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> 53. The War Economy
dragos
Posted: July 15, 2004 09:46 pm
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by Ion Alexandrescu

The unfavourable international situation resulted from the new balance of forces established after the rising of the revisionist powers had negative consequences for the national economy. These were amplified following the amputation of the national territory in the summer of 1940, a fact which seriously affected the unity of the economy and the internal market - that both have had an ascendent evolution, especially during the previous decade and diminished a lot the agricultural and raw materials resources of the country, also the industrial production units.

Since 1941 in Romania, like in other countries participating in the war, the institutions and the industrial enterprises were militarized. Thus was intensified statal authorities' interference on the economy, through the instatment of so-called "production-trade offlces" that linked together the main factories in an industrial branch. Within these offices the great capital collaborated with the Romanian State's authorities for the repartition of the production orders, for listing the shares of raw materials and the delivery quotation on the market. This way was registered an important expansion in the industrial production for the needs of the Army and concomitantly the deliveries in the benefit of civilians decreased, the majority of the goods for the population being standardized.

The number representing the industrial units from the secondary branches decreased also as a result of the centralization of the production (from 2,721 units in 1940 to 2,250 in 1942). In the same time the power force installed in the industrial units diminished, but the number of men who worked was increased, this fact reveiling that the installations of the factories suffered important damages, especially concerning their modern energetic supplies.

Relating to the personnel engaged, to the installed power force and to the production dimensions, the first were those branches of the national economy that worked particularly for the needs of the front - the metallurgic industrial units, the units in the chemistry, textile and foods domains.

Following the 1943 year, in the circumstances when the state of war was prolonged, a visible degradation of the production appeared, resulting from the huge raw materials consumption in the industrial units working for the front and also from the greater and greater difficulties that intervened in the process of recovering their supply stocks and the damages produced to the equipments, as the importation transactions became harder.

Major negative consequences had the quasi-monopoly position of Germany in the Romanian trade exchanges and also de facto non-equivalency within the balance of the commercial relations between the two countries. The civil expenses and the productive investments established in the annual budgets were reduced to the lowest level that could assure the function of the administrative structures. Between 1940/41 - 1943/44 these expenses represented on an average approximately 26.8% from the budget, while the military costs reach in the same period 62.1%. The tendency to decrease the civil costs and the productive investments was to be continued during 1944/1945, when beside the war expenses added the ones required by the assurance of the provisions stipulated in the Truce Convention of September 1944. Thus, from a total of 673.7 billions lei, representing the expenses in the budget, the civil costs and the productive investments totallized only 122.7 billions lei (18.2%), while the military expenses for repairing and keeping in function Army's equipments reach 209.9 billions lei (31.2%). For a seven months time only (between September 1944-March 1945), the costs resuited from the appliance of the Truce Convention's provisions represented 207. l billions lei (30.7%).

The consequences of such an evolution of the facts were the lowering of the living standard of the public workers, the deterioration of the public goods, the chronic insufficiency of the funds destined for health, public education, for repairing and keeping in good condition the industrial units belonging to Romanian State.

In the agricultural domain, the territorial raptures in 1940, the encroachments of Germany and the needs of the Army produced the increase of the areas under crops where grew industrial plants such as flax, hemp, soy, beans and cotton and also feeding plants. Yet, this didn't change the predominancy of cereals and the methods used in farming before the war.

The lack of working men, because of the mobilizations, the diminishing of the number of animals used in the agricultural fields, the massive lock up of cereals stocks, the measures taken by the Government for keeping low the prices for cereals in the benefit of the industrial goods, with the hope to avoid an increase of the costs for the usual articles needed by the poor people reach to the decrease of the areas where grew cereals.

A visible tendency to low down gradually was also seen in the live stock, even if some rises and falls were registered as a result of the increase or decrease of requisitions in the benefit of the Army and also because measures were taken for the regulation of the civil consumption and to restrict thc sacrifices.

The lowering of the industrial and agricultural production, the rising of the prices, the great diminishing of the purchasing power of salaries concomitantly with the enrichment of some speculators, the grow of the daily-working time and of the intensity of labour led to a low living standard of the majority of people, not to mention that it was already lower than in other European countries since before the wartime. In Bucharest, the level of the salary represented in August 1944 only 53.3% as compared to the one existent in 1939. Here we must add the unjust repartition of the taxes for covering State's expenses, these being a burden especially for the poor peopie. The rate of the direct taxes from the budgets, more suitable and more fair as compared to the indirect taxes which were sustained by the poors and by the great majority of Romanians, diminished - as related to the total ammount of taxes - from 26% in 1941/42 to 17% in 1942/43 and 15% in 1943/44. Moreover, within the frame of these taxes the income ones kept a very high level, representing 45.4% in 1940/41, 61.5% in 1941/42, 55.9% in 1942/43 and 48.8% in 1944/45.

Following August 23, 1944 the phenomenons which appeared in the previous years within the war economy continued to act - some of them even grew, because of the great obligations imposed through the Truce Convention and of the intensified effort of war beside the Allies. In these circumstances the main objective in the economic activity for all Romanian Governments was to provide priority the production in the factories working for the Army, the military transportations for the needs of the front and also the supplies of food and goods for the population, indispensable for living.
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