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Recent replacement of Schacht by Dr. Funk as Reichsbank head has revived talk in U. S. newspapers of internal German inflation. Proponents of Nazi economic methods argue, however, that "inflation" is a word that has no meaning in relation to Nazi finance. The Nazis have, almost from the beginning, supplemented tax receipts by debt-creation" through forced loans. With the "secret" debt added to the acknowledged public debt of 40,000,000,000 marks, the total Government deficit may be as high as 54,000,000,000 marks. But prices #151;the popular measure of inflation— have not risen markedly except on the "black" markets, nor are they likely to rise as long as Heinrich Himmler's Gestapo is busy spying on the shopkeepers. The over-all German standard of living has, however, fallen by at least 20% since the depression. And if extended work hours, the quality of goods and the recent failure to build houses or to replace obsolescent railroad equipment are considered, the decline has been even more precipitous. Money that formerly went into dwellings and the making of machines for producing articles that could be enjoyed is now funneled off by Government command into industrially sterile armaments and showy public monuments. Before the War only 5% of the national income was spent on armaments—and that was a time when Colonel House was reporting that Berlin presented a spectacle of "militarism run stark mad." Today one-fourth of the national income goes for guns, fortresses and stadia for the self-glorification of Nazi party meetings.
By comparison with 1932 standards the Nazis have raised the level of over-all German consumption. But immediate consumption (which omits money spent for housing construction) is still 10% below that of 1927. Moreover, Nazi economists themselves predict a decline of purchasing power for this year. The regime gains acquiescence from the majority because the industrial working class (approximately 40% of the population) has lost relatively less income than the upper, upper middle and lower middle classes—and with the unemployed now at work the class as a whole has gained. The farmers (approximately 21% of the population) receive about what they were getting per capita in 1927. Hence it can be argued that Naziism has a mass base, even though forced contributions (party dues, winter relief, etc.) subtract considerably from workers' incomes. The decline in quality is most noticeable in upper and middle class goods; working class goods are maintained in comparative quality and abundance. The German lower class diet, however, has always been heavily weighted with potatoes, cabbage and bread, and in consequence working class food standards have not very much room in which to fall. The one real gain the "little man" in Germany has over his 1932 condition is assurance of employment.