Cautious Birthday

The West had another anniversary to celebrate. A year and one week ago, the U.S., Britain and France had introduced the currency reform in West Germany against which the Russians had retaliated with the siege of Berlin. Last week, West Germany was on the way to statehood and moving jerkily toward prosperity.

Blocks of bright new stores have appeared amid the ruins of West German cities; rings of huge sausages festoon the show windows of butcher shops. Even the sidewalk vendor of frankfurters has reappeared in Frankfurt. West German industrial production stands at 87% of the 1936 level, steel output has soared to nine million tons a year. But the anniversary triumph requires a damper of caution. West Germany is beset by some alarming economic difficulties.

More than a million are unemployed. Refugees at the rate of 30,000 a month stream in from Germany's Soviet zone and Eastern Europe; these people have no place to stay, for few houses are being built in West Germany, despite a desperate need. Most of West Germany's economic trouble is a shortage of investment capital.

A year ago, the West's economic experts wiped out 90% of West Germany's inflated currency and clamped tight restrictions on credit in order to guard against a relapse into inflation. Many industries, notably the Ruhr mines, lack funds to replace badly worn-out equipment. Businessmen, without long-term risk capital, are forced to seek quick profits; they build nightclubs and theaters rather than homes and factories.

Last month, Western officials cautiously started to let some money pour into West Germany's economic pool. The Bank Deutscher Laender relaxed credit restrictions by lowering the rediscount rate for its member banks. West Germany's economic boss, Dr. Ludwig Erhard, announced an 8 1/2-billion-mark investment program for the coming fiscal year.

So far, alarmist reports to the contrary, West Germany is merely going through an essentially healthy process of deflation, not a slump. Would prosperity continue? Says Erhard: "I'm dead sure."

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