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goods are badly needed, but foreign investors
taliation for the blockade the western Allies
are reluctant and the internal economy is not
promptly embargoed the shipment of goods
able to provide funds necessary for the pur-
from the western zones to the Soviet Zone.
chase. Labor unrest, strikes, and a reduction
With the lifting of the counterblockade in
in the productivity of labor are encouraged
May 1949, there was a revival of industrial
by the need for further tax reform, broad-scale
domestic readjustments in prices and wages,
output, although it is doubtful if quotas un-
der the Two-Year Plan can be met in view of
and a reduction in occupation costs.
continuing shortages. The full restoration of
Factors favorable to improvement in the
interzonal trade relations may see further im-
economic situation are the continuing ERP
provement in eastern German economic con-
aid to western Germany and to Western
ditions. There is slight indication, however,
Europe and the fear of Soviet expansion, a
that further improvement in general produc-
fear which strengthens morale in the western
tion levels will improve the general public's
zones and is conducive to German support of
consumption standards. Gains will be regis-
Allied efforts to improve economic conditions.
tered only in those industries and for those
Germany also possesses a reservoir of highly
groups favored by SMA. The area as pres-
skilled labor, great technical skill and ingenu-
ently bounded is not self-sufficient in food-
ity, and a will to dominance in all fields which
stuffs. The area, moreover, normally im-
should assist in overcoming the obstacles now
ported coal and manufactures from western
hampering economic recovery.
Germany and elsewhere. The satellite coun-
b. Soviet Zone.
tries are not able to provide substitute sup-
Despite the Soviet currency reform in June
plies, because their surpluses (except for Pol-
1948, production in the Soviet Zone declined
ish coal) are channeled to the USSR or are
in subsequent months. The decline there was
traded within the Soviet orbit. There is evi-
in part attributable to Soviet removals with-
dence that this economic outlook gives less
out compensation of both current output and
concern to the SMA than the development of
plant equipment. In part also the Soviet
governmental organization and controls simi-
blockade of Berlin was responsible, since in re-
lar to those of the Soviet Union.
II-35
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"ocrText": "goods are badly needed, but foreign investors\ntaliation for the blockade the western Allies\nare reluctant and the internal economy is not\npromptly embargoed the shipment of goods\nable to provide funds necessary for the pur-\nfrom the western zones to the Soviet Zone.\nchase. Labor unrest, strikes, and a reduction\nWith the lifting of the counterblockade in\nin the productivity of labor are encouraged\nMay 1949, there was a revival of industrial\nby the need for further tax reform, broad-scale\ndomestic readjustments in prices and wages,\noutput, although it is doubtful if quotas un-\nder the Two-Year Plan can be met in view of\nand a reduction in occupation costs.\ncontinuing shortages. The full restoration of\nFactors favorable to improvement in the\ninterzonal trade relations may see further im-\neconomic situation are the continuing ERP\nprovement in eastern German economic con-\naid to western Germany and to Western\nditions. There is slight indication, however,\nEurope and the fear of Soviet expansion, a\nthat further improvement in general produc-\nfear which strengthens morale in the western\ntion levels will improve the general public's\nzones and is conducive to German support of\nconsumption standards. Gains will be regis-\nAllied efforts to improve economic conditions.\ntered only in those industries and for those\nGermany also possesses a reservoir of highly\ngroups favored by SMA. The area as pres-\nskilled labor, great technical skill and ingenu-\nently bounded is not self-sufficient in food-\nity, and a will to dominance in all fields which\nstuffs. The area, moreover, normally im-\nshould assist in overcoming the obstacles now\nported coal and manufactures from western\nhampering economic recovery.\nGermany and elsewhere. The satellite coun-\nb. Soviet Zone.\ntries are not able to provide substitute sup-\nDespite the Soviet currency reform in June\nplies, because their surpluses (except for Pol-\n1948, production in the Soviet Zone declined\nish coal) are channeled to the USSR or are\nin subsequent months. The decline there was\ntraded within the Soviet orbit. There is evi-\nin part attributable to Soviet removals with-\ndence that this economic outlook gives less\nout compensation of both current output and\nconcern to the SMA than the development of\nplant equipment. In part also the Soviet\ngovernmental organization and controls simi-\nblockade of Berlin was responsible, since in re-\nlar to those of the Soviet Union.\nII-35"
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