UNEMPLOYMENT

Senator KILGORE. Could I interject a question at that point that fits right into that picture?

Along that same line, how about the unemployment situation over there? That is somewhat of a yardstick.

Dr. CONANT. In the Federal Republic itself there is very small unemployment. Indeed, many people predict that when the rearmament starts and their industry becomes occupied with arms manufacture, as well as with their consumer and other goods, there will be an actual shortage of labor. They are talking about that.

In Berlin the situation is somewhat different. In Berlin we have reduced the unemployment figure to the lowest it has been since the It is about 160,000.

war.

Senator KILGORE. You have a high concentration there?

Dr. CONANT. Berlin is a very special situation, and that I want to underline here. But in Germany itself, the Federal Republic, there is essentially no unemployment.

(The following information was subsequently submitted:)

Unemployment in Western Germany is now less than unemployment at anytime during the postwar period. Unemployment has declined from 10 3 percent of the wage and salary-earning labor forces in 1950 to 6.9 percent for 1954. The following table shows the comparison between total wage and salary-earning labor force and unemployed for the period 1950 to 1954.

NOTE.-In September 1954, unemployment was 4.7 percent of the total wage and salary earnir g labor

force.

BANKING AND CURRENCY SITUATION

Senator HAYDEN. Senator Ellender would like to know if their banking situation is on a sound basis, and what is the ratio of German currency to American currency, or the ratio to other countries?

Dr. CONANT. I cannot give you that figure but I can get it for the record. I can sum up for the sake of the hearing today that in the opinion of our experts on these matters, the German currency is on a very sound basis. Their financial situation is in a stable state. (The following information was subsequently submitted:)

As economic recovery progresses in Germany, the ratio of currency in circulation to bank deposits is also increasing. The following table shows the amounts of currency in circulation and bank deposits, and their ratio, for the years 1950, 1953, and 1954 for Germany, the United States, United Kingdom, and France.

Senator KILGORE. Are they still operating on that system of issuing currency against bonds levied upon what you might call a capital levy? That was initiated by Hitler.

Dr. CONANT. Oh, no. You know there was a complete currency reform in 1949, and they set up a whole new currency basis with a separate banking system. More than one private banker has said to me that he thought that the setup in Germany was remarkably good, and leaves the bank which controls the fiscal policy of the country free from the political influence of the Bundestatt. It is a remarkably sound system and the people have great confidence in the currency.

As soon as that currency reform was put in, that was the upturn of their economy. As one German industrialist and banker combined said to me, "Until we had sound currency, nobody could work and nobody will work in such a country. As soon as we had sound currency, which we owe to the occupying forces who put it in, then our recovery became spectacular."

EXTENT OF AID PROGRAM

Senator HAYDEN. Senator Ellender has two questions which are. related. The first one is:

What is the increase in the rate of food production in Western Germany since 1953? I think you stated then that there had been an increase of 15 percent in the past 3 or 4 years.

Then he would like to know whether our aid to Germany is to try to develop industry.

Dr. CONANT. We have no aid program to the Federal Republic. There has been no money appropriated, to my understanding, for some years for that. We have a certain amount of money still there. That is in the so-called productivity program. But since I have been there, Congress has appropriated no new money for aid to the Federal Republic of Germany. The aid has been for Berlin. I have underlined Berlin as a special situation.

Senator HAYDEN. What aid have we given to promote agriculture? Dr. CONANT. As far as I am aware, no money has been appropriated in the last 2 years for that purpose. What was done before we would

have to go back into the record to see.

(The following information was subsequently submitted:)

The following table shows the development of food production in the Federal Republic of Germany during the crop years 1948-49 through 1953-54:

Senator HAYDEN. Senator Ellender asks further:

Do the many American troops in the American Zone in Germany present any problems for you?

Dr. CONANT. Essentially none. One might put it this way: Considering that they are foreign troops in large numbers, I think it is remarkable how little friction and how few difficulties have arisen between either the German population and the troops, or between the German authorities and the officers. I think it is a great tribute both to our soldiers and our officers on the one hand, and the Germans on the other that we have these excellent relations which have prevailed almost without exception.

Senator HAYDEN. You have practically answered the next two questions. He wanted to know whether we are regarded as occupiers or protectors and what is the relationship between the American troops and the German Government.

Dr. CONANT. I would like to answer that. Ever since the decision was made to reenforce our troops there in Germany, which if I recall rightly was made in 1950 late, after the Korean crisis, from that time on I think that all of the Germans, almost without exception, have recognized that we are there in fact as defenders and not as occupiers, although legally still until the treaties are passed we are there on an occupation status.

FRENCH AND ENGLISH PARTICIPATION

Senator HAYDEN, Senator Ellender has asked:

Isn't it true that France and England have spent little or nothing, yet they have as much, if not more say-so than we have in Germany?

Dr. CONANT. On the first question, I have no figures and I don't know that anybody does. I don't know what the French and British have spent. I don't know that we have any figures or would be able to get them.

But this other question on the old allied High Commission, when it was operating as an agency for running occupied Germany, the votes were according to the arrangements set up originally in which in many cases you had to have unanimous vote. But, of course, this machinery has been used very little in the last year, and we are essentially out of the occupation business. Therefore, we have been dealing through more normal diplomatic channels. Each Government is representing its own point of view.

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