The Vampire Economy

Chapter XIV

FASCIST EMPIRE BUILDING

“‘Something for nothing’ is a dominant principle in the methods of imperialist expansion adopted by all ‘have not’ powers.”

A BRITISH businessman, visiting Germany during the first years of the Nazi regime, would have been welcomed as a “pure Aryan” and as a representative of a sister nation. Such an attitude arose from Hitler’s views as expressed in Mein Kampf. Today the situation is different. In present-day Nazi propaganda, Great Britain is pictured as the most covetous bourgeois “have” power and the ringleader of those countries who seek to prevent the rise of “young” nations like Germany and Japan. Every newspaper reader in Germany is fully acquainted with the most unsavory aspects of British imperial policy. Nazi propagandists harp on the fact that the Britons, like all other empire builders, employed brute force in creating their own empire. Germans are repeatedly told how British imperialism ruthlessly destroyed India’s domestic textile industry in the interests of the Lancashire textile manufacturers. They are also reminded of the fact that Great Britain has repeatedly denied self-rule to the Indian people. The Germans are also fed with numerous statistics illustrating the tight control that the “have” powers exercise over the raw materials needed by German industry, such as copper, tin, rubber, crude oil and so on. They are informed of the huge incomes that British capitalists receive from abroad as well as of the enormous investments that the British have made in their colonies. So insistent has this propaganda been, that the German businessman generally is better acquainted with the early history of British imperialism than even the British businessman.

This being so, it would be vain to attempt to counter the propaganda of the Nazi regime by moralizing about Germany’s desire for absolute power and her declining respect for international treaties. As a matter of fact, in Germany, as well as in Italy, anti-British propaganda has proved much more effective than propaganda for the crusade against Bolshevism. The Nazis constantly utilize Germany’s scarcity of foreign currency and raw material to popularize and justify her struggle for the creation of an empire.

Since the foundation of the British Empire, however, world conditions have changed. There are no longer “uncivilized” countries—that is, countries in which pre-industrial economic systems predominate or which are sparsely settled—free from imperialist control. With only minor exceptions, the entire world has been staked out and claimed. New colonial empires can be created, therefore, only by the destruction of rival empires—and of the U.S.S.R.—through a new world war.

Previously when an imperialist power gained control of a “backward” country, new and large-scale investments were made in order to open up the undeveloped natural resources of the country. This process took a certain period of time—frequently many years—to bear fruit. Fascist imperialism, however, is unable to wait for the slow economic penetration of new territory. It cannot use the methods employed by the older imperialists, namely, the establishment of “spheres of influence” through the export of capital. The precarious economic situation and the pressing military needs of the “have not” powers make it necessary for them to gain immediate, not deferred, economic advantages from the new territories that come under their influence. Nazi Germany, therefore, in each of her conquests has rushed to appropriate to herself all tangible resources of capital, foodstuffs and raw materials available in the new territory, largely without compensation to the former owners.

New methods of exploitation must be used where the conquered country already has fully developed capitalist property relations and established industries belonging to native or rival foreign capitalists. Since the lack of raw materials and of exchange has been a motive power in forcing fascism to take the road of imperialist expansion, the economic exploitation of the conquered country must be made completely subordinate to the urgent needs of the “mother country.” Native and rival foreign capitalists must be expropriated on a large scale so that the conquerors can acquire without compensation the accumulated wealth of the country. The principle of “the sanctity of private property” derived from capitalist property relations becomes embarrassing. Therefore the prospective “mother country” must proclaim new principles in order to justify the wholesale expropriation of capital and the destruction of competitive enterprise. These new principles, as employed by the Nazis, have been called “racial principles,” “national interests,” and the like.

Neither Japan in China nor Nazi Germany in Czechoslovakia began the economic penetration of their “protectorates” or new colonies by large-scale investments which would have created new industries within the boundaries of the vassal state. Only those enterprises which could supply the “mother country” with urgently needed materials were encouraged.

When the Nazi Reich embarked on its expansionist drive, stocks of raw materials, foreign currency and gold were at a low ebb, and it was impossible to replenish them with sufficient speed in the normal way. The military machine might have collapsed had it not used its power to obtain these vital necessities.

The immediate cause for Germany’s expansion was not her need of finding an increased outlet for industrial products, but there were internal difficulties which were intensified by her need of gold, foreign currency and raw materials. The Reich had no means of paying for these in quantities sufficiently large to keep the industrial machine at work, because its “free capital” had all been invested in strengthening its military power. In a sense, Germany was in the position of having to utilize its military power to prevent the capital invested in it from becoming obsolete.

The first act of the Nazi Reich after the occupation of Vienna as well as after the occupation of Prague was symbolic. Gold and foreign currency found in these two former capitals were immediately transferred to Berlin. The possession by Austria and Czechoslovakia of large stocks of both of these valuables hastened Germany’s decision to occupy their territories by military force. The booty in Vienna amounted to 416 million shillings or $78,000,000, three times the currency reserve of the Reichsbank at that time. The raid on the Prague National Bank was a little disappointing because a large percentage of the Czechoslovakian reserves was deposited abroad, principally in London, and, to a smaller extent, in New York. Official stocks amounted to $81,000,000, or over four times the Reichsbank reserves.1

In addition, all private holdings of gold, foreign currency and other types of foreign property had to be handed over to the Reich. According to private estimates, this booty in Austria was more than double the amount of gold and foreign currency found in the vaults of the Austrian National Bank (about 1,000,-000,000 shillings, or $188,000,000). The private holdings in former Czechoslovakia2 were even greater. Large quantities of materials, machines, foodstuffs and so on were “requisitioned” and sent to the Reich.

Germany is extracting a maximum amount of plunder from these conquered lands [Bohemia and Moravia]. The equipment of a superb army, food reserves calculated to supply the whole Czechoslovak Republic for eighteen months, and a small but welcome sum in foreign exchange are but a fraction of the real gains. To this must be added the skill of hundreds of thousands of workers, and the property and industries of Jews which are being bought with paper money seized last October with the Sudeten territories.3

Dr. Eduard Benes, former president of the Czechoslovakian Republic, supplemented this picture of the fate of Bohemia and of Moravia.

I hear that preparations are now made to transport important objects of culture and art [to the Reich]. Factories are being ruined and industry crippled as machinery is carried away for war purposes. … Safety deposit boxes and safes may be opened only in the presence of the Gestapo.4

Foreign property rights likewise were abolished in fact, if not in law. This was true not only of foreign loans granted to the preceding governments, but also of private foreign holdings. French stockholders in the Vienna Laenderbank, which controlled a great many industrial enterprises in Austria and southeastern Europe, were forced to sell out for almost nothing. Numerous industrial enterprises owned by “non-Aryans” were expropriated without compensation and handed over a new State-owned concern, called the Hermann Wilhelm Gustloff Stiftung.5 The greater part of Austria’s large-scale industry has been concentrated in this trust and in another large State trust, the Hermann Goering Reich Iron Works.

Fascist conquest has still another aim, more permanent in character—the acquisition of monopolies. The strict control which the fascist State imposes on production and sales of raw materials, as well as on exports and imports, is used to compel the “protectorate” to sell its agricultural products and raw materials to the “mother country” at artificially low prices, while prices for industrial goods imported from the “mother country” are maintained at artificially high levels. The German cartels and syndicates which control the market within Germany keep internal prices much higher than prices abroad. These national monopolies are now able to extend their “internal market” by including the conquered areas which are under the political control of the Nazi State.

Thus, by the use of military force, the fascist State gains new monopolies or extends the power of the existing monopolies without developing new productive forces.

Austria, for example, was a highly developed industrial country before it became a province of the “Greater Reich.” Formerly Austria imported 24 per cent of its food supply (in Germany prior to the annexation the figure was 19 per cent). The most important food imports were wheat, 43.2 per cent; rye, 28.4 per cent, and corn, 66.6 per cent.6 Coal and iron were imported in large quantities from Poland, Czechoslovakia, and to a smaller extent from Germany. Austrian importers had formed a syndicate in order to obtain cheap coal. This syndicate was, of course, independent of the German coal syndicates, since it could obtain coal from sources other than Germany. After the occupation of Austria, trustees who were Nazis connected with the German coal syndicates replaced the former directors of the Austrian coal syndicate. Now Austrian manufacturers must pay a higher price for coal than formerly and must accept the domination of the Reich’s coal concerns. The bulk of the profits of the Austrian coal syndicate is under control of the Nazi party.

In Austria, as in the other newly acquired countries, only those industries are flourishing which supplement German industry. Specifically this means armament factories, which are important from the strategic point of view as industrial strongholds for German militarism.

Austria’s contribution to Goering’s Four-Year Plan consists mainly in supplying ore, timber, hydroelectric power and labor to Germany and, to a smaller extent, machinery and materials for armament factories. Aside from these resources, however, Austria has relatively few raw materials and is largely dependent on supplies from abroad, which can no longer be obtained in sufficient quantities. To a certain extent, Austria will participate in ersatz production. For example, cell wool will be produced from Austrian wood to replace cotton and wool, previously imported from America and Britain. Apart from considerable construction work for fortifications, only a few factories in Austria are being constructed or enlarged. And even these are devoted to the armament industry or to ersatz production, as, for instance, the iron and steel works now being erected at Linz. New roads are being built for strategic reasons. But this much advertised construction work means little or nothing when compared with the decline which has taken place in other important branches of Austrian industry. Formerly most Austrian factories produced for the world market in competition with German industry. Today Austria’s iron ore or iron is being used for armaments. Previously Austria had a flourishing trade with Czechoslovakia. Now this market is dominated by central German and Saxon industrialists. Only an enlargement of the Reich to the shores of the Black Sea and through Turkey to Asia might give Austria’s export trade an opportunity to revive under the hegemony of the Reich. But this imperialistic dream of the future offers no remedy for the distressed conditions of today.

Through the absorption of Czechoslovakia, Germany’s heavy industries further strengthened their monopolist position. Formerly their largest competitor in central and southeastern Europe was the Witkowitzer Iron Works owned by Czech industrialists. As a matter of fact, these industrialists had thought that by making concessions they could co-operate with the Nazi Government. Their attempt to do so was doomed to failure. Not a vestige of their former independence remains. German iron and steel magnates no longer need reckon with the strong Czechoslovakian competitors who had many geographical advantages in central and southeastern Europe. The Ruhr industrialists have simply extended their domestic market and swallowed up their former competitors.

It is no longer possible for the fascist State to build up its own monopolies on the basis of hitherto undeveloped resources. Therefore Abyssinia has been a burden rather than an asset to Italian imperialism. There are no raw material resources or industries already developed, hence there is nothing to requisition. Superior military strength made possible the conquest of Abyssinia, but the Italian military victory did not, and will not, lead to economic wealth. In order to make the victory profitable, vast amounts of capital would have to be invested. A tremendous amount of technical equipment would be necessary to open up the unexplored wealth of the conquered country. But Italy itself is suffering from a scarcity of these very materials and technical means which are necessary to the development of productive forces in colonial lands. Therefore, Abyssinia has for Mussolini a strategic rather than an economic value—not counting the increase in prestige.

Nazi imperialism was more fortunate than Italian imperialism. The Third Reich was in a position to conquer countries which had achieved a relatively high degree of development. These countries had accumulated considerable wealth—at least in comparison with Abyssinia—and their raw material resources are more easily accessible.

In a very illuminating study,7 Freda Utley has shown the manner in which Japanese imperialism is exploiting newly conquered countries. Trade monopolies were established and as much economic wealth of native citizens acquired as could be obtained without developing any new productive forces, except those which supported Japanese industry and militarism. “Something for nothing” is a dominant principle in the methods of imperialist expansion adopted by all “have not” powers.

There are certain peculiarities of imperialist expansion in Europe which distinguish it from the Japanese conquest in China. Germany, for instance, is surrounded by countries where the natural resources have already been developed and where modern industries are in existence. Japan is not. It is true that industrialization of southeastern and eastern Europe is less advanced than in Germany, yet in these areas, especially in former Czechoslovakia, modern industries already existed. Czechoslovakia manufactured articles from raw materials which are rare in Germany and exported finished products largely in competition with German manufacturers. Czechoslovakia and Austria possessed highly developed modern industries which distributed manufactured goods to all parts of the world. German monopolistic control of southeastern European markets was impossible as long as the rival industries remained independent. Establishment of a “protectorate” over the semi-industrialized countries of central Europe by the Nazi Reich, therefore, entailed the throttling of existing industrial productive forces in the interest of Germany’s monopolies. This policy involved the expropriation, even to the point of ruin, of the propertied classes of the new colony. Because of this, the Nazi Reich was unable to find any social stratum among the native population through which it could exercise an effective but indirect control over the country. Direct military intervention and constant police supervision became necessary.

In some instances, it is true, attempts were made to form governments which would be the tools of the Nazi Reich. Such a government, for instance, was the last Czechoslovakian government prior to the march of the German army into Prague. Another example was the “autonomous” Slovakian government which agreed to remove all “ideological” obstacles to an understanding with the Nazi Reich, and to adopt certain Nazi principles, such as anti-Jewish “racial laws.” The Slovakian government stood ready to grant preferential treatment to German businessmen and to export surplus foodstuffs and raw materials to Germany in exchange for industrial goods. There are always groups within such groups which are ready and willing to sacrifice the wealth and the interests of others in order to clear away the obstacle to co-operation with the imperialist power. But this was not sufficient. Complete direct domination was necessary. As long as a subjugated country keeps some degree of political independence, its Government, no matter how dictatorial or subservient to the interests of German imperialism, must consider the requirements of domestic business and agrarian interests. Even the farmers were concerned in the maintenance of domestic industry, because the downfall of the latter would mean the ruin of the internal market for agricultural products and a rise in the prices of the industrial goods which the farmers need.

Statistics on production reveal that there was a definite trend toward an industrial growth in those semiagrarian or agrarian countries which were trying to preserve their independence.

In nearly all countries industrial production has increased since 1932, exceeding in many cases the 1929 level. The increase has been much more rapid in agrarian or semi-agrarian countries than in industrial countries. The agrarian producers in southeastern Europe consume only a few industrial products; their standard of living was, and is, exceedingly low. The greater growth of industrial production in agrarian countries was due, in the final analysis, to governmental action. The governments tried to strengthen national forces of resistance by promoting and subsidizing industries of military importance.

In 1937, industrial production in southeastern Europe was 112.6 per cent above the 1928 level. In the rest of Europe the increase was only 37.1 per cent.8 This unequal development continued during 1938. In commenting on this situation, the German Institute for Business Research stated:

“Southeastern European countries are gradually beginning to build up their own capital goods industries. … This development, which is primarily due to military considerations, has also led to a considerable expansion of heavy industry in Yugoslavia, Rumania and Greece. It is to be assumed that these tendencies will become stronger in the next few years.” 9

Increased domestic production replaced imported articles, thus hurting foreign industries which formerly supplied the agrarian countries with finished products. This development had not yet gone far enough to revolutionize the economic structure of these countries, which still remained backward by comparison with Germany. Yet it prevented German industrial monopolies from gaining absolute control of the markets and dictating prices. It also aided in solving the problem of outlets for domestic raw materials; they could now be utilized within the boundaries of each country.

The Sudetenland and the remainder of Czechoslovakia possessed large industries which produced finished goods not merely for domestic consumption but also for the world market. Not only did they supply southeastern Europe with textiles, machinery, etc., but they also carried on considerable export trade with England and the United States. In order to supply this extensive export trade, Czechoslovakia imported large quantities of raw materials. Nearly a quarter of the population of the Sudetenland was engaged in the production of textiles, many of which were shipped abroad. There were many other industries producing for export in competition with German industry.

Following the Anschluss, industrial life in the Sudetenland decayed, but “flax cultivation and sheep breeding are once more beginning to increase.” 10

An English author recently commented on industrial conditions in Czechoslovakia as follows:

“The cotton industry, which is the most important branch of Czechoslovak industries, has a capacity far in excess of the home demand, so that it is particularly dependent on exports. … A large proportion of the wool used is imported from British sources.

“After the cotton and wool industries come flax spinning, linen manufacture, the jute industry and the silk industry. … The Czechoslovak jute industry buys its raw materials very largely from India and has a great export to the United States.

“… Comparatively little of the pig-iron produced in Czechoslovakia is exported, about 83 per cent of it being used in the country for the manufacture of steel and malleable iron.

“The iron manufacturing industries, on the other hand, produce very largely for export. Thus the enameled ware industry exports some four-fifths of its production and the agricultural machines and implements are produced mainly for export. A great many of these go to the Soviet Union.” 11

Before the dismemberment of Czechoslovakia, Czech industries had a distinct competitive advantage because of Czechoslovakia’s favorable commercial treaties with England and the United States and because of its geographical position in southeastern Europe. These advantages have now been lost. Czech industries can no longer compete with the better-equipped German factories, especially when the latter have a greater supply of raw materials at their disposal.

The deterioration of industries has progressed much further in Czechoslovakia proper than in Austria and the Sudetenland. Czechoslovakian industries were larger and they have not been given the few privileges granted “Aryan” manufacturers in the Sudetenland and Austria. The ruin of these industries was initiated by the application of “racial principles” shortly before Prague was occupied and Czechoslovakia proclaimed a “protectorate” of the Third Reich.

Prior to the end of Czechoslovakia, Jewish manufacturers who had fled from the Sudetenland with their machines and with some capital tried in vain to transfer their plants and capital to Slovakia. Early in 1939, a member of the Slovakian government received a deputation of Jewish capitalists. He encouraged them to settle in Slovakia with the object of transforming it into a new manufacturing center producing for the Balkan market. The Slovakian government promised to respect the property rights of the manufacturers. The erection of a soap factory in Tyrnau was decided upon and was to be financed by Jewish capital, but with State representatives as members of the management. These plans for developing Slovakian industries would have hurt the German monopolistic position in the Balkans. Consequently the Nazi magazine Der Wirtschaftsdienst, which is closely connected with German export interests, described the intended development of Slovakian industries as creating “a serious and dangerous situation… .12 This warning foreshadowed the military occupation of Czechoslovakia.

A clear indication of future Nazi plans for the economic development of her “protectorates” can be gleaned from a consideration of the negotiations between the German and Rumanian governments in March, 1939. As an essential condition for future cooperation, the Nazi government openly demanded the suppression of all domestic industries which were competitive with German industries, hoping thus to obtain an absolute monopoly for the Nazi industrialists. This demand was considered necessary because in recent years the Rumanian government, desirous of decreasing its dependence on foreign countries, especially in the armament field, had systematically encouraged the development of its own domestic industry. According to the plans of the Nazi government, only those industries should be developed which would help to open up Rumania’s raw material resources and to increase its agricultural production to supplement Germany’s economy.

Foreign capital has financed most of the industry in semiagrarian countries. Consequently, the Nazi policy of ruining industries they regard as “undesirable competitors” is tied up with their propaganda for a “National-Socialist” regime and for “racial principles” which will destroy the property rights of “alien elements.”

This open attack on the sanctity of private property is used even outside of Europe as a propaganda weapon against the “have” powers. Britain and the United States have important investments in certain South American countries with large raw material resources, where governments are in debt to them. As governments which guarantee the sanctity of private property—for foreign investors—they are dictatorships whose power depends on military force rather than on popular consent. In these countries fascist agitators find it easy to gain ground by advocating rebellion of debtors against creditors. Nazi propagandists approach such countries with the slogans: “no payment of foreign debts,” and “against exploitation by foreign [Jewish] capital.”

In commenting on the changes which have taken place in Rumanian industry, a German periodical declared:

“Many overseas countries are economically dependent on foreign capital … or they are countries producing raw materials. Foreign capital was conceded a superior position since it undertook to develop such resources. In every case one can observe a distinctive one-sidedness in economic relationships. All these counttries are able to export huge quantities of domestic goods, but the capacity to export is much greater than their capacity to import. This is due to the fact that only a minor part of the income from exports remains with the producing countries. A more or less large part of this income is taken by the leading corporations and remains with the mother countries of these corporations. … This disproportion between the capacity to export and to import is especially great in Africa. All African colonies must do statute labor for foreign capital since the colony receives too little for its exported products.” 13

Nazi imperialists cannot make large loans to States whose raw materials and foodstuffs they need, but as a substitute they can offer assistance in expropriating the capital invested by the “have” powers. Such propaganda spread by Nazi agents is very persuasive and has obtained response in some parts of South America. Of course, the Nazis do not intend to make large-scale investments of their own in the Western Hemisphere, if only because of strategic considerations. In case of war, connections with South America would be severed. Therefore, whatever limited capital Germany is able to export will be directed into areas which can be controlled by German militarism in the event of another world war.

In countries, however, which have become Nazi “protectorates,” the sanctity of private property is preserved in a one-sided way, disappointing to native businessmen and foreign capitalists. At the time of the occupation of the Sudetenland, most Sudeten manufacturers were heavily indebted to banks which were largely under Czech and Jewish management and in which both British and French capital participated. Before the Anschluss the Nazis promised that no debts need be paid to Jewish or foreign capitalists. “Interest slavery” would cease under National Socialism. This part of the program has been fulfilled—in so far as Czech, Jewish or foreign capitalists are concerned. Most of their capital has been expropriated; they are paid neither interest nor amortization. Foreign creditors can look forward to receiving only a tiny fraction of the credits they have advanced.

When the Sudetenland was occupied, its “Aryan” manufacturers welcomed the Nazi commissars who took over the banks in their districts, but they wondered how they would obtain further credits urgently needed for new investments. At that time, Herr Henlein, Sudetenland Fuehrer, solved the problem of what to do with the banks and their credit facilities.

He often promised his Sudeten German Party comrades that the Third Reich would cancel banking debts. This was privately said and never published. We can therefore only quote him from confidential reports of some of his Party friends.

“There are no difficulties,” Herr Henlein used to say. “Sudeten German industrialists who do not want to pay their debts to Czech banks need not bother to do so. And they need have no fear about obtaining further credits. We shall open a new regional bank for the Sudetenland. We have all the accumulated capital of the country at our disposal. The Czech and Jewish banks will have to hand over their stocks and bonds at a price we shall decide upon. We will fix the value of these assets and pay for them with State debentures while the new banks will be under our control.”

The Reichsbank was informed that certain countermeasures would be taken if the Nazis expropriated British and French investments in the newly occupied areas. Schacht hastened to warn the Nazi leaders of possible serious consequences if Herr Henlein were allowed to follow the policy of expropriation of foreign capital investments. British and French capitalists could not be treated like the Jews. A compromise was reached. In June, 1939, the British and the Reich Governments agreed that the Sudetenland should fall within the scope of the Anglo-German debt payments. The German Government successfully insisted that the date of September 29, 1939 (Munich Conference) be set as determining the ownership of debts so that nothing must be paid for credits which were transferred to British creditors after that date.

The Nazis used the threat of complete expropriation and boycott, however, in order to intimidate foreign banks and foreign investors. The threat was at least partially successful. Foreign investors were willing to surrender a large part of their investments and regarded themselves as lucky to have salvaged anything. But the regional banks became mere branches of the Berlin big banks.

The Deutsche Bank acquired 23 branches of the Bohemian Union Bank, the Dresdner Bank, the branches of the Czech Escompte Bank; the Allgemeine Deutsche Kredit-Anstalt, the branches of the Anglo-Czech Bank (subsidiary of the Laenderbank) and of the Czech Industrie Bank.

In the future, the money paid in by Sudeten manufacturers will flow to Berlin and not remain in the Sudetenland. New capital will not be invested in areas where competitive industries are undesirable.

A few big German trusts “bought” those Sudeten factories which were likely to have a prosperous future in connection with the armament boom. The I. G. Farbenindustrie “purchased” the stock of the Bruexer Bergbaugesellschaft and of the Nordboehmische Bergbaugesellschaft (in which Lord Runciman has an interest). The I. G. Farbenindustrie intends to construct a factory near Bruenn for the production of synthetic gasoline from coal. Mannesmann, a German concern well known in the armament business, acquired several mines from Witkowitz, the Czech iron firm.

Businessmen in the newly conquered areas who at first welcomed Nazi rule because of dissatisfaction with former conditions were disillusioned almost overnight. In addition to full interest payments on their debts—their debts have not been diminished, only the nationality of the creditors has changed—they now pay higher taxes and higher prices for raw materials—mostly ersatz. Worst of all, they have lost their export markets without receiving any compensation in the domestic market, because, on the whole, they produced consumption goods, not armaments. Small and medium-sized enterprises have deteriorated to a much greater extent than similar enterprises in the Reich proper. A few big trusts have become predominant in industrial life. They own the new armament factories in the Sudeten area and they exploit the raw material resources of the region for the benefit of the Reich’s economy.

Apart from strategically important armament factories, industries in the newly acquired territories must operate at minimum capacity so that all raw material resources may be exploited fully in the interest of the “mother country.” Czech manufacturers in Bohemia and Moravia try in vain to obtain from their new rulers sufficient supplies of those raw materials which are scarce in Germany. Only a fraction of the allotments granted the Germans is accorded the Czech manufacturers. Allotments for scarce raw materials granted to Czech manufacturers amounted to only 15 per cent of the allotments for German manufacturers.14 The imperialist “mother country” tries to satisfy its deficiencies at the expense of the new colony. Since there is not enough raw material to go around, the colony’s productive forces are permitted to deteriorate.

The handicaps under which the industries of the Reich are laboring are being felt with even greater intensity in the newly conquered countries. State interference in business and private life assumes greater proportions in the vassal states than in the “mother country” itself.

The greater the exploitation and economic devastation in the vassal states, the more necessary does it become to build a strong military machine under centralized authoritarian leadership. Party leaders have hailed this growth of the State machine because it gives them more power. Within the Reich proper they have tried and probably will continue trying to increase their authority and popularity by new conquests. From the territory thus acquired, the leaders have been able to recover at least a fraction of their huge expenditures by levying tribute on the “colonies.” They can also slightly extend the narrow base of the privileged “friends of the State bureaucracy” at the expense of the new vassal States.

But the number of the underprivileged grows much more rapidly than the number of the privileged. The further this development proceeds, the more absolute is the power needed for the maintenance of the regime.