approved by the last congress of the
East German Communist Party. It laid down plans for what the
West Germans call "Sovietization" and sought to put down unrest
among youth and intellectuals with new stern measures. Several
retreats have been made from this program in a belated effort
to slow down the new flood of refugees it loosed. A rule for-
bidding the children of professional people admission to univer-
sities was canceled; doctors were promised they would once again
be allowed to visit West Germany.
Red Threats
Communist authorities try to halt the westward flights by
threats and restrictive measures. Any East German resident must
apply to the police for a permit to travel, particularly to the
West Zone. Travel abroad is restricted mainly to official propa-
ganda delegations which can be watched.
Even East German scientists who want to attend scientific
meetings outside East Germany must first attend trials of men
who have tried to obtain jobs in another country. Trying to get
work abroad is a "crime" punishab:Le by sentences up to life im-
prisonment.
Police terrorism is an old story to East Germans. Police are
everywhere. They check travelers in trains and railroad stations.
They check workers at the factory gates. They inspect hotels and
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dance halls and each apartment house has its Communist warden
who informs police of all suspicious activities.
Another element of discontent among workers in the East
Zone is the pressure used to prevent any contact with friends
and relatives who live in the Western areas. The West Berlin
publication Freies Wort, which is dedicated to labor affairs,
has summed this up in the following words:
"The uncertainty of one's personal life is
unfortunately one of those things which can-
not be explained to those who live in West
Germany....a worker can. go on doing his duty
for years and when a little thing happens
such as a trip to West Germany, the person
in question is hurled into the depths and
even membership in the Party is not always
enough to rescue him. The staff is broken
across his back and he sees himself branded
in the local press."
The frantic efforts the East: German regime makes to hinder
the movement of people between East and West Germany are all the
more unpopular inasmuch as they are a flagrant denial of the
terms of the so-called Constitution. Paragraph 8 of that docu-
ment says that "personal freedom, the inviolability of the domi-
cile, the secrecy of postal communications and the right to live
in any place, are guaranteed."
The truth is that in the East Zone nothing is guaranteed
and as in all Communist regimes there is no question of personal
liberty. Furthermore, Article 10 states that any citizen may
leave East Germany if he desires. This hardly concords with
the thousands of special police who patrol the border between
the two Germanies or with the hundreds of frontier watch towers
and their machine guns or with the hundreds of miles of electri-
fied barbed wire which keeps those of the Eastern zone separated
from their brothers in the West.
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LOW STANDARD OF LIVING IN EAST GERMANY
March 1959
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LOW STANDARD OF LIVING IN EAST GERMANY
The unpopularity of the East German Communist regime is
basic and can be ascribed in large measure to the fact that
a population which once enjoyed one of the highest standards
of living in Europe is today forced to accept a sub-standard
subsistence level.
Soviet insistence that the satellite nations concentrate
all their energy on the production of capital goods, as opposed
to a system in which there is a normal balance between that
and the production of consumer goods, has led to a situation
in East Germany, similar to that of the other captive nations,
in which items of everyday use have become virtual luxury goods.
The resultant hardship for the population is all the
greater since there are no labor unions to fight for higher
wages for the workers, and use of the strike weapon by which
a people could demonstrate dissatisfaction with living condi-
tions would be considered a crime against the State.
The level of availability of consumer goods in 1950 was
so low that the government was obliged to sanction an increase.
However, this was still insufficient and in 1953 the uprising
brought. about the so-called New Course in which the government
promised to reduce the rate of investment in heavy industry
and to increase the production and distribution of consumer
goods.
To a certain extent this was done, but the speed of the
investment program resulted in a considerable waste of resources
and a slow-down was necessary to capitalize on the investments
already made. It became evident in 1955 that the East German
standard of living was below that of 1939 and certainly one-
third below that enjoyed by Wert Germany.
Wages and Prices
Until the middle of 1958, rationing was the main instrument
whereby the distribution of scarce consumer goods was controlled.
Although the amount of consumer goods had increased to a cer-
tain extent when the end of rationing came, the supply was still
so short that new controls had to be introduced in the form of
wage ceilings and price manipulations.
In 1956, real wages in East Germany were calculated to be
about 60 percent of the value of the pay received by West
German workers. This brought the living standard of East Ger-
many to the level it had in 1936 when the country was in the
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grip of the Nazis.
Take-home benefits were increased in 1958 although there
was no increase in wages. This was done through a system of
bonuses in different guises. It had the advantage for the
State that a bonus can always be eliminated whereas it is
extremely difficult to get a worker to agree to a basic wage
cut once there has been an increase. During the same period
the basic wage increase in West Germany was 7 percent.
Even though there has been an improvement in the East
German situation in recent months, nevertheless by 1959 it was
estimated that workers and employees there were 20-25 percent
behind the standard in West Germany. One calculation placed
the average hourly wage of the East German worker at 1.68 DM
and that of the West German at 2.60 DM. Another estimated
the average monthly income for East German workers at 84 a
month, with skilled workers able to make as much as $180. But
wage earners in consumer industries were paid less than those
in other industries and early in 1959 the government issued a
new wage policy in accordance with which many jobs were down-
graded on the wage scale. This new wage policy also tied
wages to productivity which is one of the high pressure methods
employed to increase production.
West Germany achieved a very high standard of living and
a booming economy well before East Germany could afford to end
its rationing of essentials.
The economic imbalance brought about by the Communist pro-
duction system has meant that the East Germans are largely
dependent on imports for their consumer goods which are fre-
quently of shoddy quality and in short supply.
Food in East Germany is expensive and it was estimated.
that in 1957 the individual had to spend about 55 percent of
his earnings to eat. With de-rationing this was expected to
increase even higher, and this turned out to be the case in
mid-1958 when rising prices took the place of rationing. For
instance, steaks which had sold at 21 DM each under rationing
were now selling at 6 DM, while milk rose from 40 pfennigs to
80 pfennigs a quart.
By 1959, with East German standards said to be less than
four--fifths those of West Germany, the prices of man basic
foods were reduced, although coffee was selling for $8 a pound
and a small bar of chocolate was retailing at 80 cents., A
cheap suit of synthetic fiber cost about a month's wages in
East Germany while on the other side of the border it could be
purchased for less than half that amount. At the same time,
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the supply of shoddy goods was uneven and ordinary items such
as pins, parts for household equipment, etc., were largely
unobtainable.
Considerable discontent was aroused in the Zone as a result
of the 1959 Leipzig trade fair because of the huge amounts of
consumer goods sent into the area as part of the Communist
propaganda campaign designed to extol the desirableness of the
workers' "paradise." One inhabitant of Dresden said that there
was no butter to be had in that city because it had all been
sent to Leipzig.
East German Economic Orientation
The economic plight in which East Germany finds itself is
the result of two main causes. One is Russian exploitation,
and the other is the policy stressing the production of capital
goods.
In the years immediately following the war the East German
economy was strained to the utmost to pay war reparations to
the USSR. Not only was the percentage of the gross national
product taken by the Soviets excessive--it was estimated at
25 percent through 1953--but the categories of goods exacted
as reparations were prescribed by the USSR, thereby adding to
the production imbalance of the area. In addition to this,
the Russians dismantled and took to Russia a large number of
plants which were needed to maintain a balanced economy. East
Germany met Soviet demands by reducing its own consumption and
by straining to shift the emphasis to new industries to fit
into the prescribed production pattern of the Communist Bloc.
Before the war, East Germany, a fertile agricultural area,
had an exportable surplus of grains, potatoes and sugar beets.
By 1956 most of its food was being; imported while industrial
output had increased over the prewar figure. The production
of consumer goods and light industry--processing and finishing
industries--had characterized the area's industry before the
war. By 1955, some 73 percent of East Germany's exports were
going to the Soviet Bloc and they were mainly in the heavy
industry category.
The planned economy of the Communist system has a strong
autarkic bias in an attempt to be self-sufficient. East Ger-
many is trying to develop its own balanced economy by producing
those things which it formerly obtained from the western part
of the Reich. However, there is a definite contradiction for
the time being at least inasmuch as East Germany, instead of
creating a balanced economy, has sacrificed its production of
agricultural and other consumer goods to the point where it
must import most of its food from the Bloc. What has been
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achieved, therefore, is an autarkic condition within the Bloc
rather than within East Germany itself.
Meanwhile, the emphasis in East Germany is on big projects.
Even with a sizable annual deficit--in 1958 the USSR supported
the East German economy with loans and credits totaling 700
million rubles--East Germany has embarked on the building of
a port for ocean-going vessels at Rostock, despite the fact
engineers have said this is impossible owing to the topography.
Seven hundred million marks are to be spent on the harbor plus
another 500 million on a connecting canal and railroad lines.
Availability of Consumer Goods
When the war ended, West Germany soon outstripped the
Eastern zone in recovery. Not only did West Germany rebuild
more quickly, but it maintained a healthy living standard, while
the East Germans were at a level which was barely sufficient to
sustain life. The East German economic plans for 1956-1960 and
1961-1965 continue to emphasize investment, capital goods and
heavy industry, to the detriment of consumer goods which will
continue to be in short supply.
Agricultural production has been characterized for many
years by insufficient investment, inadequate use of fertilizers
and worn-out machinery. In 1956, for example, 100 out of 275
harvesting machines in the Halle area were out of commission
for lack of essential replacement parts. In 1955, the plants
had switched to the production of the "Stalin" type tractor
which was unusable in the hilly country of East Germany and
had to be sent back to'Russia. As a result, in 1956, agricul-
tural output was no higher than it had been in 1950 and was
still below the figure for 1936. Industrial production, how-
ever, was 80 percent above that of 1936.
The people of East Germany are dependent on imports for
a large portion of their consumer goods and in 1956 food consti-
tuted 40 percent of their total imports, although the Germans
did not have to import food products before World War II. In
1957, they had to import 50 percent of their grain. The import
of basic food products has increased in the following amounts
between 1950 and 1958: meat, two times; butter, more than two
times; animal fats, five times; vegetable oil, ten times and
grains, four times.
The economic targets in the 1961-1965 plan show that there
will be a continued concentration on exports to the Soviet Union.
East Germany is the chief exporter of heavy industrial products
to Russia, providing some 20 percent of all her imports in this
category while Russian deliveries make up 50 percent of all East
German imports.
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In early 1959, the East German regime said that the build-
ing of the basic industrial plant "is to continue to have
priority over the manufacture of consumer goods." Supplies of
consumer foods are to rise by 1960, but only if production
standards are met in all other branches of the economy. The
statement was followed with the admonition that the standard
of living would be improved only if the citizens worked harder.
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EAST GERMAN FOREIGN TRADE: POLITICAL, NOT ECONOMIC
March 19`?9
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EAST GERMAN FOREIGN TRADE: POLITICAL, NOT ECONOMIC
The East German trade agent abroad is a member of the
East German governmental apparatus, regardless of how he re-
presents himself. He may represent a particular factory,
enterprise or industry, the German Democratic Republic (GDR)
Chamber of Foreign Trade, or an ostensible commercial company
such as the Deutsche Ein and Ausfuhr GmbH (German Import and
Export Co.), but as a member d the GDR governmental apparatus,
lacks the flexibility in bargaining possessed by sales and
purchasing agents from non-Communist countries. He is also
a political agent seeking to advance a political objective,
for every trade transaction with a non-Communist country is
calculated primarily to achieve a political advantage and
is viewed only secondarily in economic terms.
The GDR conducts the greater part of its trade--over 70
percent--with the Bloc; and its economy, including the foreign
trade sector, serves first the needs of the USSR and the Bloc
and only secondarily the needs and interests of East Germany.
The GDR is subject to orders from the Soviet Union and CEMA
(Council for Economic Mutual Arid) as to what it shall produce,
where it must buy its imports, and where it shall be permitted
to sell its exports. As a result, in many cases it sells its
products to the USSR and the Bloc at less than world market
prices and buys from them import goods at prices above those
the West would charge for the same items.
Although recognized diplomatically only by the member
states of the Sino-Soviet Bloc, the GDR carries on trade re-
lations with 130 different countries and territories. However,
because of its subordination to Soviet-Bloc needs, GDR trade
agents, in their dealings with non-Communist countries, are
not free to offer the whole gamut of GDR production or to bid
for all local products which might meet GDR import needs.
Soviet and Bloc import-export needs must be satisfied first.
The only exceptions are those authorized by the Soviets to
advance Communist penetration of a particular country.
Another drawback which non-Communist countries face in
trading with the GDR is that the latter's products are fre-
quently sub-standard. As a result of worker apathy, shortage
of trained workers due to flights to the West, and use of in-
ferior materials, GDR products do not always reflect the tra-
ditional German efficiency and. craftsmanship which still
characterize West German manufactures.
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Administrative Mechanisms
From the founding of the GDR in 1949 until 1951, GDR
foreign trade was controlled by an organization called
Deutsche Aussenhandel (German Foreign Trade - DAHA). In
September 1951, however, control of foreign as well as of
domestic trade passed to the newly created Deutscher Innen-
und Aussenhandel (German Domestic and Foreign Trade - DIA),
a section of the Ministerium fuer Aussenhandel and Inner-
deutschen Handel (Ministry for Foreign and Intra-German Trade
MIA).
The DIA, which has the responsibility of executing over-
all planning in foreign trade, operates through special sub-
divisions for the various groups of,industries. Since the
1958 decentralization of the GDR governmental economic appara-
tus, the MIA has also had branch offices in all bezirk (admin-
istrative districts analogous to provinces) capitals. These
offices maintain contact with bezirk-controlled enterprises
and industries and provide them wit i advice, guidance and
support in problems concerned with foreign trade. However,
all foreign trade decisions,'policy or otherwise, are made by
DIA or the all-powerful Party organs.
In the GDR, economic activity is based on planning and
scheduling, for which the main responsibility lies with the
State Planning Commission. In the field of foreign trade,
however, the Commission's authority is somewhat curtailed by
the necessity of having to give priority to CEMA directives
and also by the Coordination and Control Office for Domestic
and Foreign Trade. Created in late 1952, the Control Office
has the right in certain cases to give orders to the Planning
Commission.
The indistinct lines between Party and governmental
authority and the priority of political over economic interests,
however, continue to create jurisdictional problems. In late
1958, for example, DIA was forced to pay for 50,000 cubic meters
of unwanted lumber imported from the Soviet Union because Bruno
Leuschner, chairman of the Planning Commission, had negotiated
a contract for its purchase in Moscow in June 1958, despite the
fact that the GDR already possessed large stockpiles of lumber.
The MIA and DIA also lack control over trade carried on
by the Deutsche Ein- and Ausfuhr GmbH. This is a Party-con-
trolled organization wi.ich conducts illegal trade with West
Germany and other European countries, particularly in connection
with the importation of steel and scarce non-ferrous metals.
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Subordination to Bloc Interests
In general the GDR economy, including the foreign trade
sector, is operated not for the benefit of East Germany and
its inhabitants but for the interests of the Bloc in general
and those of the Soviet.Union in particular. That is to say,
the GDR produces for export those products which the USSR,
acting through CEMA, orders it to produce.
This subordination to Soviet; and Bloc needs was acknow-
ledged officially in the First; East German Five Year Plan,
which states:
Our foreign trade must be intensified, particularly
with the Soviet Union, the Popular Democracies, and
Popular China,...By means of long-term trade treaties
it is necessary to assure a production which corres-
ponds to the desires of our partners....
A similar statement is included in the Second Five Year Plan.
In the future, the economy is to be linked even closer
to that of the rest of the Bloc. An SED convention in July
1958 was told that CEMA had decided the GDR should become the
center of the Bloc's chemical industry and that the Third
Five Year Plan (1961-65) would therefore have as its major
goal the development of that industry.
The extent to which the GDR's foreign trade is already
linked to Bloc needs is reflected by the fact that, in 1957,
the GDR conducted 73 percent of all its trade with Sino-Soviet
Bloc members. It was the USSR's most important trading part-
ner, supplying one-fifth of all Soviet imports, while the GDR
obtained more than one-half of its imports from the Soviet
Union.
Effect of Integration on Trading Patterns
This subordination of the GDR economy to Soviet and Bloc
needs is not without significance for East Germany's present
and possibly future non-Communist trading partners. When MIA-
DIA bureaucrats abroad approach a foreign country about the
possibility of trade, they are not free to offer the whole
gamut of GDR production or to bid for all local products which
might conform to GDR import needs. GDR production must first
of all satisfy Soviet and Bloc demands; only what is left can
be offered for sale elsewhere. Similarly, GDR import needs
must first be met from goods available for export in the Soviet
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Union and other Bloc countries. Only those requirements not
met by these sources may freely be bargained for in the non-
Communist world. There are, of course, exceptions to the
above, but the pattern is always a factor in GDR trade.
The situation also provides an illustration of the extent
to which economic requirements are outweighed by political
exigencies. In 1955, the GDR had to pay more than world market
prices for 15 of 21 Soviet export items for which statistics
are available, so that total GDR imports from the USSR cost 25
percent more than they should have. In 1956, its bill to the
USSR was 16 percent more as a result of overcharges for 18 out
of 29 commodities and 11 percent more in 1957 due to excessive
prices for 14 out of 20 items. Amon; the principal overpriced
products were wheat, cotton fibers, butter, vegetable oils,
crude oil and zinc.
In the case of cotton, the Soviets were exploiting not
only East Germany but also Egypt. Since 1955, the Soviets have
taken a large part of the Egyptian cotton crop as payment for
arms and other credits extended to that country. But since the
USSR already produces enough cotton for its own use, it resells
most of this Egyptian cotton. The GDR (and also the other satel-
lites) buys it at prices higher than if it dealt directly with
Egypt, while the latter is deprived of a market for its remain-
ing cotton. When GDR trade agents deal with Egyptians, there-
fore, cotton does not figure as prominently in their bargainings
as it otherwise would.
In similar fashion, the GDR must frequently sell its goods
to the USSR at prices below the regular market price. In 1955,
for example, the Soviets underpaid for 10 out of 18 products
for which statistics are available, for 14 out of 23 in 1956,
and 13 out of 19 in 1957. Had the satellites sold these same
items elsewhere, they would have realized 23 percent more in
1955, 20 percent more in 1956, and 21 percent more in 1957.
Trade With Non-Communist World
Exceptions to this pattern of enforced intra-Bloc trading
occur when the USSR, for political reasons, decides that a satel-
lite should be free to buy certain import needs from, or sell
certain of its manufactures to, a non-Communist country. Thus,
for example, under the 17 November 1958 trade agreement signed
with the Republic of Guinea--the first international agreement
concluded by that newly independent country--the GDR undertook
to purchase coffee, bananas, oilseeds and other agricultural
products from Guinea in exchange for complete industrial plants,
textiles, chemical products and various consumer goods. Carl
Eckloff, GDR Deputy Trade Minister who negotiated the pact,
later publicly boasted of its political significance.
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Eckloff's attitude should not be considered unusual since
it is axiomatic that every GDR trade deal with a non-Communist
country has been carefully weighed .as to its political advanta-
ges and desirability, while type and quantity of goods involved
must accord with over-all planning quotas and specifications.
If Communist political objectives or GDR planning goals should
change, the GDR trading partner discovers that the GDR declines
to make promised purchases and that the promised GDR goods are
not forthcoming.
Another hazard facing GDR trading partners is the possi-
bility of finding themselves stuck with poor quality goods or
services. The traditional German efficiency and craftsmanship
are far from being reflected in full measure by East German
products, as a result of worker apathy, shortages of trained
workers (the best have fled to the West), and the use of inferior
materials.
Indonesia provides an excellent example both of the politi-
cal aspects of GDR trade and of the inferior quality of GDR
products. In recent years the GDR has participated in Commun-
ist efforts to secure an economic foothold in Indonesia. Its
exports to Indonesia, which totalled only 100,000 rubles in
1953 and one million rubles in 1954, jumped to 26.9 million in
1955 and have continued to increase since that time. GDR im-
ports from that country, non-existent in 1953, were 1.2 million
rubles in 1954 and 2.3 million in 1955.
When significant trade began in 1955, one of the first
major items to be delivered by the GDR was a complete modern
sugar cane mill, costing approximately 40 million rubles. As
an inducement to Indonesia, the GDR agreed to provide the
installation on long-term credit and to supply the specialists
to assemble it. Built near Jogjakarta on the island of Java,
the plant--Made Kismo Sugar Mill--was scheduled for completion
in August 1956. Actual completion, however, was delayed almost
two years by slow deliveries of GDR machinery, by a lack of
spare parts, and by a deterioration of some of the machinery
while in storage. Moreover, the Indonesians discovered to
their dismay that the final cost was five to six times more than
the original estimate.
When the mill finally opened in June 1958, it broke down
immediately. Due either to faulty design or installation, or
both, the Germans had failed to provide for proper drainage.
As a result, 14 generators were flooded, forcing the mill to
close. In August Indonesian Agriculture Minister Sadjarwo told
the Antara News Agency that he hoped the mill would be able to
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EAST GERMANY: A PLANNED ECONOMY
March 11359
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EAST GERMANY: A PLANNED ECONOMY
East Germany is the leading satellite in industrial
output and in trade with the Soviet Union. It exports
machinery, chemicals, electrical engineering products and
heavy industrial installations in return for raw materials
and food. A member of the Communist Bloc since 1945, East
Germany has a planned economy dominated by the Soviet Union
for its own, rather than East German, purposes. Soviet aims
in East Germany are to exploit the East German economy, to
further Soviet military and political aims, and to integrate
East Germany into the Soviet empire.
The East German economy, planned in accordance with the
Soviet model, has not succeeded in giving the East German
people a standard of living equal to pre-war levels. Emphasis
in successive long-range plans has been on industrial produc-
tion, principally heavy industry, and on collectivization in
agriculture. After the period of crippling reparations pay-
ments exacted by the USSR at the end of the war, the East
German economy made considerable strides in improving indus-
trial production. In 1956 the government claimed to have
reached a 90 percent increase over the 1950 level, which,
however, was only 85 percent of 1936 production. The current
plan (Second Five Year Plan 1956-1960 scheduled a lower rate
of industrial increase and that figure has since been revised
downward.
It appears probable that the revised goals of the cur-
rent plan are the result of failures to meet intermediate
target figures. Although the production level of the East
German worker is high, the economy suffers from a number of
negative factors. Over-all plans.made and administered by
a centralized authority far from the producing units fre-
quently result in unrealistic goals and inefficient use of
materials, labor and credit. The labor force has been de-
clining steadily since 1949 because of the exodus of refugees
resulting from the unpopularity of the regime and the greater
economic opportunity in the West.
In agriculture the policy of collectivization has proved
disastrous. East Germany, a fertile agricultural area which
before the war exported food, now is required to import it
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to feed its population. Agricultural production in 1956 had
not increased above the 1950 level and still remained much
below the pre-war figure. In spite of coercive measures by
the regime, which have driven many farmers to abandon their
farms and flee to the West, the -socialized sector is still
only 46 percent of the total agricultural land.
In view of the decline in t'ae growth rate of the economy,
the continuing loss of manpower, and the stagnation in agri-
culture, it appears unlikely that the Soviet-directed economy
will ever catch up with the standard of living in West
Germany.
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Economic Structure
The German Democratic Republic (GDR) is the most indus-
trialized of the European satellite states, the chief ex-
porter of heavy industrial products to the USSR and Moscowts
most important trading partner. East Germany produces and
exports machinery, chemicals, electrical engineering products,
and heavy industrial installations and in return buys from
the USSR and the satellites raw materials and food.
Since, before the war, East Germany was a highly indus-
trialized area with diversified industries, an industrious
and skilled labor force, and a greater proportion of the
labor force in industry than in agriculture, it would appear
that it was a perfect proving ground for the establishment
of a Marxist economy. The Communist takeover in 1945 was
followed by the development of a planned economy according
to the Soviet model. Industry, transportation, financial
institutions, and trade have been wholly or largely taken
over by the state. The private sector of the economy has
shrunk. In agriculture the aim of complete collectivization
has been announced and partially accomplished.
The results, midway through the Second Five Year Plan,
are disappointing. The standard of living is still below
pre-war levels. In comparison with the free market economy
of West Germany, East German living standards are less than
four-fifths of those in West Germany, while since 1950 the
average income in West Germany has increased one and two-
fifths as much as it has in the Soviet zone.
In the Soviet zone the emphasis has been upon heavy
industry rather than consumer goods. In industry, production
has indeed risen from the extremely low post-war levels. By
1953, however, the East German gross national product (GNP)
was still slightly below the 1938 level. As estimated in
1958, the East German GNP has only increased about 10-20 per-
cent in the aggregate, compared to 1936. In agriculture,
output in 1956 had not increased above that of 1950, and
still remained below the 1936 level. In fact, East Germany,
a fertile agricultural region which before the war was an
exporter of agricultural produce, is now required to import
food in order to feed its population.
Area and Population
East Germany and East Berlin together contain
41,726
square miles or 23 percent of pre-war Germany. In
1937
Germany had a population of 69.3 million, of which
16.7
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million or 24.3 percent lived in what is now East Germany.
In the years immediately following the war, large numbers
of refugees from the territories east of the Oder and Neisse
rivers entered the Soviet zone of occupation raising the
population to slightly over 19 million. Since 1949, how-
ever, the population of the zone has declined steadily,
reaching an estimated 17.6 million in December 1956. The
loss is due primarily to the refugees who move to West
Berlin or West Germany, and whose numbers exceed the natural
increase in the population.
Labor Force
The population figures of East Germany are of great
significance in the country's economy because the decline
has had a damaging effect upon the labor force. The refugee
flow, caused both by the unpopularity of the regime and the
greater economic opportunity in the West, has siphoned off
primarily men in the working-age group. The age and sex
distribution, already distorted by the war, has therefore
deteriorated further. In 1939 the working-age group (men
aged 15-64, women aged 15-59) totalled 67.5 percent of the
population; in 1955 the percentage was 63.2 percent but the
percentage of men in the labor force had fallen from 50.6
to 45.7 percent.
In comparison with the pre-war situation, the GDR there-
fore now contains relatively fewer people in the potential
labor force compared to the total population. Furthermore
the percentage of both young and old is higher than it was
before the war and the ratio of men to women is more unfavor-
able. The effect of these trends upon an economy dedicated
to increasing industrialization with emphasis upon heavy
industries is of the greate.t importance.
Pre-War Economy
Prior to the Nazi takeover in 1933, Germany was a
highly industrialized country with a free enterprise eco-
nomic system. East Germany was as industrialized as West
Germany, although the Eastern area contained a higher per-
centage of processing and finishing industries. During the
Nazi era, state-controlled combines were established, par-
ticularly in the armaments industries. However, these were
intended to bolster the war production effort rather than
to supersede private ownership or enterprise.
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Soviet Economic Policy in East Germany
Since the end of World War II and the division of
Germany into Western and Eastern zones, the economy of the
two regions has developed very differently. East Germany,
under Soviet occupation since 192+5, has been subjected to
different occupation policies, different domestic economic
policies and integration into a different foreign trade area
than has West Germany. The result has been that in the West
the traditional free enterprise system has been resumed
while in the East a planned economy dictated by the USSR has
taken its place.
Soviet economic policy in East Germany has been conducted
with the following aims in view: (1) to exploit the East
German economy for the benefit of the USSR; (2) to integrate
East Germany into the Soviet empire as a satellite state;
and (3) to further Soviet military or political aims. In
East Germany as in the other satellites, the determining
factor of all economic planning is the long-range political
advantage of the USSR.
The principal economic authority in each of the satel-
lites is the Planning Commission. To coordinate the work
of the various satellite planning commissions, the USSR
established a special agency, the "Council for Mutual Eco-
nomic Assistance." By 1950 all the European satellites
were members of the Council. A:I..though theoretically the
Second Five Year Plan, which began in 1956, was internation-
ally coordinated, the East German economy in fact is planned
to obtain national self-sufficiency. Although the Soviet
Bloc planners do not appear ouccessfully to have solved the
problems of multilateralism within the Bloc or those arising
from foreign trade outside the.13loc, a certain amount of
coordination has been accomplished. The satellite foreign
trade programs are responsive to over-all Soviet planning
and the satellite economies have developed a considerable
mutual dependence and a corresponding separation from the
West.
System of State Control
The ruling political authority of East Germany, the
(Communist) Socialist Unity Party (Sozialistische Einheits-
partei Deutschlands - SED), controls the economy as it does
all other aspects of East German national life. The SED,
under the leadership of First Secretary Walter Ulbricht,
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is one of the most Stalinist Communist Parties in the Bloc
and follows Soviet policy closely. In controlling the econ-
omy the highest governing body, the East German Council of
Ministers, acts through the Stake Planning Commission, the
Central Commission for State Control, and the East German
state bank.
The State Planning Commission is responsible for working
out the annual and long-range plans for the development and
operation of the economy. The Commission also supervises
the allocation and distribution of material supplies, organ-
ization of sales, utilization of reserves, collection of
statistics, and research development. It keeps watch on
the fulfillment of the plans while simultaneously the state
bank checks the over-all financial plan. The bank also
supervises the supply of currency and credit, and collects
revenue.
On the local level the plans are coordinated with the
administrative district economic councils, the nationally-
owned industries, and other economic organs to decide mate-
rials, labor, and financial resources needed to attain the
plan goals. However, the final decisions are made at the
top by the Planning Commission and handed down to the local
authorities for implementation. The fact that the plans
are made up and administered by a highly centralized author-
ity far from the producing units results in unrealistic
goals, inefficient allocations of material and credit, and
shortages of certain goods.
The state not only directs the producing end of the
economy, it also operates the major part of East German
trade, both domestic and foreign. Wholesale trade is com-
pletely controlled by the government through the German
Trade Centers (Deutsche Handelszentrale) in each major in-
dustry. Retail trade is partially controlled by the Trade
Organization (Handelsorganization - HO) which has preferential
status and a monopoly on higher quality consumer's goods.
The growth of the HO stores has paralleled a decline in
private retail trade. Foreign trade is controlled by the
German Domestic and Foreign Trade (Deutscher Innen- and
Aussenhandel - DIA), founded in September 1951.
East Germany Economy 1945-19+8
Soviet economic policy in East Germany immediately after
the war was one of ruthless exploitation. From July 19+5
until the end of 1948, reparations, exacted in varying forms,
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were the dominating economic factor. The Soviets, acting
independently of the Allied Control Commission, sent dis-
mantling teams into the Soviet zone almost with the second
echelon of the occupying armies. The teams had wide dis-
cretionary powers of selection and removal. Not only fac-
tories, but also telephone exchanges, railroad workshops,
haulage equipment and university laboratories were dis-
mantled and removed to Russia.
The factories which remained produced strategic goods
such as synthetic gasoline and rubber to be delivered to
the Russians as reparations. One of the economic control
measures instituted by the Soviets was the complete takeover
of about 200 of the largest and most important industrial
organizations as Soviet Joint Stock Companies (Sovietische
Aktiengesellschaf ten - SAG). The SAG's were gradually re-
turned to the East Germans. By L954 all were under German
control with the exception of the iismuth AG engaged in
uranium mining, which is now a joint Soviet-East German
corporation.
In 1948 after the currency reform to halt inflation,
Soviet policy put increasing emphasis on the Sovietization
of the zone. As in the USSR and the other satellites this
policy was conceived in terms of increasing industrializa-
tion and collectivization. Practically all the large, and
some of the medium-sized enterprises, previously privately
owned, were reorganized as state enterprises (Volkseigene
Betreibe - VEB). Reparations payments continued, estimated
as high as 25 percent of production, but the Soviet aim
was to restore and enlarge the East German industrial
machine.
Two Year Plan, 1949-1950
( -195O) was the first attempt at
The two year plan '(194)
large-scale economic planning. It was devoted at least in
part to obtaining basic information necessary for the more
extensive Five Year Plan to follow. The emphasis of the
two year economic program wa?3 on capital goods and raw
materials, with steel, iron, and soft metals taking the
top priority. The Russians increasingly took their repara-
tions payments in finished consumer goods and specialized
machinery. The result for the at German consumer was un-
favorable--the 9f theyinconsumer dustrialgproductiono
higher than than in 1946. However
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 Approved For Release 1999/08/24: CIA-RDP78-02771 R000100310004-0
increased, reaching the plan goal of 85 percent of 1936.
In agriculture while many of the large farms had been ex-
propriated and made into state farms, the drive to collect-
ivize medium and small farms was just beginning. Production
of grain, potatoes and sugar beets was still below the 1935-
1939 average yields.
First Five Year Plan, 1951-1955
The principal aims of the First Five Year Plan were to
increase collectivization in agriculture and to raise the
level of industrial production. In agriculture the effort
was directed principally to incorporating the medium and
small farmers into cooperatives (Landwirtschaftliche Produk-
tionsgenossenschaften - LPG). Due to the government's pro-
gram of raising production quotas of independent farmers
and propagandizing against them as "exploiters" and "class
enemies," the LPG's increased from 1,815 at the beginning of
1953 to 5,070 in June of that year. Many farmers fled to the
West rather than enter the LPG's. After the workers' upris-
ing of June 1953 and the proclamation of the "new course"
modifying the targets of the plan, the efforts to enforce
collectivization became less intense. The proportion of
socialized land during the last two years of the plan con-
tinued to be about 30 percent of the total agricultural area.
The socialist sector in industry increased from 76 per-
cent in 1950 to 86 percent in 1955. The goal for gross in-
dustrial production was officially declared to have been
reached with a claimed increase of 90 percent over the 1950
level. The "new course" altered somewhat the operation of
the plan for 1953-1954 but there was little or no change in
the objectives of the over-all plan. Supplies of food and
housing were still substandard when the plan was completed.
Second Five Year Plan, 1956-1960
The Second Five Year Plan was announced in March 1956.
Its goals were similar to those of the previous plans, al-
though the planned increases were not as large. The original
announcement called for a 55 percent rise in gross industrial
production and about 22 percent in agricultural production.
In October 1957, however, a revision of the plan was announced
which reduced the goals for industrial production to 34 per-
cent and revised investment plans for 1958-1960.
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It seems probable that the plan revisions were caused
by the slowing down in the rate of growth in the economy
and by failures to meet planned goals in 1956-1957. Even
the degree of recovery which the East German economy achieved
after the war has been accompanied by a number of negative
factors. Machines and plants are older and in worse condi-
tion, the quality of goods produced is poor and below West-
ern standards, and even more oeri_ous, the labor force con-
tinues to decline. These f actor$$, plus the disastrous
policy of collectivization in agriculture, make it unlikely
that the East German economy can continue to grow sufficiently
to bring the East German people even up to their pre-war
standard much less to that of prosperous West Germany.
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