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

All this was to the taste of businessmen. While they, in theory, lost control of the three types of organizations, in fact they got what they wanted in all three. We have shown that the employers’ associations were coordinated. Yet employers got the labor, wage, and working conditions they wanted, and abolished labor unions and collective bargaining, which had been their chief ambition in this field. In the second field (trade associations) activities were largely reduced to social and propaganda actions, but the leaders, even under the “leadership principle,” continued to be prominent businessmen. Of 173 leaders throughout Germany, 9 were civil servants, only 21 were party members, 108 were businessmen, and the status of the rest is unknown. Of 17 leaders in provincial economic chambers, all were businessmen, of whom 14 were party members. In the third field, the activities of cartels were so extended that almost all forms of market competition were ended, and these activities were controlled by the biggest enterprises. The Nazis permitted the cartels to destroy all competition by forcing all business into cartels and giving these into the control of the biggest businessmen. At the same time it did all it could to benefit big business, to force mergers, and to destroy smaller businesses. A few examples of this process will suffice.

A law of July 15, 1933, gave the minister of economics the right to make certain cartels compulsory, to regulate capacity of enterprises, and prohibit the creation of new enterprises. Hundreds of decrees were issued under this law. On the same day, the cartel statute of 1923 which prevented cartels from using boycotts against nonmembers was amended to permit this practice. As a result, cartels were able to prohibit new retail outlets, and frequently refused to supply wholesalers or retailers unless they did more than a minimum volume of business or had more than a minimum amount of capital. These actions were taken, for example, by the radio and the cigarette cartels.

Cartels were controlled by big business, since voting power within the cartel was based on output or number of employees. Concentration of enterprise was increased by various expedients, such as granting public contracts only to large enterprises or by “Aryanization” (which forced Jews to sell out to established firms). As a result, on May 7, 1938, the Ministry of Economics reported that 90,448 out of 600,000 one-man firms had been closed in two years. The Corporation Law of 1937 facilitated mergers, refused to permit new corporations of below 500,000 marks capital, ordered all new shares to be issued at a par value of at least 1,000 marks, and ordered the dissolution of all corporations of less than 100,000 marks capital. By this last provision 20 percent of all corporations with 0.3 percent of all corporate capital were condemned. At the same time shareowners lost most of their rights against the board of directors, and on the board the power of the chairman was greatly extended. As an example of a change, the board could refuse information to stockholders on flimsy excuses.

The control of raw materials, which was lacking under the Weimar Republic, was entrusted to the functional trade associations. After August 18, 1939, priority numbers, based on the decisions of the trade associations, were issued by the Reichstellen (subordinate offices of the Ministry of Economics). In some critical cases subordinate offices of the Reichstellen were set up as public offices to allot raw materials, but in each case these were only existing business organizations with a new name. In some cases, such as coal and paper, they were nothing but the existing cartels.

In this way competition of the old kind was largely eliminated, and that, not by the state but by industrial self-regulation, and not at the expense of profits, but to the benefit of profits, especially of those enterprises which had supported the Nazis—large units in heavy industry.

The threat to industry from depression was eliminated. This can be seen from the following figures:

1929

1932

1938

National income, 1925-1934 prices billions

RM

70.0

52.0

84.0

Per capita incomes, 1925-1934 prices

RM

1,089.0

998.0

1,226.0

Percentage of national incomes:

to industry

to workers

to others

21.0%

68.8%

10.2%

17.4%

77.6%

5.0%

26.6%

63.1%

10.3%

Number of corporate bankruptcies

116

134

7

Profit ratios of corporations

(heavy industry)

4.06%

-6.94%

6.44%

In the period after 1933 the threat to industry from forms of production based on a nonprofit organization of business largely vanished. Such threats could come from government ownership, from cooperatives, or from syndicalism. The last was destroyed by the destruction of the labor unions. The cooperatives were coordinated by being subjected “irrevocably and unconditionally to the command and administrative authority of the leader of the German Labor Front, Dr. Robert Ley,” on May 13, 1933. The threat from public ownership was eliminated under Hitler, as we have indicated.

It would seem, from these facts, that industry was riding the crest of the wave under Nazism. This is quite true. But industry had to share this crest with the party and the army. Of these three it was unquestionably in at least second place, a higher rank than it had ever achieved in any earlier period of German history. Party participation in business activities was not the threat to industry which it might appear to be at first glance. These participations were the efforts of the party to secure an independent economic foundation, and were largely built up of unprofitable activities, or non-Aryan, non-German, or labor-union activities, and were not constructed at the expense of “legitimate” German industry. The Hermann Göring Works arose from government efforts to utilize low-grade iron ore in Brunswick. To this was added various other enterprises: those already in government control (which were thus shifted from a socialized to a profit-seeking basis), those taken from newly annexed areas, and those confiscated from Thyssen when he became a traitor. The Gustloff Works, in complete party control, were made up of non-Aryan properties. The Labor Front, with sixty-five corporations in 1938, was an improvement over the previous situation, since all, except the People’s Auto enterprise (Volkswagen), were taken from labor unions. Other party activities were in publishing, a field of little concern to big industry, and largely non-Aryan previously.

The advent of war was contrary to the desires and probably to the interests of industry. Industry wanted to prepare for war, since it was profitable, but they did not like war, since profits, in wartime, took a secondary role to victory. The advent of war was the result of the fact that industry was not ruling Germany directly, but was ruling through an agent. It was not government of, by, and for industry, but government of and by the party and for industry. The interests and desires of these two were not identical. The party was largely paranoid, racist, violently nationalistic, and really believed its own propaganda about Germany’s imperial mission through “blood and soil.” Industry wanted rearmaments and an aggressive foreign policy to support these, not in order to carry out a paranoid policy but because this was the only kind of program they could see which would combine full employment of labor and equipment with profits. In the period 1936-1939 the policies of “rearmament for war” and “rearmament for profits” ran parallel courses. From 1939 on they ran parallel only because the two groups shared the booty of conquered areas and were divergent because of the danger of defeat. This danger was regarded as a necessary risk in pursuit of world conquest by the party; it was regarded as an unnecessary risk in pursuit of profits by industry.