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Hoarders Causing Food Shortages, Government Says

May 30, 1990

EAST BERLIN (AP) _ East Germans are clearing store shelves and filling their refrigerators because they fear massive price increases when the nation converts to a free market, officials said Wednesday.

East Germans are making a run on canned goods, meat, soap, sugar and ″everything that can be stored,″ said Commerce Ministry spokeswoman Christian Boschek.

Food distributors also are sitting on large stocks of meat and other goods, creating shortages, apparently while waiting for the July 2 economic merger with West Germany, the government said. Unification of the German states’ economies is expected to bring higher prices and massive unemployment.

Government spokesman Matthias Gehler said subsidies on food will be scrapped July 2 and prices will be set by the free market, rather than the state.

But subsidies for utilities, rents and public transporation will remain at least until Dec. 31, when the government will assess the effects of capitalism on the country, Gehler said.

″We cannot have half a marriage. We want to enter into it entirely,″ he said at a news conference.

Prices of many products already are rising as West German goods begin filling East German stores.

Boschek said people she called ″hamster buyers″ were purchasing as many goods as they can.

Gehler said more than 100 inspectors will be sent around the country to investigate reports that East German food distributors and producers are intentionally keeping products off the market until July 2. On that date they can be paid in convertible West German marks.

The centerpiece of the economic union is the conversion of East German currency to West German marks.

Under a treaty between the Germanys, most East Germans will be able to convert up to $2,400 to West German marks at a 1-1 rate. Amounts above that will be converted at a 2-1 rate.

Salaries and pensions also will be converted at a 1-1 rate.

The government will begin passing out applications next week to East Germans for converting their cash.

East Germans now have 440 billion marks in savings accounts, said Wolfrid Stoll, vice president of the East German Staatsbank. That includes 25 million accounts held by 16 million East Germans and hundreds of thousands held by enterprises, legal entities and foreigners.

Stoll said banks would stay open longer and personnel would be reinforced to handle the expected crunch. He urged East Germans to remain ″calm and level-headed″ when the droves of people begin descending on East German banks.

He said East Germans are expected to open between 1.5 million and 2 million new accounts in June alone in anticipation of the economic union. East Germans must have their money in bank accounts to convert their currency.

The government will begin passing out West German currency to stores in the days before the economic union is official. East Germans will be able to buy products in East German marks and get their change back in West marks at a 2-1 exchange rate.

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