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       Appendix
C
The Economic Fate of the Sudeten Germans The Sudeten Germans whose inclusion in the Reich was realized a few days ago were subjected during the last two decades to an economic pressure which undermined more and more the supports of their national existence and which threatened finally to lead to a steady decline of their racial power. In the first place, the Sudeten-German territory was hard hit by the dissolution of the Austro-Hungarian Monarchy -just as was Austria, the present German Ostmark. Three-quarters to four-fifths of the total industry of the double monarchy was located within the borders of the newly-created state of Czecho-Slovakia, and of this share again 75-80% was located in the Sudeten-German border districts. However, by the drawing of the new borders, this industry's domestic market was reduced from 53 million to 14 million consumers, so that it had to seek a foreign market for the greatest part of its production. But in this it was confronted by the greatest difficulties, due to the fact that the industrialization of the other successor states and the promotion of agriculture in Czecho-Slovakia had to a great extent destroyed the former division of labour between the agricultural and industrial territories of the old double monarchy and also due to the fact that the Czecho-Slovakian foreign trade policy considered to only a small degree the needs of the Sudeten-German industry. For example, the Prague Government showed little interest in the possibility, provided for in the peace treaties of Trianon and St. Germain, of a closer customs union between Czecho-Slovakia, Hungary and Austria. Instead of cultivating good trade relations with the traditional sales territories of the Sudeten-German industry, i.e., the South- [107] Eastern European countries and Germany, the Czech leaders endeavoured to bind the country economically with those powers from whose hands they had received the gift of the new state. The slight success of this "western orientation" did not even begin to make up for the losses suffered by the Sudeten-German industry as the result of the coolness of trade relations with Germany and some of the successor states. Moreover, the Czech domestic market policy was not suited to ease the Sudeten-German industry of the heavy burden of an industry with a big over-capacity and to promote its adjustment to the new conditions. On the contrary: The Czech economic policy was in relation to the great problems presented by the change in Central Europe and later by the world depression not only completely passive - following in this respect the example of France and of the former regime in Austria, where also a decisive work creation policy was taboo - but in addition the Czech government discriminated against the Sudeten-German industry in favour of the Czechs in almost all the important measures undertaken and thus clearly entered into the struggle of nationalities.1 The decisive blow against the Sudeten-German industry was delivered soon after the war. By the prohibition (beginning of 1919) of transfer of bank notes and bank balances between Czecho-Slovakia and the other territories of the former double monarchy, the Sudeten-German industry was deprived, for example, of a great part of its liquid funds, and thus within a few months after the establishment of the new republic, was driven into the arms of the Czech banks which are said to have been informed of the coming measures and which had made, therefore, suitable dispositions. Furthermore, the refusal of the new state to pay for the wartime deliveries of the Sudeten-German industry to the imperial army weakened the capital strength of the Sudeten-German [108] economy, even though it is impossible to determine what part of the estimated 4.5 billion gold kroner in unpaid wartime deliveries was owed to the German industry in Czecho-Slovakia. Along the same lines were the capital tax of 1919-1920 and the regulation of the war loan obligations of the state, both of which hit German property not only absolutely but also relatively harder than they hit Czech property. Of the some 8 billion kroner in war loans subscribed in the territory of Czecho-Slovakia, at least 6-7 billion kroner were held by Germans, i.e., far more than corresponded to the property relations of the German and Czech national groups. The obligation of the state resulting from the war loans was now - with the exception of certain small amounts - acknowledged only if 75% of the nominal amount was paid up in cash once more, and even then, the war loans held by "privileged" creditors (banks, churches, municipalities, orphan asylums, etc.) only bore 5% interest, while the loans of the "non-privileged" creditors bore but 3½%. The land reform, which was carried out by Czecho-Slovakia in the post-war years, was also accomplished at the cost of the German minority. Of the total of 1.8 million hectares which were expropriated from 1919 to 1936 (mostly against only slight compensation),2 750,000 hectares were located in the German border districts, 591,000 hectares in the Hungarian and Slovakian districts, 162,000 hectares in the Carpatho-Russian district and only 250,000 hectares in the Czech portion of the country. In relation to the property held, the German loss was probably even greater. Nevertheless, by far the greatest part of the expropriated land made available for settlement was, even in the pure German districts, turned over to Czech settlers, especially to the Legionnaires. In this way, the migration of Czechs to German language districts, so characteristic of the past 20 years, was helped immensely. Other and later measures of Czech economic policy also resulted - whether purposely or not - in the decline of the German element in the economy of the new state or in an [109] apparent disadvantage to the Sudeten-German economy. The preference for consumption taxes in the Czech tax system naturally hit the Sudeten-German industry harder than the Czech industry, since in the German industrial sector, consumption goods industries predominate. Furthermore, the shifting of certain industries to the interior of the country for strategic reasons was also at the sole cost of the German border districts and, indeed, the Czechs did not hesitate, despite the depression, to confront the German industry for military reasons with the competition of a number of enterprises newly established in the heart of the country. However, the most outstanding discrimination was the disregarding of German industry in the granting of government orders, for which the government tried in recent years to create a legal basis by all sorts of petty regulations as to the racial composition not only of the workers but also of the officials of the companies qualified to bid for such orders. According to figures of E. Winkler, even after the "reform" 250 orders granted from January 1st, 1937, to January 20th, 1938, to companies in predominately German territory, were divided as follows: 69.2% went to Czech firms, 7.5% to mixed firms and only 23.3% to German firms.3 For work on the fortifications which have been constructed in the German border districts in recent years, the government used almost solely Czech workers brought from the interior of the country. A further means of such "administrative" discrimination against the German group was the disadvantage to which Germans were subjected in the setting of production quotas (especially for the very important sugar, spirit and margarine production). Last, but by no means least, there was the Czech banking policy, against which many complaints were made on the ground that it hindered granting of credit to German firms - unless by that means control of the firm concerned could be secured. The difference in the support given to German and Czech banks contributed especially to the fact [110] that the Sudeten-German banking system declined more and more, thus forcing German industry to seek loans from and to become indebted to Czech banks, above all the Zivnostenská bank. This all resulted in the fact that the Sudeten-German economy for the last two decades stood on the shadow side of the Czech business development. The Sudeten-German economy had far less part than the Czech economy in the upswing which started after the severe deflationary crisis in 1922-1923 and which culminated in 1929. On the other hand, the depression hit the German section of the country far harder than the Czech section, and in the relatively weak recovery which has taken place since then, the Sudeten-German district has had but little share. In addition to the above-mentioned discrimination, this is due to the fact that the domestic (and foreign) armament requirements, which have played an important part in this recovery, have helped German industry but little, first because it produces mostly consumption goods and second because it was deliberately excluded from the armament business. On the other hand, the recovery of the Czech economy from the effects of the world depression lasted only a short time. In contrast to many other countries, revival in Czecho-Slovakia set in only after the first devaluation of the Kroner in 1934, while recovery in consumption did not begin until 1935. Then already in Autumn 1937 there was a setback which was far greater than that suffered by other European countries. This setback hit the Sudeten-German export industries especially hard. The political disturbances during the current year have naturally aggravated the situation and, just as the decline in world trade, have weakened especially the Sudeten-German economy. Two results of the continual disadvantages to which the Sudeten-German economy has been subjected, can be especially clearly discerned.
[112] The unemployment figures are just as characteristic: Ever since it has been possible to compare unemployment in the German districts with unemployment in the non-German districts, that of the former has been many times greater than that of the latter. While, for example, in August of this year there were in the non-German districts of Czecho-Slovakia 6.5 unemployed per 1,000 inhabitants, there were in the predominately German districts 29.3 per 1,000. This proportion does not change if districts with approximately the same economic structure are compared. On August 31st, 1938, there were in the Sudeten-German industrial districts (where Germans make up over 80% of the population) 38.7 unemployed per 1,000 inhabitants, in the industrial districts with a German population of 20 to 80% the number of unemployed was 17.9 per 1,000 while the figure for industrial districts with less than 20% Germans was only 6.9 per 1,000. The figures for the agricultural districts were 20.8, 6.0, and 3.0 respectively. Thus, unemployment in Czecho-Slovakia was national fate, or, better said, German fate. Where Germans lived, there wandered the ghost of unemployment. Where the new masters of Bohemia and Moravia settled, unemployment was slight. Probably nowhere in the world was unemployment so great as in the Sudeten-German territory, formerly called the pearl of the Hapsburg kingdom.
Many have written in an affecting fashion of what this economic distress has meant for the racial force of the Sudeten Germans.4 The dwelling conditions were crying to heaven. [113] The infant mortality was abnormally high for one of the most progressive districts of a modern industrial state, and the sickness records were horrifying. How this nibbled at the roots of the racial power of the people is realized when one learns that the Sudeten-German region reported the highest suicide figure in Europe and that the birth surplus of the Sudeten Germans decreased from year to year (just as in Austria) and threatened gradually to turn into a birth deficit, although unlike the Ostmark (former Austria) one-third of the population was not crowded within the bounds of a single city. Therefore, just as the Austrians seemed to be on the way to steady decline before the union with the Reich, the Sudeten Germans seemed near their death-bed, when they were saved by inclusion in the Reich.
Structure of the Sudeten-German Economy
The economic structure of the Sudeten-German region is determined mainly by the geographical elements of the German settlement districts in Bohemia and Moravia. The greatest part [114] of the Sudeten region lies on the western, northern and eastern borders of Bohemia and Moravia and stretches from the mountains surrounding these two districts back into the Bohemian and Moravian plains. The German region consists mostly of mountainous and semi-mountainous country. As a result, it is rich in forests, but possesses only a moderate amount of good agricultural land. For this reason, the population of this region was forced early in its history to make up for the scantiness of its land by handicraft and industrial activity. Thus, German Bohemia is one of the oldest industrial regions in Europe. In the latter part of the Middle Ages, the Bohemian mountain region was a famous mining district, with silver as one of the main items of production. Later it became to an ever-increasing degree a centre of manufacturing, especially of textile manufacturing. In the former Austro-Hungarian monarchy, this region - after the elimination of the domestic customs restrictions - became the industrial centre of that tremendous economy. In the last 20 years, during which the Sudeten region has been part of Czecho-Slovakia, the structure of its economy seems to have changed but little, despite the almost continual economic depression. The structure of the Sudeten-German region must of necessity be determined by arranging the occupational census of Czecho-Slovakia according to the various nationalities and by drawing from the figures for the German part conclusions concerning the Sudeten region. This method is relatively reliable, since the so-called "closed" German settlement district in Czecho-Sovakia (that is, the German settlement districts bordering on Germany) include about nine-tenths of the Germans living in Czecho-Slovakia and, furthermore, the borders between the Czech and German districts are quite sharply defined. If the results of the occupational census for the German section of Czecho-Slovakia are compared with the results of the occupational census for the Czech section, a clear picture is given of the occupational classification of the Germans and Czechs in Bohemia, Moravia and Silesia since only a few Czechs and Germans live in Slovakia. It is clear from the following table that the Sudeten-German region is more highly industrialized than the Czech section: not less than one-half of all Sudeten-Germans were engaged in industry and handicraft, while in the case of the Czechs the figure was about two-fifths. In the post-war years the share of those engaged in industry and handicraft has increased some- [115] what in both sections, and in both there has been a rather sharp decrease in the share of those engaged in agriculture. However, in absolute figures, the increase from 1921 to 1930 in the number of Czechs engaged in industry and handicraft was three times as great as the increase in the number of Germans engaged in this field, despite the fact that the Czechs in Czecho-Slovakia outnumbered the Germans only two to one. This means that industrialization has made more progress in the Czech national group than in the German national group.
The development in the fields of trade, banking, transportation, and public services, [116] free professions, and army shows even greater differences. Here the absolute increase in the number of Czechs was some more than eight to almost twenty times as great as the increase in the number of Germans. A comparison with Germany shows how highly industrialized the Sudeten region is:
The Sudeten-German region is thus more highly industrialized than Germany; in the whole world only two countries, Belgium and England, are more highly industrialized. In Belgium (1930) 48.9% of all gainfully employed were engaged in industry and handicraft while in England (1931) the figure was 49.9%. There is a striking similarity between the German region in Czecho-Slovakia and neighbouring Saxony where the natural and historical conditions of development are closely related to those in Sudetenland. In Saxony, too, the economic upswing began with mining and then turned to manufacturing, especially textile manufacturing. Moreover, the degree of industrialization in Saxony is quite a bit higher than the Reich average. But there was one fundamental difference between the economic development in Saxony and in the German section of Czecho-Slovakia: in the last decades the Saxon industry has been able to develop due to the size of German economy and in the last five years, due also to the national-socialist leadership, while the Sudeten-German industry did not have the advantage of a large domestic market and a sound governmental economic policy, and was hit hard by the political disturbances.
In 1918, Czecho-Slovakia obtained the following percentages of Austria's industry6:
If the German element participated to an important degree in building up this industry under the Austro-Hungarian monarchy, it also kept an important place in the industrial work of the new Czecho-Slovakia, even under the difficult conditions during the post-war years. This was due to three factors: 1. Distribution of property-holdings. 2. Share of German-speaking workers, employees and entrepreneurs in total number of employed in Czecho-Slovakia. 3. Massing of industrial companies in the German language districts.
Information as to what firms in Czecho-Slovakia were or are controlled by Germans must necessarily be indefinite. For there are no official statistics on this subject; and private investigation is often based on external factors which are not absolutely definite (capital participation, number of Germans on board of directors, type of administration, etc.). Nevertheless, it can be stated with a great degree of surety that a decade ago the textile industry, the porcelain and glass industry, the lignite coal industry and the musical instrument industry were largely controlled by Germans. The German element was also very strong in the paper industry, the electro-technical industry, the sugar industry, etc. [118] Of course, these figures are for 1927; in the meantime, the German property holdings have declined. Furthermore, by no means all of the firms under German administration or owned by Germans are located in what were the German language districts of Czecho-Slovakia.
The Share of Germans in Industrial Employed The second factor - the size of the share of German-speaking employed in the total number of those employed in industry in Czecho-Slovakia - also points to the importance of the German elements in the industrial life of the country. The following are approximate relations between German and Czech property-holdings, according to the occupational and industrial census8 of 1930: The total number of those engaged in industry in Czecho-Slovakia was 5,147,000, of which 1,418,000 were Sudeten-Germans and 53,000 Carpatho-Germans. This is an average of [119] 28.59% of all those engaged in industry. This is a higher percentage than would correspond to the "population percentage" (22.53%). The share of the Germans was especially high in the groups given in the table below. Here, too, it can be seen that the consumption goods industries have given employment to more Germans than any other industry. Roughly estimating, it can be said that in 1930, about one-third of those employed in the consumption goods industries in Czecho-Slovakia were Germans; in other industrial branches the percentage was only about one-quarter. This basic characteristic is also to be seen in the third factor - the share of firms located in the German language districts.
Industry in the German Language Districts The industrial capacity located in the German language areas can best be shown by taking only the Sudetenland, because here the Germans live for the most part in connected settlements. The best measure is, in addition to the number of employed, the amount of installed horsepower, because in this way it is possible to get somewhat of a picture of the capital intensity of the firms. According to the industrial census of 1930, there were employed in industry within the German language areas 724,900 persons or 32.2% of all those engaged in industry in Czecho-Slovakia. In the same year, installed horsepower amounted to 830,900 H.P. or 28% of the total installed horsepower in industry in Czecho-Slovakia.
The preceding table takes the employed and the horsepower figures together and gives a classification for the various branches. The industries with the highest German share are: the glass industry, the paper industry, the textile industry and the stone and earth industry. Several small industries, which are not given separately in the table, such as the porcelain industry, the musical instrument industry and the toy industry, are also located for the most part in German areas. On the other hand, only a few firms in the graphic industry, the clothing industry and metal and engineering industry are located in the German areas. Thus the Sudeten-German region along the Erz and Sudeten mountains is one of the most highly industrialized areas in Europe. Some districts (e.g., Asch, Grasslitz, Weipert, Rumburg, Warnsdorf, Reichenberg, Gablonz) report that up to 70% of their employed are engaged in industry. There are no definite figures for the value of the production of the Sudeten-German industry. But it can be estimated that [121] in and around the year 1930, almost as much was produced here as was produced by the Austrian industry (the number of employed was in 1930 only one-fifth less than in Austria). This means for the period around 1930 a gross production value of surely over 4 billion RM., or somewhat more than two-thirds the monthly value of German industrial production. Probably about two-thirds of this production consisted of consumption goods - textile production alone accounted for one-quarter of total industrial production in the Sudeten area. Thus, just as in the case of Austria, the inclusion of Sudetenland in the German Reich will mean mainly an increase in the field occupied by the consumption goods industries. At present, production value in the Sudeten area is probably less than in 1930. This is due not only to low sales prices but also to the decrease in foreign trade which has hit the Sudeten-German industries very hard, as they are to a great extent dependent on exports. Moreover, Sudeten industry has also been affected by the endeavours of the Czech economic policy to strengthen the Czech-owned industries. This explains why a large part of Sudeten industry finds itself to-day in great difficulties.
 Notes: 1This is testified to by a personality of such high international standing as Lord Runciman who stated in his letter to the British Prime Minister dated September 21st, 1938: "I have been left with the impression that Czecho-Slovak rule in the Sudeten areas for the last twenty years... has been marked by tactlessness, lack of understanding, petty intolerance and discrimination, to a point where the resentment of the German population was inevitably moving in the direction of revolt." ...back... 2The act even provided that no compensation should be paid to "people who had committed grave offences against the Czecho-Slovak nation during the World War," and thus made it possible to expropriate citizens who had only been loyal to the former legitimate government. ...back... 3Even a neutral witness like Lord Runciman stated in his above-mentioned letter: "...there is a very general belief that Czech firms were favoured as against German firms in the allocation of state contracts, and that the State provided work and relief for Czechs more readily than for Germans. I believe these complaints to be in the main justified." ...back... 4See, for example, Kurt Vorbach, 200,000 Sudetendeutsche zu viel! München, 1936. ...back... 5From E. Winkler, Die Tschechoslowakei im Spiegel der Statistik, Karlsbad-Leipzig, 1937, page 69. ...back... 6Figures from Karl Janovsky: "Das industrielle Antlitz des Sudetendeutschtums" in: Deutsche Zeitschrift für Wirtschaftskunde, 1. Jahrgang, Heft 3. Leipzig, 193, page 268. ...back... 7From figures of the Czech economist G. Hejda. See Dieter Bleibtreu: Besitzstand und Gefahrenlage des Sudetendeutschtums, Karlsbad, 1935. ...back... 8Calculated from figures given by Albin Oberschall, Berufliche Gliederung und soziale Schichtung der Deutschen in der Tschechoslowakei, Teplitz-Schönau. ...back...
9Measured by number of those engaged
in respective industries. ...back...
  
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