PROBABLE ECONOMIC DEVELOPMENTS IN EAST GERMANY THROUGH 1955

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01093A000400170001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 85
• Document Creation Date: November 9, 2016
• Document Release Date: February 12, 1999
• Sequence Number: 1
• Publication Date: February 15, 1954
• Content Type: IR

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PROVISIONAL INTELLIGENCE REPORT
PROBABLE ECONOMIC DEVELOPMENTS
IN EAST GERMANY
THROUGH 1955
CIA/RR PR-48
15 February 1954
DOCUMENT NO.
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CLASS CHANGED TO
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DATE:_VF_`7 EVIEWEC. ,2_
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
US OFFICIALS ONLY
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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CONFIDENTIAL
US OFFICIALS ONLY
PROVISIONAL INTELLIGENCE REPORT
PROBABLE ECONOMIC DEVELOPMENTS IN EAST GERMANY THROUGH 1955
CIA/RR PR-48
(ORR Project 10.103)
The data and conclusions contained in this report
do not necessarily represent the final position of
ORR and should be regarded as provisional only and
subject to revision. Comments and data which may
be available to the user are solicited.
Office of Research and Reports
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CONTENTS
Page
Summary and Conclusions . . . . . . . . . . . . . . . . . .
1
I.
Economic Organization and Policy . . . . . . . . . . . .
5
A. Soviet Organization and Policy . . . . . . . . . . .
5
B. German Economic Organizations . . . . . . . . . . . .
15
1. Governmental Organization . . . . . . . . . . . .
15
2. Extent of State Control of the Economy . . . .
17
3. Economic Planning . . . . .
. . . . . . . . . . .
20
C. Economic Policy . . . . . . . .
. . . . . . . . . . .
25
D. The "New Course" . . . . . .
. . . . . . . . .
27
II.
Economic Development of East Germany
. . . . . . . . . .
30
A. Over-All Development . . . . .
. . . . . . . . . . .
30
B. Industry . . . . . . . . .
. . . . . . . . . . .
32
C . Agriculture . . . . . . . . . .
. . . . . . . . .
38
III.
Foreign Economic Relations . . . .
. . . . . . . . . . .
40
A. Pattern of Trade . . . . . . .
. . . . . . . . . .
40
. . . .
1. East German Trade with the West . .
42
i
2. East German Trade with the Other Soviet Bloc
Countries . . . . . . . . . . . . . . . . . . .
44
B. Role of East Germany in the Soviet Bloc Economy . . .
49
IV.
Labor and Population . .. . . . . .
. . . . . . . . . . .
A. State Control over Labor . . .
. . . . . . . . . . .
51
B. Manpower and Labor Planning . .
. . . . . . . . . . .
54
C. Labor Force and Population . .
. . . . . . . . .
55
D. Incentives and Other Devices to Increase Output
55
E. Migration . . . . . . . . . . .
. . . . . . . . . .
57
F. Scale of Living . . . . . . . .
. . . . . . . . . . .
58
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A )endixe s
Page
Appendix A. Tables . . . . . . . . . . . . . . . . . . . . 61
Appendix B. Sources . . . . . . . . . . . . . . . . . . . . 69
1. Percentage of Gross National Product of East Germany by
Sectors, 1952 . . . . . . . . . . . . . . . . . . . . . 31
2. Indexes of Production in East Germany by Sectors, 1938,
1946-52 . . . . . .. . . . . . . . . . . . . . . 33
3. Production of Agricultural Commodities in East Germany,
1952 and 1955 Plan . . . . . . . . . . . . . . . . . . 40
4. Foreign Trade of East Germany, 1948-52 . . . . . . . . . 41
Value of the Trade of East Germany with the West by
Countries, 1948-49 and 1951-52 . . . . . . . . . . . . 43
6. Commodity Composition of the Trade of East Germany with
the West, 1948, 1949, and 1951 . . . . . . . . . . 45
7. Distribution of the Trade of East Germany with Other
Soviet Bloc Countries, 1948-52 . . . . . . . . . . . . 47
8. Commodity Composition of the Trade of East Germany
with Other Soviet Bloc Countries, 1949 . . . . . . . . 48
9. Employment in East Germany by Sectors, 1952
and 1955 Plan . . . . . . .. . . . . . . . . . . . . . .
10. Production of Selected Commodities in East Germany,
56
the USSR, and the Soviet Bloc, 1952 . . . . . . . . . . 61
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11. Migration between West Germany and East Germany,
between West Berlin and East Germany, and between
West Berlin and East Berlin, by Time Period,
19+8-52 . . . . . . . . .. . . . . . . . . . . . 65
12. Total Persons Passing Through the Emergency
Acceptance Procedure in Berlin by Age and Sex,
January 1952-June 1953 . . . . . . . . . . . . . 67
CONFIDENTIA
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CIA/RR PR-48 t"M _
(ORR Project 10.103)
PROBABLE ECONOMIC DEVELOPMENTS IN EAST GERMANY THROUGH 1955*
Summary and Conclusions
The East German economy is. the largest and most productive in the
European Satellites. The gross national product. (GNP) of East Ger-
many in 1952 was about $15.5 billion (1951 $ US), the largest GNP
among the Satellites, with the highest percentage of total GNP pro-
duced by industry. Like the other Satellites, East Germany in the
postwar period has been progressively remodeled on the Soviet pattern.
Transportation, the greater part of industry, nearly all financial
services, and much of trade have been nationalized, and government
controls over the private sector have been directed toward tying this
sector to the directly planned economy with correspondingly reduced
scope for private initiative. Controls over labor have reduced the
unions to subservience to the government's economic administration,
and several government measures permitting the compulsory assignment
of workers to particular places of employment supplement Soviet-
patterned wage differentials as a means of allocating workers to
various industries and categories of employment. Only in agriculture
has the Soviet remodeling of the East German economy failed to
develop to the desired extent. The goal for eventual socialization
of this sector, however, has been made explicit and remains in effect
despite a temporary slackening of the pace toward its realization
under the concessions of the "new course" which began in June 1953.
Soviet control over East Germany from the original occupation to
the present has been complete. Although the USSR ostensibly has
relaxed controls over the East German economy, there is no conclusive
evidence that such a relaxation has in fact taken place, and there
is some evidence that close Soviet supervision is remaining in
effect. Every effort is being made to strengthen the East German
Communist Party, through which much of Soviet control is exercised.
The progressive changes in the organization of the East German gov-
ernment and economic administration have been directed toward closer
* This report contains information available as of 24 December 1953.
It is a revision of the ORR contribution to NIE-94, circulated as
IP-350, dated 19 November 1953.
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approximation to the Soviet prototype for the management of a cen-
trally planned economy. Economic policy following the Soviet
classic example has attempted to reorient the economy away from
light industry toward heavy industry, and the planning methodology
and procedures represent faithful attempts to follow current Soviet
practices.
With its advanced technology, highly developed industry, and
highly skilled labor force, East Germany has been exploited to the
benefit of the USSR through heavy reparations and other forms of
uncompensated deliveries. Even if the USSR is sincere in cancel-
ing reparations and making other concessi
long as the area remains under firm Sovie
produce must be included in appraisals of
is to East Germany, as
control its capacity to
Soviet capabilities for
supporting hot or cold war. In 1952 the East German GNP repre-
sented about 8 percent of the total for the Soviet Bloc,* or about
14 percent of the Soviet GNP.
Under Soviet domination the East German economy is being inte-
grated with that of the rest of the Soviet Bloc. About 75 percent
of the foreign trade turnover of East Germany is currently with
other Bloc countries, and the greater part of that is with the USSR.
As an advanced industrial area, East Germany is an important sup-
plier of machinery, chemicals, electrical engineering products, and
precision equipment, and in return it receives from the USSR and
the Satellites primarily agricultural and industrial raw materials,
food, mineral fuels, lubricants, and certain manufactured products.
East Germany contributes the following large percentages of total
Bloc output of the indicated products: secondary copper, 39; re-
fined lead, 10; ammonia, 29; nitric acid, 17; calcium carbide, 55;
caustic soda, 29; refined phenol, 59; synthetic rubber, 22; rayon, 53;
machine tools, 16; turbines, 18; and transformers, 16. On the other
hand, East Germany is a relatively small producer of iron and steel,
grains, vegetable oils, and natural fibers.
During the postwar period, production in the East German econ-
omy staged a rapid recovery from extremely low postwar levels,
especially after 1911$, when Soviet direct exploitation through dis-
mantling and collection of war booty ceased and uncompensated Soviet
withdrawals from current production were reduced. In 1952, however,
the estimated GNP was still slightly below the 1938 level. The
annual rate of growth leveled off sharply in 1952 to about 5 percent,
and it is estimated that growth through 1955 will continue at about
this rate.
* Including Communist China.
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The growth of industrial production has been impressive since
1949, although the level attained by 1952 failed to reach the 1938
level by a small margin. The investment plans, however, on which
the original plans for industrial production after 1952 depended,
have not been fulfilled. Excessive concentration upon building up
basic industries (such as ferrous metallurgy), poor planning, short-
ages of raw materials. and of competent technicians, and the heavy
burden imposed upon the engineering industries by reparations -- all
these factors contributed to the failure to realize the planned
increases in investment.
Agricultural production as measured in terms of leading crops
and animal products still has not come up to prewar levels. The 1955
goals for agriculture under the Fifth Five Year Plan, though technically
feasible, very probably will not be reached, because of the unfavorable
reaction of farmers to the government's exactions in the form of
compulsory deliveries and to the official interest in collectivization,
which has continued despite the modest retreat since June 1953.
The scale of living in East Germany is still considerably below
prewar levels. A number of factors have contributed to this situation:
(1) production of investment goods has been favored at the expense of
consumers' goods; (2) the population of the present area is about 10
percent higher than before the war, and East Germany has been obliged
also to support the Soviet occupation troops; and (3) reparations and
other uncompensated deliveries have imposed a heavy burden on the
East German economy. In 1952, unfavorable weather resulted in poor
yields of potatoes, sugar beets, and fodder, and harvesting was dis-
rupted by the newly instituted drive for collectivization. At the
same time, the government sought to add food to the state reserves.
As a result of these circumstances the scale of living in 1952 declined
for the first time since 1947. Not only did the scale of living
decline in the latter part of 1952 and early 1953, but also the East
German regime, under the slogan of building up socialism, adopted a
number of harshly repressive measures of a political nature, such as
increased arrests, greater severity of punishment for a broadened
assortment of economic crimes, and increased persecution of the churches.
As a consequence, migration from East to West Germany reached new high
levels.
On 9 June 1953 the Communist Party of East Germany suddenly
announced that the policies adopted and the actions taken during the
preceding year as part of the program of building socialism had been
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incorrect and that their "new course" would be to increase the scale
of living by increasing the production of consumers' goods at the
expense of the projected growth of heavy industry. On 17 June,
widespread rioting occurred throughout East Germany.
There are many factors which influenced the timing of the riots.
The impact of the newly increased work norms was especially onerous,
and this by itself may have been the spark. that finally transformed
widespread but latent hostility to the regime into active protest.
In addition, the fact that some concessions had already been announced
by the government may have been interpreted by the workers as evidence
of weakness and indecision on the part of the regime. The effect of
the riots was to bring about further concessions and hasten their
implementation.
The implementation of the "new course" has been materially aided
by the USSR. In August 1953 a lengthy protocol containing a number
of concessions to East Germany was announced jointly by the govern-
ments of East Germany and the USSR.. These concessions included
cessation of reparations deliveries, the return of Soviet-owned com-
panies in East Germany to-German control, and the promise of a large
loan on the foreign trade account. In July, moreover, Soviet ship-
ments of foodstuffs to East Germany increased significantly. These
concessions were designed to bolster the sagging prestige of the East
German regime and to strengthen it as an instrument of Soviet control
over the area. In the short run the USSR appears to have given up
some benefits from the East German economy, but in the long run the
"new course" should tend to reduce popular unrest and make it easier
to keep East Germany in the Soviet Bloc.
Under the "new course," plans for investment in heavy industry
have been cut back, and plans for production of consumers' goods
have been raised. Prices and taxes have been reduced, and wages have
been somewhat increased. If the diversion of resources from heavy
to consumers' goods industries takes place as planned, it will be
possible for retail trade turnover to increase substantially. If
East Germany is indeed freed from Soviet exactions, the projected
increase in consumption is feasible.
The leaders of the East German regime have emphasized that the
"new course" is not a retreat from the basic aim of achieving
socialism but instead is a better way of realizing this goal. No
retreat from the level of socialization achieved by the summer of
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1952 is promised. Collectivization of agriculture is not being forced
at present, but it has not been abandoned as an objective.
I. Economic Organization and Policy.
A. Soviet Organization and Policy.
Since the end of the war, Soviet economic policy with respect
to East Germany has been conditioned by three basically conflicting
aims: (1) to exploit East. Germany as much as possible for the benefit
of the Soviet economy, (2) to transform East Germany into a dependable
Satellite with a planned economy along Soviet lines, and (3) to use
East Germany and the promise of German unity as a means of extending
Soviet influence in West Germany and of preventing the formation of
an effective European Army. Until mid-1948 the first aim was dom-
inant, and Soviet policy was one of ruthless exploitation through
dismantling factories and levying heavy reparations from current
production. Between 1948 and mid-1953, Soviet policy was to restore
and enlarge the East German industrial base insofar as this was com-
patible with reduced, though still substantial, reparations deliveries,
and to change the structure of the economy to conform to the Soviet
model insofar as this was compatible with extending Soviet influence
in West Germany. Beginning in the summer of 1952, rapid Sovietization
seemed to have become the dominant policy, and the campaign for German
unity seemed to have assumed a subsidiary role. On 10 June 1953 the
SED (Sozialistische Einheitspartei Deutschlands -- Socialist Unity Party
of Germany 'East German Communist Party7) announced. a number of measures,
referred to as the "new course," that in effect revoked the policy of
rapid Sovietization and also inaugurated a policy that promised to in-
crease the real income of the East German people.*
Manifestations of Soviet policy with respect to East Germany
may be divided into three categories: (1) direct action, (2) delega-
tion of authority to German organizations, and (3) more or less covert
action through these organizations. It may be said that all sections
of the East German government, the parties, and the SED-controlled
mass organizations are manifestations of Soviet policy. Thus there
* See D, below, for a discussion of the "new course."
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is no real distinction between Soviet and East German policy. (For
purposes of formal organization, the first two forms of Soviet action
are discussed in this section, and the last, East German policy and
organization, is discussed in the following section.)
According to the Potsdam Agreement (Article III, par. 14+),
Germany was to be treated as a single economic unit, and to that end
common policies were to be established with respect to all important
aspects of economic life. J* This condition has never obtained to
any important degree. Decisions of the Allied Control Council were
to be unanimous. J As a result of this requirement and the funda-
mental disagreement of council members, no comprehensive program for
Germany as'a whole could be worked out.
In organizing the administration of their zone the Soviet
authorities carried out, after their fashion, decisions of the Control
Council to the effect that German provincial (Laender) administrations
be established and also that certain central German administrative
departments be established, "particularly in the fields of finance,
transport, communications, foreign trade, and industry." 3/ Such
departments were to act under the direction of the Control Council;
but the Council as an effective governing body soon became unimpor-
tant, and the Soviet forces pursued an independent policy in the Soviet
zone of occupation. J The German Central Administrations established
in the Soviet zone were under the direct supervision of the Soviet
Military Administration (SMA).,which was established on 9 June 1945. ~I
The Laender Administrations were supervised by the branches of the
SMA in each Land. J
In the early days of the Soviet occupation, lines of command
within both the Soviet and the German organizations were not clear.
A number of special missions concerned with the seizure of war booty
and the organization of reparations were operating in East Germany
and were controlled directly from Moscow rather than by the SMA.
In addition, many orders from Moscow regarding occupation duties were
sent directly to the provincial SMA's without going through the "nor-
mal;" channels of command. / Numerous conflicts took place between
various Soviet ministries that laid claim to East German installations
and supplies and the SMA, which had the responsibility for maintaining
* Footnote references in arabic numerals are to sources listed in
Appendix B.
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internal order by supporting the troops in Germany and by fulfilling
plans for exports and reparations from current production.
The principal Soviet policies were, however, sufficiently
clear. During the first 3 years of the occupation, the USSR tried
to restore East German industrial production as rapidly as possible
at a time when little attention was given to such development in
West Germany. At the same time, however, the USSR was quickly remov-
ing as much war booty as possible, such as livestock, raw materials,
automobiles, tractors, and other valuables, as well as reparations in
the form of industrial equipment. ~/ The Russians met with consider-
able success in each of these seemingly contradictory endeavors.
One of the most important early policy measures carried out
by the SMA was the land reform begun in September 1945. All estates
containing over 100 hectares were confiscated without compensation
and distributed to owners of small- and medium-size holdings and to
expellees. J The land reform probably was intended to lead to
collectivization, for many of the newly created farms were too small
to be operated economically. LO/ Other Soviet measures sought to
maintain the German structure of controlled prices by continuing in
force the German price and wage ceilings. 11 The SMA also blocked
bank accounts and canceled interest-bearing state securities. L2/
The anti-inflationary effects of these measures were more than
offset, however, by the reparations policy. From 1945 through mid-
194+8 the USSR took as reparations from current production about one-
third of the total industrial production of East Germany. 13 As a
result, prices and wages could not be held at the 1944 level, and a
severe inflation developed. L4J
Planning of production during the early years of the occupa-
tion was carried on by detailed command of the Soviet representatives.
In carrying out Soviet orders, conflicts arose between the German
Central Administrations and the provincial German governments.' The
Soviet representatives resolved this conflict through increased
centralization of administration, by transforming the Central Admin-
istrations into the German Economic Commission (Deutsche Wirtschafts
Kommission -- DWK) in 1947 and by giving the DWK extensive powers in
economic affairs in February 1948. 15/ The DWK was the forerunner of
the German Democratic Republic, whicE was proclaimed provisionally on
6 October 1949. 16/ Four days later the SMA announced its own dis-
solution and the formation of the Soviet Control Commission (SCC) and
the Group of Occupation Forces in Germany (GOFG). 17/ The SCC
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retained some of the economic functions of the SMA, and the GOFG
assumed responsibility for the security of the Soviet. occupation.
These changes represented an increasing delegation of the functions of
government to the Germans and also an increasing centralization of eco-
nomic controls. In 1952 the SCC had a total personnel of about 3,000
as compared with 50,000 on the staff of the SMA in 1949. 19 The
five Land governments and East Berlin retained some control over local
industry until the summer of 1952, when the Land governments were
dissolved and replaced by 14 Bezirke (administrative districts), which
were-designated as local organs of the state executive, thus virtually
completing the centralization.of government. 20
At the end of May 1953, it was announced that the SCC was
dissolved and replaced by the Office of the High Commissioner for
Germany, which was to limit its activities to representing the
interests of the USSR in Germany and to overseeing the activities
of the German Democratic Republic under the Potsdam Agreement. At
the same time, the Chief of the Soviet.Forces in Germany was relieved
of responsibility for supervising the East German government. 21/
The constitution adopted by the People's Congress in May 1949
gave the German Democratic Republic a greater degree of control over
its.own affairs than was granted the West Germans a few days later.
Soviet Bloc constitutional edifices, however, are notoriously at
variance with political realities, and the constitution of East Ger-
many is no exception to this rule. 22 In theory, the formation of
the SCC represented a change from direct Soviet control to mere
supervision, but no known contractual agreement was drawn up defin-
ing this relationship. Thus the Soviet authorities have remained
free to exercise an arbitrary veto over all acts of the East German
government. L3/
Economic planning in East Germany reportedly is conducted
very much as in the USSR. According to one reliable source, the forms,
nomenclature, and commodity code have been taken over unchanged from
Soviet practice. 24 According to the same source, the East German State
Planning Commission receives mandatory goals for the production of key
products on a yearly basis from the economic planning departments of the
SCC. The extent to which these goals are set forth in detail is not
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known, but it is likely that they comprise the 90-odd products and
product groups shown on an East German classified report called
"Key Positions of the People's Economic Plan" (Schluesse.lpositionen
des Volkswirtschaftsplanes). 25/ In the past, Soviet authorities
have kept a close check on the planning process at the ministry and
planning commission levels and in some cases even at the plant level.
It is not known whether or not the change from the SCC to the Office
of the High Commissioner has resulted in any real lessening of Soviet
controls over, East German planning and production. Generally speak-
ing, orders for reparations goods, for exports to the USSR, and for
SAG Wismut* have received top priority in the procurement of raw
materials and labor in East Germany. 26/ In the fall of 1952, orders
for the East German armed forces were given top place on the priority
schedule. 27/ Information on the priority schedule since the inaugu-
ration of the "new course" is unavailable at present.
From the end of the war until mid-1948 the procurement of
reparations in one form or another dominated Soviet economic policy
in East Germany, and throughout the entire postwar period reparations
policy has been the most important single factor influencing East
German economic development. The following brief account of Soviet
reparations policy and practice is necessary in order to give per-
spective to the recent Soviet announcement that reparations are to
cease beginning on 1 January 1954.
The Yalta and Potsdam Agreements asserted the principle that
Germany should compensate to the greatest extent possible for the
damage caused to the Allied nations. 28/ At Yalta the USSR demanded
$10 billion worth of capital equipment and goods from current pro-
duction at 1938 prices as reparations from Germany. The Allies did
not reach final agreement on the subject, but the USSR has continued
to use the figure of $10 billion as the basis for its reparations
claims. 29/ The Potsdam Agreement (of August 1945) provided that
the reparations claims of the USSR should be met by removal of capital
equipment and current production from the zone of Germany occupied
by the USSR and by seizure of appropriate German external assets. 30/
The Potsdam Agreement provided further that payment of reparations
should leave enough resources to enable the German people to subsist
without external assistance. 31/
* Soviet enterprise in East Germany engaged in mining uranium ore.
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War damage and dismantling reportedly reduced the capacity
of East German industry to about 50 percent of 1936 capacity. 32
About 30 percent of the total reduction was due to war damage, and
about 70 percent to dismantling. 33/* In view of the subsequent
rapid recovery of production, these estimates of reduced capacity
appear to be based on inability of plants to operate because of loss
of essential machinery, rather than on complete loss of fixed capital.
In December 1945 the SMA ordered. some 200 of the largest and
most important factories transferred to Soviet ownership and manage-
ment- 34 It has been alleged that these plants were originally
scheduled for dismantling as reparations but were saved, in the words
of Marshal Sokolovskiy, "in order to provide employment and part of
the output for the German economy." 35 These Soviet corporations,
which are known by the abbreviation SAG," for Sowjetische (later
Staatliche) Aktiengesellschaften, are administered by USIG (Upravleniye
Sovetskovo Imushtchestvo v' Germanii -- Administration of Soviet Prop-
erty in Germany)'. 36 The SAG's are registered in Germany as public
companies of limited liability owned by the USSR. 37 The SAG's pay
the USSR a yearly rent for the property and installations and also
their profits, if any. 38 It is reported that they are subsidized
from the East German budget in the event losses are incurred. 39
Investment in the SAG's also is believed. to come out of the East Ger-
man budget, but it is assumed that these sums are credited to the
Soviet reparations account. 40 Most of the production of the SAG's,
especially in recent years, has been sent to the USSR as reparations,
exports, or profits in kind. 41 Soviet authorities were reported
to have returned 74 SAG's to German ownership (as nationalized firms)
in 1947, and they returned 23 in May 1950 and 66 more in May 1952. 42
According to the Soviet-East German Protocol of 23 August 1953, the
remaining 33 SAG's (not including SAG Wismut) are to be returned,
without compensation, to German ownership on 1 January 1954. 43
The SAG's returned in 1950 and 1952 and possibly those returned in
1947 had to be paid for by the Germans. 44 The Protocol of 23 Aug-
ust 1953 provided that the remaining, East German debt of DME (Deutsche
Mark East) 430 million for the 66 SAG's returned in 1952 would be
canceled. 45
* The West German Social Democratic Party (SPD) estimates the value
of war booty and dismantled factories at about RM.(Reichsmark) 5
billion for each category.
** These figures leave four SAG's unaccounted for, but they probably
were absorbed by other SAG's.
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From 1945 until the present time, the SAG's have formed a
powerful economic empire within East Germany. The value of the pro-
duction of the last 33 SAG's to be returned is estimated to be from
15 to 18 percent of the total value of industrial production in
East Germany. 46 The SAG's are included in the Five Year Plan,
but their production plans and material requirements have had to be
accepted in toto by the East German planning authorities. L7/ There
is little evidence to indicate that the USSR does not intend to
relinquish direct control over the SAG's as provided by the Protocol.
In the absence of information to the contrary, it must be assumed
that the USSR considers the political advantage to be gained in giving
up the SAG's to be worth the loss of about DME 400 million a year in
profits from the last 33 SAG's 48 and the loss of direct control
over an important segment of East German industry.
SAG Wismut was founded by the Soviet authorities in 1945
or 1946 for the purpose of mining uranium ore in East Germany. 49
It is ultimately supervised by the Council of Ministers of the USSR.
About 300 ore-bearing shafts in the neighborhood of Aue in Saxony
and Saalfeld in Thuringia are being worked. 50 Including subsidiaries
that supply the mines with equipment, SAG Wismut employed about 225,000
people in the fall of 1951. 51 Working conditions have improved dur-
ing the course of time from catastrophic to miserable. 52 Wages are
high, but other pressures must be used to force people to work in
the mines. 53 The West German Ministry for All-German Questions
estimates the yearly cost of SAG Wismut in wages and equipment at
DME 2.5 billion. 54 This estimate is based on average 'wage rates
and employment and assumes wages to be about.half of total costs. A
part of the profits of the other SAG's and the Soviet trading com-
panies is reportedly used to help defray the cost of SAG Wismut. 55/
Moreover, payments for the support of SAG Wismut probably are made from
the East German budget. 56/ Payments of DME 400 million and DME 600
million in 1950 and 1951, respectively, to the Soviet-owned Guarantee and
-Credit Bank are belived to be for this purpose. 57/ The estimated profit
of the SAG's for those years is DME 600 million to DME 700 million. 58/
The sum of these two items amounts to only half of the yearly cost of
operation of SAG Wismut as estimated by the West German authorities.
Other sources of financing are not known but might be the funds taken
from East German banks after the capitulation. Withdrawals from the
account of the Soviet-owned Guarantee and Credit Bank with the Deutsche
Notenbank were about DME 1.1 billion in 1950. 59/ It is understood
that this account was almost exhausted by the end of 1950. 60/ In
his address before the People's Chamber (Volkskammer) on 25 August 1953,
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Otto Grotewohl stated that a joint Soviet-German Wismut corporation
was to be formed on a basis of parity. 61/ It is possible that, the
Russians having exhausted hoarded supplies of marks and given up the
SAG's as a source of funds, a joint company is being formed as an
excuse for continuing to require the East German government to bear
a large share of the cost of SAG Wismut.
The Soviet trade and transport companies are an important
adjunct of Soviet economic activities in. East Germany. They are
supervised by the Soviet Trade Delegation in East Germany, which is a
subdivision of the Soviet Ministry of Foreign Trade. L2/ There have
been as many as 16 Soviet trade and transport companies operating in
East Germany, each ostensibly specializing in a group of related
products. ?3/* Their main task has been the organization of the export
* The Soviet trading and transport companies believed to be operating
in East Germany at the present time are as follows:
Exportlen (flax, yarn, fibers, jute, cotton, wool, and products
made from these materials.)
Exportles (such as wood, paper and paper products, and cellulose)
Mashinoimport (equipment for mining, metallurgy, power plants, and
transport industries)
Promexport (coal and chemicals)
Promsyr'yeimport (ferrous and nonferrous metals and scrap)
Sovexportfilm (Soviet movie film and exchange agency)
Soyuzpushchina (furs, pelts, live animals, and fur products)
Tekhnoexport (machines for automotive industry, agricultural
machinery, tractors, electrical goods, and metal-
processing machines)
Tekhnopromimport (equipment for the chemical, food-processing,
paper, rubber, textile-printing, and leather
industries; leather goods; telephone and
telegraph equipment; control and precision
machines; and laboratory, X-ray, and optical
equipment)
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of reparations and SAG goods, but they also have reportedly procured
scarce goods for the USSR from Western countries and engaged in all
sorts of black-market activities. L4/
As part of the Protocol of 23 August 1953 the Russians
announced that reparations from Germany would cease on 1 January
1954. 65 The Protocol stated further that at the end of 1953 the
unpaid balance which was to be canceled would amount to $2,537 million.
Since in May 1950 the Soviet News Agency announced that -total Soviet
reparations demands had been reduced from $10 billion in 1938 prices
to $6,829 million, 66 it appears that the USSR by its own calculations
will have received from Germany $4,292 million worth of reparations
in 1938 prices by the end of 1953. West German authorities agree that
$4.3 billion in 1938 prices is a considerable understatement of total
Soviet takings from East Germany, excluding occupation costs. The
USSR does not recognize as reparations several forms of exploitation
of the German economy such as war booty, the expenditure of captured
Reichsmark and printed occupation currency, transportation and packing
of reparations goods, and profits and rents paid by the SAG's. The
.`Weser Germans also believe that additional -payments-'were made to the
SAG's and the SMA and that these payments were charged neither to
reparations nor to occupation costs. 7~?
The West German Social Democratic Party (SPD) gives an esti-
mate of total Soviet takings for 1945-52 as IDMF'78.6 billion in
current prices, including RM/DME 7.6 billion or occupation costs. 67
The SPD converts this at the rate of RM/DME 2.5 equals $1 to arrive
at $31.4 billion, which probably should be considered a maximum esti-
mate of total Soviet takings from the German economy. The SPD esti-
mate of reparations from current production in 1950 and 1951 is over
2.5 times as high as estimated by State, HICOG, Berlin, for those
years. State estimates total Soviet takings for 1950,including occu-
pation costs, to have been about DME 6 billion; and for 1951, DME 4
to 4.5 billion. 68 The SPD estimates Soviet takings for 1951,
excluding occupation costs, at DME 5,041 million. 69 Addition of
DME 1,950 million for occupation costs (the figure used by State and
exactly the same as the figure given in the Protocol of 23 August 1953
for 1953 occupation costs) gives an SPD estimate of total takings for
1951 of DME 6,991 million. Since the original data underlying both
these estimates are not available, it is not possible to evaluate them,
and the figures are given only to indicate the approximate magnitude
of Soviet takings.
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A question of considerably greater interest than the value
of total reparations is the current value of Soviet takings and the
amount of current income from East Germany to be given up by the
USSR under the terms of the Protocol of 23 August 1953. The con-
cessions in the Protocol affecting current Soviet income from East
Germany are the return of the 33 SAG's, the cessation of reparations,
the reduction of occupation costs, and the cancelation of the debt
of DME 430 million still owing on the 66 SAG's returned in May 1952. 70/
The profits of the SAG's were estimated at DME 600 million to
DME 700 million yearly in 1950 and 1951. 71 Since the return of the
66 SAG's in 1952 reduced the SAG's share of East German industrial
production from about 25 to 27 percent 72/ to 15 to 18 percent, it is
assumed that profits were correspondingly reduced -- that is, to
about DME 400 million, disregarding any change in profits from 1951
to 1952. The Protocol announced that occupation costs in 1954 will
be DME 350 million less than in 1953. 73 Nothing is known about
the rate at which the debt on the 66 SAG's was being paid off, but for
the purpose of estimating the annual Soviet takings, a rate of DME
215 million a year in 1954 and 1955 is arbitrarily assumed.*
Greatest difficulty is found in estimating reparations from
current production, because more information is available and not all
of it is consistent. Estimates of reparations from current production
range from a high figure of DME 2.4 billion for 1952 reparations given
by the SPD 75/ to a low of about DME 1 billion suggested by East Ger-
man budget data published by State, HICOG, Berlin. 76/ An intermediate
figure of DME 1.4 billion can be derived by applying a dollar-mark
conversion ratio of $1 equals 2.5 marks (the prewar rate, which the
Russians are said to use) and a price inflator (1.75) to the 1938
dollar figures published by the Soviet sources. By adding to the
reparations from current production the estimated SAG profits of DME
400 million, DME 215 million for debt repayment, and DME 350 million
for the saving on occupation costs, one arrives at estimates ranging
from DME 2 billion to DME 3.4 million as the annual sum which East
Germany will be relieved of paying the USSR during the next 2 years.
These sums amount to 4.5 and 7.6 percent, respectively, of an esti-
mated East German GNP of DME 44 billion in 1953.
* This is a minimum estimate. The value of the SAG's returned in
1952 has been estimated at DME 1.6 billion, which would have meant
a repayment rate of DME 600 million a year in.1952 and 1953. 74
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B. German Economic Organizations.
1. Governmental Organization.
The East German central. government came into existence
in a de facto sense on 13 February 1948, when the German Economic
Commission (Deutsche Wirtschafts Kommission -- DWK) was expanded and
given extensive powers by order of the chief of the SCC, Marshal
Sokolovskiy. 77 The transfer of power from the provincial govern-
ments to the DWK was completed by a transfer of property, in which
the largest and most important nationalized firms, whose capacity
amounted to two-thirds of the capacity of nationalized industry under
German administration, passed from the control of the provincial
governments to the DWK. 78 Since the Soviet-appointed membership of
the DWK contained a laxge proportion of important members of the SED,
the centralization of German governmental organizations increased the
influence of the SED. The nature of the relationship between the SED
and the DWK was made clear in July 19+8 by the handling of the Two
Year Plan. This plan was first presented as the plan of the Party
at the Annual Congress of the SED, and it was subsequently adopted by
the DWK without substantial change. 79 The SED was at that time,
and still is, the de facto German government of East Germany, but its
operations are monitored and controlled by the Soviet authorities.
The provisional German government proclaimed in October 19+9 was con-
firmed by the People's Chamber (Volkskammer), elected from a single
list of candidates, on 15 October 1950. 80/
The economic administration of East Germany is concentrated
in the Council of Ministers, which consists of a minister president,
his 6 deputies, 17 functional ministers, a minister of coordination
and control, the chairman of the State Planning Commission, and 6
state secretaries with their own fields of responsibility. 81 The
list of ministries includes those customarily found in a European
government (for example, foreign affairs, interior, and finance) and
other ministries whose functions are directly related to the manage-
ment of the nationalized industry (for example, the Ministry of Heavy
Machine Construction). The ministries concerned with the adminis-
tration of nationalized industry have been reorganized almost yearly.
In the latest reorganization, announced on 4 November 1953, a new
Ministry of Heavy Industry has been created which will take over the
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functions of the former Ministry of Metallurgy and Mining; the State
Secretariat for Coal and Energy; and the State Secretariat for Chemi-
cals, Stones, and Earths. J
Three important reorganizations of the East German govern-
ment took place in 1952. The first occurred under the "Law on the
Government of the German Democratic Republic" of 23 May 1952, which
incorporated the following essential features 83/:
a. It increased the number of deputy prime ministers
from 5 to 6 and added a minister without; portfolio to be in charge
of coordination and control.
b. It established five coordination and control bodies
within the Office of the Minister President.
c. It authorized the government to adapt its structure
to the requirements of the economic plan by acting on its own decision.
d. It extended the right of the Council of Ministers to
establish autonomous state secretariats assigned to special tasks.
The second reorganization established a Presidium within
the Council of Ministers on 17 July 1952. 84 The Presidium is the
top executive body in the East German government and consists of
7 voting and 7 nonvoting members. The nonvoting members are the five
chiefs of the coordination and control offices, the Chairman of the
State Planning Commission, and the Chairman. of the Central Commission
for State Control. The law of 23 July 1952 on the "Further Demo-
cratization of the Structure and Functioning of the State Organs in
the Laender of the German Democratic Republic" abolished the last
vestige of federalism in East Germany. This third reorganization
provided for the following 85/:
a. The replacement of the 5 Land governments by 14
Bezirke (administrative districts).
143 to 217.
b. An increase in the number of Kreise (counties) from
c. The transfer of the functions of the Land governments
to the central government and the Bezirk councils.
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d. The dismissal or reassignment of the personnel of the
Land governments to the new Bezirk councils.
As a result of these changes, the government of East
Germany approximates more closely the Soviet model for the operation
of a centrally planned and directly controlled economy. An uncon-
firmed report received on 6 November 1953 states that a further
reorganization of the GDR government has taken place. 86 According
to this report, the coordination and control bodies have been abolished,
but a new "Office of the Council of Ministers" designed to implement
Council decisions has been created. This new office is reported to
have under it a larger number of control groups. The staff of the
"Office of the Council of Ministers" is reported to consist of
Grotewohl, Ulbricht, Leuschner, Stoph, Rau, Selbmann, and Wach. If
this report is true, it indicates a greater degree of centralization
of power in the hands. of these men.
2. Extent of State Control of the Economy.
The German-owned nationalized enterprises (Volkseigene
Betriebe -- VEB) derived initially from the expropriation of firms
owned by the government and leading Nazis. On 30 June 19+6 the
people of Saxony voted "yes" to a referendum calling for the expro-
priation and socialization of factories owned by "nationalist mo-
nopoly capital and Hitlerite fascists," and this decision was en-
forced throughout East Germany without much more ado. 87 Although
the Soviet-owned plants and the German-owned nationalized enterprises
together comprised not more than 10 percent of the number of plants
in East Germany, it is estimated that they accounted for about 75
percent of the total value of industrial production in 1950. L8/
According to Ulbricht, this share had risen to 80 percent by the end
of 1952. 89 The goal of the Five Year Plan is that 81.2 percent of
total production is to be produced by nationalized and comparable
(SAG) firms by 1955. 90 The Five Year Plan implies that this increase
in the share of nationalized industry in industrial production is to
come about through a relatively greater increase in the production of
the nationalized sector. The Plan provides that the value of the pro-
duction of the nationalized firms* shall increase during the 5 years
by 12+.8 percent, while the production of private industry is to in-
crease by 66.7 percent and the production of handicrafts by 66.5
percent. 91
* Presumably not including SAG's.
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Heavy industry is entirely nationalized in East Germany.
The 20 percent of industrial production still in private hands is
restricted almost entirely to small-scale consumers' goods industries,
such as flour mills, clothing firms, woodworking establishments, and
handicrafts. 92 There also are several thousand small machine
shops. 93 Handicrafts undoubtedly comprise the largest part of pri-
vate industry. In 1949 there were 304,000 handicraft shops employ-
ing about 980,000 people in East Germany. 94 These establishments
are required to belong to the Handicraft Chambers in their localities
and are encouraged, mainly by tax privileges and larger supplies of
raw materials, to form handicraft cooperatives. 95 Handicrafts are
regulated by the "Law for the Advancement of Handicrafts" of 16 March
1951. 96/ This law provides, among other things, that in order to
secure materials, a handicraft establishment must conclude contracts
with the State Contract Office (Vertragskontor), or with a nation-
alized firm, thus tying the handicraft firms to the directly planned
sector. Prices and wages in the handicraft trades are fixed by law.
The consequence is that, though private industry still exists, very
little scope is left for private initiative.
German telephone and -telegraph communications and rail
transport were nationalized before the war. In addition, barge and
truck transport are now nationalized. Wholesale trade in East Ger-
many today is almost completely nationalized. German Trade Controls
(Deutsche Handelszentrale -- DHZ's) for each principal industry are
subordinate to the ministry to which their industry belongs and
operate as wholesalers for the nationalized industry. 97 State Con-
tract Offices operate as wholesalers on the local level for private
industry and the cooperatives. 98/ The Associations of People's
Owned Procurement and Purchasing Enterprises (Vereinigungen Volks-
eigener Erfassungs- and Aufkaufbetriebe -- VVEAB) function both as
wholesalers of agricultural products and purchasing agents for private,
cooperative, and nationalized farms. 99 Next to agriculture, retail
trade and the professions have the largest proportions of private
enterprise of any sector of the economy. Retail trade is carried on
by the state-owned shops (Handelsorganizationen -- HO's), the consumers'
cooperatives, and private firms. 100/ In 1950, the last full year
for which actual data are available, 26.6 percent of the total retail
trade was handled by the HO's, 16.8 percent by the cooperatives, and
56.5 percent by private firms. The Plan for 1955 was 40.7 percent
of turnover to be handled by the HO's, 25 percent by the cooperatives,
and 34.3 percent by private firms. 101/
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The banking system of East Germany has been entirely
nationalized since 1946 and completely centralized since the end
of 1950. The system consists of the German Bank of Issue (Deutsche
Notenbank), with 14 branches and about 300 subsidiaries and deposi-
tories; the German Investment Bank, with 15 branches and 23 sub-
sidiaries; the German Farmers' Bank, with 14 branches and 3,150
State loan offices run by the Farmers' Trade Cooperatives; the 125
Savings Banks, with 2,300 depositories; and the Guarantee and Credit
Bank, which is Soviet-bwned.and handles all of the banking of the
Soviet High Commission, the GOFG, the SAG, and the Soviet trading
and transport companies. 102
Agriculture is the least socialized sector of the econ-
omy of East Germany. Until July 1952, collectivization of agri-
culture was approached only indirectly in East Germany. The land
reform of 1945, in which-estates over 100 hectares were broken up
and distributed to owners of small- and medium-size holdings and to
expellees, seemed to be a step in the opposite direction. By the
end of 1949, only 1 percent of the farms were over 125 acres, and
78 percent were under 25 acres. 103/ It is probable that many of
the new farms were deliberately made too small to be economically
operated and that the USSR intended to achieve collectivization in
East Germany gradually through the voluntary cooperation of the
farmers with Machine Tractor Stations (MTS's)* and the Farmers'
Mutual Aid Association (Vereinigung der gegenseitigen Bauernhilfe --
VdgB). The MTS's, which were founded in 1949, took over the tractors
and equipment acquired from farms expropriated under the land reform.
Starting out with about 4,800 usable tractors, the, number of MTS's
increased to 585 active stations with a park of about 20,000 tractors
(calculated in terms of 30-horsepower units). 104 These stations
do not lend their machines but send their operators and equipment
out to the farms to plow and harvest. Fees per hectare of work per-
formed increase with the size of the farm, a measure designed to
divide the peasantry into opposing factions with a view toward
voluntary collectivization.of the smaller farmers and eventual elim-
ination of the larger units. 105/ The VdgB, which during the early
years of the occupation was the collecting agency for agricultural
products, was amalgamated with the village cooperatives (Bauerliche
Handelsgenossenschaften -- BHG's) in 1950, and the collection function
was transferred to the VVEAB. 106/ The VdgB is now primarily a
political organization, but it also handles some purchasing of
supplies for the farmers and agricultural loans. The VVEAB, in con-
junction with the Ministry of Agriculture and Forestry, plans and
Formerly Machine Lending Stations (MAS's).
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sets the quotas for, and prices of, farm products to be delivered
each year. Both prices and quotas have tended to discriminate
against large farmers. 107 These organizational changes in agri-
culture parallel changes in other Satellites in Europe, but the
Sovietization of agriculture is less advanced in East Germany than
in the other Satellites.
State farms (Volkseigene Gueter -- VEG's) have existed in
East Germany since 1949. There are now about 513 VEG's with an
estimated agricultural area of 212,000 hectares, or approximately
4 percent of the total arable land. 108 The VEG's are supposed to
function as experimental and model farms, and as sources of seed and
breeding stock.
Collectivization of agriculture as a goal of agricultural
policy was admitted by the SED for the first time at the Second Paxty
Conference in July 1952, when a program for the formation of agri-
cultural cooperatives was announced. 109 Although the formation
of the cooperatives was ostensibly voluntary, farmers were subjected
to a variety of pressures to get them to join. By mid-1953 there
were 3,255 agricultural production cooperatives (Landwirtschaftliche
Productiongenossenschaften -- LPG's) farming 14+ percent of the total
arable land. 110 Most of the cooperatives were small. The average
size was estimated to be about 125 hectares of arable land farmed
by 21 members and their families.
3. Economic Planning.
The East German State Planning Commission receives yearly
from the Economic Planning Department of the SCC mandatory goals
for the production of key products. 111 How detailed these goals
are is not definitely known, but it is likely that they comprise the
90-odd basic materials and commodity groups shown.in the "Key Positions
of the People's Economic Plan." 112 The key position figures re-
ceived from the SCC are expanded by the State Planning Commission to
include additional products and product groups, and it is this list
of production targets, called "control-figures" (Kontrollziffern),
to which the remainder of production and all resource allocation must
adjust. Good authority states that there were 300 such figures in
the 1952 planning. 113 These control figures for the yearly plans
are distributed by the State Planning Commission to the appropriate
ministries and state secretariats, which expand them further and
distribute the production targets to the nation ized firms, directly
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in some cases and in others through the associations of nationalized
firms or the Bezirk administration. 114 The nationalized firms
then work out requirements plans incorporating the material, labor,
investment, and subsidies necessary to meet the Plan goals expressed
in the control figures. According to the West German Ministry for
All-German Questions, these control figures can in no way be lowered
by the ministries, state secretariats, or nationalized firms but are
frequently raised by them. 115/ The requirements plans follow the
same route back to the State Planning Commission and are adjusted
and aggregated at each higher administrative level.
The State Planning Commission then "balances" the material
requirements with available resources and, in consultation with the
Ministry of Finance, draws up the plans for production, investment,
finance, export, import, and material and labor supply. 116 Additions
to state reserves may be incorporated into planned production to meet
emergency production requirements. The individual plans are reported
to be synchronized exactly in quantitative terms only with respect
to the key positions laid down by the Russians. For the other products,
only a rather general or aggregative balancing takes place. 117
A good many reports were received near the end of 1951
about unrealistic goals laid on from above and about insufficient
knowledge on the part of the State Planning Commission of actual
capacities and lead times. 118 Thereafter, occasional references
were made to planning "from below to above instead of from above to
below." 119 The first of a series of articles in Die Wirtschaft,
entitled Balancing in Economic Planning," stresses the point that
since all parts of the economy are related, all parts of the Plan
must be worked out simultaneously. 120 This view is borne out by
the procedures for preparation of the Economic Plan for 1953, passed
by the East German Cabinet on 30 May 1952. 121 The ministries,
state secretariats, and Land governments were directed to instruct
the nationalized firms to begin preparatory work immediately for the
1953 Plan, to establish contracts immediately with each other, and
to conclude temporary contracts. for 1953 in order to guarantee the
sale of the items to be produced in 1953. 122 The Ministry of
Foreign and Domestic Trade* was likewise directed to begin prepara-
tions for 1953 trade agreements. All of this was to take place
* Ministerium fuer Aussenhandel and Innerdeutschen Handel. Inner-
deutschen here means "interzonal." In translating Innerdeutschen
as t Domestic," the State Department convention is followed.
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before the confirmation of the 1953 control figures by the Cabinet.
It appears that the nationalized firms are directed to start planning
on the basis of the production of the previous year and of the goals
of the Five Year Plan.
The place of private enterprise in the system is not
clear. In those cases where the products of a private firm are
consumed by a nationalized firm, the nationalized firm contracts
for the production of the private firm and receives an allocation of
raw materials for transmittal to the private firm. Otherwise, private
firms receive their allocations of raw material (if any) from the
State Contract Offices under the Bezirk and Kreis administrations. 123/
Generally, the Bezirk administrations receive their control figures
only in value terms. Occasionally, when there is a private firm in
the Bezirk whose production is particularly important, control figures
are received in quantitative terms. 124
The nationalized firms receive their production quotas in
quantitative and value terms or only in value terms, depending upon
the nature and relative importance of the product. Production is
planned in terms of Plan prices, or Messwerten. Messwerten, literally
translated, means "measuring values." They are based on the prices
used in the 1950 Plan, which were, for the most part, current
prices. 125 The Messwerten were fixed for the duration of the Five
Year Plan and were intended to take the place of a price index --
that is, to permit the measurement of the change in production in
constant prices. The Messwerten apply to the gross production of a
factory as defined by the products contained in the General Commodity
Code (Allgemeine Warenverzeichnis), regardless of whether or not
they are consumed entirely or in part within the factory. 126
In some aspects of planning, such as the planning of
sales, current prices are used. These prices take the usual form
of factory, wholesale, and retail, with the latter divided into HO
prices and rationed prices. Current prices are fixed by law. They
derive originally from the 1944 ceiling prices, which were continued
in effect by order of the chief of the SMA, 127 but they have been
changed piecemeal over the years.
The East German planning authorities intend eventually
to recalculate all prices on the basis of the Marxian labor theory
of value. 128 They do not seem to have solved in theory the prob-
lem of expressing in prices relative scarcity deriving from demand.
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In practice, the problem is partially solved on an ad hoc basis by
manipulating the turnover tax rates on retail sales and by the use
of a priorities system for allocating raw materials and components
within the nationalized economy.
Although the "balancing" of planned production and
material requirements by the State Planning Commission theoretically
equates supply and demand, it has not balanced supply and demand
in practice. Goods have been produced according to Plan which
could not be sold at fixed. prices, while at the same time the raw
materials used in their production have been in short supply. The
import plans seem never to be fulfilled on time, and raw material
shortages are chronic. In order to assist the economy in balancing
supply and demand as planned by the State Planning Commission, the
"Law on the Introduction of the General Contract System for Goods
Deliveries in the Nationalized and Comparable Industry" was passed
in December 1951. 129 This law provides that within a month after
the distribution of Plan goals to the firms, they must complete
contracts with other firms and with import and export agencies for
both their material requirements and the sale of their products.
Financial penalties are imposed on the firm for nonfulfillment of
these contracts. The General Contracts Court has been set up to
handle disputes arising from the operation of this law. The result
of these cases has usually been that no penalty has been imposed.,
because the nonfulfillment can be traced back to an event for which
nobody in East Germany can be blamed, often to the nonfulfillment
of the import plan. The law provides, however, an important in-
centive to the factory manager to fulfill his production plan,
since by the "Lag on the Reorganization of the People's Owned Indus-
try" of 22 December 1950, the individual firm manager is responsible
for operating the firm as economically as possible. 130 Before the
passage of this law, profits and losses were equalized among the
firms belonging to an association of nationalized firms (Vereinigung
Volkseigener Betriebe -- VVB's).
Financial planning in East Germany serves the purpose
of control rather than direction, the latter being determined by
the over-all economic plan. The nationalized firms receive their
circulating capital from the Deutsche Notenbank and pay it back
according to plan. Profits, subsidies, and the reduction of
operating costs are planned. Until 1953, amortization funds were
paid into the state treasury and redistributed by the German Invest-
ment Bank, not as loans, but as grants, to industry for investment
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purposes. Beginning in 1953, nationalized firms must use their
amortization funds and may use a part of their profits for planned
investment. 131 Additional funds for investment are available
through the German Investment Bank. Of course, no investment may be
undertaken that is not planned, and the banking system is directed to
see that funds are spent only as planned.
The currency plan is an important aspect of East German
financial controls. Under the "Law for Control of Payments," dated
21 April 1950, 132 particularly under its second implementation of
28 June 1950, a.sharp distinction is made between two different
groups of money users. The first group comprises practically all
private persons, small tradesmen with a yearly turnover of less than
DME 20,000, landlords with less than DME 250 monthly income, and mem-
bers of the professions with less than three employees. The second
group comprises the bulk of the economy -- that is, all other persons,
enterprises, and organizations. The use of cash is restricted mainly
to the first group. Private persons are subject to no limitations as
to its internal use. Since bank accounts of private persons and of
small private industry are kept exclusively with the savings banks
or cooperative banks, it is easy to handle them differently from the
accounts of the rest of the economy. 133
The enterprises and organizations are permitted.to accept
cash, but they may not spend such receipts as cash except in trans-
actions amounting to no more than DME 50. Otherwise, they are under
obligation to pay all cash receipts immediately into accounts with
credit institutions. 13 For payment of wages, they receive the
required cash from the credit institutions, subject to submission
of their payrolls. Since the Deutsche Notenbank knows the wage bill,
retail turnover, and savings deposited in banks for any given period,
the Notenbank can theoretically calculate the amount of cash being
hoarded and going into illegal trade.
The Deutsche Notenbank has a phobia about inflating the
currency and apparently confuses the amount of hand-to-hand money
with the total supply of money. It has maintained the amount of
currency in circulation almost constant at about DME 3.5 billion
since the end of 1949, 135/ despite rising wages and an increase in
retail turnover. As a result of this procedure, a serious shortage
of hand-to-hand currency has developed in East Germany. 136 It is
uncertain whether the shortage is a result of a miscalculation on
the part of the Notenbank as to the amount of currency needed or
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whether sizable sums are being hoarded. Toward the end of 1951 the
Notenbank calculated that about DME 2,100 million in circulation
could not be accounted for. 137 This amounted to roughly DME 300
per capita of all gainfully employed persons. 138 It is highly
unlikely that this sum was evenly distributed among the population,
because the scale of living has been so low that many such cash
hoards would have become effective demand for unrationed goods in
the HO's. State, HICOG, Berlin, concludes that "the SED, the semi-
official trading organization, the occupation power, economic enter-
prises (particularly private industry), trade and agriculture, and
black marketeers have large cash holdings and that there are large-
scale transactions in the economy outside the plan." 139 Because
currency has become scarce, the Notenbank may have concluded that
cash hoards are larger now than in 1951. The real or fancied
existence of this unaccounted-for cash may be one reason for the
frequent rumors of an impending currency reform in East Germany.
Such rumors, however, cannot always be accepted as reliable indi-
cators, because currency reform rumors are the stock in trade of
black marketeers of currency.
If the East German authorities contemplated a currency
reform, it is likely that it was to assist in the program for "build-
ing socialism."* A currency reform would not be consistent with the
present policy of increasing the real income of the population. A
reform that did not touch savings in banks might, however, be politi-
cally feasible.
C. Economic Policy.
The organization of the economy described above was virtually
complete by the end of 1950, with the exception of the agricultural
cooperatives. East German economic policy from 1950 until mid-1952
concentrated on fulfilling the goals of the Five Year Plan and im-
proving the functioning of the existing organization. Further sociali-
zation was played down and the theme of German unity emphasized. 140
In July 1952 the Second Party Conference of the SED signaled
an abrupt shift in policy. The conference announced that the time
had arrived for East Germany to proceed with "building socialism."
According to the decisions of the conference, the building of social-
ism required the following 11+1:
* The program for "building socialism" consists of the various meas-
ures for Sovietization of the economy and for its development under
centralized planning following the Soviet model. See C, below.
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1. The creation of a national army.
2. The strengthening of the state through a reorganization
of the government and the rewriting of the labor, civil, and criminal
codes.
3. The creation of the economic basis for socialism by
quickly breaking the bottlenecks in basic industries, increasing labor
productivity, improving the quality of production, and so on.
4. The formation of agricultural producers' cooperatives.
5. The strengthening of the ideological orientation of Party
members and the elimination of the last vestiges of capitalistic
thought and methods from the nationalized economy.
Following the Second Party Conference, the atmosphere of terror
and oppression in East Germany increased appreciably. Persecution of
the churches increased, and membership in Protestant youth groups was
made ground for dismissal from school. Prosecution of farmers and
other private business men for tax evasion and sabotage increased.
In October the "Law for the Protection of the People's Property" was
passed. 142 This vague law provided stiff penalties for incorrect
reporting in the nationalized economy and for failing to report an
instance of planned or actual crime against the nationalized economy,
as well as for the usual crimes of theft and embezzlement. Recruiting
for the People's Police was stepped up, and restrictions on interzonal
travel were increased. In January 1953 a law was passed forbidding
East Germans to make any contact with representatives of Western
governments and international organizations except through the Foreign
Office. 143 In January also the Central Committee of the SED recom-
mended that the efficiency of the distribution system be improved by
removing all capitalistic influence from wholesale trade and by
expanding local retail cooperatives. 144 Quotas for the delivery of
meat animals, milk, and eggs were raised. in January. 145 In February
1953 the law on the "Safeguarding of Agricultural Production and the
Supply of the People" was passed. 146 This law provided that a
farmer who, in the judgment of the Bezirk council, violated the law
or did not operate his farm according to regulations could be dis-
possessed of his farm and that the farm could be turned over to the
agricultural cooperatives. In March the income tax for private firms
was increased. 147/ In April, ration cards were taken away from
the self-employed and owners of private industry and trade. 148
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On 14 May the Central Committee of the SED called for a 10-percent
increase in working norms, effective 1 June 1953. L29/
The introduction of these repressive and unpopular measures
leading to more complete Sovietization coincided with a severe food
shortage, brought on partly by a very poor harvest of root crops in
1952 but aggravated by greatly increased deliveries of foodstuffs to
the state reserves and by the drive for collectivization. Beginning
in the second half of 1952, the influx of refugees from East Germany
into West Germany rose.sharply, and it reached unprecedented propor-
tions in the first half of 1953.* About 340,000 people fled to the
West between June 1952 and July 1953. 150
D. The "New Course."
On 9 June 1953 the Central Committee of the SED recommended
a number of measures than amounted to an abrupt reversal of the
repressive tactics of the previous year. The recommendations were
accompanied by the admission that the government and Party decisions
of the past year and the manner in which they had been enforced had
been responsible for the mass exodus from East Germany. 151 The
measures recommended by the SED and subsequently adopted by the
government included; (1) a reduction of the rate of investment in
heavy industry and an increase in the production and distribution
of consumers' goods; (2) some rehabilitation of the private sector
of trade and industry; (3) some reduction of pressure on the private
sector of agriculture, including repeal of the laws on "Safeguarding
Agricultural Production and the Supply of the People" and "Devastated
Agricultural Land," (4) nonretaliation against refugees returning
from West Germany and the return of confiscated property; (5) easing
of restrictions on travel between East and West Germany; (6) aban-
donment of the campaign against the churches and Protestant youth
organizations and the release of arrested pastors; (7) amnesty for
persons sentenced to 3 years or less for economic crimes; and (8)
issuance of ration cards to all persons. No mention was made of
repealing the increase in working norms. On 17 June, widespread
rioting occurred throughout East Germany, beginning ostensibly as a
protest against increased working norms. The riots,were stopped by
the intervention of Soviet troops and tanks.
* For a discussion of migration, see IV, E. below.
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On 21 June 1953 the Central Committee of the SED recommended
further concessions, including (1) repeal of the minimum 10-percent
increase in working norms which had been ordered in May to take
effect in June, (2) an increase in social security benefits and the
reduction of contributions to former levels, (3) an increase of over
DME 600 million in the value of housing construction and social
facilities as compared with 1952, and (4) the abolition of electric
power cuts for householders. 152
In succeeding months, announcements of measures to improve
the standard of living of the populace have increased in number and
importance. The most important of these measures are (1) an increase
in wage rates for the.four lowest wage groups, and for doctors,
dentists, and pharmacists; (2) a decrease in taxes on wages and on
incomes from private business; (3) price reductions on over 12,000
consumers' goods; (4) reductions in compulsory deliveries of agri-
cultural products; and (5) announcement of quantitative changes in
the plan to decrease investments in heavy industry and to increase
the production of consumers' goods. 153
Nearly every member of the East German government who has
spoken on the "new course" has quantified the value of the planned
increase in real income. The latest estimate was by Foreign Minister
Bolz, who said on 7 November that "the population had benefited to
the extent of DME 3.4 billion in the second half of 1953." L/ On
26 October, Grotewohl gave DME 3.8 billion as the value of measures
taken under the "new course," but the period and the items covered
were not specified. 155 The most detailed and internally consistent
account of the financial aspects of the "new course" was given by
Grotewohl in a speech before the Volkskammer on 29 July 1953. 156
It can be calculated from Grotewohl's figures that the increase in
real income from wage increases and price and tax reductions is
DME 1.4 billion. Late in October, prices and taxes were reduced
further. In his October speech, Grotewohl gave figures of DME 540
million for the value of the latter price cuts and DME 450 million
as the value of the tax cuts, but the period to which he referred is
not clear. 157 If these latter figures are on an annual basis,
then for November-December DME 165 million more should be added to
the planned increase in real income during the second half of 1953.
This gives a total of DME 1,565 million as the added benefit to the
population from wage increases and price and tax reductions. The
average monthly wage bill originally planned for 1953 was probably
something over DME 2.1 billion. 158
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The planned increase in retail turnover in the second half
of 1953 is DME 5 billion over actual turnover during the-first half.
A part of this increase was originally planned as ,.a normal"seasonal
increase. About DME 2.4 billion worth of goods, in pre-July prices,
are to be available in the second half of 1953 in addition to those
originally planned. According to Grotewohl, the sources of these
goods are imports from the USSR and added production from domestic
sources under the revised plans. 159
Aggregative data on the value of increased imports from,the
USSR during the second half of 1953 are not available, but during
July the number of freight cars bringing grain into East Germany
from the USSR reportedly increased-by 74 percent over theaverage
for the previous 9 months. 160 A'phenomenal increase in the move-
ment. of refrigerator cars into. East Germany from the USSR also was
observed. Previously a monthly average of 100 to 150 loaded refrig-
erator cars entered East Germany from the USSR. In July this traffic
of meat, fruits, and vegetables is reported to have increased to
1,256 carloads, an increase of over 700 percent. 161- Refrigerator
car traffic from Hungary, Rumania, and Bulgaria was reported at the
normal rate. These countries did; however, make refrigerator cars,
available for food shipments into East Germany from the USSR.-
A normal seasonal increase in supplies of food took place
during July and August. Additional meat, fats, and textiles
appeared on the market in July; apparently released from state.
reserves as announced by the government. Ration cards appear to have
been fully honored since the beginning of the "new course."- Accord-
ing to reports in East German newspapers., the elimination of electric
power cuts to households has- not been accomplished, but improvements
in that direction are reported. 162
It appears that in its initial stages the improvement in the..
scale of living promised under the "new course"-is-being implemented
with imports from the USSR and from domestic reserves.-The important
question is whether or not.East Germany can continue to improve the
scale of living and pay off its' foreign trade debt from. its;,;own
resources. It seems that this is quite possible.. The cessation of
reparations deliveries and other uncompensated deliveries will free
a minimum of 4.4 percent of GNP and 8.8,.:percent of .industrial goods
output for East German use in 'consumption' or investment . In. the.
recent past, reparations goods have been largely machinery and fine
mechanical optical. equipment. .Not much of the capacity: of the firms
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formerly producing reparations goods can be used directly to increase
the scale of living, but the goods formerly sent to the USSR as
reparations presumably can now be exported. Excess capacity is also
available in the consumers' goods industries of East Germany.*
The leaders of the SED have reiterated that the "new course"
is not a. retreat from socialism but is merely a better way of
achieving it. They have stated that the general line of the Party
was and remains correct. 163 In this they have been consistent.
None of the measures taken under the "'new course" would reduce the
level of socialization achieved by the summer of 1952, although a
minor retreat from mid-1953 levels took place. The pace of invest-
ment in heavy industry has apparently slackened, and a real increase
in the scale of living has taken place. In the long run, this
policy should serve the USSR better than the harsh measures under-
taken to build up socialism in the summer of 1952. There is evidence
that the very speed of the investment program resulted in considerable
waste of resources. A slowly rising scale of living should do much
to allay unrest among the East German people and at least reduce
active resistance. The USSR thus can continue to hold out the promise
of German unity while consolidating its hold upon East Germany and
particularly upon the minds of its youth.
II. Economic Development of East Germany.
A. Over-All Development.
East.Germany, including East Berlin, had in 1945 approximately
one-third of the total area, population, arable land, and industrial
capacity of "Potsdam" Germany. 164 Before the war the area now
known as East Germany (the West Germans refer to it as "mittel
Deutschland") "exported" to the :rest of Germany about as much as it
"imported" in value, sending out one type of agricultural product
(grain, potatoes, and sugar) in return for another (dairy produce,
meat, edible fats, and livestock) and exchanging such industrial
commodities and raw materials as optics, precision instruments,
textile and printing machinery, textiles, newsprint, and lignite
against heavy machinery, bearings, rubber products, iron, and
steel. 165 Before the war, industry and agriculture each produced
a slightly higher share of the regional GNP in East Germany than in
* The changes in the production and investment plans connected with
the "new course" are discussed in II, below.
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West Germany. !L6/ In the prewar economy, when the relative roles
of West and East German industries are compared, it can be.said
roughly that West Germany was the producer of basic materials and
that East Germany contained predominantly the processing and fin-
ishing industries. 167
The industrial composition of the East German economy is
shown in Table 1. East dermany.is the most industrialized country
in the Soviet Bloc. The percentage of GNP produced in industry was
larger in East Germany than in any other Bloc country, and the
percentage produced in agriculture was the smallest. In the USSR
the comparable percentages in 1952 were 40.5 percent in industry
and 21.4 percent in agriculture.
Percentage of Gross National Product of East Germany
by Sectors al 1,68
1952
Percent of GNP
Agriculture
13.0
Industry
49.9
Transport
and Communications
5.8
Building
1+.9
Services
13.0
Trade
13.3
a. The product by industrial sectors was calculated
from wage and employment data.
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The GNP of East Germany in 1952 amounted to $15.5 billion
(1951 $ US).*' Table 2 shows the trend in the East German GNP.
Recovery from the very low` postwar level was rapid, especially
after 1948, but the GNP in 1952 was still slightly below the 1938
level. Recent annual rates of increase were 19.5 percent in 1950,
14.6 percent in 1951, and 5.5 percent in 1952. The high rate of
increase in 1950 was partly due to a sizable gain in agriculture that
resulted from favorable weather conditions. In addition to this,
the rapid growth of GNP prior to 1952 represents a recovery from the
effects of the war and Soviet dismantlings. The rate of gain in
1952is more nearly the rate that would be expected for the years
1952 to'1955. If the East German economy averages a 5-percent-per-
year gain from 1952 to 1955, the GNP in 1955 will be about $17.9
billion (1951 $ US).
The "new course" is not likely to affect substantially the
over-all'growth of the economy over the next 2 years except insofar
as it checks a deterioration of worker morale and productivity.
Some gain in production can be expected from the fuller utilization
of consumers' goods industries, where considerable excess capacity
has existed. Primarily the "new course" will affect the composition
of production rather than its over-all growth. Output of consumers'
goods will grow more rapidly and producers' goods more slowly than
heretofore.
B. Industry.
When the'Kremlin stopped the removal of capital equipment in
1948, Eat German industrial capacity was less than 50 percent of
the'prewar level. 171_ In mid-1948 the SED announced the Plan for
1948 acid the Two Year Plan for 1949-50. 172_ This was the first
public mention of either an annual economic plan or a long-term
* The dollar value of the GNP for 1952 was arrived at by moving
forward an estimate of prewar GNP in dollars by the GNP indexes
given in Table 1'. The prewar dollar estimate was obtained from
Colin Clark's estimate 169 for prewar. Germany. Ferdinand
Grunig''s estimate 170 of West Germany's share in prewar Germany
was subtracted and adjustments were made for other territorial
changes. The prewar estimate was then inflated to 1951 dollars.
* Table 2 follows' on p.- 33
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Table 2
Indexes of Production in East Germany'
by Sectors, 1938, 1946-52
1938
Major Sectors
Industry
143
Producers' Goods
106
Consumers' Goods
189
Agriculture
114
Transportation
140
Communications
121
GNP
126
Industry
Energy
Electric Power
68
Solid Fuels
90
POL
28
Nonferrous
150
Ferrous
164
Machinery and Equipment
Shipbuilding
Bearings
Automotive Equipment
Electronic Equipment
Railway Equipment
Machine Tools
Chemicals
Forestry Products
Light and Textile
Industries
1946 1947 1948 1949 1950 1951 1952
52 61 67 77 100 127. 140`
52 58 68 86 . 100+ ` 123 137
52 64 59 75 100 133 144
69 66 85 85 100 103 101
48 55 66 84 100 112, 120
N.A. N.A. 85 96 100 106 105
N.A. N.A. 76 84 100 115 121
59 70 81 92 100 113 ' 124;
81 76 82 92 100 ,113 r 127
39 58 66 83 loo , 126..,
N.A. , 62
23 24
38 N.A.: 3 .
N.A.',N.A. N.A.
N.A. N.A.; N.A.
IQ 31
N
A
.
.
N.A. N.A. N.A.
195 N.A. N.A 48:..
58:
6o
N.A.
,,72
74
57
100 ,159 .
100 1Q7
loo 2Q7
100 117
,..- 10
0 ll
100 2~
78 39 58 70- 83 100'
100 N A. 56 52 79 100
96 123' 127 122 91 100-
157 1556 62 74 -lo6.
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74 , 89, 100 ' o5 '`10
.
4g 67 100 113'1-1176
N.A.,
202 -
300
1 37
~8
OFIVY
117 ,25,
1d5 x:1'1
100 99
116.. 136.
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plan. The Two Year Plan declared that by 1950 industrial production
was to reach 81 percent of 1936 and 1.35 percent of 1947. 173 To
facilitate this planned increase in production, the USSR reduced
reparations deliveries somewhat and stopped dismantling altogether.
It was announced in January 1950 that the Two Year Plan would be
fulfilled in 18 months instead of 24. L7,4 Industrial production
in East Germany revived rapidly after 1948, though at a somewhat
lower rate than in West Germany. On the basis of indexes compiled
from ORR estimates of the physical production of a number of com-
modities, it is, estimated that East German industrial production
(1938 = 100) rose from 47 percent in 1948 to 70 percent in 1950
and 98 percent in 1952. 175 West German indexes of industrial
production for the same years were 52, 94, and 121 percent of 1938,
respectively. 176
Both parts of Germany had a currency reform in 1948, but
there the similarity in bases of recovery ends. West Germany
received large amounts of free food and raw materials from GARIOA*
and Marshall Plan aid and gradually removed wartime and postwar
restrictions on the economy. East Germany, however, continued to
pay heavy reparations, which reduced the amount of goods available
for export and correspondingly reduced the ability to import raw
materials and industrial equipment. Restrictions on interzonal
trade imposed by both the USSR and the Western Allies worked more
to the disadvantage of East than West Germany. Moreover, poor
planning by the East German authorities made for inefficient use of
resources.
The indexes of industrial production compiled by ORR shown
in Table 2 indicate approximately the same growth in over-all indus-
trial production as that claimed by the East German authorities. For
instance, ORR shows total industrial production in 1952 to have been
40 percent higher than in 1950 -- East German authorities claim an
increase of 41.4 percent. 177 This is an impressive achievement,
particularly in view of the handicaps under which the economy has
* Government and Relief in Occupied Areas -- a part of the title of
the US law appropriating funds to be used by the US Armed Forces for
this purpose.
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operated.* The ORR indexes also tend to bear out the East German
claim that on an over-all basis the goals of the Five Year Plan have
been fulfilled.
The East German Five Year Plan (1951-55) requires the gross
value of industrial production (excluding handicrafts) to increase
from DME 23.4 billion in 1950 to DME 45 billion in 1955, a, total
increase of 92.3 percent, or an average annual increase of 13.7 per-
cent.** 179 Explicit in the Plan are the following aims: (1)
independence of East Germany from Western capitalistic countries
for supplies of basic materials, (2) great expansion of basic and
heavy machine industries, and (3) considerable reduction in the scope
of private enterprise.
Over the 5-year period the original Plan allocated DME 28.6
billion to net investment, of which DME 5.8 billion were to be for
residential and cultural buildings. ILO/ This represents an average
of DME 5.7 billion a year, on the average less than 15 percent of
GNP. On the surface this would not appear to be an excessive rate
of investment and might well be sufficient to provide the industrial
basis for the planned increases in production. Nevertheless, the
investment plan has not been announced as fulfilled in any of the
first 10 quarters of the Five Year Plan, and a reduction in the rate
of investment has been announced as a part of the "new course."
Four principal factors contributed to the failure of the
investment plan: (1) the kind of investment attempted, (2) in-
adequate and incorrect planning; (3) reparations and other uncom-
pensated deliveries, and (4) curbs on interzonal trade. Under the
Five Year Plan, investment has been concentrated in a relatively few
key projects in the basic. materials industries and. in the heavy
machine building industry. Investment and even. replacement has been
neglected in other industries, including transportation. 'East Germany
has relatively few technicians well trained for building an iron and
,In West Germany the increase in industrial production for the
same period was only 28 percent. 178 It must be borne in mind,
however, that in 1950 the West German. economy was at a more advanced
stage of recovery than the East German economy.
** This is a lower rate of increase than implied by the planned
rates of increase in the production of the nationalized firms and
private firms (see p. 17, above). Such apparent inconsistencies are
not uncommon in published East German accounts of both plans and
achievement.
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steel industry or a heavy machine construction industry. Conse-
quently, many serious mistakes were made in plans, and the plans were
never completed on time. Political considerations often interfered,
with disastrous results. The premature firing of the first blast.
furnace at the Stalin Kombinat (formerly the Iron and Steel Combine
East) is an example perhaps extreme in its results but typical in
origin. In order to have the firing coincide with the anniversary of
the October Revolution, the furnace was fired before the equipment
had been adequately tested; the blowers broke down; and the charge
solidified, causing great damage to the furnace. Reparations de-
liveries and some other forms of uncompensated deliveries had a greater
adverse effect on the investment program than their total value in re-
lation to ONP (about 5 to 8 percent, excluding occupation costs*) would
indicate, because the bulk of reparations deliveries in recent years
have been products of the machine industry, especially the heavy
machine and electroengineering industries. Products of these indus-
tries were especially needed for the investment program. Similarly,
the restrictions on interzonal trade deprived East Germany of iron
and steel and equipment needed for the investment program.
Although the gross production plans were announced as fulfilled
every year until the first quarter of 1953, in each year the nonful-
fillment of production plans for a number of important products was
announced. In 1952 these were bituminous coal and heavy machinery., 1811
In 1951, building materials, crude steel, rolling. mill products from
nonferrous metals, metallurgical equipment, and some chemicals were
among the products whose production plans were not fulfilled. 182
In the first and second quarters of 1953 the following products were
among those whose production plans were not fulfilled: electric power,
coal, copper ore, copper, power machine construction, steam turbines,
revolving lathes, freight cars, trucks, electric generators, sulfuric
acid, various textiles, and food products. 183- The investment plan
of the nationalized industry for the first quarter of 1953 was announced
as being "by far not fulfilled," although a substantial increase over
the preceding year was shown. 184+ The nonfulfillment of the invest-
ment plan meant that a great many projects were only partially com-
pleted, thus tying up materials and labor without achieving the
planned increases in capacity. At the same time, the shortage of
materials resulted in an underutilization of capacity in some indus-
tries.
* Based on a GNP estimate of about DME 41.6 billion in 1952 and the
reparations estimates, I, A, above.
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Leaders. of the SED have emphasized that the changes in the
production and investment plans under the."new course" are designed
to eliminate "disproportions" in the economy, and to bring the speed
of "socialist construction" into line with existing economic capacities
as well as to improve the scale of living. Ulbricht in a speech
before the Central Committee of the SED on 19 September said; "The
ministries and administrative authorities ... as well as the enter-
prises and various organizations of the GDR must be guided above all
by the principle that existing capacities must be fully utilized so
that investment funds may be used in particular for the expansion
and reconstruction of enterprises actually in operation. This will
make it possible to increase production at a lower cost and within a
shorter time to the extent necessary to meet the requirements of the
people and the economy." 185 The announced changes in plans bear out
this general statement of policy.
In discussing the revised plan for the second half of 1953,
Bruno Leuschner, Chairman of the State Planning Commission, stated
that the revised figures for total volume of gross production were
not substantially different from those in the original plan. 186
Grotewohl revealed that for the-entire year the plan was to be changed,
so that heavy industry would produce DME 1.4 billion less, while the
light industries and foodstuffs industries would produce DME 950 mil-
lion more. 187 According to the resolution of the Central Committee
of the SED, heavy industrial production in 1953 as compared with 1952
was to rise 5.5 to 6 percent instead of the originally planned 13 per-
cent, and light industrial production was to increase by 10 percent
instead of 7.1 percent. 188.
According to Grotewohl, planned investments in 1953 had been
reduced by DME 1.7 billion from the amount in the original plan.
However, expenditures for housing, construction of highways, and
social facilities were to be increased by DME 670 million, giving a
net reduction of DNE 1,030 billion. 189 No firm figures are avail-
able on the original investment plan. The reported figures for total
investment range all the way from DME 4.9 billion to DME 6.5 bil-
lion. 190 If the higher figure is authentic, it probably contains
planned investments for armaments and military construction, which
are not shown in the official economic plan and which a private
information bureau in Berlin reported to be DME 1.6 billion for the
year mid-1952 through mid-1953. 191 Since investments in light
industry.and in power and coal mining are not to be reduced, and
since it is unlikely that the entire reduction could come out of
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investment in heavy industry, which in Communist planning termi-
nology includes replacements, it appears that a part of the reduc-
tion probably will take place in military investment, such as
investments for armaments and military construction.
In 1953 and 1954, originally planned investment will be
reduced by DME 2 billion each year. The reduction is to affect pri-
marily the metallurgical, ore mining, and heavy machine construction
industries, while investment in industries producing consumers' goods,
power, and coal, as well as in the MI'S's and the state-owned farms,
is to be further expanded. 192 Grotewohl stated that in 1954 retail
turnover, measured in 1953 prices, would increase by DME 4.5 billion
as compared with the revised plan for 1953. Taking into account the
additive role of excise taxes and distributors' margins in retail
price formation, it seems that this increase in turnover is quite
possible, if investments are reduced as planned. Capacity for produc-
tion of consumers' goods in light industry has not been fully utilized
in the postwar period or has been partially diverted toward production
of investment goods. The changes in the, investment program for 1945-55
should make available additional materials for the expanded production
of consumers' goods.
C. Agriculture.
In 1952, East German agricultural production as a whole was
about 11 percent below the 1938 level.* Population, on the other
hand, was about 10 percent greater than in 1939. 193 (The increase
in population came about primarily as a result of the transfer of
population from the German territories east of the Oder-Neisse
line.) 194 East Germany had to feed, in addition to its own popu-
lation, about 400,000 Soviet occupation troops. 195- Before the
war the area known as East Germany was, on balance, about self-
sufficient in foodstuffs, exporting to Western Germany grains,
potatoes, and sugar, and importing meats, fats, and dairy products. 196/
Among the major agricultural commodities, only the production
of meat and vegetable oils had exceeded the 1935-39 average by 1952.
The increase in meat production was achieved by abnormal slaughter
of livestock in the face of shortages of feedstuffs caused by the
* Estimate based on indexes computed in CIA. Indexes derived from
CIA estimates of agricultural production in physical quantities.
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unfavorable crop conditions in 1952. East Germany had deficits, more-
over, of both meat and vegetable oils before the war. As a result
of generally lower postwar production in agriculture and higher re-
quirements because of increased population, East Germany has found
it necessary to import foodstuffs. These imports, which for the
most part have come from within the Soviet Bloc, have not been
sufficient to provide an adequate diet for the population.
In 1952, supplies of potatoes, sugar beets, and other sources
of food for the population declined sharply. The harvest was poor
because of unfavorable weather conditions and of disaffection among
farmers caused by the drive for collectivization. Moreover, consider-
able quantities of foodstuffs were added to the State reserves.
The East German Five Year Plan calls for considerable increases
in agricultural production (see Table 3).* The goals of the Five Year
Plan for agriculture can possibly be achieved in view of the prewar
performance in this sector and in view of the expansion of yields in
West German agriculture by amounts greater than those required by
the East German Five Year Plan. 197 Fulfillment of the Five Year
Plan will depend primarily upon adequate supplies of fertilizers and
upon achieving peace and stability in the agricultural community. The
cessation of reparations deliveries should enable East Germany to
obtain phosphatic fertilizers, and it should be possible to. expand
domestic production. of potash and nitrogen fertilizers. The goals for
animal products very probably will not be realized, because of the
abnormal slaughter of livestock in 1953 following a shortfall in pro-
duction of fodder in 1952. The number of swine declined by
approximately 20 percent, and the population of other major kinds of
livestock failed to increase. Although the present livestock popula-
tion is close to prewar levels, the average weight of slaughter
animals is considerably below prewar.
As part of the "new course," compulsory delivery quotas for
agricultural commodities have been decreased, and several of the
measures designed to drive farmers into cooperatives have been re-
pealed. Independent farmers have been promised credits and some
easement of obligations to pay back taxes. Nevertheless, the policy.
of collectivization has merely been slowed, not abandoned.. The speech
of Ulbricht before the Central Committee of the SED on 19 September 1953,
in. which he stated, among other things, that one reason for the diffi-
culties in 1952 was that the political work of the NTS's was not good
* Table 3 follows on p. 40.
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Table 3
Production of Agricultural Commodities in East Germany
1952 and 1955 Plan 198/
Thousand Metric Tons J
1955 Plan
Annual Average 1955 as Percent of
Postwar Peak 1952 Plan Prewar
Crops
Grain and Legumes
6,129 b
5,6+7
7,313
111
Oil Seeds
182 J
181
279
71
Potatoes
13,.098 c/
10,1.62
17,507
129
Sugar Beets
5,880 b
3,788
6,8o4
127
Meat
619 /
619
1,357
221
Milk
N.A.
N.A.
6,772
124
Eggs (1,000 Eggs)
N.A.
N.A.
1,980
153
Butter
71 J
71
100
95
Slaughter Fats
124+
124
245
175
a. Unless otherwise indicated.
b. 1951.
c. 1950.
d. 1952.
enough, could hardly have been reassuring to the independent farmer. 1221
For the time being, however, the East German regime apparently intends
to pacify the independent farmer. Although a measure of improvement in
over-all agricultural production can be expected, the 1955 goals for
leading plant and animal products very probably will not be met.
III. Foreign Economic Relations.
A. Pattern of Trade.
East German foreign trade has shown constant and substantial
gains since the reversal of the policy of dismantling German industry
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in mid-1948. Soviet plans for East Germany suggest that its role
in the economy of the Soviet Bloc is to be similar to its former role
in the European economy, the role of a modern manufacturing economy.
If these plans materialize, a. continuation of the upward trend of
exports and imports may be expected, and trade with the Bloc as a
percentage of the total trade of East Germany is likely to increase
over the long run.
As shown in Table 4, the world trade of East Germany increased
several'fold over the period from 1948 to 1952. This increase was
Table 4
Foreign Trade of East Germany
1948-52
Current Prices
Total Trade East-West Trade
(Thousand (Thousand
Percent of
Exports I$ us) I$ US)
Total
1948 133,870 20o J 48,419 202a/
36.2
1949 299,227 202 J 94,616 20o a/
31.6
1950 460,000 201 183,041 202
39.8
1951 714,800 20l
112,964 202
15.8
1952 724,344
123,731 2E2/
17.1
1952 724,344 203
174,567 204 J
24.1
204 J
Imports
1948 170,946 Loo
a/ 63,358 200 J
37.1
1949 314,576 20o
a/ 160,448 200J
51.0
1950 511,000 201
154,624 202
30.3
1951 557,500 20l
101,011 202
18.1
1952 971,943
110,603 202
11.4
1952 b 971,943 203
240,617 203
24.8
a. Does not include interzonal trade with the French Zone of
Germany.
b. The share of East=West trade in the total imports and exports
in 1952 is higher when East German figures for the East-West
trade are used than when US Department of Commerce totals based
on official Western sources are used. See also Table 5, foot-
note c, p. 43, below.
c. Based on the results for January-September.
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achieved despite the payment of a substantial portion of East German
production to the USSR on reparations account, which account is
excluded from the totals treated in this section.
For the period 1948-50, East German foreign trade statistics
were originally calculated in dollars and then converted to marks
at the official exchange rate (to August 1950, 1 RM/DME equals $0.40
and after. August 1950, 1 DME equals $0.30). In recent years the
same practice is reported to have been followed, except that the
dollar figures are converted to rubles at the rate 1 ruble equals
$0.25. 205 Therefore, these exchange rates are appropriate for
converting the East German foreign trade figures as reported in marks
or rubles to dollars, and the question of whether these rates ade-
quately reflect the internal purchasing power of the mark or the
ruble is beside the point in this connection.
1. East German Trade with the West.
East German trade with the West increased substantially
during the period 1948-52. Western Europe accounted for the major
portion of this East-West total (see Table 5).* For the years
1948-49 and 1951-52-, over 90 percent of East German exports to the
West went to Western Europe, and over 98 percent of all imports from
the West came from that area. 206/ Trade with North America came
second, and the remainder of East German trade with the West was
.widely scattered. The largest part of this Western trade was with
the nearby countries of northwestern Europe. West Germany, the
Netherlands, Sweden, Norway, and Denmark accounted for about 86 per-
cent of total exports to the West in 1951 and about 60 percent in
1952. As in the case of exports, neighboring countries of northwestern
Europe dominated the import field and accounted for almost 90 percent
of total imports into East Germany from the West in 1951 and 75 percent
in 1952. Although exports were fairly evenly divided among the fore-
going countries, West Germany was a more important source of imports,
accounting for 38 percent in 1951 and 23 percent in 1952. The decline
in trade with northwestern Europe in 1952 was largely replaced by an
increase in trade with France and Finland.
The commodity composition of East German trade with the
West underlines the East German emphasis on industrial development at
Table 5 follows on p. 43.
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Value of the Trade of East Germany with the West
by Countries, 1948-49 and 1951-52
Exports
Total
West Germany
Netherlands
Sweden
Norway
Denmark
Switzerland
Finland
Austria
France
Other Western
European
Countries
Other
Western
Countries
1948 207
I
23,519.0 J
N.A.
8,318.2
813.0
2,961.5
2,052.6
3,465.4
413.4
687.5
42.2
4,125.6
639.6
1949
1951
38,795.8 J
112,964.0 /
N.A.
29,185.0
9,126.9
10,388.0
4,175.2
18,442.0
1,132.8
6,625.0
7,140.2
12,449.0
5,915.8
6,089.0
1,342.4
5,489.0
1,791.6
7,442.0
423.6
1,523.0
5,922.0
12,118.0
1,825.3
3,214.0
1952 20
123,731.0
19,335.0
11,067.0
20,007.0
9,768.0
14,046.0
4,270.0
8,531.0
8,259.0
6,006.0
-10,866.0
11,576.0
1948 212
31,857.7
N.A.
8,459.7
1,064.7
2,109.1
1,535.9
1,489.2
132.2
5,066.6
16.6
11,697.9
285.8
1949 2t3J
100,287.6 af
N.A.
24,220.4
6,802.0
3,838.4
7,423.6
4,064.0
1,436.0
2,708.0
254.4
47,493.2
2,047.6
1951
101,011.0
35,291.0
13,025.0
12,238.0
6,292.0
16,596.0
5,189.0
1,797.0
4,114.0
348.0
6,046.0
75.0
1952 21
110,603.0
35,016.0
14,057.0
16,273.0
7,329.0
12,479.0
7,960.0
2,908.0
5,648.0
2,916.0
4,630.0
1,387.0
a. Totals for 1948-+59 do not include trade with the French Zone of Germany.
b. Countries not separately specifying East or West Germany not included. '''/
c. The following breakdown of 1952 exports and imports (in current thousand $ US) is taken from an official East German source. / Some measure of the
magnitude of illegal trade may be deduced from a comparison of these totals with those of Table 5, which were derived from official Western sources.
Other Western Other
European Western
(1952) Total West Germany Netherlands Sweden Norway Denmark Switzerland Finland Austria France Countries Countries
Exports 174,567 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
Lap its 240,617 23,713 34,726 31,184 7,808 25,575 28,159 9,076 8,579 7,771 41,626 22,400
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the expense of production of food and other consumers' goods.
Table 6* presents the commodity composition of East German trade with
the West for 1948, 1949, and 1951. Over 60 percent of East German
exports to the West in 1951 consisted of industrial products, while
almost 50 percent of East German imports were composed of food,
beverages and tobacco, and fats and oils, with food alone comprising
most of this amount.
Restrictions on trade with the West, whether designed to
promote Soviet Bloc.autarky or to conserve supplies of Western cur-
rency, appear to have been relaxed to some extent in late 1952 and
1953. Evidence to this effect rests chiefly on an increasing number
of trade agreements with the free world and on the comparative volume
of trade in 1952 and 1953. The agreements with Egypt in February of
1953 and with Argentina are cases in point. Comparative data on East
German trade with Western countries, excluding West Germany, for the
first 6 months of 1952 and 1953 are as follows:
January to
June 1952
January to
June 1953
Current Thousand $ US
Exports
51,817
69,325
Imports
44,009
48,968
At the beginning of 1953 it was estimated that. East Germany owed
West Germany DMW (Deutsche Mark West) 35 million to DMW 40 million.
There were earnest efforts to reduce this balance in March, April,
May, and June of 1953, but a reversal of this trend had resulted in
an increase of the deficit by almost DMW 5 million on 1 September 1953.
2. East German Trade with Other Soviet Bloc Countries.
East German trade with the Soviet Bloc amounted to about
75 percent of the total foreign trade of the country for 1951-52.
For the year 1952, total foreign trade turnover with the Satellites
amounted to about $1.3 billion. Both imports and exports were nearly
Table 6 follows on p. 45.
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Table 6
Commodity Composition of the Trade of East Germany with the West aJ
1948, 1949, and 1951
Thousand $ US
1948 f
1949 217 b
1951 218
Food
5.4
2,551.6
4,387.0
Beverages and Tobacco
0.0
280.4
254.0
Raw Materials, Inedible
8,462.2
1,739.3
13,841.0
Mineral Fuels and Related Materials
638.4
95.2
19,489.0
Animal and Vegetable Oils and Fats
0.0
0.0
91.0
Chemicals
1,796.5
2,901.2
?.9,779.0
Manufactured Goods
5,908.1
14,433.6
13,693.0
Machinery and Transport Equipment
3,261.9
12,120.4
13,296.0
Miscellaneous Manufactured Articles
3,422.5
4,639.6
2,164.0
Miscellaneous Commodities and Transactions
23.6
34.5
14,409.0
23,519.0
38,795.8
101,403.0
Imports
1948 219 1
1949 220 b
1951 221
Food
2,154.8
14,463.2
42,366.0
Beverages and Tobacco
555.5
731.2
205.0
Raw Materials, Inedible
12,415.1
5,877.2
11,448.0
Mineral Fuels and Related Materials
2,819.9
3,515.2
5,862.0
Animal and Vegetable Oils and Fats
3.0
9,659.2
1,725.0
Chemicals
1,971.5
56,415.2
7,191.0
Manufactured Goods
11,347.5
7,272.0
14,487.0
Machinery and Transport Equipment
222.4
897.2
3,496.0
Miscellaneous Manufactured Articles
3.56.0
1,417.6
732.0
Miscellaneous Commodities and Transactions
12.0
39.6
7,073.0
Total
31,857.7
100,'287.6
94,585.0
a. Table 6 cannot be reconciled with Table 5, because each is
the US Department of Commerce.
b. Totals for 1948-49 do not include West Germany.
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seven times as great in 1952 as in 1948. The percentage increase in
trade with the Bloc exceeded the percentage increase in trade with
the West, and in dollar terms the increase was several times greater.
Table 7* shows the relative importance of Soviet Bloc
countries in the trade of East Germany with the Bloc in the period
1948-52. The USSR accounted for about half of East German exports to
the Bloc for the 5 years and was the source of a slightly larger
proportion of imports. Poland ranked next, accounting for about one-
fourth of the exports and imports of East Germany to the Bloc.
Czechoslolakia, Hungary, Rumania, and Bulgaria followed in that order.
Trade with Communist China, although relatively small, shows a marked
increase from 1951 to 1952. 222 Imports of Chinese foodstuffs became
especially important in the-last quarter of 1952.
A detailed year-by-year comparison of the commodity compo-
sition of the trade of East Germany with the other Soviet Bloc coun-
tries over the postwar period is made difficult by the lack of
comparable statistics. Table 8** shows the composition of this trade
for 1949. Exports in 1949 consisted chiefly of inedible raw materials,
about 40 percent of the total; machinery and transport equipment,
about 20 percent; and other manufactured goods, about 16 percent, with
chemicals and miscellaneous other categories comprising the remainder.
On the import side, manufactured goods, excluding machinery and trans-
port equipment, accounted for about 46 percent of the total; mineral
fuels and lubricants, about 20 percent; and inedible crude materials,
about 13 percent, with food, machinery, and other lesser categories
accounting for the remainder.
Beginning in 1950, exports and imports were classified
by industry rather than by commodity groupings as in the earlier
years. In 1952 the machinery construction industry contributed 38
percent of total East German exports to the Soviet Bloc countries;
chemicals, about 20 percent; and electrical engineering products and
precision equipment, about 21 percent. A complete breakdown of im-
ports is not available, but large imports of food and agricultural
and industrial raw materials suggest that East Germany is becoming
increasingly dependent on Bloc sources of supply. 223
Table 7 follows on p. 47.
# Table 8 follows on p. 48.
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Table 7
Distribution of the Trade of East Germany with Other Soviet Bloc Countries
1948-52
Exports
Total
USSR
Poland
Czechoslovakia
Hungary
Bulgaria
Rumania
Albania
China
1948
100.0
48.4
39.7
9.9
1.7
0.2
0.1
0
0
1949
100.0
67.2
22.4
8.3
1.0
0.8
0.3
0
0
1950
100.0
55.5
28.5
11.0
2.9
1.2
0.9
0
0
1951
100.0
55.2
22.4
11.0
4.3
1.7
2.2
0.3
2.9
1952
100.0
51.5
19.2
10.0
7.2
1.9
3.4
0.4
6.4
Imports
1948
100.0
56.8
31.5
11.1
0.1
0.5
0
0
0
1949
100.0
63.9
18.1
11.7
3.5
1.8
1.0
0
0
1950
100.0
54.5
24.4
11.8
6.9
1.4
1.0
0
0
1951
100.0
55.1
23.3
8.6
3.8
2.7
2.2
0
4.3
1952
100.0
52.8
18.9
8.0
7.1
1.9
3.7
0.4
7.2
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Commodity Composition of the Trade of East Germany with Other Soviet Bloc Countries
1949
Exports 224
Total
USSR
Poland
Czecho-
slovakia
Hungary
Bulgaria
Rumania
Albania
China
Food
11,592
1,158
431
3
0
0
0
0
Beverages and Tobacco
1,211
1,211
0
0
0
0
0
0
0
Raw Materials, Inedible
84,889
44,469
32,142
7,765
507
0
6
0
0
Mineral Fuels, Lubricants, and
Related Materials
17,932
14,924
2,681
327
0
0
0
0
0
Animal and Vegetable Oils and Fats
0
0
0
0
0
0
0
0
0
Chemicals
13,516
7,843
2,271
2,727
270
388
17
0
0
Manufactured Goods
25,175
19,800
3,170
1,527
215
329
134
0
0
Machinery and Transport Equipment
42,785
34,941
3,316
2,525
1,035
734
234
0
0
Miscellaneous Manufactured Goods
7,511
3,170
.1,866
2,079
73
226
97
0
0
Miscellaneous Commodities and Transactions
0
0
0
0
0
0
0
0
0
Total
204,611
137,516
45,877
16,953
2,100
i,677
488
0
0
Imports 225!
Food
11,088
676
1,708
1,016
3,926
2,379
1,383
0
0
Beverages and Tobacco
1,300
824
0
0
476
0
0
0
0
Raw Materials, Inedible
19,318
16,401
1,614
712
238
270
83
0
0
Mineral Fuels, Lubricants, and
Related Materials
31,95q
2,216
18,975
10,122
6646
0
0
0
0
Animal and Vegetable Oils and Fats
6,747
6,747
0
0
0
0
0
0
0
Chemicals
3,297
2,015
626
481
127
48
0
0
0
Manufactured Goods
69,884
61,315
4,974
3,581
0
14
0
0
0
Machinery and Transport Equipment
10,100
8,067
0
1,993
40
0
0
0
0
Miscellaneous Manufactured Articles
435
292
0
143
0
0
0
0
0
Miscellaneous Commodities and Transactions
0
0
0
0
0
0
0
0
0
Total
154,128
98,553
27,897
18,048
5,453
2,711
1,466
0
0
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B. Role of East Germany in the Soviet Bloc Economy.
As long as East Germany remains under'Soviet control, its
total production must be considered in estimating the economic capa-
bility of the Soviet Bloc for particular courses of action.* In
terms of GNP, East Germany in 1952 represented about 8 percent of the
Bloc total, or about i4+ percent of the GNP of the USSR. Among the
European Satellites, East Germany comes first in size of GNP, ranking
slightly ahead of Poland. 226 The pattern of specialization of the
East German economy in the Bloc may be appraised in the light of the
commodity composition of the trade of the country with other members
of the Bloc.** In brief, East Germany as an advanced industrial area
is an important supplier of machinery, chemicals, electrical engineering
products, and precision equipment and in return receives primarily
agricultural and industrial raw materials, food, mineral fuels, lubri-
cants, and certain manufactured products.
East Germany has been supplying to the USSR an estimated one-
fourth to one-half of the uranium available to the Soviet atomic
energy program. This is considerably more than is produced by all the
other Satellites combined. The rate of production in East Germany is
being maintained by deeper mining and by increasing the exploitation
of very low-grade ores at a greatly increased cost in capital invest-
ment and operating expenses. Significant changes in this production
rate are not expected to occur by 1955. 227
The advanced industrial character of East Germany and certain
specializations imposed by its small area are shown by an examination
of its array of basic raw materials and intermediate and final prod-
ucts, in relation to the production of the Soviet Bloc*** as a whole
and the USSR in particular. As may be seen from Appendix A,
Table 10,**** East Germany is not an especially important producer of
ferrous'metals, being limited in this respect by lack of high-grade
ores and coking coal. In nonferrous metals, East Germany contributes
39 percent of secondary copper and almost 10 percent of refined lead.
* For a discussion of Soviet takings from East Germany in the form
of reparations and other uncompensated deliveries, see I, A, and
I, C, above.
** See A, above.
*** Including Communist China.
****. See this table (p. 61, below)-for production in physical or
value units and for comparable totals for the Soviet Bloc and the USSR.
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Although completely lacking in crude petroleum production, East Ger-
many has an important synthetic liquid, fuel industry which accounts
for about two-thirds of the total output of the Bloc. This repre-
sents, however, only a little more than 2 percent of the combined
output of the Bloc of natural and synthetic petroleum products. East
Germany is a particularly important producer of chemicals, accounting
for the following approximate percentages of total Bloc production:
ammonia, 29; nitric acid, 17; chlorine, 37; calcium carbide, 55;
caustic soda, 29; refined phenol, 59; and synthetic rubber, 22.
Among agricultural products and fibers, sugar and rayon are
important contributions of East Germany to the production of the
Soviet Bloc, representing, respectively, about 11 percent and 53 per-
cent of the Bloc totals. On the other hand, the country is deficient
in grains, vegetable oils, and natural fibers.
East Germany is an important producer in the Soviet Bloc of
certain types of industrial products, especially machine tools, which
account for 16 percent of the Bloc total, and certain types of
electrical equipment, particularly turbines and transformers, which
account for 16 to 18 percent of the Bloc total.
This enumeration of leading commodities produced by East
Germany as a percentage of the Soviet Bloc total should be supple-
mented by other items in the production of which East Germany does
not rank so favorably. For this purpose, see the more complete
list in Appendix A, Table 10.* Taking all economic factors into
consideration, however, it is clear that.East Germany represents a
rich prize among the Satellites for economic reasons alone. If the
Soviet cancelation of reparations and suspension of other uncom-
pensated deliveries are not replaced by new exactions, the Soviet
economic benefit from this area will be smaller than in the past
and will be measured by the advantages derived from trade. If, how-
ever, Soviet control over East Germany remains secure, the resources
and production of this area must be counted among the elements con-
stituting Soviet capabilities for hot or cold war.
* P. 61, below.
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IV. Labor and Population.
A. State Control over Labor.
In the administration of labor policy, as well as in other
aspects of the centrally planned economy, the East German government.
tries to assume the appearance of democratic procedures. Actually
it relies essentially on government regulations which may impose
direct restraints on the factors of production or indirectly influence
their allocation through the market mechanism by means of government-
controlled prices and wages. To achieve the appearance of democracy,
it is pretended that governmental measures are taken only in response
to popular demand as voiced by democratically operated organizations.
The numerous public, quasipublic, and private agencies which seemingly
participate on an equal footing in the conduct of public business are
in fact puppets, responding to the instructions of a relatively small
inner circle of the government. Since these so-called mass organiza-
tions are under the leadership of the same small group that runs the
government, it is possible to evoke the appearance of popular enthusi-
asm for particular governmental measures and to have these measures
appear to be demanded by the public.
Public policy in the field of labor is administered chiefly
by the Ministry of Labor. Other economic ministries, however,
especially those directly concerned with production, and local agencies
participate in the implementation and control of labor policy.
Measures taken by the various organizations are coordinated in the
over-all economic plan which establishes the objectives for the econ-
omy as a whole and for the principal sectors. The Ministry of Labor
exercises jurisdiction in general labor matters and collaborates
with the other economic ministries in the execution of manpower plans.
If necessary, the Ministry of Labor may issue mandatory directives
for carrying out government-approved.plans for the allocation of
labor to projects of special economic significance. The Ministry,
through its departments and local agencies, is primarily concerned
with procurement of labor for basic industries and important enter-
prises, research on manpower requirements and supply, attempts to in-
crease the percentage of women in the. working force, supervision of
labor reserves and juvenile workers, promotion of the activist move-
ment and socialist competition, formulation of wage policy, develop-
ment and introduction of wage group classifications and technical
work norms, drafting of new social legislation, and labor statistics.
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The executive organs of the local governments are subordinated
to the ministries of the central government in carrying out labor
policies. These agencies replace the traditional labor exchange
offices, which were dissolved. In addition to certain functions in
confirming and supervising collective wage "agreements," the local
agencies have the following duties: to utilize the local labor
reserves, to organize the allocation of workers among the various
establishments and administrative districts of the country, to assist
nationalizes enterprises in the recruitment of labor, and to maintain
registers of employed and unemployed workers. Managements of local
enterprises are required to report at frequent intervals the number
of workers employed, new additions, and workers discharged, giving
details for changes of status of individual workers. In carrying
out the allocation of workers to particularly important establishments,
the local agencies may issue compulsory work assignments.
The government utilizes the training facilities of the
educational system in planning the supply of labor to meet the re-
quirements of economic plans. Vocational training receives great
emphasis. The production ministries arrange for apprentice training
and factory vocational schools.
Free unionism of the Western type does not exist in East
Germany today. The Labor Code asserts: "In our new democratic order
in which the key enterprises belong to the state, the right of wage
and salary earners -- the decisive power in the state -- to partici-
pate in the determination of the conduct of the economy is realized
through the organs of the democratic state." 228 Accordingly, the
unions cannot strike against state-owned enterprises, and they have
been deprived of the right to negotiate the basic conditions of
employment and of other rights which under traditional Western and
German thought are considered part of the freedom to organize. Only
one union organization is allowed to exist -- the Federation of Free
German Unions -- which is composed of 20 affiliated unions with a
total membership of more than 5 million persons. Its primary function
is to carry out the policies of the government and the SED rather
than to represent the specific interests of }workers with respect to
management or even the government. Performance of this duty is
secured by placing reliable Communists in the leading positions in
the unions and in the government. The most important functions of
the unions in the nationalized enterprises are to promote increased
productivity at lowest possible costs, to organize "cultural pro-
grams" for indoctrinating labor with the Communist ideology, and
to administer the social insurance system. At most, the role of
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unions in the management of the publicly owned sector is advisory,
and though the trade-union shop representative may use his partici-
pation in "People's Control" to complain about irregularities,
action on complaints will occur only with the consent of the public
administration, the Party leadership, and the top command of the
union. The latter, however, are unified through the device of
identical, Communist leadership, and action will be taken only when
it is expedient in the view of this leadership.
Administration of the social insurance system by the Federa-
tion of Free German Unions has increased the strong pressure on
workers to become and remain members of the unions. This again
brings out the quasigovernmental character of the union organization.
Union officials, instead of working for changes in policies con-
sidered undesirable by workers, are obliged to help in the enforce-
ment of such policies. For this reason, most of the important union
activities are in practice initiated and carried out by the executives
of the Federation rather than by the member unions. One of the aims
of. the regime is to indoctrinate the youth of the country and re-
educate adults to accept the new concept of the union as an executor
of public policies. At present, opposition to this concept is still
strong.
In the declining private sector of the economy, unions are
expected to safeguard the interests of workers and to promote the
conversion of private enterprise to socialist forms. Apart from the
enforcement of the "right to codetermine" business policies in private
enterprises, the Federation of Free German Unions points out that the
tasks of the unions should include checking'of tax payments, control
of price policy, and supervision of the performance of contracts
with publicly owned enterprises. But lower union officials and mem-
bers, instead of supporting the policy of the Federation, have, not
infrequently, helped private employers to ward off the breakdown of
their business. In such instances, union officials have followed
the policy of demanding concessions on the basis of the employer's
ability to finance them out of profits after taxes without endanger-
ing the existence of the firm. As a result, employees in the private
sector sometimes have been more favorably paid than in the public
sector and sometimes less so. Federation leadership has criticized
this as a violation of the principle of equal pay for equal work and
has urged that skilled workers in the private sector should not be
paid more than those in the public sector, since their skills are
necessary for "building socialism." At the same time, it is strongly
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urged that wages in the lower categories should be raised in the
private sector. Beyond that, Federation leadership has demanded
that any remnants of class harmony between workers and private em-
ployers should be extirpated.
B. Manpower and Labor Planning.
The current Five Year Plan 229 sets the goal for employment
in the national economy at 7.1 million persons by 1955: that is,
13 percent above the 1950 level, or a gain of about 800,000 workers.
Of the total, 2.77 million are to be women, and 4.33 million are to
be men. The plan also provides for a 60-percent increase in labor
productivity during the same period. In view of the available pool
of manpower, the Plan does not appear unfeasible quantitatively. The
requirements for highly skilled labor, however, may be difficult to
meet.
As a means of achieving the planned expansion of the de-
pendent* labor force, the plan envisions an increase in the propor-
tion of employed women, improvement of vocational training and
schooling, and location of new plants in the less industrialized
regions. To these measures should be added the transfer of self-
employed persons to hired status and the absorption of the unemployed.
In mid-1950 there were probably about 260,000 unemployed in East
Germany, 230/ and early in 1952 official. unemployment probably still
exceeded 200,000. This number does not include individuals who have
refused to accept jobs offered to them and who are therefore not of-
ficially recognized as unemployed. The total employment rose about
300,000 from 1950 to 1952. 231/ Since in February 1952 about 10.6 mil-
lion persons were registered under the regulation requiring all persons
between the ages of 14 and 65 and able to work to register, it appears
that the manpower pool is great enough to meet the planned expansion of
employment.. Difficulties may be experienced in getting women to leave
household duties in favor of other employment, in curtailing the flight
of people to West Germany, and in transferring the self-employed to a
hired status by the liquidation of private enterprises, but, given
the powers available to the government, it appears that the employ-
ment goal is not unattainable. Evidence of the scarcity of qualified
engineers, technicians, and other specialists is found in the cur-
rent emphasis on the creation of new training facilities and on
efforts to halt defections of these specially skilled personnel by
raising wages and salaries, 232/ by improving the professional and
Wage and salary workers as distinct from self-employed.
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social position of the "technical intelligentsia," and in the com-
prehensive program to recruit West German scientists and other
specialists. 233 In view of the relatively high proportion of
skilled and professional manpower in prewar Germany, the present
scarcity probably is caused by defection to the West and perhaps also
by Soviet recruitment for service in the USSR.
C. Labor Force and Population.
As a result of the influx of refugees and expellees from the
east and the return of prisoners of war, the population of East Ger-
many, including East Berlin, increased between 1946 and 1949 from
about 18.5 million to 19.1 million, but it has declined since then
to the 1946 level and has remained at about that level to the present
time. 234 The principal factor in the decline has been the flight
of refugees to West Germany.
Persons gainfully employed in East Germany on 1 February 1952
totaled 7,855,000, of whom 1.5 million were nonagricultural self-
employed, including family helpers. The distribution of the remainder
and the goals for 1955 are shown in Table 9.* 235 These figures
show the dominant role of nonagricultural employment in 1952 and the
relative, but not absolute, decline scheduled for agriculture by the
end of 1955.
D. Incentives and Other Devices to Increase Output.
The East German government, through the public enterprises,
employs the majority of the wage and salary workers in the country.
The government uses three basic types of methods to increase output
per worker: economic incentives, ideological indoctrination, and
coercive and penal measures. The techniques employed under each
method are constantly refined, and the pressures intensified. Eco-
nomic incentives are applied by the use of differential wages for
the various job classifications and by piecework rates and premiums
on the quantity and quality of work produced. Individual and. group
incentives are designed to increase output per worker and per pro-
duction team.
In establishing norms of output, there is a strong tendency
to use the results achieved by outstanding employees and to set the
Table 9 follows on p. 56.
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Table 9
Employment in East Germany by Sectors
1952 and 1955 Plan
Branch
Male
Female
Total
Industry
1,525,000
928,000
2,453,000
Building Trades
211,000
143,000
354,000
Agriculture and
Forestry
1,lo6,ooo
1,018,000
2,124,000
Transportation
431,000
104,000
535,000
Public and
Private Service
Employees
714,000
175,000
889,000
Male
Female
Total
1,685,000
1,185,000
2,870,000
245,000
180,ooo
425,000
1,200,000
1,100,000
2,300,000
450,000
130,000
580,000
750,000
175,000
925,000
Total 3,987,000 2,368,000 6,355,000 4,330,000 2,770,000 7,100,000
norm considerably above the statistical average attained by a given
group of workers. Ideological propaganda seeks to convince the
workers that such procedures are necessary to increase the welfare
of the country. Because of large allocations of the increment of
national product to investment and other nonconsumption uses, however,
the enthusiasm of the workers for constant upward revision of norms
with wages fairly constant has failed to come up to the planners'
expectations. Indeed, the attempt to raise norms has met with grow-
ing resentment on the part of the workers. Following the decision
of the Council of Ministers on 28 May 1953 that all norms must be
raised again at least 10 percent by 30 June 1953, without provision
for commensurate increase in wage rates, there were demonstrations
in mid-June, first by construction workers in Berlin and subsequently
by workers in other centers, which grew into broad protests against
the oppression of the Communist regime. These events forced the
government to repeal officially the decision of 28 May and to decree
that wage calculations in the socialized sector, as of 1 June 1953,
should be based on the working norms valid on 1 April 1953. Although
the government thus found it expedient to modify its immediate objec-
tives, it has not forsaken the ultimate goal. The Politbuero of the
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SED on 16 June 1953 repeated-the arguments in favor of raising work
norms.and declared that the 10-percent increase should be carried
through not by order of the ministries concerned but "solely on
the basis of persuasion and voluntary decision." This, however, is
not a fundamental change in policy, as the government has always
been careful to maintain the impression that its decisions are
motivated by the demands of the workers.
In the application of economic incentives, the government
has sought to direct workers to priority sectors of the economy by
offering higher average wages in these areas. In order to cause
workers to increase their skills, it has introduced classifications
of jobs by difficulty and by necessary skills, with corresponding
wage differences.. Extraordinary merit and achievement are rewarded
by prizes and honorary titles, and longevity in service is recognized
by premiums. As a complement to the financial incentives, the East
German policy makers have pursued a program of ideological propaganda
to win the support of workers for economic objectives of the regime.
The principal devices used in this endeavor are "cultural programs,
socialist competitions, and the activist movement, although the latter
contains financial incentives as well. It corresponds to the Soviet
Stakhanovite program. Meritorious group performance is rewarded by
expenditures for collective benefit from the "Director's Fund," which
is based on profits of the enterprise.
Although it is impossible to trace separately the effects of
the various incentives employed in increasing productivity, the presence
of an assortment of penal provisions for violations of labor discipline
and the provision for compulsory assignment of individuals to particu-
larly important segments of activity indicate that the incentive schemes
in themselves have not sufficed to reach the objectives set in plans.
The continued migration from East Germany to West Germany is further
evidence of the inadequacy of economic incentives.
E:. Migration.
After the first flare-up of defection at the beginning of
the postwar period, the number of refugees from East to West Germany
declined steadily until mid-1952. In the second half of 1952 it
began to increase again, and in the first half of 1953 it reached
unprecedented proportions. Beginning in June 1953, the influx of
refugees from East Germany dropped sharply to reach a low of less
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than half the rate which prevailed earlier in the year. In recent
weeks the number of refugees arriving in West Berlin and other
reception centers has again begun to increase. Details of the East-
West migration are shown in Appendix A, Tables 10* and 11**.
There is no reason to assume that the large drop in defec-
tions has been entirely, or even chiefly, caused by the introduction
of the "new course." Although a number of persons may have given up
or postponed defection because of hope for improvement of their lot
under the "new course," it is probable that more people have been pre-
vented from fleeing by more effective border controls.
F. Scale of Living.
Analysis of the trend in the scale of living in East Germany
from price-wage. statistics is complicated by the presence of coupon
rationing and a two-price system of rationing under which scarce
goods are sold for very high prices in state-owned stores called
HO's. The basic needs of the low-income sectors of the population
can theoretically be met by the private retailers and consumers'
cooperatives, which must sell at controlled prices. During the past
3 years the prices in HO stores have been lowered a number of times,
and controlled prices have been raised, with a resultant lowering
of the gap between the two, but the gap is still considerable. The
scale of living in East Germany rose gradually from very low postwar
levels up to 1952, when per capita consumption is estimated to be
still substantially below the prewar level.
Poor agricultural harvests in 1951 and 1952 sharply reduced
the availability of food supplies in the 1952-53 food year. Follow-
ing the announcement of the "new course" in June, the situation was
relieved in part by drawing on state reserves and by supplemental
food imports from the USSR. 236 The average daily caloric intake
per capita in East Germany stood at 2,612 in the period from 1933 to
1937, 2,081 in the food year 1951_52,#** and 1,917 in 19.52-53, 237
or, in percentages, 1952-53 was about 73 percent of prewar and 92
percent of 1951-52. Reduced availabilities of milk, cheese, eggs,
P. 61, below.
P. 65, below.
The food year extends from 1 July to the following 30 June.
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vegetables, and legumes probably account for a lesser percentage of
total calories consumed in postwar than in prewar years.
The consumption of manufactured consumers' goods presents
a more difficult problem for analysis than food alone. Per capita
production of a representative sample of manufactured consumers'
goods, which includes an estimate of manufactured food items, indi-
cates that East Germany has been able to attain a postwar high of
about 70 percent of the prewar level in 1953.* 238 Although the
present area produced a surplus of consumers' goods end items prior
to the war, it is thought that present levels of production fall
well short of local requirements. Ample evidence indicates that
shortages of consumers' goods are very real to the residents of
East Germany.
Under the "new course" the output of agricultural and light
industrial products has received more favorable attention than in
the past. Increased imports of manufactured consumers' goods and
food items will depend upon the availability of export commodities.
With the apparent relief from the burden of reparations and other
uncompensated deliveries to the USSR, it would appear that East
Germany has a favorable opportunity for increasing the scale of
living. This, however, will depend on the possibility of new forms
of Soviet exactions and the sincerity of the local regime in its de-
clared intention of improving the lot of the people.
Based on 1953 production estimates made early in the year.
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APPENDIX A
TABLES
Table 10
Production of Selected Commodities in East Germany, the USSR,
and the Soviet Bloc
1952
1952 23 1952 240 1952 241
Total Bloc USSR East Germany East Germany
(Thous send (Thousai3d (Thousa d as Percent
East Germany
as Percent
Commodity
mt) b
mt J
mt) J
of Total Bloc
of USSR
Iron Ore (50% Fe)
62,783.0
55,000.0
330.0
0.5
0.6
Pig Iron
31,979.0
25,100.0
654.0
2.0
2.6
Raw Steel
43,917.5
34,300.0
1,800.0
4.1
5.2
Metallurgical Coke
45,288.0
33,000.0
265.0
0.6
0.8
Rolled Steel
32,317.0
25,100.0
1,362.0
4.2
5.4
Manganese Ore
4,547.6
4,200.0
20.0
0.4
0.5
Chromite (mt)
750,700.0
650,000.0
0
0
0
Primary Copper
303.2
287.0
10.4
3.4
3.6
Secondary Copper
70.0
39.0
27.0
38.6
69.2
Refined Lead
197.7
117.0
19.0
9.6
16.2
Refined Zinc
267.0
130.0
N.A.
N.A.
0
Antimony
14.5
3.0
0
0
0
Bauxite
1,865.0
625.0
0
0
0
Primary Aluminum
251.2
220.0
9.2
3.7
4.2
Secondary Aluminum
81.5
72.5
7.0
8.6
9.7
Fluorspar
198.0
160.0
38.0
19.2
23.8
Petroleum
Crude Petroleum
55,576.0
44,000.0
0
0
0
Liquid Fuels
(from Synthetics
and Shale Oils)
1,807.0
300.0
1,203.0
66.6
4ol.o
Natural and
Synthetic Petro-
leum Products
53,300.0
41,580.0
1,300.0
2.4
3.1
Natural Gas
(million cu m)
9,840.0
5,500.0
0
Footnotes for Table 10 follow on p. 64.
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Production of Selected Commodities in East Germany, the USSR,
and the Soviet Bloc a
1952
(Continued)
1952 239
1952 240 1952 241
Commodity
Total Bloc
(Thousand
mt)
USSR East Germany East Germany
(Thousand (Thousand as Percent
Mt) J rnt) J of Total Bloc
East Germany
as Percent
of USSR
Ammonia
(Synthesis)
972.0
590.0
280.0
28.8
47.5
Nitric Acid (100
Percent)
1,686.5
1,172.0
246.1
16.6
21.0
Sulfuric Acid
4,619.0
3,627.0
362.0
7.8
10.0
Toluol
67.4
56.0
3.9
5.8
7.0
Chlorine
529.0
261.0
198.0
37.4
75.9
Calcium Carbide
1,256.1
300.0
69o.4
55.0
230.1
Caustic Soda
722.9
333.0
208.9
28.9
92.8
Crude Benzol
412.1
305.0
19.1
4.6
6.3
Refined Benzol
359.3
223.0
10.3
2.9
4.6
Refined Phenol
15.5
10.6
9.2
59.4
86.8
Synthetic Rubber
253.6
187.0
.56.3
22.2
30.1
Reclaimed Rubber
70.5
55.0
2.5
3.5
4.5
Rubber Tires
(thousand units)
12.84
10.0
0.8
6.2
8.0
Bread Grains
(million mt)
103.71
61.29
3.3
3.2
5.4
Other Grains
(million mt)
48.18
29.91
2.2
4.6
Potatoes
148,506.6
8,880.0
10,162.0
6.8
12.9
Sugar
4,568.4
2,267.0
511.0
11.2
22.5
Meat
9,930.0
3,485.0
619.0
6.2
17.8
Animal Fats
2,409.0
851.0
195.0
8.1
22.9
Vegetable Oils
2,809.7
885.0
52.3
1.9
5.9
Wool (Grease Base)
235.31
150.9
3.7
1.6
:2.5
Rayon
184.o
41.2
97.5
53.0
236.7
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Production of Selected Commodities in East Germany, the USSR,
and the Soviet Bloc a/
1952
(Continued)
1952 239 1952 240 1952 241
Total.Bloc
(Thous nd
Commodity mt
USSR East Germany East Germany
(Thou~s~'nd (Thous,d as Percent
mt J mt) J of Total Bloc
East Germany
as Percent
of USSR
Anthracite and
Bituminous 372,695.0
220,500.0
2,850.0
0.8
1.3
Lignite 325,404.0
85,500.0
178,080.0
54.7
46.3
Heavy Industrial
Products
Antifriction
Bearings (million
units) 131.3
115.0
6.8
5.2
5.9
Tractors (thousand
units) 133.3
121.0
7.2
5.4
6.o
Trucks (thousand
units) 429.3
410.0
7.3
1.7
1.8
Passenger Cars
(thousand units) 76.9
35.0
16.4
21.3
46.9
Steam Locomotives
(units) 3,392.0
2,250.0
0
0
0
Electric Locomotives
(units) 341.0
280.0
61.0
17.9
21.8
Freight Cars
(equivalent 2-
axle units 188,400.0
137,500.0
6,000.0
3.2
4.4
Railroad Passenger
Cars (units) 4,380.0
2,800.0
620.0
14.2
22.1
Machine Tools
(units) 138,590.0
80,340.0
22,000.0
15.9
27.4
Cori struction
Materials
Flat Glass (million
sq m) 119.0
90.0
15.5
13.0
17.2
Gypsum 2,438.0
1,900.0
455.0
18.7
23.9
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Table 10
Production of Selected Commodities in East Germany, the USSR,
and the Soviet Bloc a/
1952
(Continued)
1952 239 1952 240 1952 241
Total Bloc USSR East Germany East Germany East Germany
(Thousand (Thousand (Thousand as Percent as Percent
Commodity mt b mt) b mt) b of Total Bloc of USSR
Construction
Materials
(Continued)
Unglazed Bricks
(million units)
21,300.0
15,990.0
1,680.0
7.9
10.5
Cement (Hydraulic)
19,150.0
14,500.0
1,620.0
8.5
11.2
Electric Power
(million kwh)
179,634.0
117,000.0
23,400.0
13.0
20.0
Electric Equip-
ment J
Turbines (thousand
kw)
5,085.0
3,600.0
1,809.0
18.1
30.0
Transformers
(thousand kilo-
volt amperes)
9,989.0
6,029.0
19,500.0
16.1
27.8
Wire and Cable
(mt of copper)
121,360.0
70,060.0
445.0
7.5
10.5
a. The Soviet Bloc includes the USSR, the European Satellites, and Communist
China.
b. Unless otherwise indicated.
c. Range of error, plus or minus 20 percent.
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Migration a/* between West Germany and East Germany, between West Berlin and East Germany,
and between West Berlin and East Berlin, by Time Period 242
1948-52
Number of Persons Migrating.
Number of Persons Migrating
Time Period
Net Migration
To West Germany
From
East Germany
To
West Germany
From East
Germany
From
West Germany
To East
Germany
Net Migration
To West Berlin
From
East Germany
To
West Berlin
From East
Germany
From
West Berlin
To East
Germany
Net Migration
To West Berlin
From
East Berlin
To
West Berlin
From East
Berlin
From
West Berlin
To East
Berlin
1948
188
1
A
N
N
A
N.A.
March
N.A.
N.A.
N.A.
1,351
2,539
8
,
8
8
.
.
A
N
.
.
N
A
N.A
2d
Quarter
N.A.
N.A.
N.A.
6,011
9,
29
1
3,
.
.
.
.
.
N
A
3d
Quarter
N.A.
N.A.
N.A.
3,751
7,264
8
3,513
N.A.
N
A
N.A.
N
A
.
.
N
A
4th Quarter
N.A.
N.A.
N.A.
5,359
,329
2,970
.
.
.
.
.
.
Total
(March-
December)
N.A.
N.A.
N.A.
16,472
27,961
11,489
N.A.
W.A.
N.A.
1949
4
4
81
2
N
A
N
A
N.A.
1st Quarter
N.A.
N.A.
N.A.
,2-55
7,07
9
,
.
.
.
.
2d Quarter
N.A.
N,.A.
N.A.
7,287
9,696
2,409
N.A.
N.A.
N.A.
A
N
3d Quarter
N.A.
N.A.
N.A.
8,795
11,292
2,497
N.A.
N
A
N.A.
N
A
.
.
N
A
4th Quarter
N.A.
N.A.
N.A.
12,742
15,049
2,307
.
.
.
.
.
.
000
220
000
2
000
35
33
079
43
111
10,032
N.A.
N.A.
N.A.
Total
,
55,
,
,
,
1950
8
1st Quarter
41,943
49,740
7,797
9,552
11,689
2,137
86
2,810
272
5,095
5
467
5
2,2
195
2
2d Quarter
48,344
56,848
8,504
11,911
13,771
0
1,
3,
,
,
6
3d Quarter
57,781 b
65,287 J
7,526 J
12,141
14,270
2,129
3,865
6 041
,
2,17
2
1
2
4th Quarter
65,779
73,849 cf
8,070
12,181
13,835
1,654
4,402
6
653
5
,
4
4
246
2 /
088
1
32
45
785
53
565
780
7
14,349
23,256
8,907
Total
21
,70
/
,79
2
,
,
,
,
* Footnotes for Table 11 follow on p. 66.
65
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Migration J between West Germany and East Germany, between West Berlin and East Germany,
and between West Berlin and East Berlin, by Time Period 242
1948-52
(Continued)
Number of Persons Migrating
Number of Persons Migrating
Time Period
Net Migration
To West Germany
From
East Germany
To
West Germany
From East
Germany
From
West Germany
To East
Germany
Net Migration
To West Berlin
From
East Germany
To
West Berlin
From East
Germany
From
West Berlin
To East
Germany
Net Migration
To West Berlin
From
East Berlin
To
West Berlin
From East
Berlin
From
West Berlin
To East
Berlin
1951
1st Quarter
44,934
49,902
4,968
9,605
11,068
1,463
1,054
5,918
4,864
2d Quarter
40,445
45,976
5,531
12,233
13,547
1,314
5,109
6,159
1,o46
3d Quarter
44,449
51,748
7,299
13,873
15,575
1,702
4,458
5,507
1X04 9
4th Quarter
42,046
47,761
5,715
13,476
14,804
1,328
3,727
4,548
821
Total
171,874
195,387
23,513
4 187
54,994
5,807
14,348
22,128
7,780
1952
1st Quarter
25,447
30,009
4,562
8,398
9,980
1,582
2,794
3,628
834
2d Quarter
27,426
32,047
4,621
N.A.
N.A.
N.A.
2,509
3,260
751
3d Quarter
24,828
27,765
2,937
N.A.
N.A.
N.A.
3,323
4,134
811
4th Quarter
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
4,732
5,550
818
Total
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
13,358
16,572
3,214
a. Based on police reports of arrivals and departures.
b. Period from 1 July to 13 September 1950.
c. Period from 14 September to 31 December 1950.
d. The totals for the four quarters are slightly different from the total for the year obtained from a later source.
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Total Persons Passing Through the Emergency Acceptance Procedure in Berlin by Age and Sex ?L3/
January 1952-June 1953
1952
1953, First Quarter
April 1953
May 1953
June 1953
Age Groups
Total
Percent
Male
Total
Percent
Male
Total
Percent
Male
Total.
Percent
Male
Total-
Percent
Male
Under 6
9,356
8.2
4,813
10,138
9.3
5,206
3,104
8.8
1,601
3,401
9.9
1,761
3,655
9.4
1,911
6 to Under 14
14,633
12.9
7,519
16,346
15.0
8,425
5,107
14.5
2,631
4,943
14.5
2,541
4,900
12.6
2,526
14 to Under 18
10,479
9.2
6,650
10,408
9.5
6,053
3,999
11.4
2,292
3,883
11..4
2,147
5,050
12.9
3,017
18 to Under 21
10,981
9.7
7,333
7,318
6.7
4,049
2,503
7.1
1,411
2,366
6.9
1,307
3,300
8.5
1,982
21 to Under 25
9,186
8.1
5,540
6,203
5.7
3,163
2,024
5.8
1,007
2,036
6.0
1,015
2,610
6.7
1,427
25 to Under 45
35,622
31.4
17,801
33,357
30.5
14,145
10,431
29.6
4,463
9,927
29.1
4,373
11,302
29.0
5,187
45 to under 65
21,411
18.9
12,390
22,999
21.0
11,147
7,146
20.3
3,593
6,769
19.8
3,410
7,320
18.8
3,797
65 and Over
1,751
1.6
957
2,569
2.3
1,215
873
2.5
425
819
2.4
405
832
2.1
397
Total
113,419
100.0
63,003
109,338
100.0
53,403
35,187
100.0
17,423
34,144
100.0
16,959
38,969
100.0
20,244
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APPENDIX B
SOURCES
Evaluations, following the classification entry and designated
"Eval.," have the following significance:
Source of Information Information
A Completely. reliable 1 - Confirmed by other sources
B - Usually reliable 2 - Probably true
C - Fairly reliable 3 - Possibly true
D Not usually reliable 4 - Doubtful
E - Not reliable 5 - Probably false
F - Cannot be judged 6 - Cannot be judged
'Evaluations not otherwise designated are those appearing on the
cited document; those designated "RR" are by the author of this re-
port. No "RR" evaluation is given when the author agrees with the
evaluation of the cited document.
1. State, Publication 2783, Occupation of Germany, Policy and
Progress 1915-)+6, Washington, D.C., 1947, pp. 1, 159. U.
2. Ibid., p. 81.
3. J.P. Nettl,.The Eastern Zone and Soviet Policy in Germany,
1 1+9 5-1950, Oxford University Press, 1951, pp. , 62. U.
Ii.
Ibid., p. 62.
5.
Ibid.,.p. xvii.
6.
Ibid., pp. 62,
123.
7.
Ibid., pp. 61,
199..
8.
Vorstand der Sozialdemokratischen Partei Deutschlands, Die
Reparationen in der Sow et-Zone von 1945-1952, p. 6. U.
Robert Slusser (editor), Soviet Economic Policy in Postwar
Germany, Research Program do the USSR, 1953, pp. 1-14. U.
Nettl, op. cit., pp. 150,
160-165.
9.
Nettl, op. cit., pp. 86,
174-177-
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10. Slusser, op. cit., pp. xiv, 93.
Nettl, ok. cit., p. 181.
11. Nettl, M. cit., p. 157.
Ministerium der Finanzen der Deutschen Demokratischen
Republik, Das neue Preisrecht, pp. 11-19. U.
12. Nettl, . cit., p. 155.
13. Ibid., p. 211.
14. Ibid., pp. 160, 242.
15. Ibid., pp. 132, 134, xviii.
16. Ibid., p. xix..
17. Ibid., p. 112.
CIA, ORR Project 41.1, 28 Sep 1953, P. 5. S.
18. CIA, ORR Project 41.1, 28 Sep 1953, P. 5. S.
25X1 A2g 20.
21. Die Wirtschaft, No. 23, 5 Jun 1953, P.
22. Nettl, op. cit., p. 73-
23. CIA/RR IP-32 7 Organizational Structure of Soviet Control
and Procurement Agencies in East Germany, 27 Jan 1953, Part II.
S, US OFFICIALS ONLY.
CIA, ORR Project 41.1, op. cit., p. 5.
24. Otto Walther, Verwaltung Lenkung and Planung in der Wirtschaft
in der Sowjetischen Besatzungszone, Bundesministerium fuer
gesamtdeutsche Fragen, Bonn, 1953, p. 20. U.
28. State, Publication 2783, op. cit., p. 161.
.29. Nettl, og. cit., p. 44.
30. Ibid., p. 1717
31. Ibid., p. 160.
32. Vorstand der Sozialdemokratischen Partei Deutschlands,
op. cit., p. 14.
Nettl, off. cit., pp. 147, 202-206.
33. Vorstand der Sozialdemokratischen Partei Deutschlands,
2E. cit., p. 14.
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34.
35.
36.
37.
38.
Nettl, off. cit., p. 220.
Ibid., p. 220.
CIA, ORR Project 41.1, OP. cit., p. 32.
Ibid., p. 30.
Bundesministerium fuer gesamtdeutsche Fragen, Die Sowjetische
Hand in der Deutschen Wirtschaft, Bonn, 1952, p. 71. U.
39.
25X1A
40. Die
60.
25X1 A+1 W
Die Sow jetische Hand in der Deutsc en sc
25X1A
42.
Np. 36 11.
Netti, off. cit., p. 220.
25X1 A3 . New York Times 24 Aug 1953. U.
44.
New York Times, op. cit.
45. New York Times, op. cit.
25X1 A 46.
25X1A2g
25X1A
Die Sow etische Hand in der Deutschen Wirtsc a , op. cit.,
p- 7?
Walther, op. cit., p. 33.
47. CIA, ORR Project 22.19, 1953, p? 9? S, US OFFICIALS ONLY.
Walther, op. cit., p. 33.
48. Walther, 2.. cit., p. 33.
49. Die Sowjetische Hand in der Deutschen Wirtschaft, op. cit.,
p. 30.
50. Ibid., p.
51,. Ibid., p.
30.
31.
52. Die Sow e isc e an in aer Deutschen Wirtschaft, op. cit.,
53.
54.
55.
56.
57.
58.
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p. 31.
Ibid., p. 33.
Ibid.
Ibid.
Ibid.
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59.
STATSPEC 60.
61.
62.
63.
64.
65.
66.
25X1A 67.
68.
69.
25X1A2g
70.
.71.
72.
73?
25X1 A 74 .
75.
25X1A
76.
77.
78.
79.
80.
81.
Ibid., p. 38.
Ibid.
CIA, ORR Project 41.1, op.. cit.., p. 44.
Ibid., pp. 44-46.
Nettl, op. cit . , pp. 225 ff.
Nettl, op. ?cit . , pp. 225 ff.
New York Times, . cit.
Nettl, op. cit., p. 255.
Vorstand der Sozialdemokratischen
pp. 52 if.
Partei Deutschlands, off. cit.,
Vorstand der Sozialdemokratischen Partei Deutschlands,
op. cit., p. 21.
New York Times, op. cit.
Die Sowjetische Hand in der Deutschen Wirtschaft, op. cit.,
p. 87.
New York Times, op. cit.
Vorstand der Sozialdemokratischen Partei Deutschlands,
Nettl,
Ibid.,
Ibid.
op. cit., p. xviii.
p. 137+.
Das Wirtschaftsjahr, 1953,
_ - 9 4
25X1A
Verlag
Die Wirtschaft,
Berlin,
STATSPE. Gesetzblatt der Deutschen Demokratischen Republik,, May 1952,
p. 07. u.
Das Wirtschaftsjahr, 1953, op. cit., p. 111. U.
84.
25X1A
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85. Das Wirtschaftsjahr,. 1953, op. cit., p. 112.
86.
87. Nettl, op. cit., p. 83.
88. CIA, ORR Project 6-51, The European Satellite Power Complex,
26 Sep 1951, p. 12. S.
89. Walter Ulbricht, "Lehren des xix Parteitages der KPdSU fuer
den Aufbau des Sozialismus in der Deutschen Demokratischen
Republik," Einheit, Dec 1952, p. 1306. U.
90. Das Wirtschaftsjahr, 1952, Verlag Die Wirtschaft, Berlin,
25X1X7 91.
1951, p. 103. U.
Ibid., pp. 102-103.
93. CIA, ORR, DI contribution to Project 0.2 (1953). S.
94. Bartho Plonies and Otto Schonwalder, Die SowJetisierung des
Mitteldeutschen Handwerks, Bundesministerium fuer
gesamtdeutsche Fragen, Bonn, 1951, p. 7. U.
95. Ibid., pp. 9-20.
96. Ibid., p. 41.
97. Felix Poehler, Die Vermichtun des privaten Grosshandels in
der Sowjetischen Besatzungszone, p. 34. U.
98. Ibid., p. 23-
99. Ibid.,. pp. 39-41.
100. Felix Poehler, Der Untergang des privaten Einzelhandels in
der Sowjetischen Besatzungs zone, Bundesministerium fuer
gesamtdeutsche Fragen, Bonn, 1952. U.
101. Berliner Zentralbank, The Economic Development in West
Berlin and in the Soviet Zone, 2d edition, revised, Berlin,
1952, P. 53. U.
25X1X7102. Das Wirtschafts abr 1953, 0 . cit., p. 227.
25X1A 103'
104.
105. CIA FDD, u-4415, 21 Aug 1953. C.
106. K. von der Neide, Raiffeisens Ende in der Sowjetischen
Besatzungszone,'Bundesministerium fuer gesamtdeutsche
Fragen, Bonn, 1952. U.
107. Mathias Kramer, Die Landwirtschaft in der Sowjetischen
Besatzungszone, Bundesministeriumn fuer gesamtdeutsche
25X1A Fr en Bonn. U.
108.
25X1A 109. Das Wirtschaftsjahr, 1953, ? cit-., p. 94.
110.
111. Walther, op. cit., p. 20.
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25X1A2g
25X1A2g
25X1A 121.
113. Die Materialversorgung, Verlag Die Wirtschaft, Berlin,
1952, p. 33. U.
114+. Walther, op. cit., pp. 29-33.
115. Ibid., p. 30.
116. Ibid.
117. Ibid.
118.
119.
120. Die Wirtschaft, No. 22, Berlin
122. id.
123.
124.
125.
25X1 A 126.
P. 1141. U.
130. Ibid., 22 Dec 1950, p. 1233, U-
131. Das Wirtschaftsjahr, 1953, op. cit., p. 138.
132. Gesetzblatt der Deutschen Demokratischen Republik,
CIA FDD,
Q592, 28 May 1953.
S.
CIA FDD,
Q586, 15 May 1953.
S.
CIA FDD,
Q517, 28 oct 1952.
S.
Walther,
o.. cit., p. 30.
"Die statistisches Berechterstattun.g zum Volkswirtschaftsplan
1951," Statistisches Praxis, Berlin, 1951, vol. 5. U.
127. Ministerium der Finanzen tier DDR, Das neue Preisrecht,
Berlin, p. B 1. U.
128. Gesetzblatt der Deutschen Demokratischen Republik, No. 22,
21 Feb 1953, P. 31 4. U.
129. Gesetzblatt der Deutschen Demokratischen Republik, 6 Dec 1951,
21 Apr 1950,
133.
25X1A
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134. Ibid.
135. Ibid., p. U.
25X1A Die Wirtschaft, No. 38, Berlin, 18 Sep 1953, p. 5? U.
25X1A
138. Ibid.
139. Ibid., p. 13.
140.
141. as r sc a s , 1953, op, cit., pp.
142. Gesetzblatt der Deutschen Demokratischen Republik,
2 Oct 1952, p. g b2. U.
143. Ibid., 31 Jan 1953, p. 165-
144. Die Wirtschaft, No. 5, Berlin, 30 Jan 1953, p. 2. U.
145. Gesetzblatt der Deutschen Demokratischen Republik,
146.
147.
148.
25X1A
3 Feb 1953, p. 175.
U.
Ibid.,
27 Feb 1953,
p.?
329.
U.
Ibid.,
10 Mar 1953,
pp?
392 if.
U.
Ibid.,
14 Apr 1953,
p.
543?
U.
149. Die Wirtschaft, 22 May 1953, Berlin, p. 1. U.
150. CIA ORR estimate.
151. Die Wirtschaft, 13 Jun 1953, Berlin, p. 1. U.
25X1A8a 152.
153.
154.
155.
156.
25X1A
,STATSPEC
25X1A2g
75 -
S-E-C-R-E-T
157.
158.
159.
160.
161.
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162.
25X1A8a 163.
25X1A6a
Die Wirtschaft, 11 Sep 1953, Berlin, p. 6. U.
164+. Economic Data on Potsdam Germany,. Office for Military
Government US 1947. U.
25X1 X7 165-
166.
25X1A
167.
168. CIA, ORR Project 1 4.1, op. cit.
169. Colin Clark, Conditions of Economic Progress, 2d edition,
1951, pp. 90 ff. U.
17O. United Nations, National Income Statistics, 1938-48,
25X1 X7 171.
. 80 ff . U.
172. Nettl, off. cit., p. xviii.
173. Ibid., pp. 2771ff.
174. Ibid.
17~ . CIA estimate.
176. Recomputed on a 1938 base from the following sources:
a. International Financial Statistics, Jun 1953, p. 86. U.
b. Statistisches Jahrbuch fuer die Bundesrepublik
Deutschlands, 1952. U.
c. Wirtschaftswissenschaftliches Institut der Gewerkschaeten,
Deutschland in Zahlen, 1950, Cologne, Bund Verlag,
1951. U.
177. Statistisches Praxis, Oct 1953. U.
178. Wirtschaft and Statistik, Statistisches Bundesamt, Bonn,
Jun 1953, p. 23 . U-
179. Das Wirtschaftsjahr, 1952, 2E. cit., p. 101.
180. Ibid., p. 115.
STATSPE(~-81. Die Wirtschaft, Berlin, 20 Feb 1953. U-
82.
183. Die Wirtschaft, Berlin, 1 Aug 1953. U.
Ibid., 1 Nov 1953.
184. Ibid., 1 Nov 1953-
STATSPEC
185.
186. Ma. 1 c , p. .
25X1 A 187. Ibid., 30 Jul 1953, p. EE 21.
25X1A2g
188.
189. Ibid., p. 5.
190.
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25X1A
25X1A2g
191.
192.
193.
194.
195.
196.
197.
198.
199.
STATSPEC 200.
25X1A2g
25X1 A 203.
201.
202.
Contribution to ORR Project 0.2, The Economy of East Germany,
Commerce, World Trade Compilation from Official Sources,
25X1A2g 2o4.
205.
25X1A2g
25X1A2g
25X1A
Ibid., p. 5.
Bundesministerium fuer gesamtdeutsche Fragen, Die
Bevoelkerungsbilanz der Sowjetischen Besatzungszone,
1939 bis 1949, supplement, "Die Volkszahlung 1950,"
Bonn, 1951. U.
Statistisches Jahrbuch fuer die Bundesrepublik Deutschland,
1952, Stuttgart-Cologne, 1953? U.
CIA ORR, D/M/AG contribution to Project 0.2, 1953. S.
Bundesministerium fuer gesamtdeutsche Fragen, Der Aussenhandel
der Sowjetischen Besatzungszone Deutschlands, Bonn, 1953,
pp. 4-6. U.
Bundesministerium fuer gesamtdeutsche Fragen, Der Aussennancte
der Sowjetischen Besatzungszone Deutschlands, Bonn, 1953,
pp. 4-6. U.
206. CIA, ORR, S/TF, The Foreign Trade of East Germany, 19+8-52,
207.
208.
209.
210.
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pp. 5a passim. S. US OFFICIALS ONLY. This reference con-
stitutes the source of all data on East-West trade of East
Germany.
Commerce, 1952, OP. cit.
Ibid., 1951, 1952.
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240. Ibid.
241. Ibid.
242. Bundesminister.fuer Vertriebene, "Ueb.ersicht.ueber_die
Zuwanderer aus der Sowjetischen Besatzungszone and dem
Sowjetischen Sektor von Berlin (S BZ) seit 1949," IV
2 a-8610-7043/53, 4 Jul 1953, p. 5-
243- West Germany:
1949: Wirtschaft and Statistik, Vol. 2, No. 3, Jun 1950,
p. 77.
1950: Yearly total: Statistische Berichte, VIII/12/6,
5 Nov 1951;
1st quarter, ibid., VIII/12/1, 4 Sep 1950
2d quarter, ibid., VIII/12/2, 7 Oct 1950
3d quarter, ibid., VIII/12/3, 1 Mar 1951
4th quarter, ibid., VIII/12/4, 30 Apr 1951.
1951:
1st quarter, ibid... VIII/12/5, 14 Jul 1951
2d quarter, ibid., VIII/12/7, 8 Nov 1951
3d quarter, ibid., VIII/12/8, 6 Feb 1952
4th quarter,, ibid., VIII/12/9, 23 May 1952.
1952:
1st quarter, ibid., VIII/12/10, 1 Sep 1952
2d quarter, ibid., VIII/12/11, 2 Jan 1953
3d quarter, ibid., VIII/12/12, 25 Mar 1953.
1948: Berliner Statistik, Vol. 3, No. 12, Dec 1949,
pp. 292-293.
1949: Ibid., Vol. 3, No. 12, Dec 1949, pp. 292-293
Ibid., Vol. 5, Nos. 7 and 8, Jul and Aug 1951,
p. 169.
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1st quarter, ibid., Vol. 4, Nos. 5 and 6, May and
Jun 1950,,P. 117
2d quarter, (,ibid., Vol. 4, No. 9, Sep 1950,
p. 213
3d quarter, ibid., Vol. 5, No. 1, Jan 1951,
p. 22
4th quarter, ibid., Vol--5, No. 6, Jun 1951,
p. 149.
1951
and
1952:
Migration between West Berlin and the Soviet Zone:
Berliner Statistik, Sonderdienst, No. 33
7 Jul 1951 and No. 48 (31 Aug 1951)
Berliner Statistik, Quellenwerk, Reihe
Bev
oelkerungswesen
, Nos. 3 (26 Sep 195
6 (
27 Nov 1951), 9
(22 Dec 1951),
11
(28 Jan 1952),
13 (21 Feb 1952),
15
(31 Mar 1952),
18 (7 May 1952), and
20
(4 Jun 1952).
1),
Migration between West Berlin and East Berlin:
Berliner Statistik, Beilage: Zahlenaus
Verwaltung and Wirtschaft, Jan and Feb 1950-
Feb 1953.
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