and 10% remains ans an efficiency bonus. Indirect taxes may be added to price  
but the special "war contribution" must be shown separately so as to preserve  
                      the price stop.                       
 
                                                            
 
 
5. The restrictions on civilian consumption are rigorousincome and  
consumption are "unrelated quantities". The amount of consumption is determined  
by the "distributable social product" which is only that left over after full   
military needs. There is no minimum of subsistence". The former "declarations   
of need" led to abuses and now strict rationing extends to nearly all articles  
with the customer attached to specified shop-keepers so that there can be no   
                          evasion.                          
 
                                                            
 
 
6. The private investment field is Shut off through prohibitions on the   
use of all the heavy metals and most of the light metals for civilian construction   
or repair. The only read or ether building has to do with war. By special war  
contributions, local and regional authorities have been forced to cut down   
spending by about 50% and they are not allowed to levy special taxes to make   
                 up for the contributions.                  
 
                                                            
 
 
7. The development and production of substitutes is encouraged by special  
advice bureaus. A newspaper issue has been printed from paper made from potato   
plants. Zinc is being used instead of tin and copper, and low grade iron ores   
                    are being utilized.                     
 
                                                            
 
 
8. The war expenses are being paid by taxes and loans about 50-50 and the  
emphasis is on not using up German "capital" which seems to mean money capital.   
Thus a capital levy is barred because it touches the "substance" which must be  
left unimpaired. Present liquidity as well as future is all important, and a   
special "liquidity help fund" of about $350 m. looks out for firms in need of  
 cash. Also "Army I.O.U.'s" are issued which the banks must discount. Local and  
regional authorities are held down but private investors are encouraged. A   
dividend limitation to 3% was turned down because "it would hit the capital   
ich must be carefully nursed with a view to possible future 
 
                                                            
 
II  
                                                            
 
April, 194l  
                                                            
 
 
1. The General Economic Council was created early in 1940 with all the   
departments represented except the Treasury and the Reichsbank. It has a   
somewhat vague over-all function. The tendency of bureaus to expand has been   
hit and a general order reduces their budgets for 1940 to 85% of 1939. Also   
naires are being cut down- 167 were dropped and 237 simplifi
 
                                                            
 
 
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