The Past and Present Society

Conflicts within German Industry and the Collapse of the Weimar Republic Author(s): David Abraham Source: Past & Present, No. 88 (Aug., 1980), pp. 88-128 Published by: Oxford University Press on behalf of The Past and Present Society Stable URL: http://www.jstor.org/stable/650555 Accessed: 23/06/2010 08:38
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CONFLICTS WITHIN GERMAN INDUSTRY AND THE COLLAPSE OF THE WEIMAR REPUBLIC*
THE ROLE OF GERMANINDUSTRY, INDUSTRIALLEADERSAND INDUSTRIAL

organizations has long been one of the most vehemently debated issues in the study of the collapse of the Weimarrepublic and the transfer of power to the Nazis. All too often the underlying purpose of research has been to indict or exonerate die Wirtschaft (Germany's economic leadership),which has been treated as a fairly homogeneousforce.1By contrast this article will examine the conflicts within German industry itself and demonstrate how they contributed to the terminal crisis of the republic. Struggles occurred between different branches or "fractions" of industry and among both organized and de facto groups of industrialists. The nature of these struggles was both economic and political, structural and contingent, and any account of them must therefore also be structural as well as narrative. It must analyse the character of production in different sectors of industry and explain how different industrialists acted. However, neither the manner in which the industrialsector formulated its prioritiesnor the methods by which the industrialistsorganized, or failed to organize, themselves to affect the post-I 928 political crisis can be fully understoodby focusing exclusively on developments within industry itself. Particularly after the onset of the Depression, the relationship of industry both with the agricultural sector and with the organized working class was essential in determining the changing balance of forces within industry. Nevertheless the inability of several Weimargovernmentsto co-ordinate the interests of the dominant classes and to put forward a consistent economic programme was largely due to structural conflicts within the industrial sector itself. Different industrial factions preferreddifferent coalitions, depending on the nature of their own production, capital composition and international standing. Economic, political and ideo* This essay is based on chapter 3 of my book, The Collapse of the WeimarRepublic: Political Economy and Political Crisis (Princeton, I980). I would like to thank Derek Linton for his assistance in preparing this version. 1 The literature on this topic is immense and continues to accumulate even after five decades. The issues play a role in social conflict in West Germany, in the discourse between East and West Germany, in the ideological self-legitimation of East Germany, and in almost all theories of fascism, class conflict and capitalist development. Recent research has been summarized by two scholars of very different convictions: Dirk Stegmann, "Kapitalismus und Faschismus, I929-1934: Thesen und Materialen", in H. G. Backhaus (ed.), Gesellschaft: Beitrdge zur Marxschen Theorie, vi (Frankfurt, 1976), pp. 14-75; Henry A. Turner, Faschismus und Kapitalismus (G6ttingen, 1972).

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logical cleavages divided German industry into two fairly distinct camps, one "liberal" and the other "national". As we shall see, in a period of economic recovery and expansion the "dynamic" and export branches of industry tended to favour coalitions with organized labour whereas the older, heavy and domesticoriented branches tended to opt for conservative coalitions with the rural sector.2But this division was never absolute. Alongside the problem of organizing the interests of the dominant classes, there always remained a second problem: the means by which the interests of the subordinate classes were to be incorporated, moulded or repressed.3 Solutions to this question could easily exacerbate tensions within any bloc of dominant classes and result in the formation of parliamentary and social coalitions with subordinate classes, which would benefit one fraction of industry at the direct expense of the other. Many industrialists were willing to accommodate the interests of the organized working class, in so far as they could afford to, but the increasing costliness of worker demands set limits to the fratricidal potential of Weimarindustrialists. Although they could not agree on a programme for incorporating the interests of one or more of the subordinate classes, after I930-I Germany's industrialists could agree on a programme for repressing those interests. However, even the repressive programme agreed on reflected the conflicts within the industrial sector. Some of those conflicts dated back to the empire and continued to be salient up to the moment of Hitler's elevation to the chancellorship at the end of January 1933.

THE IMPERIAL INHERITANCE

Concentration and cartelization had been a tendency in German industry almost from its inception,4 and each major turning-point in the empire's economic and social development accelerated this ten2 For an analysis of coalition- and bloc-building in Weimar Germany, see my "State and Classes in Weimar Germany", Politics and Society, vii (1977), pp. 229-66, and also my "Constituting Hegemony: The Bourgeois Crisis of Weimar Germany", Jl. Mod. Hist., li (I979), pp. 417-50. 3 Antonio Gramsci, Selections from the Prison Notebooks (New York, I97 I), esp. pp. 16 , 18 , I82. There is a third problem as well: that of successfully presenting the interests of the dominant classes as the interests of the entire nation. 4 The active role of the state and the general hostility to the economics of the Manchester School date back before List to the beginning of industrialization in Prussia and have long been the subject of considerable analysis. See, for example, Joseph Clapham, The Economic Development of France and Germany, 181-I914, 4th edn. (Cambridge, 1936); Thorstein Veblen, Imperial Germany and the Industrial Revolution (New York, 1939 edn.); W. O. Henderson, The State and the Industrial Revolution in Prussia (Liverpool, I958). On the differential stigmata of early versus late industrialization, see Alexander Gerschenkron, Economic Backwardness in Historical Perspective (Cambridge, Mass., 1962), pp. 5-30.

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dency. Producers of coke, pig-iron, steel sheeting and potash formed the first cartels, but by the turn of the century the new electronics, chemical and machine industries had surpassedthe older industries in "self-organization". Such self-organization ranged from complete centralized control of production quotas, marketing allocations and the supply of raw materials, to looser combines that simply fixed prices or distributed market shares. Nor did German industries hesitate to enter international cartels, such as the International Rail-Makers' Association founded in 1883. The shape of what was soon to become the monopoly sector of German industry changed early and rapidly. For example, between I882 and I895 the number of industrial units employing over a thousand workers doubled from 127 to 255, with 500,000 adults employed there.5 These large-scale hierarchically organized firms required a whole new category of salaried employees (Angestellten), whose emergence drastically altered the composition and political behaviour of both the lower middle class (Mittelstand) and the working class. Since the newer industries were more capital-intensive they needed more finance, which increased the role of the major banks.6 As the proportion of fixed capital increased, production factors became more rigid. In order to offset this trend, the larger industries institutionalized scientific and technological researchby the establishment of corporate laboratories,7and the results of this research spurred the entire economy. Next to the organization of the market (through cartels and finance) to relieve the pressure of competition faced by individual capitalists, there began the institutionalization of technological progress to counter the crises faced by the economy as a whole. Moreover the state increasingly sought to create the necessary conditions for business stability by reducing pressure from social, political and economic tensions.8
5The figures are cited by Hans-Ulrich Wehler, "Der Aufstieg des Organisierter Kapitalismus in Deutschland", in H. A. Winkler (ed.), Organisierter Kapitalismus (G6ttingen, 1974), p. 40. 6 One need only recall the rapidity with which steel production changed (the Bessemer, Siemens-Martin and Thomas-Gilchrist processes) to realize how quickly a producer could have his facility become obsolete if he had inadequate investment funds. On the role of the banks, see Richard Tilly, "German Banks and German Industry", Jl. Econ. Hist., xxxvi (1976), pp. 180-8. Banking and science overlapped nicely in the case of Siemens; see Jiirgen Kocka, Unternehmersverwaltung und Angestelltenschaft am Beispiel Siemens, 1847-I914 (Stuttgart, 1969). The Siemens enterprise and the Deutsche Bank were intimately related. 7 Carl Duisberg, later head of I. G. Farben and the R.D.I., began as a chemist. Siemens too was renowned for its laboratories. It was also between the 87os and I 900 that theories of "scientific management" were developed. Marx had already had more than an inkling of this double effect of fixed capital and science: see Karl Marx, Grundrisse der Kritik der politischen Okonomie (Berlin, 1953 edn.), p. 592. 8 The last of these three stages in the historical development of capitalism remains a matter of current contention; see Claus Offe, Strukturprobleme des kapitalistischen
Staates (Frankfurt,
1972),

pp. 2 I-5.

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DURING THE WEIMAR

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One step in the development of this form of organized capitalism was the founding of a variety of industrial associations national, regional and sectoral - three of the most powerful of which were formed between 1872 and I876.9 From the outset they greatly influenced state policy, as is indicated by the central part they played in Germany's move to protectionism in 1879. Their leaders were drawn from the major industries and cartels, and their weight in the political parties and state apparatus permanently altered the political decisionmaking process.10The Wilhelmine state provided a meeting-ground for industrialists and the large estate owners, and mediated numerous conflicts between the two sectors, the one rising, the other declining. Imperialismwas the one form of state action undertaken primarilyfor the benefit of industry, being both a form of trade treaty negotiation and a means of securing mass popular support. Although organized heavy industry increasingly dominated the economy, a very substantial sector of small firms remained, mostly engaged in light industry. The number of these small firms and the value of their productive capacity should not be underestimated, yet their survival depended to a large extent on their ability to find allies within the monopoly sector. The small craft industriesof the south and south-west forged new links with the electronics, machine and chemical industries of Berlin and the Rhineland. This amalgam of the older craft industries with the newer dynamic sectors was based on their common anti-protectionist, export orientation, which placed them in opposition to much of heavy industry and agriculture. Furthermore the wage demands of labour were of secondary importance to both groups. Many light industries employed only a few, very skilled hands which made them vulnerable to the demands of their employees. For the technologically more advanced industries, labour contributed less of what the industrialists called "added value".11Paralleling this
9 In I 872 the Association for the Furtherance of the Joint Economic Interests of the Rhineland and Westphalia (or the Long Name Association, Langnamverein, for short); in 874 the Association of German Iron and Steel Industrialists (V.D.E.S.I.); in 1876 the Central League of German Industrialists (Z.D.I.). In 1895 dissidents from the Z.D.I. formed the Union of Industrialists (B.D.I.); it represented primarily the export-oriented light and processing industries, although it was led by representatives of the rapidly expanding chemical industry. More on this alliance below. The progressive and free-trading Congress of German Commerce (D.H.T.) was organized in 186 , but, significantly, it did not become the Congress of German Industry and Commerce (D.I.H.T.) until 1919. 10Hans-Jiirgen Puhle has enumerated the elements of this development in his Politische Agrarbewegungen in Industriegesellschaften (Gottingen, 1975), p. 29. Cf. Hartmut Kaelble, Industrielle Interessenpolitik in der Wilheminischen Gesellschaft (Berlin, 1967). 1 Even in the pre-war period one such advanced industrialist, Duisberg, became known as the "welfare professor" because of his insistence that employers were best off training and paying their employees well and involving them in the operations of the plant. See the testimonial by Hans-Joachim Flechtner, Carl Duisberg: Vom Chemiker zum Wirtschaftsfiihrer (Diisseldorf, 1959), pp. 233-43.

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was a less hostile stance towards the Social Democratic Party (Sozialdemokratische Partei Deutschlands; S.P.D.) which even allowed for occasional co-operation, as in the successful anti-protectionistalliance
of I890

quota-allocation programmesof their suppliersin heavy industry hurt many of the smaller processing, finishing and consumer goods industries. Moreover as the Central League of German Industrialists (Zentralverband deutscher Industrieller;Z.D.I.) increasingly expressed the views of the larger monopolies and cartels, the smaller industries were stifled and their interests unrepresented.13 Because of growing dissatisfaction with the policies of the Z.D.I., the representatives of both the older craft industries and the newer dynamic industries secededin I895 to form the Union of Industrialists (Bund der Industriellen;B.D.I.). Although representativesof the new dynamic sector constituted a minority in the B.D.I., they supplied many of those leaders14 (the most prominent being Gustav Stresemann) who were to assume positions of importance in the alliance between export industry and the socialists during the Weimar republic. The B.D.I. stood for an aggressive and expansionist export policy largely directed at the most developed markets. It rejected the protectionism of the conservative agrarians and considered the Z.D.I.'s repressive approach towards labour a fetter on economic expansion. Along with commercialgroups like the Hansa Bund, the B.D.I. was involved in a persistent but primarily defensive struggle to counter the alliance between agrarian interests and heavy industry."1 In certain respectsthis dynamic, free-trade,export-orientedfraction of industry was more imperialist than the majority of the conservative agrarians; although unlike that of the latter, their imperialism also included a social component calculated to augment the legitimacy of the social order. This became apparent in the course of the debates which took place at the turn of the century over naval construction, in
12 In the elections of 1890 an S.P.D.-Progressive coalition defeated the Conservative-National Liberal alliance of agrarians and heavy industry. This victory was reversed in I902 but made good again in I9I2. See Carl Schorske, German Social Democracy, I90o-1917 (Cambridge, Mass., 1955), pp. 225 ff.; Arthur Rosenberg, Imperial Germany (Boston, Mass., 1964 edn.), pp. 40 ff., 56 ff. In some areas, like Baden, the coalition was not just electoral but almost permanent. 13See Helga Nussbaum, Unternehmer gegen Monopole (Berlin, 1966), pp. 36 ff. 14Details on the formation and composition of the B.D.I. and its relationship to the Z.D.I. are in Dirk Stegmann, Die Erben Bismarcks (Cologne, 1970), pp. 176 ff., 236 ff., 328 ff. Four years earlier the chemical industry had led the dissidents in the formation of an association for trade treaties. A more recent work on the B.D.I. is Hans Peter Ullmann, Der Bund der Industriellen: Organisation, Einfluss und Politik klein und mittelbetrieblicher im deutschen Kaiserreich, I895-I914 (Gittingen, 1976). 15 On the evolution of policy within the B.D.I. and related trade and commercial Parteien in Deutschland, 2 organizations, see Dieter Fricke (ed.), Die buzrgerlichen vols. (Berlin and Leipzig, 1968-7I), i, pp. 117-26. On the Hansa Bund, see Siegfried Mielke, Der Hansa Bund, I909-I914 (G6ttingen, 1976).

and the unsuccessful one of I902.12 The price-fixing and

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the context of which Max Weber and Friedrich Naumann sought to link imperialism to social reform and political democratization.16 However, this programmedid not become the platform of the whole of German industry because, as usual, the mildest threat from the left drove industry to the right. After briefly flirting with the B.D.I. in I905, the Z.D.I. ultimately rejected marriage, and in 1913 returned with its old agrarian partner to form the Cartel of the Productive Strata (Kartel der schaffende Stande). This, in turn, made industry's pursuit of imperialism all the more difficult, since it was compelled to add the demandsof a backwardrural elite to a programmewhich could not appeal to a poorly integrated and largely socialist working class. Submerging their differences in a minimal programme acceptable to both was the best the two fractions of industry could achieve. II
THE AFTERMATH OF REVOLUTION AND INFLATION

With the defeat of German imperialismand the onset of social revolution, the differences between the two industrial fractions paled into insignificance. In February I9I9 the Z.D.I. and the B.D.I. joined to form the National League of Industry (Reichsverband der Deutschen Industrie; R.D.I.). Partly because of fear of socialist policies, the early leadership was centralized in a sixteen-man presidium dominated by the representativesof heavy industry. The first chairman was a Krupp director, Kurt Sorge, who, along with most of his colleagues, did not pretend to accept the republic. In order to maximize its political influence the R.D.I. organized on both a trade and regional basis. The method of representationfavoured the largest producers,with a thousand trade organizations gathered into twenty-seven trade groups. The republican minority from the chemical, electronics and machine industries was virtually excluded from power.17For the industrialists, internal reconstruction and reconsolidation were of primary importance; inter-class co-operation and market expansion would have to
16 Naumann demanded a democratic basis in domestic affairs and an imperialistic basis in foreign policy. For Weber, Germany's economic development demanded The "political education of the nation" could not proceed, imperialist expansion. according to Weber, because of the nature of the German regime: "half caesaristic, half patriarchal, and in addition recently distorted by a philistine fear of the red specter"! All this is incisively presented by Eckart Kehr, Battleship Building andParty Politics (Chicago, 1975), pp. 454, 460. For more on Weber's path to social imperialism, see Hans Gerth and C. Wright Mills (eds.), From Max Weber (New York, 1958), pp. 32-44. On social imperialism in Germany, see Geoff Ely, "Social Imperialism in Germany: Reformist Synthesis or Reactionary Sleight of Hand?", in Joachim Radkau (ed.), Imperialismus im 20 Jahrhundert: Gedenkschrift fiir George W. F. Hallgarten (Munich, 1976). 17 On the balance of forces at this early stage, see Friedrich Zunkel, "Die Gewichtung der Industriegruppen bei der Etablierung des Reichsverbandes der Deutschen Industrie", in Hans Mommsen, Dietmar Petzina and Bernd Weisbrod (eds.), Industrielles System und politische Entwicklung in der Weimarer Republik (Diisseldorf,

I974), PP. 637-47.

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await some more auspicious period, when the threat of"socialization" had disappeared. Although the socialization committees for heavy industry and the anti-cartel laws of 1919-23 proved to be dead letters,18 fear of social revolution and counter-revolutionary strategy preoccupied the industrial leaders at least until the end of 1923. Inflation, the struggle for control of the Ruhr, the terms of the Versailles treaty, fear of S.P.D.-sponsored socialization, and communist insurrection all affected the character of inter-industrial relations. But there were several ways to defeat the working class and bring it into a "constructive" relationship with the recaptured state and the national economy. (Most industrialists eschewed overt counter-revolution; few supported the right-wing Kapp Putsch.)19 One way was for industry to avoid too direct a presence within the political parties, while assisting those whose programmes were both acceptable to them and competitive. Thus the Siemens group and some textile concerns financed the German Democratic Party (Deutsche Demokratische Partei; D.D.P.), hoping that it might become a bourgeois reform party that could sap the strength of the S.P.D.; other industrialists and bankers backed the German People's Party (Deutsche Volkspartei; D.V.P.) for the same reasons.20 In 1919 the R.D.I. recognized the exclusive bargaining rights of the unions and accepted the eight-hour day, the joint working committees (Arbeitsgemeinschaften) and factory committees. Although industry soon used reparations payments, the Ruhr crisis and inflation to withdraw these concessions, the immediate effect of such difficulties was to neutralize the power of the unions and to increase the republican legitimacy of organized industry. With the formation of bourgeois cabinets after I920 some industrialists even offered the republic their expertise through ministerial service. By 1923 industry had been so successful in recapturing the initiative that Robert Bosch and Hermann Cohen could even suggest that industry should fund the revisionist S.P.D. journal Sozialistische Monatshefte in order to guide it in the proper direction.21 However, a majority within the R.D.I. opposed organizational intervention in the

s1 Cf. Gerald Feldman, "Wirtschafts- und sozialpolitische Probleme der Demobilmachung", in ibid., pp. 618-36; Gustav Stolper, The German Economy, 1870-I940 (New York, 1940), pp. 200-3. 19 It is illustrative of the divisions within German industry that while Albert Vbgler, Hugo Stinnes, Emil Kirdorf and some others in the steel industry supported Kapp, the chemical industry supported the general strike against the putsch and chose to pay workers for the strike days. See Gerald Feldman, "Big Business and the Kapp Putsch", Central European Hist., iv (197 1), pp. 99-1 30. 20 Lothar Albertin, "Faktoren eines Arrangements zwischen industriellem und politischen Systems in der Weimarer Republik", in Mommsen, Petzina and Weisbrod (eds.), Industrielles System undpolitische Entwicklung in der WeimarerRepublik, pp. 66 , 662. 21This proposal was too sophisticated for most industrialists. Paul Reusch, for example, dismissed it brusquely as foolhardy. Bosch to Reusch, 4 Nov. i923, and reply: Historisches Archiv der Gutehoffnungshiitte (hereafter H.A., G.H.H.), Nachlass Reusch, 400 Io 290/43.

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electoral process, preferring instead to aggregate the demands of industry and then present them to the different branches of the state as demands "of the economy".22By such means did the bourgeois parties at this time enjoy an autonomy which they would later lose. Inflation began during the war and continued to worsen after 918. It contributed to a massive displacement in the national wealth, a process which reached its peak during the French occupation of the Ruhr in I923. Ruhr industrialists discovered that there was a time and a place for patriotism; others could be made to pay the price both for resistance and its abandonment. First the inflation was used to stimulate economic activity while keeping down the real value of reparations payments, and then during the ensuing stabilization the costs of resistance and compliance were transferred to other social classes.23Apart from the new breed of overnight empire-builders and speculators, those who benefited from this situation were those in control of the means of production and those who could sell products or shares abroad. Major industries were relieved of their debts - thereby freeing themselves to some degree from their dependence on the banks -while the working class was relieved both of its real wages and the eight-hour day, and the petty bourgeoisie of its bonds and savings. By mid-I 923 real wages were down to almost half their pre-war and I92I levels, and this despite full employment. Moreover industry increased its influence in the state at the expense of the organized working class. Industrialists bought out a great many newspapers to mould public opinion and financed right-wing paramilitaryformations, while union funds were quickly depleted. For most of the Mittelstand the inflation permanently delegitimized the republic while increasing the diffused resentment towards supposed speculators and representatives of international finance. For years afterwards Mittelstand parties were created to press for the upward revaluation of bonds and savings "expropriated"by inflation.24
22 In the East German literature the ability to do this successfully is yet another indicator of the existence of "state monopoly capitalism"; see Fricke (ed.), Die burgerlichen Parteien in Deutschland, ii, p. 584. For the "incapacitated pluralism" school this was another step towards "corporatism";see Charles Maier, Recasting Bourgeois Europe (Princeton, 1974), chs. 6, 8. Later, industry did seek to penetrate and even unite several parties. 23 In 1921 the index of industrial output in Germany was 77 (derived from a base of 1913 = ioo), whereas in France it was 58, in England 61, in Belgium 55, and even in the U.S.A. only 86. The decline in German production in 1923 was a direct result of the occupation of the Ruhr, and recovery was very quick. The allies restored control of Ruhr industry to its owners in exchange for their providing the allies with a proportion of their output. The German government would then reimburse the industrialists, who could now afford to be generous. On this settlement, the M.I.C.U.M. Accords, see Maier, Recasting Bourgeois Europe, pp. 392-6, 414-I8. 24 There is little reason to revise the assertion ofConstantino Bresciani-Turroni that "the depreciation of the currency caused the vastest expropriation of some classes of society that has ever been effected in time of peace": C. Bresciani-Turroni, The Economics of Inflation (London, 1937), p. 318. Revaluation after I924 was usually at a rate of about 5 per cent of nominal value.

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Following the stabilization of the currencylate in I 923, a number of conflicting developments were set in motion. At first unemployment grew and the eight-hour day was virtually eliminated, but overall demand for consumer goods increased while demand in the production sector declined. Exports fell, while imports rose. Within industry horizontal integration replaced vertical integration as the luxuriant growth of the inflation period was pruned or "rationalized". This prorationalization was characterizedby technical progress,new plant and enlarged stock, but even more by an infatuation with "Fordism" and an intensification of production designed to raise productivity and profitability. Outlay on public works also spiralledupwards, especially for infrastructure. Both of these developments depended heavily on American loans, and both showed quick results. Between I924 and the government reported the following percentages of "syndicalization" in sample industries: mining 98 per cent; dyes 96 per cent; electro-technical 87 per cent; shipping 8I per cent; and banking 74 per cent. Rationalization, which emphasized cartelized ownership and management, fixed capital and science, and co-ordination between industry and state, swept through all the larger industries.25 Like concentration and cartelization, rationalization was another means by which to protect producers from competition and overproduction. The power of the state backed up the agreementsbetween private producers.Although all cartel agreementswere legal contracts, the I926 International Iron Community (Internationale Rohstahlgemeinschaft; I.R.G.) was the clearest case of the underwritingof private accords by the state. Producers in several countries negotiated an agreement on production, marketing and pricing which the respective governments underwrote as a virtual treaty.26Although German industrialists later became dissatisfied with their allocated quotas, they were initially pleased for three reasons: first, the agreements brought high prices, order and stability to west European ferrous production; secondly, the state had allowed them to determine "national interests" in a vital area; thirdly, Germanproducerswere virtually free to charge their customers in the light and processing industries whatever they wished, since the latter had little recourse to imports. Events in the phase of rationalization provide much evidence for any theory of corporatism, neo-feudalism or state-monopoly capitalism. Whichever
25 These figures, from the state statistical office, are cited in Manfred Clemenz, Gesellschaftliche Ursprunge des Faschismus (Frankfurt, 1972), p. 197. Some units totally dominated entire industries: United Steelworks, organized in 1926, employed 200,000 workers and produced 30-50 per cent of all ferrous and non-ferrous metals; I.G. Farben, organized in 1925, employed over 0oo,ooo workers. 26 On the details and significance of the I.R.G. Agreements, see Maier, Recasting Bourgeois Europe, pp. 540-5.

cess began cautiously but was in full swing by I926. The post- 924

I927 industrial productivity climbed by almost 40 per cent. In 1926

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theory one prefers, the dominant features of this phase remain the tremendous discipline and organization within German industry, and the interweaving of industry with the state.27 The rationalization movement increased industry's political activism for yet another reason. The recoverywhich the movement fostered was fragile. Expanded capacity and the predominanceof fixed capital left little flexibility in the event of an economic downturn. Given the relative stagnation of the entire western economy during the inter-war years28some way had to be found to keep the factories busy. Therefore industry needed to attend both to economic policy and to its political prerequisites. In the steel industry, for example, any utilization-ofcapacity rate below 67 per cent was unprofitable.At the height of prosperity from 1927 to 1929 the rate was just over 80 per cent, and when it dropped to below 40 per cent by mid-i 93 I, all that the steel industry could do to retrench was to cut wages.29Although the margins were not so narrow in other industries, rationalization contributed to the precariousness of the post- 925 recovery. Production exceeded 19 3 levels during only three years, 1927-30, and the differential effects of the period of prosperity were crucial in determining the political activity and coalitional preferences of the two industrial fractions. By I930 the political crisis was full-blown, but its outcome was substantially affected by the politics of industry, which in turn were largely conditioned by the economics of the preceding years. An examination will be made below of the economic and political conflicts between the two fractions of industry after I925 and during the political crisis; the subject will be seen in terms of the function of differences in the desiderata and viability of production. Before comparing them internally, however, we shall scan the politics of the two fractions and their organizations during the period of stability. During the "good years" there were major shifts in the balance of forces within industry. In
27See Robert Brady, The Rationalization Movement in German Industry (Berkeley, 1933), pp. 363 ff., appendix C. Brady refers to German industry as a "state within the state and a state among the states" and maintains that "there is scarcely an aspect of the normal functions of the state ... which these economic entities [the cartels] do not possess to some degree, or have not arrogated in some wise to themselves": ibid., p. 368. Whether or not their voice was overwhelming in the councils of state, they had certainly changed the political process. 28 This thesis is convincingly demonstrated in Dietmar Petzina and Werner Abelshauser, "Zum Problem der relativen Stagnation der deutschen Wirtschaft in den zwanziger Jahren", in Mommsen, Petzina and Weisbrod (eds.), Industrielles System und politische Entwicklung in der Weimarer Republik, pp. 57-76. For the entire western economy, see Ingvar Svennilson, Growth and Stagnation in the European Economy (Geneva, 9 54), esp. pp. 4 -58, and appendix. The nature of the period was already analysed, despite the intervening prosperity, by Rolf Wagenf'hr, "Die Industriewirtschaft: Entwicklungstendenzen der Industrieproduktion 1860 bis 1932", Vierteljahrsheftezur Konjunkturforschung, Sonderheft xxxi ( 933), esp. pp. 29-44. 29 Figures cited by Alfred Sohn-Rethal, Okonomie und Klassenstruktur des deutschen Faschismus (Frankfurt, 1973), p. 49. Sohn-Rethel analyses the dilemma of rationalization and the consequent rigidity of a higher organic composition of capital.

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I925 the two industrial fractions were in rough political equilibrium. Between I920 and I925 the "right wing" of heavy industry had successfully reversed the major working-class gains of the revolutionary period and had expelled the S.P.D. from the government. The republic was made acceptable. After I925 the dynamic "liberal" fraction seemed to gain the upper hand. But different groups continued to advance different political programmes,and these were rooted in different coalitions and bases of mass support.

III
INDUSTRIAL POLITICS IN THE PERIOD OF STABILITY

With the acceptance of the Dawes Plan in i924, the beginnings of economic recovery, and the formation of a purely bourgeois government, industrial forces were in a position to create a political base for their social dominance. This became evident when Stresemann attempted to enlist the parliamentarysupport of the S.P.D., even at the risk of losing the right wing of his own D.V.P. Stresemann led the approach to organized labour as foreign minister; the chancellorship itself revolved between the D.V.P. and the Catholic Centre Party (Zentrumspartei,or Zentrum). This parliamentaryoverture to labour also found its counterpartin the industrial organizations and reflected the ascent of the dynamic and export groups. Thus in January 1925 Carl Duisberg, the "welfare professor", late of the Chemical Industries Association (Verbandder chemischen Industrien), was chosen as head of the R.D.I. over two considerablymore conservativecandidates representing older heavy industry.30Ludwig Kastl, who had been an active proponent of a fulfilment policy towards reparations and a strategy to reintegrate Germany into the world economy, became its business chairman.31 His two assistants were Hermann Biicher of General Electric (Allgemeine Elektrizitats Gesellschaft; A.E.G.) and Jacob Herle, a leader of the old B.D.I.; both were known for their moderatelyprogressivesocial views. The I925 elections and committee appointments were virtually a clean sweep for the dynamic export fraction. The new leadership brought a more conciliatory tone and
30Duisberg defeated Albert Vogler, a steel industrialist and Stresemann's archenemy, and Ernst von Borsig of the reactionary Employers' League. Numerous industrialists let it be known that Duisberg was the only candidate acceptable to the export and processing industries - which might otherwise secede from the R.D.I. Speaking on behalf of heavy industry Paul Reusch recognized that "leadership of the R.D.I. will now pass to someone who thinks about social and commercial matters differently from us in Ruhr heavy industry". Reusch to Von Wilmowsky, 23 Dec. I924: H.A., G.H.H., Nachlass Reusch, 400o I 290/39. See Abraham, Collapse of the Weimar Republic,
31 Before the war Kastl had been an active social imperialist propagandizing for German expansion in Africa while supporting progressive reform of the Prussian franchise.

pp. 133-6.

GERMAN INDUSTRY DURING THE WEIMAR REPUBLIC

99

agenda to policy debates. Accompanying this new orientation was a different posture towards labour and its place in the state. Re-establishing Germany's economic potential and international stature required a national consensus which could be based on the reintegration of a chastened but still strong S.P.D. A class compromise bloc thus replaced the anti-socialist bloc.32 The dynamic export fraction could now abandon other economically powerful classes in favour of fruitful co-operation with parts of the organized working class. This collaboration was now feasible because the essential interests of industry were no longer threatened. The counter-revolution of
19 19-23

32See Abraham, "State and Classes in Weimar Germany", pp. 242-5 , and Bernd Weisbrod, Schwerindustrie in der WeimarerRepublic (Wuppertal, 1978), pp. 217-26, for two different assessments of the new situation. 33Gramsci, Selections from the Prison Notebooks, p. 161. 34 Fricke (ed.), Die biirgerlichen Parteien in Deutschland, ii, p. 594.

cise the decisive function in the decisive nucleus of economic activity";33with such a guarantee a popular class state was possible. Once the revolutionaryimpulseof the working class had been defeated, some of its interests could be incorporated and moulded by the ascendant dynamic industrial fraction. Thus in 1925 Hermann Biicher called for "labour and social peace". He suggested binding compulsory arbitration of wage disputes and recommended the former socialist labour minister Rudolf Wissel as chief arbitrator.34 Duisberg went so far as to his loyalty to the Weimar constitution and democracy, and he profess called for the abandonment of pre-war attitudes towards the unions, even acknowledging the justice and frequent practicality of the eighthour day. Such proposals issued from a position of strength. The ad hoc institutions of the revolutionary period which briefly operated as institutions of working-classpower (the joint working committees, factory councils and Reichs Economic Council) had either been dismantled, penetrated or recapturedby industry. Policies on foreign, national and social affairs could now be forged into a coherent whole. Just as acceptance of the Dawes Plan was meant to bind Germany's foreign creditors to its economic fate, social policy was intended to draw the working class by way of the right wing of the S.P.D. into a national endeavour with reconsolidatedcapitalism. In both areas it was a question of costs -costs which the dynamic industries were willing and able to pay, especially once the elections of I924 had produced large gains for the right. Inevitably this two-pronged strategy widened the cleavages within industry. Acceptance of the Dawes Plan precipitated a minor secession from the R.D.I., while within it the new policy of social peace and class co-operationprovokeda real struggle - because of both its costs and its political implications. The election results of 1924 and the formation of an all-bourgeois government made "Entrepreneursand the State" and "Industry and

had guaranteed to industry that it would continue "to exer-

IOO

PAST AND PRESENT

NUMBER 88

Parliament" central topics during the meetings of the R.D.I. in 1925. The direct, parliamentary influence of industry expanded: numerous industrialists belonged to the victoriousparties, and some even became members of parliament and of the executive.3 The meetings of the R.D.I. in I926 sought to come to grips with the opening to the S.P.D., and therefore they highlighted the splits within industry. The outcome of the political class struggles of the previous six years contributed to a change in the structure and programmeof both industry and the working class. In the case of the S.P.D. this change manifested itself in the shift from social to production politics, in the theory of "organized capital" and its implications for a neutral state, and in a hardening attitude towardsthe Communists(KommunistischePartei Deutschland; K.P.D.). In the case of industry, Paul Silverberg's keynote address at the meetings of the R.D.I. in September 1926 outlined the new line of the dynamic fraction: social peace and compromise with labour through acceptance of the republic, and an export offensive through trade treaties negotiated largely at the expense of both agriculture and the backward sectors of German industry. Not only could Germany not be governed against the S.P.D., it could not be governed without the S.P.D. Now that the socialists had abandoned the "politics of force, the politics of the street" and had responsiblyaccepted "the politics of facts rather than of doctrine", that party should be welcomed into government. For the sake of the nation a "social partnership"was needed.36 Kastl elaborated Silverberg's position. What Germany required, he argued,was an export offensive based on "quality production and expandedtrade and consumption". This was the theme of the R.D.I. convention in I927 during which delegates accepted sweeping legislation on social issues and labour, as well as increased state and public expenditure.
35 This relationship has been most closely explored for the D.V.P.; see Lothar D6hn, Politik und Interesse: Die Interessenstruktur der Deutschen VolksPartei (Meisenheim am Glan, I970), esp. pp. 9I-I 3, and the charts on pp. 401-2I. The D.V.P. perhaps provides the best ground for a discussion of the links between representatives and the represented; and the later collapse of the party was indicative of the limited autonomy of the party leadership, especially after Stresemann's death in 1929. For examples of the ties between industry and other bourgeois parties, from the D.D.P. through the Zentrum to the D.N.V.P., see Fricke (ed.), Die buirgerlichen Parteien in Deutschland, ii, pp. 597 ff. After the 1924 elections some 65 delegates (about 5 per cent of the total) occupied 269 seats on the boards of directors and interlocking directorates of industry and commerce. Duisberg argued that industry ought to use parliament, rather than simply rejecting it as many in heavy industry were wont to do. He especially valued close relations with parliamentary committees and established a standing committee of the R.D.I. members of the Reichstag. 36 Silverberg's speech, "Der deutsche Industrieunternehmer in der Nachkriegszeit", is reprinted in Reden und Schriften von Paul Silverberg, ed. Franz Mariaux (Cologne, 1952), pp. 46-69. Silverberg entertained the interesting theory that the S.P.D. and the A.D.G.B. had always been responsible, except for the few months after November 1918 when they picked up an irregular membershipand were driven by it to an uncharacteristic radicalism.

GERMAN INDUSTRY DURING THE WEIMAR REPUBLIC

IOI

Silverberg's speech immediately provoked heated responses from heavy industry and agriculture. Spokesmen for heavy industry found no solace in a programme which endangered both their profitability and their pivotal position in politics. The stage was set for conflicts between the two fractions which would last until the end of the republic. Representatives of heavy industry opposed Stresemann in the Reichstag and Silverberg in the R.D.I. In the former they worked for the unity of all parties to the right of the D.D.P., and in the latter they pleaded for a domestic market and an anti-socialist strategy. They wanted a coalition of the right and, unlike the leaders of the capitalintensive and export industries, they were not prepared to compromise.37 Paul Reusch told the Langnamverein convention in October 1926 that only a market and coalition strategy based on the "productive strata", especially agricultural, and on the home market could revive German prosperity and provide industry with tolerable economic policies.38Whereas the R.D.I. strategy implied a parliamentary Grand Coalition of D.V.P. through S.P.D., the heavy industry strategy implied an industrial-agricultural biirgerliche Sammlung coalition (bourgeois concentration). Neither fraction could achieve its goals on its own terms. For a parliamentary Sammlung bloc there was insufficient unity; and when the Grand Coalition was finally formed in I928 it came as a result of the S.P.D.'s electoral victory. Throughout its duration from autumn I928 to spring I930 the Grand Coalition was a source of conflict between the fractions of industry. Before the Depression, industrial opinion varied within a broad range. At one extreme were commercial and export groups like the Congress of German Industry and Commerce(Deutsche Industrieund Handelstag; D.I.H.T.), which welcomed the trade and social policies of the coalition and which were willing to pay added social costs in exchange for a counterweight against the protectionist demands of agriculture and the monopoly price policies of heavy industry. At the other extreme were groups like the Association of German Iron and Steel Industrialists (Verein Deutscher Eisen- und Stahlindustrieller; V.D.E.S.I.) and the Langnamverein, mostly concentratedin the heavy industry of the Ruhr, who allowed the Grand Coalition no quarter. So long as Germany's export picture remained bright and the alliance of labour and industry continued to be viable, the balance of forces with37Dirk Stegmann, "Die Silverberg-Kontroverse, 1926", in Hans-Ulrich Wehler (ed.), Sozialgeschichte Heute. Festschrift fur Hans Rosenberg (Gottingen, 1974), pp. 594-610, considers the Silverberg initiative to have been little more than a flash in the pan, almost unintended, and supported "only" by the chemical, machine-building, textile and optical industries, and also perhaps by the big banks (p. 604). The coal, iron and steel industries in the west led the vast majority who opposed it in a "successful" counter-offensive, which continued throughout the lock-out of 300,000 ironworkersin the Ruhr in 1928 until January 1933! But Stegmann bends too many curved lines into straight ones, particularly considering how powerful his "only" industries really were. 38 Cited in Bundesarchiv Koblenz (hereafter B.A.), Z Sg. 126, I Oct. 1926.

I02

PAST AND PRESENT

NUMBER

88

in the R.D.I. favoured the dynamic sector. The forces had not changed much over three decades; even some of the spokesmen remained the
same.39

Eduard Hamm, chairman of the D.I.H.T., considered 1928 a boom year and therefore an appropriatetime to increaseexports and to make concessions to the unions. He felt that industry and commerce should "never indulge in simple nay-saying" to labour. Germany's only way out of its dilemmas was by reintegration into the world economy, and even domestic cartels should yield to that priority.40This was tantamount to full support for the programme of the Grand Coalition. Labour and this group of industrialists agreed that exports equalled jobs,41and that industry had to check those within its own ranks who impeded co-operation. Thus the size of the R.D.I. executive was doubled in order to increase the role of the export and pro-coalition producers and to counter the right of veto within the R.D.I. which the
Langnamverein claimed for itself.42

As a countermeasure, the top twelve leaders of Rhenish-West-

phalian industry formed the Ruhrlade at the end of I927.43 These

leaders of heavy industry objected in particular to the economics minister Julius Curtius (D.V.P.), who personified the co-operation between export and labour. They dubbed his and Stresemann's policies "Illusionspolitik", and supported agriculture's demands for high tariffs and a return to the domestic market. When the R.D.I. meetings of June 1929 declared that "a high level of exports is an economic and political necessity", spokesmen for the Langnamverein replied that limiting imports, lowering taxes, reducing Sozialpolitik, and ending reparations would be a far better national programme.44
39 On this correlation, see Ingolf Liesebach, Der Wandel der politischen Fiihrungsschicht der deutschen Industrie (Hanover, 1957), pp. 70 ff. On the persistence of the split and the spokesmen, see Dirk Stegmann, "Hugenberg contra Stresemann: Die Politik der Industrieverbdnde am Ende des Kaiserreichs", Vierteljahrsheftefiir Zeitgeschichte, xxiv (1976), pp. 329-78. 40 These points appear in B.A., Ri i-D.I.H.T., 124, pp. 4449, 4701, 2612, 3942, 1780, respectively. The D.I.H.T. stuck to the Grand Coalition through thick and thin; see Dieter Schafer, Der D.I.H.T. als politisches Forum der WeimarerRepublik (Hamburg, 966), p. 58. 41 Hamm informed Paul Silverberg that every 1,800 RM. worth of exports meant one job: B.A., Nachlass Silverberg, 646, p. 96. 42 On the Langnamverein's presumption of a right of veto and on heavy industry's strenuous efforts within the R.D.I., see Weisbrod, Schwerindustrie in der Weimarer Republik, ch. 3. On the push to "democratize" the R.D.I., see B.A., Nachlass Silverberg, 274, p. I I. 43The Ruhrlade was heavy industry's private cabinet; to facilitate decisiveness, membership was never to exceed twelve: H.A., G.H.H., Nachlass Reusch-Ruhrlade, 400 10 24/I I. See also Henry A. Turner, "The Ruhrlade: Secret Cabinet of Heavy Industry", Central European Hist., iii (1970), pp. 195-228. 44The R.D.I. statement and the Langnamverein response are in the Deutsches Zentral Archiv, Potsdam (hereafter D.Z.A.), R.L.B. Pressarchiv 132/I I, pp. I2 , 123. The Langnamverein's position reflected the resolution of its meeting of 4 November 1928, at which Reusch attacked Curtius directly. See also Deutsche Bergwerkszeitung, 22 June 1928; Ruhr und Rhein Wirtschaftszeitung, 20 June 1929.

GERMAN INDUSTRY DURING THE WEIMAR REPUBLIC

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Finally, the Ruhr lock-outs of autumn I928 emphasized both the hostility of heavy industry to the Grand Coalition and the split within industry's ranks. When contracts expired in mid-October the employers locked out 250,000 Ruhr metalworkersin what amounted to a provocation by heavy industry through the North-West Employers' Organization (Arbeit Nordwest).45Both the prerogative of the labour minister, now a socialist, to impose binding arbitration and the entire modus vivendi of labour and industry under the Grand Coalition were under attack.46 But the industrialists of the Ruhr were rapidly disappointedwhen the R.D.I. failed to come to their defence. Paul Reusch complained bitterly: "We here in the west are greatly dismayed that the R.D.I. and the Berliners do not support us in this struggle, which we have undertakenin order to secure a free economy in Germany".47 Not all of industry was yet preparedto accept what spokesmen for heavy industry euphemisticallycalled a "healthy economy in a strong state". To understand the political and ideological divergences between the two camps on the question of the Grand Coalition and the governments which succeeded it, we must first look at the structure of industrial production. This will establish a context for examining the economic conflicts within industry and the political activity of its fractions after I930. IV
INDUSTRIAL PRODUCTION

The pessimism with which heavy industry greeted the post-I926 collaboration with labour contrasted sharply with the attitude of the dynamic branches. In general such co-operation was most acceptable to the moder and profitableindustriestogether with those where fixed rather than variable capital contributed most to profits. A look at the performanceand structure of production of several key industries will aid the analysis. Table I shows production indices for a sample of major industries between I925 and I932. The expansive industries tended to belong to the liberal bloc, whereas the stagnant industries belonged to the na-

45 On the employers' leagues (Arbeitgeberverbdnde),see Fricke (ed.), Die burgerlichen Parteien in Deutschland, ii, pp. 75 I-6 . 46Ursula Hiillbiisch, "Der Ruhreisenstreit in gewerkschaftlicher Sicht", in Mommsen, Petzina and Weisbrod (eds.), Industrielles System und politische Entwicklung in der WeimarerRepublik, pp. 271-89, argues rather convincingly that both the S.P.D. and the A.D.G.B. failed to appreciate the political significance of the lock-outs and compounded that mistake by failing to utilize public sympathy for the workers in order to launch a counter-offensive. Yet she overlooks the weakness of the "victorious" S.P.D.; cf. Georges Castellan, L'Allemagne de Weimar (Paris, 1969), p. 76; Nicos Poulantzas, Fascisme et dictateur (Paris, 1970), p. 187; Weisbrod, Schwerindustrie in der WeimarerRepublik, pp. 458, 495. 47Reusch to Max Schlenker, I9 Nov. 1928: H.A., G.H.H., Nachlass ReuschLangnamverein, 400 101 22I/9A. Reusch also expressed his bitterness to Kastl and Lange.

IO4

PAST AND PRESENT

NUMBER 88

TABLE I
PRODUCTION INDICES FOR SAMPLE MAJOR INDUSTRIES* Stagnant
A

Borderline Textile and clothing

96 80 117

Expansive
A

Coal

All Iron and mining steel

79 82 88 70 62 86

Lignitet

Metal- Chemical finishing:

I31 104 I43 133
124

1925 1926 1927

70 76 8i

1928
1929

79
86 75 62
55

88
98 84 70
63

80
86 63 45
32

98
89 83 77
82

158 I59 171 197 I63 151

140

I88

155

I64
170 157 I20
84

I6I

1930 1931
1932

I86 I72 148

I39

of 1913 =

* Notes and source: Walther Hoffmann, Das Wachstum der deutschen Wirtschaft (Berlin and Heidelberg, 1965), pp. 342, 343, 392, 393. All figures derive from a base
00oo.

t Lignite was used primarily for electric power production. It was a new and booming field closely linked to those whom it supplied. The most prominent lignite industrialist was the liberal Paul Silverberg. : Includes all those industries consuming raw iron or steel and producing finished products or machinery.

TABLE 2
EMPLOYMENT IN MAJOR INDUSTRIES AND NET VALUE OF PRODUCTION 1928* All mining
1925 1926 1927
1928

Raw metal production

550

Textile and clothingt

2000

Metalfinishing
2350

Chemical
380

750

700
715 687

413
490 510

1650
2150 2145

I860
2220 2300 2192

340
375 390

1929

1930 1931
1932

689 620 500

420

487 430 320

262

1990 1790 1465

1200

1935 1560
1228

41o 360 320

280

Net value of production

(in billions RM.) 4-2 4-5 figures are in thousands. 6-o 6-4 2.5

* Notes and sources: Hoffmann, Das Wachstum der deutschen Wirtschaft, pp. Gerhard Bry, Wages in Germany, 1871-1945 (Princeton, 1960), p. 27, has substantially higher employment figures for mining and chemicals, substantially lower ones for textiles and clothing. t Employment in the textile and clothing category is overestimated, because some workers are counted twice (once for each field), and work at home is included irregularly.
195, 198. Employment

GERMAN INDUSTRY DURING THE WEIMAR REPUBLIC

105

TABLE 3
HOURLY INCOME, ANNUAL EARNINGS AND THEIR INDEX VALUE IN SELECTED MAJOR INDUSTRIES*
1925 1926 1927 1928 1929 1930 1931 1932

Coal-mining Hourly (a)

Yearly (b)
Index(c)

73
1838
121

78
2025
132

87
2142
139

88
2265
148

89
2406 157

91
2252
149

83
2028
135

74
I690 115

Metal production Hourly

Yearly 2135 2197 2440 2556 2565 2574 2332 I95I

Index Textiles and clothing (d) Hourly

Yearly
Index I280 150

88
1345
156

92
1525
177

96
I6oo
187

97
1656
194

93
1525
178

8i
1329
154

1440
i68

Metal goods
Hourly
Yearly

71
1915

77
1873

80
2126

88
2290

94
2452

95
2520

90
2381

78
2065

Index

135

132 86 2167 164

150 92 2241 169

162

173

178 io8 2540 198

i68

146

Chemicals
Hourly Yearly Index 80 1921 147 06 00oo 2586 2428 185 197 104 2500 I90 87 2190 165

* Notes and sources: Hoffmann, Das Wachstum der deutschen Wirtschaft, pp. 461, 470-1; Bry, Wages in Germany, '87'1-945, pp. 393, 418-21, 473. Hourly income is given in pfennigs; annual earnings in RM. Their index value derives from a base of (a) Hourly figures for 1925-7 refer to hard-coal workers only; those for 1928-32 to all coal-miners. (b) Annual earnings refer to all workers. (c) The index value is based on the earnings of all workers and employers. (d) Wage rates were substantially higher in textiles than in clothing; the figures here are composite.
1913 = I00.

tional bloc. Table 2 indicates the relative economic importance of the major industries according to the size of the work-force and the net value of production. These five branches accounted for two-thirds of the net non-agriculturalincome. Table 3 together with Table 2 demonstrate the movement and burden of wages in several key industries. However, the burden of wages was not simply a function of their level and the number of employees; capital-intensive branches like chemicals and electronics could afford higher wages. Industries like textiles and clothing with low wages and a largely female work-force were increasingly atypical. German industrialists were fully aware of the differential impact of labour costs on their production and profits, as shown by the R.D.I.'s

io6

PAST AND PRESENT

NUMBER 88

analysis of taxation, receipts and wages for 1927. In general it argued there were no profits in production. Even in this very good year, 56 per cent of the value added went to wages, 15 per cent to salaries, 7 per cent to social insurance, o per cent to taxes, and only Io per cent "to the company itself".48 Mining, with the highest proportion of costs devoted to wages, salaries and social insurance, had a low 4 per cent rate and the iron and steel industry a mere 2.8 per cent, while textiles had a 0o per cent rate of profit owing to low wages. The electro-technical branch where wage costs played a minor role enjoyed a 7 per cent rate.49Industry to industry, labour costs varied dramatically. TABLE 4
EARNINGS AND PROFIT RATE I927* All mining Taxable earnings
Net earnings

Iron and steel 14

5

Textiles 132
75

All metal- Electro- Chemicals finishing technical 52

i6

151
65

32
17

31
17

Profitrate

4-3

2.8

io

4.6

6-2

6.3

* Note and source: Besteuerung, Ertrag und Arbeitslohn im Jahre I927 (Veriffentlichung des R.D.I., xlvii, Berlin, 1929), table io, p. 35. Figures for taxable and net earnings represent millions of RM.; the profit rate is given as a percentage.

Table 4 displays the earnings and profit rates of key branches for 1927 and verifies that the dynamic industries enjoyed better profit and net-to-gross earnings ratios.50 Table 5 compares the share of the labour component for several industries according to the "value of marketed goods (Umsatz)" and "value added (Wertsch6pfung)".51 The labour component in the value of marketed goods reveals the share of labour in determining the price of marketed goods (costs), while the labour component in the added value reveals the share of labour in transformingraw materials into marketedproducts (profits). Labour in Table 4 accounts for B per cent of the costs in an industry while creating D per cent of the profits. The "exploitation ratio" indicates how much an industry got in return for its wage inputs. In mining, for example, the share constituted by labour costs was 50 per cent, while labour contributed 83 per cent to profits. In chemicals, on the other hand, labour costs were an extremely low 15 per cent, so that labour's 68 per cent contribution to profits made workers in this
48Besteuerung, Ertrag und Arbeitslohn im Jahre I927 (Veriffentlichung des R.D.I., xlvii, Berlin, 1929), p. 15. 50Fairly complete figures demonstrating how much more profitable the dynamic industries were than the older sectors have been compiled by Maxine Sweezy, "German Corporate Profits, 1926-1938", Quart.Jl. Econ, liv (1940), esp. pp. 390-2. 51 "Value added" is equal to "value of marketed goods" minus "cost of materials"; "value added" is defined as "labour costs" plus "profits".
49 Ibid., pp. 31-3.

GERMAN INDUSTRY DURING THE WEIMAR REPUBLIC

IO7

branch much more worth their money. By and large, the less a labour force in any given industry was worth its money, the more opposed were its industrialists to organized labour and the Grand Coalition. The anomalies are generally explicable.52 TABLE 5
LABOUR'S SHARE OF TOTAL COSTS AND ITS CONTRIBUTION TO PROFITS IN KEY INDUSTRIES I927* All mining Costst A. Fixed costs B. Labour costs (workers only) C. Labour costs (all employees) Contributions to profits D. Labour (workers only) Iron and Textilest steel MetalElectro- Chemicals finishing technical machines 56
28

35
13

64
20

65
i8

56
21

74
9

26

22

36

31

I5

73

63

55

68

52

41

E. Labour (all employees) I 83 F. Capital 8-7

82 9-6

68
21

86 71I

77 13.9

68 19.9

"Exploitation" ratio I :i-7 B:D(orC:E)

1:3-2

1:3

I:2-4

1:2.5

1:4-5

* Notes and source: Adapted from Besteuerung, Ertrag und Arbeitslohn im Jahre 1927, tables 13-14, pp. 38, 41. Figures for costs and contributions to profits denote percentages. t Textiles only; the clothing industry is excluded. t Taxes, depreciation and debt retirement are omitted.

Table 6 lists the absolute and index figures for the value and volume of exports, and indicates their share of world trade. Exports alone would not dispose an industry towards co-operation with organized
52 Thus the hostility of steel industrialists towards organized labour was grounded in the low profit rate. Also the unionization of the industry had bred disproportionate animosities which were reinforced in the 192os by a strong communist presence. Further, as Table i indicates, the industry was relatively stagnant after 1925 and not very competitive internationally. Conversely the liberal politics of the metal-finishing and machine industries were undoubtedly furthered by their expansionist tendencies during this period and their extremely strong position in the world market. Between 1925 and 1930 they provided over 27 per cent of all of Germany's exports.

io8

PAST AND PRESENT

NUMBER 88

TABLE 6
EXPORTS OF SEVERAL KEY INDUSTRIES: VALUES, EXPORT PRICES, VOLUME AND "WORLD" SHARE*
1925 1926 1927 1928 1929 1930 1931 1932

Coal
Value Priceindex

Volume index 39 105 World share 1928 = I per cent Raw and semi iron and steel Value 457 Priceindex 127 Volume index 51 Textiles (a)
Value Priceindex Volume index 1150 195 57 1167 183
62

311 140

895 148

66o 155

523 137

74

66

590 138

56I 143

466
123

275
91

75

68

66

53

670
ii8

589
127

650
125

781
129

622
I30

531
123

284
112

8i

66

74

86

68

6i

36

World share 1928 = 22 per cent

1274 195 70

1338 196
72

1399 189 79

1249
190

73

1055 163 71

526 133
42

World share 1928 = 13 per cent

Metal goods (b)

Value Price index Volume index 2445 135 85 World share 1928 = 30 per cent 138 77 Value Priceindex
2261

2670 135 91

3146 140 107

3769 143
126

3645 139
129

1943 131
112

I835
124

74

Chemicals (c) Volume index 80 109 96 69 87 97 87 67 World share 1928 = 43 per cent * Notes and sources: Hoffmann, Das Wachstum der deutschen Wirtschaft, pp. 522, 534, 604-7; Ingvar Svennilson, Growth and Stagnation in the European Economy (Geneva, 1954), P. 187. All figures for value denote millions of RM.; export price and volume indices derive from a base of 1913 = Ioo; figures for "world" share denote percentages. "World" share here means the eight most industrialized countries of Europe plus the United States. Given the products being considered this definition should not introduce much of a discrepancy. (a) Figures for textiles include clothing. The export price index for clothing was some seventy or more points higher than that of cloth and fabric. In the 1920S Germany became a large importer of clothing. (b) Figures for metal goods include machines and vehicles. (c) Figures for chemicals include finished goods only.
953 133 1173 138 1277 143 1396 138 1460
129

1257
126

1036 115

730
105

labour, since the desire to remain competitive could have the opposite effect. But the Stresemann policy of reintegrating Germany internationally depended on S.P.D. support and thereby linked exporters and workers. Furthermore, for many export products, their "state of the art" quality compensated for higher prices.

GERMAN INDUSTRY DURING THE WEIMAR REPUBLIC

Io9

The importance of the export branches clearly grew throughout the

period. In
1925,

(RM.) worth of goods for export whereas in 1929, 4 I million workers produced 13 5 billion RM. worth of goods for export - over one-third of total production. For the period 1926-30 Germany was the only European nation with a favourable balance of trade. Once the Depression began, the export branches remainedmore viable than the domestic branches, and gained internationally. Germany moved from being the world's third-largest exporter in I929 to being the world's largest in 193I, surpassing both Britain and the United States.53 Heavy industry lacked the political strength that export industry derived from its superior economic position and its co-operation with the S.P.D. in trade, fiscal, reparations and even social policies. Not only did working-classgains limit heavy industry's profitability, but so also did Stresemann's acceptance of restrictions on armaments.54 The support of the even more depressedrural sector could not tip the balance in favour of heavy industry. Of all branches of heavy industry, mining probably suffered the earliest reversals. Its fortunes had actually reached a peak in 1926. In that year the mines had obtained some 88 per cent of the foreign loans made in Rhineland-Westphalia; by 1928 the mine-owners received only 22 per cent of a slightly larger gross, perhaps with good reason. Because of cheap, primarily Polish, competition the Ruhr mine-owners claimed to be losing nearly I-5 RM. per ton.55In this respect too, mine-owners felt a distinct kinship with organized agriculture. Together they bore the brunt of higher costs and, according to Arthur Mohrus of the Dresdner Bank, it was in effect they "who were paying off the Dawes Plan". Heavy industry was "slowly but surely going the way of agriculture" towards nearBecause the mining and steel industries belonged to several international cartels, tariffs and quotas were not as important to them as they were to agriculture.This difference limited their identity of inter53 Thus the value of finished goods exported quarterly dropped from 2-5 billion RM. in mid-1929 to 2 billion RM. at the end of 1931. For Britain, however, the drop was from 3 to 15 billion, and for the U.S.A. from 2-7 to 13 billion. See the Geschiftliche Mitteilungen fur die Mitglieder der R.D.I., xiii no. 28 (I9 Dec. 1931). In the meantime, production for the domestic market dropped 50 per cent between 1929 and 1932. 54 Paul Reusch to the Langnamverein, 1928: H.A., G.H.H., Nachlass ReuschLangnamverein, 400 1o 221/3. 55 They blamed this on high wages and overcapacity due to a shrunken domestic market. They claimed that the English working day was longer than, and social costs only half of, Germany's; real wages in England had declined by 14 per cent since 1913, but had risen in Germany by almost that amount: Die wirtschaftliche Lage des Ruhrbergbaues (Berlin, 1929), pp. 25-9. 56 Cited in B.A., Nachlass Silverberg, 362, p. 163, 3 Feb. 1929. Both suffered from a

2 7 million workers produced 9 -3 billion Reichsmarks

bankruptcy.56

debt estimated at over 50 per cent of capital value. See also B.A., Nachlass Hugenburg, 151, p. I85, where the same line is argued, only more vitriolically. The Langnamverein meetings of 5 May I928 reiterated the same themes.

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ests, just as the ascendancy of the export industry had limited the identity of interests between the two industrial fractions themselves. Instead heavy industry emphasized the losses it incurred through high wages, Sozialpolitik and taxes - policies resulting from the tacit coalition of the representativesof export and labour.7 Efforts to unify the two fractions of industry were never abandoned. Heavy industry in particularwas anxious to counteract its declining economic position by establishing mechanisms to bind the two segments of industry together, preferablyin a way that could reassertits own leadership. Such mechanisms were at once economic and political, private and public. They reflectedthe conflicts within industry and were attempts to overcome those conflicts. V
INTER-INDUSTRIAL CONFLICTS AND MECHANISMS: A.V.I., TARIFFS AND REPARATIONS

Here we shall examine three areas of conflict between the fractions of industry after 1928 and the mechanisms which were proposed or established to manage them. The first arose simply because processing branches were customers of the primary producers. The second area was international trade policy: by what means and to whose advantage would trade treaties be negotiated, and with what compensation?The third area involved reparations, especially the Young Plan, and pitted those favouring fulfilment against those who preferred a reckoning. The outcome of these conflicts dislocatedeconomic from political dominance within industry. This dislocation helped to bring a quick end to the coalition of labour and export, and foreclosed certain political options after 1930. The inability of either fraction of industry to win clear dominance lessened the political effectiveness of industry and forced it to accept a political solution in whose making it had little say.58 The first inter-industrial conflict we shall consider is the one over the mechanism used to regulate relations between buyers and producers of ferrous metals. This mechanism was the export rebate scheme known as the Iron ProcessingIndustries (Arbeitsgemeinschaft der Eisen VerarbeitendenIndustrie; A.V.I.) Agreement. In exchange for not posing a political challenge to the fixed and high price of domestic iron and steel, the producersof these raw materials refunded to the
57 Already in April 1927 Reusch had called for a reversal of these policies in a memorandum to Chancellor Marx: H.A., G.H.H., Nachlass Reusch-Politische und Wirt-

58The caveat here was what we might call industry's "lowest common denominator", that is, it would have little to say in the making of a solution to the crisis of the republic besides that any solution would have to restore profitability to capital and eliminate the political influence of the organized working class.

schaftliche Angelegenheiten,

400 10

293/13.

GERMAN INDUSTRY DURING THE WEIMAR REPUBLIC

III

processing and finishing industries the difference between the domestic and world prices for the portion of the iron and steel which these latter industries exported. While they worked, the A.V.I. agreements bound the export-oriented finishing industries both economically and politically to the heavy industry cartels. Though costly to the primary producers, these agreements were crucial in preventing a break between the two groups. Heavy industry obtained complete control over the domestic market, including pricing,59 while the finishing industries improved their international position. Freed from pressure from the "left", heavy industry was better able to deal with organized agriculture on its "right", and after 1929 all three could oppose the demands of labour.60 The first A.V.I. agreement was reached in 1925, and its impact was immediatelyfelt. Most representativesof the finishing industries in the D.D.P., the Zentrum and the D.V.P. deserted the S.P.D. and voted in favour of higher tariffs and against a Saar agreement with France.61 The finishing industries ceased opposing the I.R.G. and, after further assurances, even opposed government surveillance of cartel price policies. High domestic prices became acceptable since they subsidized exports. Once again a republican government failed to interpret the interests of the bourgeoisie as a whole against its parts,62since industrialists preferred to institutionalize their internecine conflicts within their own organizations. As long as the economy expanded, the A.V.I. mechanism worked. A number of processing industries therefore altered their initial positions and supported the Ruhr steel-producers' lock-out in October 1928. With their significant influence in the liberal press, they did considerable damage to the unions' efforts.63 With the onset of the Depression both partners attacked Sozialpolitik rather than reconsider their own price structures. Initially the A.V.I. exportershad an advantage. The lower world market prices fell, the larger their rebates; and, since the domestic market contracted while their exports actually grew, they became increasingly dependent on their rebates. Hence many were willing in I931 to join heavy in59In 1928, for example, the domestic price of iron was 50 to 70 per cent above the export price. 60 See Dirk Stegmann, "Deutsche Zoll und Handelspolitik, 1924-1929", in Mommsen, Petzina and Weisbrod (eds.), Industrielles System und politische Entwicklung in der WeimarerRepublik, p. 509. 61 Ulrich Nocken, "Inter-Industrial Conflicts and Alliances as Exemplified by the A.V.I. Agreement", in ibid., p. 697; cf. Maier, Recasting Bourgeois Europe, pp. 519, 535. 62 In January 1928 steel manufacturers and the A.V.I. industries reached an agreement on higher prices for raw iron and steel, together with more generous rebates. A month later the A.V.I. organizations abandoned economics minister Curtius (D.V.P.) in his call for policing the cartels and for the possible use of the anti-cartel laws. B.A., R 13I-V.D.E.S.I., 215, pp. 2, 3, I 14-70. 63Nocken, "Inter-Industrial Conflicts and Alliances", p. 699.

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dustry's opposition to Briining's call for price cuts. Because of the declining value and increasedcost of alliance with organized agriculture, the A.V.I. agreements were important to heavy industry. However, to retain A.V.I. support, heavy industry had to pay ever larger amounts. This, together with the temptation to expand into the profitablefinishing trades, led the steel-producersto demand revision of the accords.4 in the politics of many finishing industries. Now a different form of payment was in order. the R.D.I. was enhanced not only by their economic vitality but also by their support of the Grand Coalition. Because of this greater freedom of political movement, the leaders of the steel industry were forced to be more accommodating. Faced with an R.D.I. resolution critical of the steel industry Albert V6gler, a director of the United Steelworks and a bitter foe of Stresemann, repliedsaying that perhapsegos played too large a role in his industry, and that he and his colleagues "fully recognize the responsibility to further the exports of the processing industries through the A.V.I. agreements".65Paul Silverberg reiterated the point that the two fractions of industry were complementary and stressed the "absolute need for both groups to work together to save what [is] left of, and attempt to restore, the lost position of the entrepreneur". Nevertheless he chided the processing industries
for demonstrating a certain "konjunkturpolitischen Opportunismus In 1928 and I929 the strength of the processing industries within Between 1925 and 1930 heavy industry had bought a rightward drift

(opportunisticpolitical vacillation)" in their dickering with the political left and right.66The collapse of the Grand Coalition in March 1930 and the subsequent offensive against the S.P.D. made it crucial to attain capitalist unity. With each in pursuit of its own corporateinterests, conflict between the steel and processing industries grew as the economic situation deteriorated in 1930. Representatives of the two groups met in June under the auspices of the R.D.I. to try to find a compromise.The transcript of that meeting clearly reveals the balance of forces between the fractions and their political drift:
64 It was the smaller producers in the finishing industries who were most vulnerable to this onslaught and, united in the Esti-Bund, they complained that the A.V.I. associations and the government were affording them inadequate protection. Many of them were early supporters of the Nazis, who they believed would halt the take-over of their fields by the big producers and, instead, establish some kind of artisanal or petit bourgeois justice. Cf. ibid., pp. 701, 702. Poulantzas describes this notion of"justice" rather aptly as the petit bourgeois "wanting everyone to be just like himself": Poulantzas, Fascisme et dictateur, p. 228. 65 V6gler, in B.A., R I3I-V.D.E.S.I., 221, pp. 216, 226. The R.D.I.'s complaint against the steel-producers was lodged on 24 May 1929. On the conflict between Vogler and Stresemann, see Maier, Recasting Bourgeois Europe, p. 443. 66 On the need for unity, see B.A., Nachlass Silverberg, 27, p. 17; on opportunism, see ibid., p. 36. Kastl estimated that "90 per cent of the R.D.I.'s work relates primarily to small and medium industry": ibid., 702, p. 38.

GERMAN INDUSTRY DURING THE WEIMAR REPUBLIC

I I3

Jacob Reichert [steel industry]: Our cartels are in no way to blame; high iron prices are strictly a consequence of a rigid wage structure and high taxes and social costs. Both of our groups see the need for lowering these. Karl Lange [machine-building industry and A.V.I. negotiator]: We view the matter of wages exactly as you do, but our wages are rigid too. However, with us sales prices are determined by competition here and abroad. We have absolutely no monopolistic cartels. You can maintain constant prices - we cannot. Yet for iron we must pay 70 per cent above the world price. You must reduce your prices ... You say you are losing money, but G.H.H. [Gutehoffnungshiitte; Good Hope Mills] has just raised its dividends. To top it all, you charge your own processing subsidiaries less than you charge us. We can be loyal for just so long. Ludwig Kastl [R.D.I., mediating]: We are pushing for wage cuts but cannot do it too aggressively, arbitrarily or one-sidedly. Reichert: Wages are the main thing, and they must be cut, from the mine itself right through to the final processing mill. Kastl: Wages and prices must both drop immediately; given reparations we cannot afford to lose any share of the world market. If we want to convince the public that wages are too high and rigid, we must demonstrate that cartel policies are not. Ernst Poensgen [steel industry]: We must demonstrate the unity of all employers, and the government must saw off the branch on which it is sitting [the S.P.D.]. Kastl: We must give the government a chance to act courageously and cut costs and prices. Paul Peddinghaus [spokesmanfor small-wares industry]: The big steel concerns sell iron to their own processing subsidiaries cheaply, use their influence with local governments - even socialists - to obtain tax concessions and reduced utilities rates, and then underbid the small and medium producers. [Catcalls from the floor.] Lange: Reduce your prices now, and we might be able to work together on wage reductions. After all, we employ nearly 2 million people whereas you employ only about a tenth that many ... Your cartels make price rigidity possible, and to prove that wages, not cartels, are responsible for the crisis you must demonstrate flexibility.67

By mid- 193 I the iron- and steel-producershad lost all interest in the export market, which was more important than ever to the processing industries. The formercould simply no longer afford to pay the export rebates. In 1925, 70 per cent of German iron and steel was consumed domestically, and only 30 per cent ultimately exported; in 1928 the ratio was 50:50. By late 1931 it had reached 25:75. By that date many steel-producers were operating at 25 per cent of capacity, with the domestic market absorbingonly 22 per cent of what it had absorbedas recently as 1929. Given the choice of either abandoning their cartelpricing or continuing the full A.V.I. rebates, they vacillated. Heavy industry sought a way out of the 1925 agreements;its representatives suggested procedureswhich would have rendered most of the smaller consumers ineligible for refunds. Other proposalswould have reduced the size of rebates to the amount of the tariff, or to some proportionof that amount; still others would have provided the A.V.I. industries with a fixed quota of cheap iron to divide among themselves as they
67 B.A., R I3 I-V.D.E.S.I., 437, pp. 277-90. In the following months a newspaper and publicity war flared up between the two groups: ibid., pp. I70-80.

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saw fit.68Reichsbankpresident Luther and the chancellory were called upon to limit the access of export industriesto foreign currency, thereby forestalling their circumvention of the reduced rates of rebate.69 The A.V.I. controversybecame a major subjectof recriminationin the press, in parliament, and within the R.D.I. In March 1932 the R.D.I. was again called upon to mediate or arbitrate. For the R.D.I. the issue became a test of the internal political balance of its forces. Under the impact of the struggle against organized labour and the S.P.D., the R.D.I. had swung to the right in mid-i93 . The selection of "steel man" Krupp to replace the retiring "chemicalsman" Duisberg in September 1931 illustrated the renewed dominance of heavy industry. In May of that year Reusch had indicated to Krupp that the R.D.I. was ready for this change; no purge would be necessary.70Instead heavy industry would attempt to integrate the demands of the exporters into an overall programmewhich the former would oversee. Renewed leadership by representatives of those heavy industries oriented towards the domestic market could only facilitate the move to the formation of a new capitalist bloc. Trade policy was another area of inter-industrial conflict where developments and results both served to reflect and affect relations between the fractions of industry. It was also an area in which a multitude of organizations sought the support of political parties and the executive branch. During the period of co-operation between
export and labour from
I925

and economics minister Curtius pursued a trade-expansionpolicy by drawing up "most-favourednation" treaties, a policy which proved damaging to agriculture and divisive for industry. While the dynamic branches profited from these policies, heavy industry banked on the expansion of the internal market and on participationin international cartels. After 1925 it became increasingly apparentthat this was not a
good wager.71
68 At the end of 1931 the price of iron in Germany was 107 RM. per ton, while the world price was 62 RM. per ton. The prescribed rebate was thus 45 RM. per ton, whereas the tariff was a mere 16 RM. per ton. By March 1932 the world price had fallen to 50 RM. per ton. The various proposals, objections and supplementary documentation are in B.A., R I3I-V.D.E.S.I., 438. 69 This was the gist of Reichert's letter to Luther on behalf of the V.D.E.S.I., 12 Feb. 1932: H.A., G.H.H., Nachlass Reusch-Briefwechsel, 400 101 290/30b; see also Weisbrod, Schwerindustrie in der WeimarerRepublik, pp. 376-92. 70 "Kastl and the Berlin forces [liberals and exporters]have made many concessions, and we can work together again. Why don't you succeed Duisberg as chairman? You would have the support of the entire west". Reusch to Krupp, 5 May 193 : H.A., I 290/27. G.H.H., Nachlass Reusch, 400 71 Much of this is summarized in Stegmann, "Deutsche Zoll und Handelspolitik", esp. pp. 507-I i. In June 1925 the Employers' League had anticipated a "more profitable and substantially more productive rural sector ... which would lower costs and substantially expand the internal market for German industry". This hardly happened. See B.A., R I3I-V.D.E.S.I., 358, pp. 288, 289.

to I930, foreign minister Stresemann

GERMAN INDUSTRY DURING THE WEIMAR REPUBLIC

II5

The prototype for fractional conflict over trade policy was supplied by the protracted dispute over a treaty with Poland. After 1925 the mining and steel industries, especially those of Upper Silesia, joined with organized agriculture in opposing a trade treaty with "low-cost Poland". Heavy industry, the Agrarian League (Reichslandbund; R.L.B.) and later the Green Front together frustrated the efforts of Stresemann, Curtius and the export industries to conclude a broad agreement.72 Export industrialists attempted to portray trade with Poland as essentially involving the exchange of Polish raw materials for German finished goods. Karl Lange of the Association of MachineBuilders (Verein der Deutschen Maschinenbau Anstaltern; V.D.M.) argued that agricultural goods constituted only 13 per cent of all imports from Poland and that East Prussia's economic problems could not be blamed on Poland. "The nation must not", he argued in 1928, "accept the foolish arguments which the estate owners have fed the Langnamverein and which they now both use against Stresemann".73 Heavy industry's interest in opposing the treaty was increased by the prospect of winning greater support from agriculture in the fight against the Grand Coalition and its policies on wages, taxes and social issues. The opposition of heavy industry was not strong enough to prevent a treaty backed by the entire labour-exportcoalition, but the lines of a future autarky coalition began to emerge. Paul Reusch wrote to a "pro-industry" member of the Agrarian League's executive that:
Neither I nor any of the enterprises I represent has the slightest interest in a trade treaty with Poland. However, some eastern and central German industries badly need this agreement. Yet agriculture and especially the R.L.B. hotheads reject completely even the most minor concessions ... This is no way for us to improve our co-operation and join ranks in our current struggle [the lock-outs] against the entire direction of the government.74

Reusch's contact in Berlin, Martin Blank, was informed by the agrarians that if heavy industry expected "the shoulder-to-shouldersupport of agriculture in social, fiscal, reparations and political ques72 On the similarity of the opponents' arguments, see B.A., R I3 I-V.D.E.S.I., 217, pp. 81-92. On the eagerness of the D.I.H.T. for such an agreement, despite the evident deleterious effects on German agriculture and mining, see B.A., RI i-D.I.H.T., 124, pp. 5523, 4532. On the "pure export" position of the commercial interests attached to the D.D.P., see B.A., Nachlass Dietrich, 227, pp. 241-5. Heavy industry and the agrarians were strong enough to keep labour and the exporters from getting all that they desired in a Polish treaty, but not strong enough to prevent what was still a very substantial agreement. 73Lange's analysis of the composition of Polish trade and his attack on the estate owners are in B.A., Nachlass Silverberg, 362, pp. 77-83; for criticism of the Langnamverein and a defence of Stresemann, see ibid., pp. I 7, 152. 74Reusch to Thilo von Wilmowsky, 18 Nov. 1928: H.A., G.H.H., Nachlass ReuschBriefwechsel, 400 IOI 290/39. Arno Panzer's argument that agriculture was entirely on its own in Weimar Germany is nonsense: Arno Panzer, Das Ringen um die deutsche Agrarpolitik (Kiel, 1970), pp. I35-44.

PAST AND PRESENT

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tions", then it would have to reverse the "slap-in-the-face attitude" towards agriculture which some representativesof the dynamic and export industries had exhibited over the question of Poland.7 Reusch and others were not yet in a position to do that, although they did step up their efforts. Thus at the very time that the R.D.I. was formulating trialists raised the slogan "Protection of National Production".76 While a majority R.D.I. report provideddetails on state assistance to agriculture which it described as hapless and incompetent, and advocated more trade with Poland, heavy industry came to agriculture's
defence in the name of the "national economy".7 The series of trade treaties negotiated after 1925 resulted from the its Contribution to an Agrarian Programme -a programme which denounced - some Ruhr steel indusorganized agriculture roundly

co-operation of the dynamic fraction of industry with labour. The collapse of the Grand Coalition came as a result of domestic factors. The costs of that co-operation could no longer be borne. But with the Grand Coalition's fall and the slow-down of international trade, the two protectionist forces, agriculture and heavy industry, reasserted themselves. While their economic situation deteriorated,they began to stage a political come-back.At least trade treaties helped to keep heavy industry producing; but in a situation where high labour costs, social welfare payments, taxes and ballooningrebate requirementscombined to take the profit out of production, heavy industry lost interest in maintaining the volume of productionand, hence, in the trade treaties drive which began with great fervour in I925 and made Germany one of the most adamant supportersof free trade at the World Economics Conference in Geneva in 1927, split the two fractions of industry. By 1931 it had become an onerous burden for heavy industry. Exports enabled individual capitalists to make substantial profits and extend German influence, but the national necessity to export emerged from the assumption of reparations obligations under the of continuing to fulfil reparations was itself the subject of conflicts within industry, and the victory, however narrow and unenthusiastic, in October I929 and March 1930 of the advocates of fulfilment over those who predictedcatastrophemust be consideredthe last significant
Dawes Plan in 1925, modified by the Young Plan in 1929. The policy which kept the export branches profitable as well as busy. The export

75Von Wilmowsky to Kastl, 17 Nov. 1928, and Blank to Reusch, 21 Nov. 1928: H.A., G.H.H., Martin Blank-Berlinstelle der G.H.H., 400 IOI 202 4/4b. 76 The slogan was coined and its intent made clear by Max Schlenker of the NorthWest Steel group: H.A., G.H.H., Nachlass Reusch, 400 0oI 24/I. Contribution to an Agrarian Programme (Berlin, 1930), was produced for the R.D.I. by Karl Brandt, Constantin von Dietze and Friedrich Zorner. 77The Lange-Kastl memorandum of February 1931 was entitled "Agrarhilfe in der Nachkriegszeit". Reusch wondered if the exporters were "demanding the total destruction of the grain-producers":H.A., G.H.H., Nachlass Reusch, 400 I I 24/3a. The chief grain-producers were, of course, the great estate owners.

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victory of the Grand Coalition.78 Coming as it did at the end of the boom period, the majorityof industry'srepresentativeswere convinced that they needed the Young Plan. A proportion of this majority believed that acceptance of the plan would assist in limiting labour's demands and restoring fiscal responsibility. For the large minority at the centre of the "national opposition", the Young Plan signified national humiliation, long-termcapital impoverishmentand a cementing of the export-labourcoalition's strategy for social peace and international re-integration - all on unsatisfactory terms. Germany's business representatives at the negotiations were split. The banker Carl Melchior and the industrialists' agent Ludwig Kastl supported acceptance of the plan they had helped to negotiate. The banker Hjalmar Schacht and the industrialist Albert Vigler rejected their own work and left the negotiating team. The R.D.I. unofficially supported Kastl, Melchior and acceptance; the Langnamverein explicitly supportedV6gler, Schacht and rejection. Many in heavy industry were preparedto allow the R.D.I. to incur the blame and discredit for any consequences of the plan. Hence they neither militated strongly against it, nor acted in support of the Hitler-Hugenberg referendum against the plan and its advocates.79The R.D.I. at its convention in October I929 described the Young Plan as exceeding Germany's ability to pay, but accepted it as politically necessary. For heavy industry the political necessities which the plan dictated were of a different order - ending co-operation with organized labour and the S.P.D. Those supporting acceptance saw it as a necessary evil, to be accepted quickly and quietly;80indeed discussion at the R.D.I. convention was notable for its brevity. By contrast the meeting of the Lang78 See Helga Timm, Die deutsche Sozialpolitik und der Bruch der Grossen Koalition (Diisseldorf, I952), pp. 140-7, I66 ff. In June 1929 the R.D.I. decided not to take an official stand on the Young Plan. Divisions were very sharp, although much of the leadership and most of the membership favoured acceptance. In July the RhenishWestphalian industrialists (the Langnamverein), under the influence of Ruhr heavy industry, resolved to oppose the Young Plan. The "Green Front", purporting to represent the whole of agriculture but effectively dominated by the big agrarians of the R.L.B., did likewise. 79See the reports cited in the press: D.Z.A., R.L.B. Pressarchiv 148/9, pp. 39-43. Some on the extreme right of heavy industry (Thyssen, Kirdorf et al.) did support the Hitler-Hugenberg referendum: J8rg-Otto Spiller, "Reformismus nach rechts: Zur Politik des R.D.I.... am Beispiel der Reparationspolitik", in Mommsen, Petzina and Weisbrod (eds.), Industrielles System und politische Entwicklung in der Weimarer Republik, pp. 597, 598. In opposition to those who wanted "the catastrophe now", Kastl maintained that the next generation of Germans would not be paying reparations, even if reparations were formally supposed to continue for forty years. The enlarged flow of foreign credits and the commercialization of reparations and war debts promised by the Young Plan obviously appealed to exporters and prosperous industries but not to the men of the Ruhr. 80This was the Kastl-Duisberg-Silverberg position to which Reusch, Reichert and others took great exception; see Reusch to Schlenker, 29 June 1929: H.A., G.H.H., Nachlass Reusch-Schlenker, 400 o I 22I/9b. Reusch rejected Silverberg's suggestion that he remain calm and adopt a far-sighted perspective.

PAST AND PRESENT

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namverein was orchestrated to maximize the vociferousness of the plan's opponents and to dissociate them from any responsibilityfor its success. In addition to expressing support for V6gler's hard line, the Ruhr industrialists used the occasion to call for the "immediate reversal of the already impossibleburden placed on us by outrageously high wages and taxes". "Especially endangered", said Reusch, "are agriculture, heavy industry and the raw material industries".81Opposition to the Young Plan became intertwined with the overall critique of policies approved or tolerated by the group of dynamic industrialists. In one and the same paragraph Reusch could protest that:
Five generations of tribute and the sell-out of the German economy are unacceptable to me. The Young Plan will reduce the German Volk from a nation to a geographical expression ... Not counting debts and interest, the demands on the economy have increased by 8 billion RM. since 1925: 35 billion in taxes, Io billion in wages, 3 billion in salaries, and 1-4 billion in social welfare expenses. Were the unions' purchasing power [Kaufkraft] theories correct we should be in the midst of blooming prosperity; we are not! Precisely those industries which could least afford it have been hardest hit ... The execution of the Young Plan on top of all that is impossible; the enslavement of the German people is impossible.82

Kastl's view was diametrically opposed. For him world economic developments and Germany's ability to export were critical. Responding to the British reparations agent MacFadyan's suggestion that Germany should facilitate its debt payments by cutting public expenditure, Kastl wrote: "Social welfare costs are a premiumfor warding off Bolshevism. Were these not paid, then large sections of social democracy would wind up in the communist camp. By preventing this, Germany serves the interests of other Europeancountries as well".83Even once allowances are made for the rhetorical content of both statements, the severity of the split between the two fractions remains clear - as does the inadequacyof the mechanismsdesigned to overcome the
division.

VI
BRUNINGBLOCK POLITICAL RESPONSES TO THE CRISIS: BURGERBLOCK, AND "NATIONAL OPPOSITION"

The abandonment of the Grand Coalition by the bourgeois parties and its subsequent collapse in March I930 left the dominant social classes without a mass base to support their programme for over81

did grow after 1928, but Kastl wilfully exaggerated the communist "threat". More important than warding off Bolshevism, Sozialpolitik secured for the bourgeoisie a mass base and some measure of capitalist stability.

82 Reusch's keynote speech, cited in B.A., Z Sg. 126, 8 July 1929. 83 B.A., Nachlass Kastl, 9, pp. 87, 88, 22 Mar. I930. Support for the communists

Cited in the Deutsche Bergwerkszeitung, 9 July 1929.

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II9

coming the worsening economic situation.84Prominent industrialists strove to replace the late coalition with a bourgeois concentration (Biirgerblock), but they were unable to marshal the requisite forces. Besides their growing electoral weakness, several of the bourgeois parties refused to co-operate with each other. Thus some in the D.V.P. would under no circumstances unite with the D.D.P., while others would unite only with that party. The largest bourgeois party remained the German National People's Party (Deutschnationale Volkspartei; D.N.V.P.), but Hugenberg's leadership was unacceptable not only to other politicians but to the industrial proponents of unity as well. Although the efforts towards unification by the industrialists were multifaceted, they were confused and reflected the primary divisions within industry. For example, Eduard Hamm of the D.I.H.T. and August Weber of the textile industry financed the "Liberal Alliance" which tried to bring about a merger of the D.D.P. and the D.V.P., while Paul Reusch and Fritz Springorum attempted to unite the D.N.V.P. (without Hugenberg), the D.V.P., the Wirtschaftspartei (the Economic Party of the Middle Class) and other splinter parties, while excluding the D.D.P.85 Although all the proposals for unity involved the D.V.P., the party's chief parliamentary and ministerial figure (following Stresemann's death), Curtius, was utterly unacceptable to almost all of heavy industry, which inveighed against him constantly.86Heavy industry also found unacceptable the D.V.P. finance minister Paul Moldenhauer, formerly of I.G. Farben, because he "ignored the immediate needs of business in the name of some vague long-term goal".87Whereassome industrialistsviewed the Zentrum as a large and needed pillar of any Biirgerblock, others saw it as too "spoils-oriented" and a major impediment to that goal. Many in the D.V.P. were unprepared to forgive the Zentrum its Prussian BlackRed coalition, but also refused to subordinate themselves to the D.N.V.P. While the D.V.P. leadership bore real enmity towards the
84 The programme was outlined in two R.D.I. memoranda: Aufstieg oder Niedergang (Veroffentlichung des R.D.I., xlix, Berlin, 1929), and Wirtschafts-, Sozial-, Steuer- und Finanzpolitik (Veriffentlichung des R.D.I., 1, Berlin, 1930). These documents are written virtually in the tone of ultimatums and mark a clear break from the politics of co-operation with labour. 85 On the problems of unity, see Larry Jones, "The Dying Middle: The Fragmentation of the Bourgeois Parties", Central European Hist., v (1972), pp. 23-54; Larry Jones, "Sammlung oder Zersplitterung", Vierteljahrsheftefur Zeitgeschichte, xxv (1977), pp. 265-304; Abraham, Collapse of the WeimarRepublic, ch. 6. 86 Curtius was the prototype of the class collaborator. Already in 1928 Reusch had written that "Curtius does not have the least ability to represent even the most basic demands of die Wirtschaft... I have tried emphatically to make clear to the D.V.P. the desperate situation into which Curtius is increasingly dragging the party and the economy. He must be pushed out": H.A., G.H.H., Nachlass Reusch, 400 101 22I/9a. 87 The attack on Moldenhauer was particularly sharp after he succeeded Hilferding in 1930: H.A., G.H.H., Nachlass Reusch, 400 101 293/4a and /Ioa (my italics).

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D.D.P., Bosch and I.G. Farben continued to fund it.88 The various efforts to buy or blackmail the bourgeoisparties into combination continued throughout 1932, but they all failed. The goals of the fractions of industry were too divergent, selfish and narrowly defined to be amenable to formation into one unified political voice. Despite critical financial support, the heavy-handed involvement of industrialists did nothing to enhance the electoral appeal of the bourgeois parties. In the absence of any substantial degree of bourgeois unity, both fractions of industry were initially constrained to accept an S.P.D.tolerated Briining governmentas the successorto the Grand Coalition. Initially, too, Briining's programme promised a restoration of profitability through lower wages, reduced state expenditure, a further revision of reparations, and general austerity combined with an expansionist trade policy - all in the context of a strong government, semiindependent of parliament. Such a catch-all programmewas bound to follow a zigzag course, but one that could not meet the needs of both fractions of industry so long as it did not seek to eliminate all socialist influence. Short of such a commitment, the two competing fractions of industry (and the rural sector) would still thwart one other.89Dissatisfied with the tempo of belt-tightening by Briining and the labour minister Stegerwald in the fiscal, labour and social spheres, spokesmen for heavy industry began looking for alternatives as early as November 1930. Not only did Briining leave intact the structuralbasis of labour's economic gains, but he appeared intent on lowering basic industrial prices in orderto facilitate an export drive.90As noted above, Germany became the world's largest exporter in I930-I, and the exporting branches found the uses of general adversity quite sweet. Reusch's Berlin representative, Martin Blank, reported in December 930: "The time for so-called bourgeois concentration is past . . . We must maintain and build the unity of the Hitler-Hugenbergopposition and pick a leader from it. We must be much more cautious in supporting Briining and his half measures". For his part, however, Reusch preferredan attempt to "crystallizethe bourgeois right and the N.S.D.A.P. [NationalsozialistischeDeutsche Arbeiterpartei;Nazi Par88 On the D.V.P.'s hostility towards the Zentrum, see B.A., Nachlass Dingelday, 73; pp. 6, 44, 47, and ibid., 75, pp. 64 if.; on the animus towards the D.D.P., see ibid., 89. 89 In this sense Poulantzas is correct in asserting that "middle capital" (small, nonmonopoly sector industries in the processing and consumer branches) found it useful to continue collaborating with labour until the Nazis were able to neutralize the conflicts within capital generally: Poulantzas, Fascisme et dictateur, pp. 96-IOI. In different terms Silverberg understood this too as he observed support for Bruining diminishing within the ranks of heavy industry between mid-i930 and mid-i93I: B.A., Nachlass Silverberg, 274, pp. 85-I08. 90The strategy behind the export offensive was twofold: it would appear as if Germany was doing its best to meet its reparations obligations, while at the same time encouraging competing foreign manufacturers to urge their governments to relent on German payments.

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ty] into one". He and several colleagues were particularly impressed with Goebbels's statement that "wage cuts for the sake of reparations and the current system are unacceptable, but in a national system they would be acceptable". Reusch was further encouraged by Strasser's remark that "industry has exerted itself too much for exports; the economy must be switched over from the world to the domestic market. That would mean the reinvigoration of both agriculture and industry. That means a feasible form of autarky". It would be unwarranted to infer from this a switch to a strategy based on the Nazis. Reusch considered the report so controversial that he asked Blank to destroy all his copies.91 Nevertheless it does help to demonstrate that the split between the liberal (Briining) and national (Hitler-Hugenberg) fractions occurred almost as soon as the outlines of Briining's programme became clear. Briining earned the wrath of heavy industry and the support of the A.V.I. industries by decreeing cuts in prices as well as wages - under the threat of invoking the long-ignored cartel laws. This was a threat to the only advantage that heavy industry still enjoyed: guaranteed high prices. By I931 the United Steelworks was operating at about one-third of capacity, but the price of its iron had dropped only 8 per cent since I929. Other branches of heavy industry were in a similar position; mine-operators faced sharply reduced demand and labour militancy, and to these was added Briining's demand for price reductions.92The constellation of economic developments and political responses sharpenedthe split over Briining and further dislocated political from economic leadership in industry. From the point of view of heavy industry, Briining's programme was neither effective nor sufficient. Nevertheless through both legislation and emergency presidential decree he increased workers' contributions to the unemployment insurance fund while at the same time reducing the amount and duration of benefits. A cut in wages was decreed while tax on wages was increased, and the tax on capital lowered. General government spending was restricted and, after much debate, civil service salaries were reduced. But the attempt to force a reduction in cartel prices and the failure to eliminate the influence of the S.P.D. and the unions
91 Blank to Reusch, 29 Dec. I930, together with Reusch's comments on Goebbels and Strasser, and his instructions to Blank, 2 Jan. 193 i, are in H.A., G.H.H., Nachlass Reusch, 400 IOI 293/I I. It is not my intention here to detail the process by which industrialists developed their contacts with, and affinities for, the Nazis. 92 On steel, see Clemenz, Gesellschaftliche Ursprunge des Faschismus, p. I98. In 1932 the United Steelworks operated at a bare 20 per cent of capacity; the cement industry had already fallen to under 30 per cent by 1930. Between 1929 and 1931 the industrial price index in Britain fell 50 per cent further than it did in Germany. For a survey of production declines in other industries, see Wagenfiihr, "Die Industriewirtschaft: Entwicklungstendenzen der Industrieproduktion I860 bis 1932", pp. 56, 57. On the decline in mining, see Rudolf Regul, "Der Wettbewerbslage der Steinkohle", Vierteljahrsheftezur Konjunkturforschung, Sonderheft xxxiv (I933).

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limited Briining's acceptability to the national fraction of industry. Briining was weakened well before the conflict with Hindenburg and the estate owners which toppled him. The representatives of the more viable industries of the dynamic fraction, the A.V.I., the commercial and export groups, and some banks, together with those who considered the Zentrum a stable mass base, supported Briining and looked with favour on the presence of I.G. Farben executives at the head of the economics and finance ministries. Short-changed, the representativesof heavy industry rebelled.93 They discoved, paradoxically, that united they possessed a greater degree of political manoeuvrabilitythan the dynamic fraction, despite suffering from greater economic paralysis. They were able to use that flexibility to demand the political leadership of the whole of industry once the export economy had also collapsed at the end of 193 I. By that time it had become increasinglyless clear which camp was in the better position to set the tone and agenda for industry as a whole. Who would integrate whose demands into a programmeto be overseen by whom? It was, in part, the absence of a hegemonic fraction which drove German industry to foster or accept a Bonapartist solution to the political crisis and an imperialist solution to the economic crisis. The offensive of heavy industry gathered steam in early I93I. In January the Mining Association (Bergbauverein)threatened to withdraw from the R.D.I. because it was "taking only half measures" and had not succeededin convincing the government to cancel wage agreements. Four months later, when Duisberg and Kastl continued to support Briining, the Mining Association withdrew and began systematically to fund the Nazis and the Harzburg Front.94At the same time that Silverberg was attempting to involve industrialists directly in government posts, industrialists of the Ruhr informed Briining that they were "no longer prepared to tolerate government inaction... even if it means calling parliament back into session".95Their anxieties over the I o7-man Nazi delegation had apparentlyebbed. In a long letter to Briining in August, Reusch and other leadersof Ruhr industry complained that the basic problem of high costs, low receipts and no capital had not been resolvedor even eased. Reusch charged the chancellor with:
93 See Fricke (ed.), Die biirgerlichen Parteien in Deutschland, ii, pp. 605-9, for a chronology; cf. Weisbrod, Schwerindustrie in der Weimarer Republik, pp. 493-8; Dohn, Politik und Interesse, p. 896; Abraham, Collapse of the Weimar Republic, p. I66. 94H.A., G.H.H., Martin Blank, 400 1o 202 4/8a; Geschiftliche Mitteilungen fiir die Mitgleider der R.D.I., xiii no. 14 (26 June I93I), p. 0I5. The A.V.I. groups launched a counter-attack against the mining firms: Nocken, "Inter-Industrial Conflicts and Alliances", p. 703. 95Springorum and Blank to Reusch, 13 May 1931: H.A., G.H.H., Martin Blank, 400 IoI 202 4/8b.

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lacking the courage to convert his understanding of the situation into deeds and failing to proceed against the existing resistance [the S.P.D. and the unions] with the required aggressive single-mindedness . . . The political parties can no longer save the fatherland. Only men who go the way of their own awareness can do that.96

The primary object of their offensive remained organized labour and the political system which permitted it to retain significant political influence. But the representatives of heavy industry increasingly distinguished between themselves and the other camp, between themselves and those who would accept "hunger exports" as a national fate. At its meetings in June 193 the Langnamvereinbecame more explicit. Again it was Reusch who spoke:
Half-way measures just make things worse; the entrepreneur's hands are still tied. Western industry demands a long-range plan for a balanced budget, an end to capital-destroying laws and policies and the re-establishment of freedom of movement for the private sector ... Our own situation is worse than that of the others because of our cost structure and because the unions have been yielded to on every one of their demands by all the cabinets. Because of our warnings, we have been labelled "the reactionary band in Diisseldorf", but we were right.

To this Thyssen added:

I remarked last November [1930] that the applause of the R.D.I. for Briining was unwarranted. He has not substituted national supporters for supporters of class struggle, and the unions, through the labour ministry, still govern from behind the scenes . . . Many of the Berliners [the dynamic fraction] booed me then, but we of Rhineland-Westphalia are harder types and demand a national awakening.97

A quickening in the pace of the offensive was possible only if control of the R.D.I. could be wrested from the export liberals. They had been considerably weakened by the end of 193I, in part because of further declines in international trade and the collapse of several major banks that summer; and they were prepared for a compromise candidate to replace the retiring Duisberg. Without attacking the aged "welfare professor" directly, representatives of the national fraction attacked his policies by assailing the R.D.I.'s chief administrativeofficer, Kastl. Intimately involved in the export-labourcoalition and in acceptance of the Young Plan, he was now accused of "cowardicein the struggle with the unions".98That spring, heavy industry had settled upon Gustav Krupp as its candidate for the R.D.I. chairmanship, and on 25th September he assumed the post. His selection, together with certain centralizing changes in the organization of the R.D.I. senate, reflected the new balance between the fractions. In effect his election moved the R.D.I. to the right but also bridged the fractions. He was not the can97 Reusch and Thyssen at the Langnamverein meetings of 3 June I93I, cited in B.A., Z Sg. 126. 98 "Under your leadership industry has until now been too cowardly to take up the struggle with the unions ... The great sickness from which we suffer is largely due to the unions ... which have in fact governed from behind the scenes": Reusch to Kastl,
6 Sept. 1931: H.A., G.H.H., Nachlass Reusch, 400 IOI 2020/I
I.

96 H.A., G.H.H.,

Nachlass Reusch, 400 0II 221/5.

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didate of the outspoken philo-fascists; they had supported Vogler. Krupp's was a true vertical empire: based on mining and steel, it also produced locomotives and sewing-machines. Its primary market was domestic, but it had substantial export interests. Despite its size it was self-financed and beholden to no banks whatsoever. The family and firm enjoyed excellent ties with agriculturalorganizations, the foreign office and with the Reichswehr (army) as well.99The moderate interpretation of the change of leadershipwas providedby newspapersclose to heavy industry, which spoke of Krupp as "a bridge from heavy industry to the processing industries who [would] smooth out conflicts". An agricultural newspaper surmised that "industry is about to split into autarky and export camps ... The accession of Krupp has helped the domestic market strategy ... the processing industries are still hostile to us, but they may be on their way out of positions of power". For the Vorwdrts a different judgement was in order: "In place of chemical capital we now have heavy industry taking over. Krupp's leadershipmeans a stronger emphasis on class conflict directed against the working class".100 Immediately after the R.D.I. convention Briining shuffled his cabinet with a distinct move to the right - Curtius and Wirth were dismissed, but this did not mollify the growing industrial opposition. Duisberg, now retired, and Kastl both belonged to the shrinking ranks of those who continued to support Briining until his dismissal at the end of May 1932. The ambivalent attitude of many industrialists towards the Briining-orchestratedre-electioncampaign for Hindenburg was symptomatic of the internal division. A further indication of the near-stalemate was the absence of any new numbers of the R.D.I. "Publications" series between September 1931 and December 1932. But it was a stalemate that worked to the advantage of heavy industry. The national bloc derived support from Briining's "avoidance of the struggle against the masses" and from his failure to abolish the compulsory arbitrationof contract disputes. Unlike the S.P.D. before him, Briining did not possess a mass base sufficiently large to divide and conquer industry. Blank remarkedthat "The chancellor demonstrates a certain petulance towards big western industry and is always praisOkonomie und Klassenstruktur des deutschen Faschismus, p. 73; and on ties with the Reichswehr, see F. L. Carsten, The Reichswehr and Politics (Berkeley and Los Angeles, 1973), pp. 135-41. Krupp had supported the 1928 Ruhr lock-outs, but was among the most conciliatory of the steel captains. The particularly disappointed Vogler-Thyssen faction proceeded to invite Hitler to speak to several of the most important industrialists after Christmas. 100 The "moderate" interpretation was provided by the Deutsche Allgemeine Zeitung, and the rural interpretation by the Westfalische Bauernzeitung. The Vorwdrtsinterpretation is striking because it actually blames class conflict on capital! All three newspapers appeared on 25 Sept. 1931.
ii, p. 608. On the diversity of Krupp's interests and connections, see Sohn-Rethel,

99On Krupp v. V6gler, see Fricke (ed.), Die biirgerlichen Parteien in Deutschland,

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ing small, flexible entrepreneurs. Perhaps that is why the R.D.I. used to support him more than we did, but that does not work any more, except maybe on Kastl".101 At about the same time that Blank enrolled Reusch and several other Ruhr industrialists in the Stahlhelm (the paramilitary "Steel Helmets") Reusch authorized a purge of Briining supporters within the D.V.P. and ordered several newspapers he owned to cease attacking Hitler and the N.S.D.A.P. By January 1932 Briining was being described as one "who for years has been making deals with Marxism while treating the national Freedom Movement the same as the communists".102 Suddenly the N.S.D.A.P. was perceived as behaving "responsibly"and as a fit coalition partner for a right-dominatedZentrum. By April 1932 both camps within industry had abandonedBriining, as demonstrated by Warmbold's resignation as economics minister. By the time he and his reformingSiedlung (rural resettlement or homesteading) commissar Schlange-Sch6ningen ran into trouble with the estate owners over "agrarian Bolshevism", Briining had already been abandoned by the last of his supporters in industry. Von Papen's ascent to the chancellorship reflected the dominant position of domestic market oriented heavy industry in conjunction with the estate owners. His coup d'etat against the "red" Prussian government in July virtually eliminated the last vestige of S.P.D. power. Nevertheless his "New State" was without a mass base, and certainly without any base outside the countryside. There existed no combination of groupings which could provide him with a parliamentary majority, and his inability to integrate the Nazis as junior partners ensured that this would remain the case. His unambigious policy towards the unions and the S.P.D. (not to mention the K.P.D.) earned him the support of both organized agriculture and industry; and the "Christian, stdndish [estate-based], organic, corporatist, authoritarian and beyond-conflict"ideology he propagated also stood him in good stead.103 The initial line-up of support behind Papen could not last, however. Despite the self-proclaimedSystemwechsel (change in the political system) and the presence in the government of all three dominant social fractions, the interests of all three could not be harmonized. At the behest of organized agriculture, Papen imposed unilateral import quotas. Export industries respondedwith dire warnings that this would mean a loss of essential markets, higher costs and
101Blank to Reusch: H.A., G.H.H., Martin Blank, 400 IoI 202 4/9. 102 Memorandum written for Reusch, 6 Jan. 1932: H.A., G.H.H., Nachlass Reusch, 400 101 293/12. On Reusch's other undertakings, see B.A., Nachlass Dingelday, 75, pp. 30-40, 70 ff.; Weisbrod, Schwerindustrie in der WeimarerRepublik, pp. 467-74. 103 H. A. Winkler, "Unternehmerverbande zwischen Standeideologie und Nationalsozialismus", Vierteljahrshefte fur Zeitgeschichte, xvii (I969), pp. 34I-71. In the hands of the Nazis, but not of Papen, this ideology could link the elites to parts of the Mittelstand - as it used to do under the empire.

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slower recovery for all, and the total demise of certain industries. Krupp himself warned Papen that one-sided agrarian measures would only compound the economy's ills. It was an issue on which they could not compromise, and they withdrew their support. The question became how to incorporate the anti-democratic and anti-labour components of Papen's programme into a viable overall economic programme with a mass base to support it. The crushing defeat of all the bourgeois parties in the elections of July 1932 forced even the liberals to give up any final hopes of a bourgeois bloc.104The Nazi party was the only force which could provide that mass base while conceivably putting forward a programme acceptable to both camps within industry. During the last phase of the Papen government, industry was divided over whether to incorporate the left wing of the N.S.D.A.P. into a coalition with the Zentrum, or the Nazi mainstreaminto a coalition with the D.N.V.P. The dynamic and export industries tended to favour the former solution, heavy industry the latter; only a few (the Keppler circle) cared to have the Nazis govern on their own. It would take another few months and the Schleicher interlude to "tame" the Nazis and make them the acceptable lowest common denominator for Through the manipulationsof the military and Hindenburg'scamarilla, General von Schleicher was appointed chancellor at the beginning of December. The Schleicher government was made possible because the N.S.D.A.P. would not be split and because numerous industrialists were, like Hindenburg, as yet unpreparedto yield full power to Hitler. Schleicher's failures were a mirror image of Papen's: if Papen erred on the side of estate owners, deflation, domestic and heavy industry, autarky and the failure to seek a mass base, then Schleicher and his minister for "work-creation",Gunther Gereke, erredgrievously on the side of a minority of peasants, inflation, the export and processing industry, integration and too much haggling with the Nazi "left" and the unions.'06 Gereke's public-works programme was too much like
104 All the parties of the bourgeois right together obtained a mere Io i per cent of the vote; they were the weakest of any potential coalition and weaker than they had ever been before. For electoral data analysis, see Bernhard Vogel, Dieter Nohlen and R. 0. Schultze, Wahlen in Deutschland (Berlin and New York, 197 1); Alfred Milatz, Wdhler und Wahlen in der WeimarerRepublik (Bonn, 1966). 105 I am not dealing here with how individual industrialists or groups of industrialists were won over by the Nazis, nor with the overworked area of financial support provided to the Nazis by industrialists, bankers and barons. I am concerned with the structural question of what types of solution were acceptable to different fractions of industry, and why. The two sets of questions are, however, not irreconcilable; see Eberhard Czichon, Wer verhalf Hitler zur Macht? (Cologne, 1967), pp. 24-56; Stegmann, "Kapitalismus und Faschismus", esp. pp. 32-7, 44-53. For an opposing viewpoint, see Henry A. Turner, "Big Business and the Rise of Hitler", Amer. Hist. Rev., lxxv (1969), pp. 56-70. 106 Schleicher had a complete falling-out with the Reichslandbund, due in large part to his reversal of Papen's ultra-protectionism and his abolition of import quotas.

industry.105

(cont. onp. 127)

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that proposed by some in the General Federation of Unions (Allgemeine Deutscher Gewerkschaftsbund; A.D.G.B.), the WoytinskyTarnow-Baade programme, and was distinctly pro-labour and inflationary. Both fractions of industry were opposed to an inflation, frequently citing the horrorswhich the very idea of it evoked in the hearts of Mittelstand holders of savings accounts.107Schleicher's shift of policy back in favour of export industry came as a rude shock to those in heavy industry who had previously brought about a shift in their own favour. Thus Jacob Reichert, director of the V.D.E.S.I., was astonished that he and his colleagues no longer had direct access to either the chancellor or the economics minister; it was indicative that he had to "depend on hearing things via Hamm of the D.I.H.T. and Steel industrialists Lange of the Machine-Builders- of all people!".108 even feared the socialization of their bankrupt companies. Once again the dynamic fraction set the economic agenda: Otto Wolff of the Deutsche Bank and Hans Raumer of the electronics industry, Schmitz of I.G. Farben, Kastl, Hamm, Bosch and to a certain extent Silverberg. Conflicts between the two fractions, rather than their joint interest, were coming to the fore. The component of Schleicher's programme which was intended to capture a mass base was the same component which isolated his industrial backers from their colleagues. The spectre of state socialism and a possible re-parliamentarizationof political life, even if in military dress, finally tipped the scales in Hitler's favour. The re-entry of the unions into the corridorsof power, in the form of Strasser'sNazi "left" as well as the A.D.G.B., threatened what was the primary political accomplishmentof the previous year and a half: their exclusion. Most industrialists rejected Schleicher's Keynesian, public sector and consumption-oriented economic proposals and would have opposed him for that reason, together with the estate owners who feared resettlement of their latifundia. Schleicher had for months been negotiating with Strasser, with representatives of the A.D.G.B. and with whitecollar associations, and the prospect of a dirigiste social dictatorship supported by anti-capitalist masses was too much to bear. The Nazi electoral losses in November and their subsequent financial difficulties rendered more real the possibility of splitting the party. Most indus(note io6 cont.)

Schleicher threatened also to enlarge peasant settlement programmes at the expense of the estate owners. On Schleicher's dealings with the A.D.G.B. and the Nazi left, see Michael Schneider, Das Arbeitsbeschaffungsprogramm des A.D.G.B. (Bonn and Bad
Godesberg,
107

Reusch returned to this theme frequently, and also described inflation as a "French trick to save reparations". He also wrote to Luther that "the currency is the only healthy part of the economy left; we cannot heal the economy by making the currency sick". Unlike Vogler he was unimpressed by the results of the British devaluation: H.A., G.H.H., Nachlass Reusch, 400 101 290/30b. o18 Reichert to Kastl, 17 Jan. I933: B.A., R I3I-V.D.E.S.I., 54, p. 8.

1975), pp. I40-57,

198-202.

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trialists, however, preferredto make use of the chastening of the party and Strasser's suspension to bring Hitler to power. It was the political fear that Schleicher's programme inspired which was central and which finally led to the appointment of the Hitler-Papen-Hugenberg government. Papen's programme, this time with a mass base and a more nationalist tone, appearedto be the lowest common denominator for the three dominant social fractions: heavy industry, dynamic industry and the rural elite. The remaining question was how to reconcile the interests of an autarkic rural elite with the interests of non-competitive and overexpanded heavy industry, and both of those with export-oriented finishing industries. A programmefor cartelizing agriculturalproduction and guaranteeingprices without altering propertyrelations would satisfy the demands of the estate owners. A programme of holding down the costs of production while increasing public spending, especially on armaments, would go some way towards satisfying heavy industry. A vigorous programme of trade expansion, especially in central and south-eastern Europe - imperialism- could open avenues for export industry without setting it against either the rural elite or heavy industry. Residual notions of laissez-faire entrepreneurship would have to give way to state guidance, and years of ideological homage to the Mittelstand would be honoured, after some early confusion, mostly in the breach. And a republic which could only infrequently muster a majority in its favour, but which was nevertheless divisive and costly, would have to be abandoned. Initially, given an improvement in the international economic situation, "only" the peasantry, the working class and Germany's neighbours would have to pay.
Princeton University David Abraham