Carroll Quigley - Tragedy and Hope - A History of the World in Our Time

The danger to the profit system from the state has always existed because the state is not essentially organized on a profit basis. In Germany this danger from the state was averted by the industrialists taking over the state, not directly, but through an agent, the Nazi Party. Hitler indicated his willingness to act as such an agent in various ways: by reassurances, such as his Düsseldorf speech of 1932; by accepting, as a party leader and his chief economic adviser, a representative of heavy industry (Walter Funk) on the very day (December 31, 1931) on which that representative joined the party at the behest of the industrialists; by the purge of those who wanted the “second revolution” or a corporative or totalitarian state (June 30, 1934).

That the industrialists’ faith in Hitler on this account was not misplaced was soon demonstrated. As Gustav Krupp, the armaments manufacturer, writing to Hitler as the official representative of the Reich Association of German Industry, put it on April 25, 1933, “The turn of political events is in line with the wishes which I myself and the Board of Directors have cherished for a long time.” This was true. The “second revolution” was publicly rejected by Hitler as early as July 1933, and many of its supporters sent to concentration camps, a development which reached its climax in the “blood purge” a year later. The radical Otto Wagener was replaced as chief economic adviser to the Nazi Party by a manufacturer, Wilhelm Keppler. The efforts to coordinate industry were summarily stopped. Many of the economic activities which had come under state control were “reprivatized.” The United Steel Works, which the government had purchased from Ferdinand Flick in 1932, as well as three of the largest banks in Germany, which had been taken over during the crisis of 1931, were restored to private ownership at a loss to the government. Reinmetal-Borsig, one of the greatest corporations in heavy industry, was sold to the Hermann Göring Works. Many other important firms were sold to private investors. At the same time the property in industrial firms still held by the state was shifted from public control to joint public-private control by being subjected to a mixed board of directors. Finally, municipal enterprise was curtailed; its profits were taxed for the first time in 1935, and the law permitting municipal electric-power plants was revoked in the same year.

The danger from labor was not nearly so great as might seem at first glance. It was not labor itself which was dangerous, because labor itself did not come directly and immediately in conflict with the profit system; rather it was with labor getting the wrong ideas, especially Marxist ideas which did seek to put the laborer directly in conflict with the profit system and with private ownership. As a result, the Nazi system sought to control the ideas and the organization of labor, and was quite as eager to control his free time and leisure activities as it was to control his working arrangements. For this reason it was not sufficient merely to smash the existing labor organizations. This would have left labor free and uncontrolled and able to pick up any kind of ideas. Nazism, therefore, did not try to destroy these organizations but to take them over. All the old unions were dissolved into the German Labor Front. This gave an amorphous body of 25 million in which the individual was lost. This Labor Front was a party organization, and its finances were under control of the party treasurer, Franz X. Schwarz.

The Labor Front soon lost all of its economic activities, chiefly to the Ministry of Economics. An elaborate facade of fraudulent organizations which either never existed or never functioned was built up about the Labor Front. They included national and regional chambers of labor and a Federal Labor and Economic Council. In fact, the Labor Front had no economic or political functions and had nothing to do with wages or labor conditions. Its chief functions were (1) to propagandize; (2) to absorb the workers’ leisure time, especially by the “Strength Through Joy” organization; (3) to tax workers for the party’s profit; (4) to provide jobs for reliable party members within the Labor Front itself; (5) to disrupt working-class solidarity.

This facade was painted with an elaborate ideology based on the idea that the factory or enterprise was a community in which leader and followers cooperated. The Charter of Labor of January 20, 1934, which established this, said, “The leader of the plant decides against the followers in all matters pertaining to the plant in so far as they are regulated by statute.” A pretense was made that these regulations merely applied the “leadership principle” to enterprise. It did no such thing. Under the “leadership principle” the leader was appointed from above. In business life the existing owner or manager became, ipso facto, leader. Under this system there were no collective agreements, no way in which any group defended the worker in the face of the great power of the employer. One of the chief instruments of duress was the “workbook” carried by the worker, which had to be signed by the employer on entering or leaving any job. If the employer refused to sign, the worker could get no other job.

Wage scales and conditions of labor, previously established by collective agreements, were made by a state employee, the labor trustee, created May 19, 1933. Under this control there was a steady downward reduction of working conditions, the chief change being from a period wage to a piecework payment. All overtime, holiday, night, and Sunday rates were abolished. The labor trustee was ordered to set maximum wage rates in June 1938, and a rigid ceiling was set in October 1939.

In return for this exploitation of labor, enforced by the terroristic activity of the “party cell’ in each plant, the worker received certain compensations of which the chief was the fact that he was no longer threatened with the danger of mass unemployment. Employment figures for Germany were 17.8 million persons in 1929, only 12.7 million in 1932, and 20 million by 1939. This increased economic activity went to non-consumers’ goods rather than consumers’ goods, as can be seen from the following indices of production:

1928

1929

1932

1938

PRODUCTION

100

100.9

58.7

124.7

a. Capital goods

100

103.2

45.7

!35.9

b. Consumers’ goods

100

98.5

78.1

107.8

Business hates competition. Such competition might appear in various forms: (a) prices; (b) for raw materials; (c) for markets; (d) potential competition (creation of new enterprises in the same activity); (e) for labor. All these make planning difficult, and jeopardize profits. Businessmen prefer to get together with competitors so that they can cooperate to exploit consumers to the benefit of profits instead of competing with each other to the injury of profits. In Germany this was done by three kinds of arrangements: (1) cartels (Kartelle), (2) trade associations (Fachverbdnde), and (3) employers’ associations (Spitzen-verbande). The cartels regulated prices, production, and markets. The trade associations were political groups organized as chambers of commerce or agriculture. The employers’ associations sought to control labor.

All these existed long before Hitler came to power, an event that had relatively little influence on the cartels, but considerable influence on the other two. The economic power of cartels, left in the hands of businessmen, was greatly extended; the employers’ associations were coordinated, subjected to party control through the establishment of the “leadership principle,” and merged into the Labor Front, but had little to do, as all relations with labor (wages, hours, working conditions) were controlled by the state (through the Ministry of Economics and the labor trustee) and enforced by the party. The trade associations were also coordinated and subject to the “leadership principle,” being organized into an elaborate hierarchy of chambers of economics, commerce, and industry, whose leaders were ultimately named by the Ministry of Economics.