abrahams weimar industry

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The Past and Present Society

Conflicts within German Industry and the Collapse of the Weimar RepublicAuthor(s): David AbrahamSource: Past & Present, No. 88 (Aug., 1980), pp. 88-128Published by: Oxford University Press on behalf of The Past and Present Society

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CONFLICTS WITHIN GERMAN INDUSTRYAND THE COLLAPSE OF THEWEIMAR REPUBLIC*THE ROLEOF GERMAN NDUSTRY,INDUSTRIALLEADERSAND INDUSTRIALorganizationshas long beenone of the most vehementlydebated issuesin the study of the collapseof the Weimarrepublicand the transferofpower to the Nazis. All too often the underlying purposeof researchhas been to indict or exonerate die Wirtschaft (Germany'seconomicleadership),which has been treated as a fairlyhomogeneousforce.1Bycontrast this articlewill examinethe conflictswithin Germanindustryitself and demonstratehow they contributedto the terminal crisis ofthe republic.Strugglesoccurred between different branchesor "frac-tions" of industry and among both organized and defacto groups ofindustrialists. The nature of these struggles was both economic andpolitical, structural and contingent, and any account of them musttherefore also be structural as well as narrative. It must analyse thecharacter of production in different sectors of industry and explainhow different industrialists acted. However, neither the manner inwhich the industrial sectorformulatedits prioritiesnor the methodsbywhich the industrialistsorganized,or failed to organize, themselves toaffect the post-I928 politicalcrisiscan be fully understoodbyfocusingexclusively on developmentswithin industry itself. Particularly afterthe onset of the Depression,the relationshipof industryboth with theagriculturalsector and with the organizedworkingclass was essentialin determiningthe changingbalance of forceswithin industry.Never-theless the inability of several Weimargovernmentsto co-ordinatetheinterests of the dominantclasses and to put forward a consistent eco-nomic programmewas largely due to structural conflicts within theindustrialsectoritself. Different industrialfactionspreferreddifferentcoalitions, depending on the nature of their own production, capitalcompositionand internationalstanding.Economic,political andideo-

* This essay is based on chapter 3 of my book, The Collapse of the WeimarRepub-lic: Political Economy and Political Crisis (Princeton, I980). I would like to thankDerek Linton for his assistance in preparing this version.1The literature on this topic is immense and continues to accumulate even after fivedecades. The issues play a role in social conflict in West Germany, in the discoursebetween East and WestGermany, in the ideological self-legitimation of East Germany,and in almost all theories of fascism, class conflict and capitalist development. Recentresearch has been summarized by two scholars of very different convictions: DirkStegmann, "Kapitalismus und Faschismus, I929-1934: Thesen und Materialen", inH. G. Backhaus (ed.), Gesellschaft: Beitrdge zur Marxschen Theorie, vi (Frankfurt,1976), pp. 14-75; Henry A. Turner, Faschismus undKapitalismus (G6ttingen, 1972).


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GERMAN INDUSTRY DURING THE WEIMAR REPUBLIClogical cleavages divided German industry into two fairly distinctcamps, one "liberal"and the other "national".As we shall see, in a periodof economic recoveryand expansionthe"dynamic" and export branches of industry tended to favour coali-tions with organized labour whereas the older, heavy and domestic-oriented branches tended to opt for conservative coalitions with therural sector.2But this division was never absolute.Alongsidethe prob-lem of organizing the interests of the dominant classes, there alwaysremained a second problem:the means by which the interests of thesubordinate classes were to be incorporated, moulded or repressed.3Solutions to this question could easily exacerbate tensions within anybloc of dominant classes and result in the formation of parliamentaryand social coalitionswith subordinateclasses, which would benefit onefraction of industry at the direct expense of the other. Many indust-rialists were willing to accommodate the interests of the organizedworkingclass, in so far as they could affordto, but the increasingcost-liness of worker demands set limits to the fratricidal potential ofWeimarindustrialists.Although they could not agreeon a programmefor incorporating the interests of one or more of the subordinateclasses, after I930-I Germany's industrialists could agree on a pro-gramme for repressingthose interests. However, even the repressiveprogramme agreed on reflected the conflicts within the industrialsector. Some of those conflicts dated back to the empireand continuedto be salient up to the moment of Hitler's elevation to the chancellor-ship at the end of January 1933.

THE IMPERIAL INHERITANCEConcentration and cartelization had been a tendency in Germanindustry almost from its inception,4and each major turning-point inthe empire's economic and social development accelerated this ten-

2 For an analysis of coalition- and bloc-building in WeimarGermany, see my "Stateand Classes in Weimar Germany", Politics and Society, vii (1977), pp. 229-66, andalso 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 theinterests 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 Man-chester School date back before List to the beginning of industrialization in Prussiaand have long been the subject of considerableanalysis. See, for example, Joseph Clap-ham, The Economic Development of France and Germany, 181-I914, 4th edn.(Cambridge, 1936); Thorstein Veblen, Imperial Germany and the Industrial Revolu-tion (New York, 1939 edn.); W. O. Henderson, The State and the Industrial Revolu-tion in Prussia (Liverpool, I958). On the differential stigmata of early versus lateindustrialization, see Alexander Gerschenkron,Economic Backwardness in HistoricalPerspective (Cambridge, Mass., 1962), pp. 5-30.

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dency. Producersof coke, pig-iron, steel sheeting and potash formedthe first cartels, but by the turn of the century the new electronics,chemical and machine industrieshad surpassedthe older industriesin"self-organization". Such self-organization ranged from completecentralized control of production quotas, marketing allocations andthe supplyof raw materials,to loosercombinesthat simplyfixedpricesor distributed market shares. Nor did German industries hesitate toenter international cartels, such as the International Rail-Makers'Associationfounded in 1883.The shape of what was soon to become the monopolysector of Ger-man industrychanged early and rapidly. For example, between I882and I895 the number of industrial units employing over a thousandworkers doubled from 127 to 255, with 500,000 adults employedthere.5 These large-scale hierarchically organized firms required awhole new categoryof salariedemployees (Angestellten),whose emer-gence drastically altered the composition and political behaviour ofboth the lower middleclass (Mittelstand)and the workingclass. Sincethe newer industries were more capital-intensive they needed morefinance, which increased the role of the majorbanks.6 As the propor-tion of fixedcapital increased,productionfactors becamemore rigid.In order to offset this trend, the larger industries institutionalizedscientificand technologicalresearchby the establishmentof corporatelaboratories,7and the results of this researchspurredthe entire econ-omy. Next to the organization of the market (through cartels andfinance) to relieve the pressure of competition faced by individualcapitalists, there began the institutionalization of technological pro-gress to counter the crises faced by the economy as a whole. Moreoverthe state increasingly sought to create the necessary conditions forbusiness stability by reducing pressurefrom social, political and eco-nomic tensions.85The figures are cited by Hans-Ulrich Wehler, "Der Aufstieg des OrganisierterKapitalismus 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 (theBessemer, Siemens-Martin and Thomas-Gilchrist processes) to realize how quickly aproducer could have his facility become obsolete if he had inadequate investmentfunds. On the role of the banks, see Richard Tilly, "German Banks and GermanIndustry", Jl. Econ. Hist., xxxvi (1976), pp. 180-8. Banking and science overlappednicely in the case of Siemens; see Jiirgen Kocka, Unternehmersverwaltung undAngestelltenschaft am Beispiel Siemens, 1847-I914 (Stuttgart, 1969). The Siemensenterprise and the Deutsche Bank were intimately related.7Carl 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 I900that theories of "scientific management" were developed. Marx had already had morethan an inkling of this double effect of fixed capital and science: see Karl Marx,Grundrisse der Kritik derpolitischen Okonomie (Berlin, 1953 edn.), p. 592.8 The last of these three stages in the historical developmentof capitalism remains amatter of current contention; see Claus Offe, Strukturprobleme des kapitalistischenStaates (Frankfurt, 1972), pp. 2 I-5.

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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICOne step in the development of this form of organized capitalismwas the founding of a variety of industrial associations national,

regional and sectoral - three of the most powerful of which wereformed between 1872 and I876.9 From the outset they greatly influ-enced state policy, as is indicated by the central part they played inGermany'smove to protectionismin 1879. Their leaders were drawnfrom the majorindustries and cartels, and their weight in the politicalparties and state apparatus permanentlyaltered the political decision-making process.10The Wilhelmine state provided a meeting-groundfor industrialists and the large estate owners, and mediated numerousconflicts between the two sectors, the one rising, the other declining.Imperialismwas the one form of state action undertakenprimarilyforthe benefit of industry, being both a form of trade treaty negotiationand a means of securingmass popularsupport.Although organized heavy industry increasingly dominated theeconomy, a very substantial sector of small firms remained, mostlyengaged in light industry. The number of these small firms and thevalue of their productive capacity should not be underestimated,yettheir survival dependedto a large extent on their ability to find allieswithin the monopolysector. The small craftindustriesof the south andsouth-west forged new links with the electronics,machine and chemi-cal industriesof Berlin and the Rhineland. This amalgamof the oldercraft industries with the newer dynamic sectors was based on theircommon anti-protectionist,export orientation, which placed them inopposition to much of heavy industry and agriculture. Furthermorethe wage demands of labour were of secondary importance to bothgroups. Many light industriesemployed only a few, very skilled handswhich made them vulnerable to the demands of their employees.For the technologicallymore advancedindustries,labour contributedless of what the industrialistscalled "added value".11Parallelingthis9 In I 872 the Association for the Furtherance of the Joint Economic Interests of theRhineland and Westphalia (or the Long Name Association, Langnamverein, forshort); 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 fromthe Z.D.I. formed the Union of Industrialists (B.D.I.); it represented primarily theexport-oriented light and processing industries, although it was led by representativesof the rapidly expanding chemical industry. More on this alliance below. The progres-sive 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 hisPolitische 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, becameknown as the "welfare professor"because of his insistence that employerswere best offtraining and paying their employees well and involving them in the operations of theplant. See the testimonial by Hans-Joachim Flechtner, CarlDuisberg: VomChemikerzum Wirtschaftsfiihrer (Diisseldorf, 1959), pp. 233-43.

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was a less hostile stance towardsthe Social Democratic Party (Sozial-demokratischePartei Deutschlands; S.P.D.) which even allowed foroccasionalco-operation,as in the successfulanti-protectionistallianceof I890 and the unsuccessful one of I902.12 The price-fixing andquota-allocationprogrammesof their suppliers n heavy industryhurtmany of the smallerprocessing, finishing and consumergoods indus-tries. Moreoveras the CentralLeagueof German Industrialists(Zent-ralverband deutscherIndustrieller;Z.D.I.) increasinglyexpressedtheviews of the largermonopoliesand cartels, the smallerindustrieswerestifled and their interests unrepresented.13Because of growing dissatisfaction with the policies of the Z.D.I.,the representativesof both the older craft industries and the newerdynamicindustries secededin I895 to form the Union of Industrialists(Bund der Industriellen;B.D.I.). Although representativesof the newdynamic sector constituted a minority in the B.D.I., they suppliedmany of those leaders14(the most prominent being Gustav Strese-mann) who were to assumepositionsof importancein the alliance be-tween export industry and the socialists during the Weimarrepublic.The B.D.I. stood for an aggressive and expansionist export policylargely directedat the most developedmarkets. It rejectedthe protec-tionism of the conservative agrariansand considered the Z.D.I.'s re-pressive approach towards labour a fetter on economic expansion.Along with commercialgroupslike the Hansa Bund, the B.D.I. was in-volved in a persistent but primarilydefensive struggle to counter thealliance between agrarianinterests and heavy industry."1In certainrespectsthis dynamic,free-trade,export-oriented ractionof industrywas more imperialistthan the majorityof the conservativeagrarians; although unlike that of the latter, their imperialism alsoincluded a social componentcalculated to augment the legitimacy ofthe social order. This became apparent in the course of the debateswhich took place at the turn of the centuryover naval construction,in

12 In the elections of 1890 an S.P.D.-Progressive coalition defeated the Conserva-tive-National Liberal alliance of agrarians and heavy industry. This victory was re-versed in I902 but made good again in I9I2. See Carl Schorske, German SocialDemocracy, I90o-1917 (Cambridge, Mass., 1955), pp. 225 ff.; Arthur Rosenberg,Imperial Germany (Boston, Mass., 1964 edn.), pp. 40 ff., 56 ff. In some areas, likeBaden, the coalition was not just electoral but almost permanent.13See Helga Nussbaum, Unternehmergegen Monopole (Berlin, 1966), pp. 36 ff.14Details on the formation and composition of the B.D.I. and its relationship to theZ.D.I. are in Dirk Stegmann, Die Erben Bismarcks (Cologne, 1970), pp. 176 ff., 236ff., 328 ff. Four years earlierthe chemical industry had led the dissidents in the forma-tion of an association for trade treaties. A more recent work on the B.D.I. is HansPeter Ullmann, Der Bund der Industriellen: Organisation, Einfluss und Politik kleinund mittelbetrieblicher im deutschen Kaiserreich, I895-I914 (Gittingen, 1976).15On the evolution of policy within the B.D.I. and related trade and commercialorganizations, see Dieter Fricke (ed.), Die buzrgerlichenParteien in Deutschland, 2vols. (Berlin and Leipzig, 1968-7I), i, pp. 117-26. On the Hansa Bund, see SiegfriedMielke, Der Hansa Bund, I909-I914 (G6ttingen, 1976).

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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICthe context of which Max Weber and Friedrich Naumann sought tolink imperialism to social reform and political democratization.16However, this programmedid not becomethe platformof the whole ofGerman industry because, as usual, the mildest threat from the leftdrove industry to the right. After briefly flirting with the B.D.I. inI905, the Z.D.I. ultimately rejected marriage, and in 1913 returnedwith its old agrarian partner to form the Cartel of the ProductiveStrata (Kartel der schaffende Stande). This, in turn, made industry'spursuit of imperialismall the more difficult, since it was compelledtoaddthe demandsof a backwardrural elite to a programmewhich couldnot appeal to a poorly integrated and largely socialist working class.Submerging their differencesin a minimal programmeacceptabletoboth was the best the two fractions of industrycould achieve.

IITHE AFTERMATH OF REVOLUTIONAND INFLATION

With the defeat of Germanimperialismand the onset of social revo-lution, the differencesbetween the two industrial fractions paled intoinsignificance. In February I9I9 the Z.D.I. and the B.D.I. joined toform the National League of Industry(Reichsverbandder DeutschenIndustrie;R.D.I.). Partly becauseof fear of socialist policies, the earlyleadership was centralized in a sixteen-man presidiumdominated bythe representativesof heavy industry.The firstchairmanwas a Kruppdirector, Kurt Sorge, who, along with most of his colleagues, did notpretendto accept the republic.In orderto maximize its political influ-ence the R.D.I. organized on both a trade and regional basis. Themethod of representationfavoured the largestproducers,with a thou-sand trade organizations gathered into twenty-seven trade groups.The republicanminority from the chemical, electronics and machineindustrieswas virtuallyexcluded from power.17For the industrialists,internal reconstruction and reconsolidationwere of primary import-ance; inter-class co-operation and market expansion would have to

16 Naumann demanded a democratic basis in domestic affairs and an imperialisticbasis in foreign policy. For Weber, Germany's economic development demandedimperialist expansion. The "political education of the nation" could not proceed,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 redspecter"! All this is incisively presented by Eckart Kehr, Battleship Building andPartyPolitics (Chicago, 1975), pp. 454, 460. For more on Weber's path to social imperial-ism, 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 inGermany: Reformist Synthesis or Reactionary Sleight of Hand?", in Joachim Radkau(ed.), Imperialismus im 20 Jahrhundert: Gedenkschriftfiir George W. F. Hallgarten(Munich, 1976).17 On the balance of forces at this early stage, see Friedrich Zunkel, "Die Gewich-tung der Industriegruppen bei der Etablierung des Reichsverbandes der DeutschenIndustrie", in Hans Mommsen, Dietmar Petzina and Bernd Weisbrod (eds.), Indus-trielles System und politische Entwicklung in der WeimarerRepublik (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 in-dustry and the anti-cartel laws of 1919-23 proved to be dead letters,18fear of social revolution and counter-revolutionary strategy preoccu-pied the industrial leaders at least until the end of 1923. Inflation, thestruggle for control of the Ruhr, the terms of the Versailles treaty, fearof S.P.D.-sponsored socialization, and communist insurrection allaffected the character of inter-industrial relations.But there were several ways to defeat the working class and bring itinto a "constructive" relationship with the recaptured state and thenational economy. (Most industrialists eschewed overt counter-revolu-tion; few supported the right-wing Kapp Putsch.)19 One way was forindustry to avoid too direct a presence within the political parties,while assisting those whose programmes were both acceptable to themand competitive. Thus the Siemens group and some textile concernsfinanced the German Democratic Party (Deutsche DemokratischePartei; D.D.P.), hoping that it might become a bourgeois reform partythat could sap the strength of the S.P.D.; other industrialists andbankers backed the German People's Party (Deutsche Volkspartei;D.V.P.) for the same reasons.20 In 1919 the R.D.I. recognized the ex-clusive bargaining rights of the unions and accepted the eight-hourday, the joint working committees (Arbeitsgemeinschaften) and fac-tory committees. Although industry soon used reparations payments,the Ruhr crisis and inflation to withdraw these concessions, the im-mediate effect of such difficulties was to neutralize the power of theunions and to increase the republican legitimacy of organized indus-try. With the formation of bourgeois cabinets after I920 some indus-trialists even offered the republic their expertise through ministerialservice. By 1923 industry had been so successful in recapturing theinitiative that Robert Bosch and Hermann Cohen could even suggestthat industry should fund the revisionist S.P.D. journal SozialistischeMonatshefte in order to guide it in the proper direction.21 However, amajority within the R.D.I. opposed organizational intervention in thes1Cf. Gerald Feldman, "Wirtschafts-und sozialpolitische Probleme der Demobil-machung", 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 AlbertVbgler,Hugo Stinnes, Emil Kirdorf and some others in the steel industry supportedKapp, thechemical industry supported the general strike against the putsch and chose to payworkers for the strikedays. See Gerald Feldman, "Big Business and the Kapp Putsch",Central European Hist., iv (197 1), pp. 99-130.20 Lothar Albertin, "Faktoren eines Arrangements zwischen industriellem undpolitischen Systems in der WeimarerRepublik", 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, forexample, dismissed it brusquely as foolhardy. Bosch to Reusch, 4 Nov. i923, andreply: Historisches ArchivderGutehoffnungshiitte (hereafterH.A., G.H.H.), NachlassReusch, 400 Io 290/43.



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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICelectoral process, preferringinstead to aggregate the demands of in-dustry and then present them to the differentbranches of the state asdemands "of the economy".22By such means did the bourgeoispartiesat this time enjoy an autonomy which they would later lose.Inflationbegan during the war and continued to worsen after 918.It contributed to a massivedisplacementin the national wealth, a pro-cess which reached its peak during the Frenchoccupationof the Ruhrin I923. Ruhr industrialists discovered that there was a time and aplace for patriotism;others could be made to pay the price both forresistance and its abandonment. First the inflation was used to stimu-late economicactivitywhile keepingdownthe realvalue of reparationspayments, and then during the ensuing stabilization the costs of resis-tance and compliancewere transferred to other social classes.23Apartfrom the new breed of overnight empire-buildersand speculators,those who benefited from this situation were those in control of themeans of production and those who could sell products or sharesabroad. Major industries were relieved of their debts - therebyfreeing themselvesto some degreefromtheir dependenceon the banks-while the workingclass was relievedboth of its real wages and theeight-hourday, and the petty bourgeoisieof its bonds and savings. Bymid-I923 real wages were down to almost half theirpre-warand I92Ilevels, and this despitefull employment.Moreoverindustryincreasedits influence in the state at the expenseof the organizedworkingclass.Industrialists bought out a great many newspapersto mould publicopinion and financedright-wing paramilitaryformations,while unionfunds were quickly depleted.For most of the Mittelstand the inflationpermanently delegitimized the republic while increasing the diffusedresentment towards supposed speculators and representativesof in-ternational finance. For years afterwards Mittelstand parties werecreated 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 anotherindicator of the existence of "state monopoly capitalism"; see Fricke (ed.), Die burger-lichen Parteien in Deutschland, ii, p. 584. For the "incapacitated pluralism" schoolthis was another step towards "corporatism";see Charles Maier, Recasting BourgeoisEurope (Princeton, 1974), chs. 6, 8. Later, industry did seek to penetrate and evenunite several parties.23 In 1921 the index of industrial output in Germanywas 77 (derived from a base of1913 = ioo), whereas in France it was 58, in England 61, in Belgium 55, and even inthe U.S.A. only 86. The decline in German production in 1923 was a direct result ofthe occupation of the Ruhr, and recovery was very quick. The allies restoredcontrol ofRuhr industry to its owners in exchange for their providingthe allies with a proportionof their output. The Germangovernment would then reimbursethe industrialists, whocould now afford to be generous. On this settlement, the M.I.C.U.M. Accords, seeMaier, 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 ofsociety that has ever been effected in time of peace": C. Bresciani-Turroni, TheEconomics of Inflation (London, 1937), p. 318. Revaluation after I924 was usually ata rate of about 5 per cent of nominal value.

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Followingthe stabilizationof the currencylate in I 923, a numberofconflicting developmentswere set in motion. At first unemploymentgrew and the eight-hour day was virtually eliminated, but overall de-mand for consumer goods increased while demand in the productionsector declined.Exportsfell, while importsrose. Withinindustryhori-zontal integration replaced vertical integration as the luxuriantgrowth of the inflationperiodwas prunedor "rationalized". This pro-cess began cautiously but was in full swing by I926. The post- 924rationalization was characterizedbytechnicalprogress,new plant andenlargedstock, but even more by an infatuation with "Fordism"andan intensification of production designed to raise productivity andprofitability. Outlay on public worksalso spiralledupwards, especiallyfor infrastructure. Both of these developments depended heavily onAmerican loans, and both showed quick results. Between I924 andI927 industrial productivity climbed by almost 40 per cent. In 1926the government reported the following percentages of "syndicaliza-tion" in sample industries:mining 98 percent; dyes 96 per cent; elec-tro-technical 87 per cent; shipping 8I per cent; and banking 74 percent. Rationalization, which emphasized cartelized ownership andmanagement,fixedcapital and science, and co-ordination betweenin-dustry and state, swept through all the larger industries.25Like concentration and cartelization, rationalization was anothermeans by which to protect producers from competition and over-production.The powerof the state backedup the agreementsbetweenprivate producers.Althoughall cartelagreementswere legal contracts,the I926 International Iron Community (InternationaleRohstahlge-meinschaft;I.R.G.) wasthe clearest case of the underwritingof privateaccords by the state. Producers in several countries negotiated anagreementon production,marketingand pricingwhich the respectivegovernments underwrote as a virtual treaty.26Although German in-dustrialists later became dissatisfiedwith their allocated quotas, theywere initially pleasedfor three reasons:first, the agreements broughthigh prices, order and stability to west Europeanferrousproduction;secondly,the state had allowed them to determine"national interests"in a vital area;thirdly,Germanproducerswerevirtuallyfree to chargetheir customers in the light and processing industries whatever theywished, since the latter had little recourse to imports. Events in thephase of rationalization providemuch evidencefor any theory of cor-poratism, neo-feudalism or state-monopoly capitalism. Whichever25 These figures, from the state statistical office, are cited in Manfred Clemenz,Gesellschaftliche Ursprunge des Faschismus (Frankfurt, 1972), p. 197. Some unitstotally dominated entire industries: United Steelworks, organized in 1926, employed200,000 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, RecastingBourgeois Europe, pp. 540-5.

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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICtheory one prefers, the dominant features of this phase remain thetremendousdisciplineand organizationwithin Germanindustry, andthe interweavingof industrywith the state.27The rationalization movement increasedindustry's political activ-ism for yet another reason. The recoverywhich the movement fosteredwas fragile. Expandedcapacity and the predominanceof fixedcapitalleft little flexibility in the event of an economic downturn. Given therelativestagnationof the entire westerneconomyduringthe inter-waryears28 omeway had to be found to keepthe factoriesbusy. Thereforeindustry needed to attend both to economic policy and to its politicalprerequisites. In the steel industry, for example, any utilization-of-capacityrate below 67 percent was unprofitable.At the heightof pros-perity from 1927 to 1929 the rate was justover 80 percent, and whenit droppedto below 40 percent by mid-i 93 I, all that the steel industrycould do to retrench was to cut wages.29Although the margins werenot so narrow in other industries, rationalization contributed to theprecariousnessof the post- 925 recovery. Production exceeded 19 3levels during only three years, 1927-30, and the differential effects ofthe periodof prosperitywere crucial in determiningthe political acti-vity and coalitional preferencesof the two industrial fractions.

By I930 the politicalcrisiswas full-blown,but its outcome was sub-stantially affectedby the politicsof industry,which in turn werelarge-ly conditioned by the economics of the precedingyears. An examina-tion will be made belowof the economic andpoliticalconflicts betweenthe two fractions of industryafter I925 andduringthe political crisis;the subject will be seen in terms of the function of differences in thedesiderata and viability of production. Before comparingthem inter-nally, however,we shall scan the politicsof the two fractions and theirorganizations during the periodof stability. During the "good years"there were major shifts in the balance of forces within industry. In27See Robert Brady, The Rationalization Movement in German Industry (Berke-ley, 1933), pp. 363 ff., appendixC. Brady refersto German industry as a "state withinthe state and a state among the states" and maintains that "there is scarcely an aspectof the normal functions of the state ... which these economic entities [the cartels] donot possess to some degree, or have not arrogatedin some wise to themselves": ibid., p.368. Whether or not their voice was overwhelming in the councils of state, they hadcertainly changed the political process.28 This thesis is convincingly demonstrated in Dietmar Petzina and WernerAbelshauser, "Zum Problem der relativen Stagnation der deutschen Wirtschaft in denzwanziger Jahren", in Mommsen, Petzina and Weisbrod (eds.), Industrielles Systemund politische Entwicklung in der Weimarer Republik, pp. 57-76. For the entirewestern economy, see Ingvar Svennilson, Growth and Stagnation in the EuropeanEconomy (Geneva, 954), esp. pp. 4 -58, and appendix. The nature of the periodwasalready analysed, despite the intervening prosperity, by Rolf Wagenf'hr, "Die Indus-triewirtschaft: 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 deut-schen Faschismus (Frankfurt, 1973), p. 49. Sohn-Rethel analyses the dilemma ofrationalization and the consequent rigidity of a higher organic composition of capital.

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I925 the two industrialfractions were in rough political equilibrium.Between I920 and I925 the "right wing" of heavy industry had suc-cessfully reversed the majorworking-class gains of the revolutionaryperiod and had expelledthe S.P.D. from the government.The repub-lic was made acceptable. After I925 the dynamic "liberal" fractionseemed to gain the upper hand. But different groups continued toadvance differentpolitical programmes,and these were rooted in dif-ferent coalitions and bases of mass support.

IIIINDUSTRIAL POLITICS IN THE PERIOD OF STABILITYWith the acceptanceof the Dawes Plan in i924, the beginnings ofeconomic recovery, and the formation of a purely bourgeois govern-ment, industrialforces were in a position to create a political base fortheir social dominance. This became evident when Stresemann at-

temptedto enlist the parliamentarysupportof the S.P.D., even at therisk of losing the right wing of his own D.V.P. Stresemann led theapproachto organizedlabour as foreign minister;the chancellorshipitself revolved between the D.V.P. and the Catholic Centre Party(Zentrumspartei,or Zentrum).This parliamentaryovertureto labouralso found its counterpart n the industrialorganizationsand reflectedthe ascent of the dynamic and export groups. Thus in January 1925Carl Duisberg, the "welfare professor", late of the Chemical Indus-tries Association (Verbandder chemischenIndustrien),was chosen ashead of the R.D.I. overtwoconsiderablymore conservativecandidatesrepresentingolder heavy industry.30Ludwig Kastl, who had been anactive proponent of a fulfilment policy towards reparations and astrategy to reintegrateGermanyinto the world economy, became itsbusiness chairman.31 His two assistants were Hermann Biicher ofGeneral Electric (AllgemeineElektrizitats Gesellschaft;A.E.G.) andJacob Herle, a leader of the old B.D.I.; both were known for theirmoderatelyprogressivesocialviews.The I925 elections and committeeappointments were virtually a clean sweep for the dynamic exportfraction. The new leadershipbrought a more conciliatory tone and

30Duisberg defeated Albert Vogler, a steel industrialist and Stresemann's arch-enemy, and Ernst von Borsig of the reactionary Employers'League. Numerous indus-trialists let it be known that Duisberg was the only candidate acceptable to the exportand processing industries- which might otherwise secede from the R.D.I. Speakingonbehalf of heavy industry Paul Reusch recognized that "leadership of the R.D.I. willnow pass to someone who thinks about social and commercial matters differently fromus in Ruhr heavy industry". Reusch to Von Wilmowsky,23 Dec. I924: H.A., G.H.H.,Nachlass Reusch, 400o 290/39. See Abraham, Collapse of the WeimarRepublic,pp. 133-6.31 Before the war Kastl had been an active social imperialist propagandizing forGerman expansion in Africa while supportingprogressivereform of the Prussian fran-chise.

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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICagenda to policy debates. Accompanyingthis new orientation was adifferent posture towards labour and its place in the state. Re-estab-lishing Germany's economic potential and international stature re-quired a national consensuswhich could be based on the reintegrationof a chastened but still strong S.P.D. A class compromisebloc thusreplaced the anti-socialist bloc.32The dynamic export fraction couldnow abandon other economically powerfulclasses in favourof fruitfulco-operationwith parts of the organizedworking class.This collaborationwas now feasible because the essential interestsof industry were no longer threatened. The counter-revolution of19 19-23 had guaranteed to industry that it would continue "to exer-cise the decisive function in the decisive nucleus of economic acti-vity";33with such a guaranteea popularclass state was possible.Oncethe revolutionary mpulseof the workingclass hadbeendefeated,someof its interests could be incorporatedand moulded by the ascendantdynamicindustrial fraction. Thus in 1925 Hermann Biicher calledfor"labour and social peace". He suggested binding compulsoryarbitra-tion of wage disputes and recommendedthe former socialist labourminister Rudolf Wisselas chief arbitrator.34Duisbergwent so far as toprofess his loyalty to the Weimar constitution and democracy,and hecalled for the abandonmentof pre-warattitudes towards the unions,even acknowledgingthe justice and frequent practicalityof the eight-hour day. Such proposals issued from a position of strength. The adhoc institutions of the revolutionaryperiodwhich brieflyoperatedasinstitutionsof working-classpower(the jointworkingcommittees,fac-tory councils and Reichs Economic Council) had either been dismant-led, penetratedor recapturedby industry.Policies on foreign, nationaland social affairs could now be forged into a coherent whole. Just asacceptance of the Dawes Plan was meant to bind Germany's foreigncreditors to its economic fate, social policy was intended to draw theworking class by way of the right wing of the S.P.D. into a nationalendeavourwith reconsolidatedcapitalism.In both areas it was a ques-tion of costs -costs which the dynamic industries were willing andable to pay, especially once the elections of I924 had produced largegains for the right. Inevitably this two-prongedstrategy widened thecleavages within industry.Acceptanceof the Dawes Plan precipitateda minor secession from the R.D.I., while within it the new policy ofsocial peace and classco-operationprovokeda realstruggle- becauseof both its costs and its political implications.The election results of 1924 and the formation of an all-bourgeoisgovernmentmade "Entrepreneursand the State" and "Industryand32See Abraham, "State and Classes in Weimar Germany", pp. 242-5 , and BerndWeisbrod,Schwerindustrie in der WeimarerRepublic (Wuppertal, 1978), pp. 217-26,for two different assessments of the new situation.33Gramsci, Selections from the Prison Notebooks, p. 161.34Fricke (ed.), Die biirgerlichen Parteien in Deutschland, ii, p. 594.

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Parliament"central topics during the meetingsof the R.D.I. in 1925.The direct, parliamentaryinfluenceof industryexpanded:numerousindustrialistsbelongedto the victoriousparties,andsome even becamemembers of parliament and of the executive.3 The meetings of theR.D.I. in I926 sought to cometo gripswith the openingto the S.P.D.,and thereforethey highlightedthe splitswithin industry.The outcomeof the politicalclassstrugglesof the previoussix yearscontributed to achange in the structure andprogrammeof both industryand the work-ing class. In the case of the S.P.D. this change manifesteditself in theshift from social to production politics, in the theory of "organizedcapital" and its implicationsfor a neutralstate, and in a hardeningat-titudetowardsthe Communists(KommunistischeParteiDeutschland;K.P.D.). In the case of industry, Paul Silverberg's keynote addressatthe meetingsof the R.D.I. in September 1926 outlined the new line ofthe dynamic fraction: social peace and compromise with labourthrough acceptanceof the republic, and an export offensive throughtrade treaties negotiatedlargely at the expenseof both agricultureandthe backwardsectors of German industry. Not only could Germanynot be governed against the S.P.D., it could not be governedwithoutthe S.P.D. Now that the socialists had abandoned the "politics offorce, the politicsof the street"and had responsiblyaccepted"thepoli-tics of facts rather than of doctrine", that party should be welcomedinto government.Forthe sake of the nation a "socialpartnership"wasneeded.36 Kastl elaborated Silverberg's position. What Germanyrequired,he argued,was an exportoffensive based on "qualityproduc-tion and expandedtrade and consumption".This was the theme of theR.D.I. convention in I927 during which delegates acceptedsweepinglegislation on social issues and labour, as well as increased state andpublic expenditure.

35 This relationship has been most closely exploredfor the D.V.P.; see Lothar D6hn,Politik und Interesse: Die Interessenstruktur derDeutschen VolksPartei (Meisenheimam Glan, I970), esp. pp. 9I-I 3, and the charts on pp. 401-2I. The D.V.P. perhapsprovides the best ground for a discussion of the links between representatives and therepresented; and the later collapse of the party was indicative of the limited autonomyof the party leadership, especially after Stresemann's death in 1929. For examples ofthe ties between industry and other bourgeois parties, from the D.D.P. through theZentrum to the D.N.V.P., see Fricke (ed.), Die buirgerlichenParteien 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 industryand commerce. Duisberg argued that industry ought to use parliament, rather thansimply rejecting it as many in heavy industry were wont to do. He especially valuedclose relations with parliamentarycommittees and established a standing committee ofthe R.D.I. members of the Reichstag.36 Silverberg's speech, "Der deutsche Industrieunternehmer in der Nachkriegs-zeit", is reprinted in Reden und Schriften von Paul Silverberg, ed. Franz Mariaux(Cologne, 1952), pp. 46-69. Silverberg entertained the interesting theory that theS.P.D. and the A.D.G.B. had always been responsible, except for the few months afterNovember 1918 when they picked up an irregularmembershipand were drivenby it toan uncharacteristic radicalism.

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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICSilverberg's speech immediately provoked heated responses fromheavy industry and agriculture.Spokesmenfor heavy industry found

no solace in a programmewhich endangeredboth their profitabilityand their pivotal position in politics. The stage was set for conflictsbetween the two fractions which would last until the end of the repub-lic. Representatives of heavy industry opposed Stresemann in theReichstag and Silverbergin the R.D.I. In the formerthey worked forthe unity of all partiesto the right of the D.D.P., and in the latter theypleaded for a domestic market and an anti-socialist strategy. Theywanted a coalition of the right and, unlike the leaders of the capital-intensive and export industries, they were not prepared to compro-mise.37 Paul Reusch told the Langnamvereinconvention in October1926 that only a marketand coalition strategybased on the "produc-tive strata", especially agricultural, and on the home market couldrevive German prosperity and provide industry with tolerable eco-nomic policies.38Whereas the R.D.I. strategyimplieda parliamentaryGrandCoalitionof D.V.P. throughS.P.D., the heavy industrystrategyimplied an industrial-agriculturalbiirgerliche Sammlung coalition(bourgeoisconcentration).Neither fraction could achieve its goals onits own terms. For a parliamentary Sammlung bloc there was insuf-ficient unity; and when the Grand Coalition was finally formed inI928 it came as a result of the S.P.D.'s electoralvictory.Throughout its duration from autumn I928 to spring I930 theGrand Coalition was a source of conflict between the fractions ofindustry. Before the Depression, industrial opinion varied within abroad range. At one extreme were commercial and exportgroupslikethe Congressof GermanIndustryandCommerce(DeutscheIndustrie-und Handelstag;D.I.H.T.), which welcomedthe trade and social poli-cies of the coalition and which werewilling to pay addedsocial costs inexchange for a counterweight against the protectionist demands ofagricultureand the monopoly price policies of heavy industry. At theother extreme were groups like the Association of German Iron andSteel Industrialists (Verein Deutscher Eisen- und Stahlindustrieller;V.D.E.S.I.) andthe Langnamverein,mostlyconcentratedin the heavyindustryof the Ruhr, who allowed the Grand Coalition no quarter.Solong as Germany'sexport picture remainedbright and the alliance oflabour and industrycontinuedto be viable, the balance of forces with-37Dirk 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 thepan, almost unintended, and supported "only" by the chemical, machine-building,textile and optical industries, and alsoperhaps by the big banks (p. 604). The coal, ironand steel industries in the west led the vast majoritywho opposed it in a "successful"counter-offensive, which continued throughout the lock-out of 300,000 ironworkers nthe Ruhr in 1928 until January 1933! But Stegmann bends too many curved lines intostraight ones, particularlyconsidering how powerfulhis "only" industries really were.38 Cited in Bundesarchiv Koblenz (hereafter B.A.), Z Sg. 126, I Oct. 1926.

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in the R.D.I. favouredthe dynamicsector.The forces had not changedmuch over three decades;even some of the spokesmenremainedthesame.39EduardHamm, chairmanof the D.I.H.T., considered1928 a boomyear and thereforean appropriate ime to increaseexportsandto makeconcessionsto the unions. He felt that industryand commerceshould"never indulge in simplenay-saying" to labour. Germany'sonly wayout of its dilemmas was by reintegrationinto the world economy, andeven domestic cartels should yield to that priority.40This was tanta-mount to full support for the programme of the Grand Coalition.Labour and this group of industrialists agreed that exports equalledjobs,41and that industryhad to check those within its own ranks whoimpeded co-operation. Thus the size of the R.D.I. executive wasdoubled in order to increase the role of the export and pro-coalitionproducersand to counter the right of veto within the R.D.I. which theLangnamverein claimed for itself.42As a countermeasure, the top twelve leaders of Rhenish-West-phalian industry formed the Ruhrlade at the end of I927.43 Theseleaders of heavy industry objected in particular to the economicsminister Julius Curtius (D.V.P.), who personified the co-operationbetween export and labour. They dubbed his and Stresemann's poli-cies "Illusionspolitik",and supportedagriculture'sdemandsfor hightariffs and a returnto the domesticmarket.Whenthe R.D.I. meetingsof June 1929 declaredthat "a high level of exportsis an economic andpolitical necessity", spokesmen for the Langnamverein replied thatlimiting imports, lowering taxes, reducing Sozialpolitik, and endingreparationswould be a far better national programme.4439 On this correlation, see Ingolf Liesebach, Der Wandel der politischen Fiihr-ungsschicht der deutschen Industrie (Hanover, 1957), pp. 70 ff. On the persistence ofthe split and the spokesmen,see Dirk Stegmann, "Hugenberg contra Stresemann: DiePolitik der Industrieverbdndeam Ende des Kaiserreichs", Vierteljahrshefte iir Zeit-geschichte, 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. alspolitisches Forum der WeimarerRepublik (Ham-burg, 966), p. 58.41 Hamm informed Paul Silverberg that every 1,800 RM. worth of exports meantone job: B.A., Nachlass Silverberg, 646, p. 96.42 On the Langnamverein's presumption of a right of veto and on heavy industry'sstrenuous efforts within the R.D.I., see Weisbrod,Schwerindustrie in der WeimarerRepublik, ch. 3. On the push to "democratize" the R.D.I., see B.A., Nachlass Silver-berg, 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 HeavyIndustry", Central European Hist., iii (1970), pp. 195-228.44The R.D.I. statement and the Langnamverein response are in the DeutschesZentral 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 November1928, at which Reusch attacked Curtius directly. See also Deutsche Bergwerks-zeitung, 22 June 1928; Ruhr und Rhein Wirtschaftszeitung, 20 June 1929.



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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICFinally, the Ruhr lock-outs of autumn I928 emphasized both thehostility of heavy industryto the Grand Coalition and the split withinindustry's ranks. When contracts expired in mid-October the em-ployerslockedout 250,000 Ruhr metalworkers n what amounted to aprovocation by heavy industry through the North-West Employers'Organization (ArbeitNordwest).45Both the prerogativeof the labourminister, now a socialist, to imposebinding arbitration and the entiremodus vivendi of labourand industryunder the Grand Coalition wereunder attack.46 But the industrialists of the Ruhr were rapidly dis-appointedwhen the R.D.I. failed to cometo theirdefence.Paul Reuschcomplained bitterly: "We here in the west are greatly dismayed that

the R.D.I. and the Berliners do not supportus in this struggle, whichwe have undertakenin order to securea freeeconomyin Germany".47Not all of industrywas yet preparedto accept what spokesmenforheavy industry euphemisticallycalled a "healthyeconomy in a strongstate". To understand the political and ideological divergences be-tween the two camps on the question of the Grand Coalition and thegovernmentswhich succeededit, we must first look at the structureofindustrialproduction.This will establish a context for examining theeconomic conflicts within industryand the politicalactivity of its frac-tions after I930.

IVINDUSTRIAL PRODUCTION

The pessimism with which heavy industry greeted the post-I926collaboration with labourcontrasted sharply with the attitude of thedynamic branches. In general such co-operationwas most acceptableto the moder andprofitable ndustriestogetherwith thosewhere fixedrather than variablecapital contributed most to profits. A look at theperformanceand structureof productionof severalkey industries willaid the analysis.Table I shows productionindices for a sample of majorindustriesbetween I925 and I932. The expansiveindustriestended to belong tothe liberal bloc, whereas the stagnant industries belonged to the na-45 On the employers' leagues (Arbeitgeberverbdnde),see Fricke (ed.), Die burger-lichen Parteien in Deutschland, ii, pp. 75 I-6 .46Ursula Hiillbiisch, "Der Ruhreisenstreit in gewerkschaftlicherSicht", in Momm-sen, Petzina and Weisbrod (eds.), Industrielles System und politische Entwicklung inder 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 andcompounded that mistake by failing to utilize public sympathy for the workersin orderto 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; NicosPoulantzas, Fascisme et dictateur (Paris, 1970), p. 187; Weisbrod,Schwerindustrie inder WeimarerRepublik, pp. 458, 495.47Reusch to Max Schlenker, I9 Nov. 1928: H.A., G.H.H., Nachlass Reusch-Langnamverein, 400 101 22I/9A. Reusch also expressed his bitterness to Kastl andLange.

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TABLE IPRODUCTION INDICES FOR SAMPLE MAJOR INDUSTRIES*

Stagnant Borderline ExpansiveA ACoal All Iron and Textile and Lignitet Metal- Chemicalmining steel clothing finishing:

1925 70 79 70 96 158 I31 1331926 76 82 62 80 I59 104 1241927 8i 88 86 117 171 I43 1551928 79 88 80 98 I88 I64 I6I1929 86 98 86 89 197 170 I861930 75 84 63 83 I63 157 I721931 62 70 45 77 151 I20 1481932 55 63 32 82 140 84 I39

* Notes and source: Walther Hoffmann, Das Wachstumder deutschen Wirtschaft(Berlin and Heidelberg, 1965), pp. 342, 343, 392, 393. All figures derive from a baseof 1913 = 00oo.t Lignite was used primarily for electric power production. It was a new andbooming field closely linked to those whom it supplied. The most prominent ligniteindustrialist was the liberal Paul Silverberg.: Includes all those industries consuming raw iron or steel and producing finishedproducts or machinery.

TABLE 2EMPLOYMENT IN MAJOR INDUSTRIESAND NET VALUE OF PRODUCTION 1928*All Rawmetal Textile and Metal- Chemical

mining production clothingt finishing1925 750 550 2000 2350 3801926 700 413 1650 I860 3401927 715 490 2150 2220 3751928 687 510 2145 2300 3901929 689 487 1990 2192 41o1930 620 430 1790 1935 3601931 500 320 1465 1560 3201932 420 262 1200 1228 280Net value of

production(in billions RM.) 4-2 4-5 6-o 6-4 2.5* Notes and sources: Hoffmann, Das Wachstum der deutschen Wirtschaft, pp.

195, 198. Employment figures are in thousands.Gerhard Bry, Wages in Germany, 1871-1945 (Princeton, 1960), p. 27, has sub-stantially higher employment figures for mining and chemicals, substantially lowerones for textiles and clothing.t Employment in the textile and clothing category is overestimated, becausesome workers are counted twice (once for each field), and work at home is includedirregularly.

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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICTABLE 3

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

Coal-miningHourly (a) 73 78 87 88 89 91 83 74Yearly (b) 1838 2025 2142 2265 2406 2252 2028 I690Index(c) 121 132 139 148 157 149 135 115

Metal productionHourlyYearly 2135 2197 2440 2556 2565 2574 2332 I95IIndex

Textiles and clothing (d)Hourly 88 92 96 97 93 8iYearly I280 1345 1440 1525 I6oo 1656 1525 1329Index 150 156 i68 177 187 194 178 154

Metal goodsHourly 71 77 80 88 94 95 90 78Yearly 1915 1873 2126 2290 2452 2520 2381 2065Index 135 132 150 162 173 178 i68 146

ChemicalsHourly 80 86 92 00oo 06 io8 104 87Yearly 1921 2167 2241 2428 2586 2540 2500 2190Index 147 164 169 185 197 198 I90 165* Notes and sources: Hoffmann, Das Wachstumder deutschen Wirtschaft,pp. 461,470-1; Bry, Wages in Germany, '87'1-945, pp. 393, 418-21, 473. Hourly income isgiven in pfennigs; annual earnings in RM. Their index value derives from a base of

1913 = I00.(a) Hourly figures for 1925-7 refer to hard-coal workersonly; those for 1928-32 toall 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 figureshereare composite.

tional bloc. Table 2 indicates the relative economic importanceof themajor industries according to the size of the work-force and the netvalue of production. These five branches accounted for two-thirds ofthe net non-agricultural ncome.Table 3 togetherwith Table 2 demon-strate the movement and burden of wages in several key industries.However, the burdenof wages was not simply a function of their leveland the number of employees; capital-intensivebranches like chemi-cals and electronicscould afford higher wages. Industrieslike textilesand clothing with low wages and a largely female work-force were in-creasingly atypical.Germanindustrialistswere fully awareof the differentialimpactoflabour costs on their productionand profits,as shown by the R.D.I.'s

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analysisof taxation, receiptsand wages for 1927. In general it arguedthere were no profitsin production.Even in thisverygoodyear, 56 percent of the value added went to wages, 15 per cent to salaries, 7 percent to social insurance, o per cent to taxes, and only Io per cent "tothe company itself".48Mining, with the highest proportion of costsdevoted to wages, salaries and social insurance, had a low 4 per centrate and the iron and steel industrya mere 2.8 percent, while textileshad a 0oper cent rate of profitowing to low wages. The electro-tech-nical branchwherewagecosts playeda minor role enjoyeda 7 percentrate.49Industryto industry, labour costs varied dramatically.TABLE 4

EARNINGS AND PROFIT RATE I927*All Iron and Textiles All metal- Electro- Chemicals

mining steel finishing technicalTaxable earnings 151 14 132 52 32 31Net earnings 65 5 75 i6 17 17Profitrate 4-3 2.8 io 4.6 6-2 6.3

* Note and source: Besteuerung, Ertrag und Arbeitslohn im Jahre I927 (Ver-iffentlichung des R.D.I., xlvii, Berlin, 1929), table io, p. 35. Figures for taxableand 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 for1927 and verifiesthat the dynamicindustriesenjoyedbetterprofitandnet-to-gross earnings ratios.50 Table 5 compares the share of thelabour component for several industries according to the "value ofmarketed goods (Umsatz)" and "value added (Wertsch6pfung)".51The labour component in the value of marketed goods reveals theshare of labour in determining the price of marketed goods (costs),while the labour component in the added value reveals the share oflabourin transformingraw materials into marketedproducts (profits).Labour in Table 4 accountsfor B per cent of the costs in an industrywhile creating D per cent of the profits. The "exploitation ratio" in-dicateshow much an industrygot in return for its wageinputs. In min-ing, for example,the shareconstitutedby labourcostswas 50 percent,while labour contributed 83 per cent to profits. In chemicals, on theother hand, labour costs were an extremely low 15 per cent, so thatlabour's 68 per cent contribution to profits made workers in this48Besteuerung, Ertrag und Arbeitslohn im Jahre I927 (Veriffentlichung desR.D.I., xlvii, Berlin, 1929), p. 15.49Ibid., pp. 31-3.50Fairly complete figures demonstrating how much more profitable the dynamicindustries were than the older sectors have been compiled by Maxine Sweezy, "Ger-man 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".

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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICbranch much more worth their money. By and large, the less a labourforce in any given industry was worth its money, the more opposedwere its industrialists to organized labour and the Grand Coalition.The anomalies are generallyexplicable.52

TABLE 5LABOUR'S SHARE OF TOTAL COSTS AND ITS CONTRIBUTIONTO

PROFITS IN KEY INDUSTRIES I927*All Iron and Textilestmining steel

CoststA. Fixed costsB. Labour costs(workersonly)C. Labour costs(all employees)

Contributions toprofitsD. Labour(workersonly)

E. Labour(all employees) IF. Capital

"Exploitation" ratioB:D(orC:E) I

Metal- Electro- Chemicalsfinishing technicalmachines

35 64 65 56 56 74

13 20 i8 28 21 9

5 26 22 36 31 I5

73 63 55 68 52 41

83 82 68 86 77 688-7 9-6 21 71I 13.9 19.9

:i-7 1:3-2 1:3 I:2-4 1:2.5 1:4-5* Notes and source: Adapted from Besteuerung, Ertrag und Arbeitslohn imJahre1927, tables 13-14, pp. 38, 41. Figures for costs and contributions to profits denotepercentages.t Textiles only; the clothing industry is excluded.t Taxes, depreciation and debt retirement are omitted.

Table 6 lists the absolute and index figuresfor the value and volumeof exports, and indicates their share of world trade. Exports alonewould not dispose an industry towards co-operation with organized52 Thus the hostility of steel industrialists towards organized labour was groundedin the low profit rate. Also the unionization of the industry had bred disproportionateanimosities which were reinforced in the 192os by a strong communist presence.Further, as Table i indicates, the industry was relatively stagnant after 1925 and notvery competitive internationally. Conversely the liberal politics of the metal-finishingand machine industries were undoubtedly furthered by their expansionist tendenciesduring this period and their extremely strong position in the world market. Between1925 and 1930 they provided over 27 per cent of all of Germany's exports.

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TABLE 6EXPORTS OF SEVERAL KEY INDUSTRIES: VALUES, EXPORT PRICES,VOLUME AND "WORLD" SHARE*

1925 1926 1927 1928 1929 1930 1931 1932CoalValue 311 895 66o 523 590 56I 466 275Priceindex 140 148 155 137 138 143 123 91Volume index 39 105 74 66 75 68 66 53World share 1928 = I per centRaw and semi iron and steel

Value 457 670 589 650 781 622 531 284Priceindex 127 ii8 127 125 129 I30 123 112Volume index 51 8i 66 74 86 68 6i 36World share 1928 = 22 per cent

Textiles (a)Value 1150 1167 1274 1338 1399 1249 1055 526Priceindex 195 183 195 196 189 190 163 133Volume index 57 62 70 72 79 73 71 42World share 1928 = 13 per cent

Metal goods (b)Value 2261 2445 2670 3146 3769 3645 1943 I835Price index 138 135 135 140 143 139 131 124Volume index 77 85 91 107 126 129 112 74World share 1928 = 30 per centChemicals (c)Value 953 1173 1277 1396 1460 1257 1036 730Priceindex 133 138 143 138 129 126 115 105Volumeindex 69 80 87 97 109 96 87 67World 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 figuresfor value denote millions of RM.; export price andvolume indices derive from a base of 1913 = Ioo; figures for "world" share denotepercentages."World" share here means the eight most industrialized countries of Europe plusthe United States. Given the products being considered this definition should notintroduce much of a discrepancy.(a) Figures for textiles include clothing. The export price index for clothing wassome seventy or more points higher than that of cloth and fabric. In the 1920SGermany became a large importerof clothing.(b) Figures for metal goods include machines and vehicles.(c) Figures for chemicals include finished goods only.

labour, since the desireto remaincompetitivecould have the oppositeeffect. But the Stresemann policy of reintegrating Germany inter-nationally depended on S.P.D. support and thereby linked exportersand workers. Furthermore,for many exportproducts, their "state ofthe art" quality compensatedfor higher prices.

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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICThe importanceof the exportbranchesclearlygrew throughout theperiod. In 1925, 2 7 million workers produced 9 -3 billion Reichsmarks(RM.) worth of goodsfor exportwhereasin 1929, 4 I million workersproduced 13 5 billion RM. worth of goodsforexport- overone-thirdof total production. For the period 1926-30 Germany was the onlyEuropeannation with a favourable balance of trade. Once the Depres-sion began, the exportbranches remainedmoreviable than the domes-tic branches, and gained internationally. Germanymoved from beingthe world's third-largestexporterin I929 to being the world's largestin 193I, surpassingboth Britain and the United States.53Heavy industry lacked the political strength that export industryderived from its superioreconomicposition and its co-operationwiththe S.P.D. in trade, fiscal, reparations and even social policies. Notonly didworking-classgains limit heavy industry'sprofitability,but soalso did Stresemann'sacceptanceof restrictions on armaments.54Thesupportof the even more depressedrural sector could not tip the bal-ance in favour of heavy industry. Of all branches of heavy industry,mining probablysuffered the earliest reversals. Its fortunes had actu-ally reached a peak in 1926. In that yearthe mines had obtained some88 per cent of the foreign loans made in Rhineland-Westphalia;by

1928 the mine-owners received only 22 per cent of a slightly largergross, perhaps with good reason. Because of cheap, primarilyPolish,competition the Ruhr mine-owners claimed to be losing nearly I-5RM. per ton.55In this respect too, mine-owners felt a distinct kinshipwith organized agriculture. Together they bore the brunt of highercosts and, accordingto Arthur Mohrus of the DresdnerBank, it was ineffect they "who were paying off the Dawes Plan". Heavy industrywas "slowly but surely going the way of agriculture"towards near-bankruptcy.56Because the mining and steel industries belonged to several inter-national cartels, tariffs and quotas were not as important to them asthey were to agriculture.This difference limited their identityof inter-

53Thus the value of finishedgoods exportedquarterly droppedfrom 2-5 billion RM.in mid-1929 to 2 billion RM. at the end of 1931. For Britain, however, the drop wasfrom 3 to 15 billion, and for the U.S.A. from 2-7 to 13 billion. See the GeschiftlicheMitteilungen fur die Mitglieder der R.D.I., xiii no. 28 (I9 Dec. 1931). In the mean-time, production for the domestic marketdropped50 percent between 1929 and 1932.54 Paul Reusch to the Langnamverein, 1928: H.A., G.H.H., Nachlass Reusch-Langnamverein, 400 1o 221/3.55They blamed this on high wages and overcapacity due to a shrunken domesticmarket. They claimed that the English working day was longer than, and social costsonly half of, Germany's; real wages in England had declined by 14 percent since 1913,but had risen in Germany by almost that amount: Die wirtschaftliche Lage desRuhrbergbaues (Berlin, 1929), pp. 25-9.56Cited in B.A., Nachlass Silverberg, 362, p. 163, 3 Feb. 1929. Both suffered from adebt 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 Langnam-verein meetings of 5 May I928 reiterated the same themes.

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ests, just as the ascendancy of the export industry had limited theidentity of interests between the two industrial fractions themselves.Instead heavy industryemphasizedthe losses it incurred through highwages, Sozialpolitik andtaxes- policiesresultingfromthe tacit coali-tion of the representativesof exportand labour.7 Efforts to unify thetwo fractions of industry were never abandoned. Heavy industry inparticularwas anxious to counteractits decliningeconomicpositionbyestablishing mechanisms to bind the two segments of industry to-gether, preferably n a way that could reassert its own leadership.Suchmechanismswere at once economic and political, private and public.They reflectedthe conflictswithin industryand wereattemptsto over-come those conflicts.V

INTER-INDUSTRIAL CONFLICTS AND MECHANISMS:A.V.I., TARIFFS AND REPARATIONSHere we shall examine three areas of conflict between the fractionsof industry after 1928 and the mechanisms which were proposedorestablished to manage them. The first arosesimplybecauseprocessingbranches were customers of the primaryproducers.The second areawas international tradepolicy:by what means andto whose advantagewould trade treaties be negotiated, and with what compensation?Thethird area involved reparations, especially the Young Plan, and pittedthose favouring fulfilment against those who preferreda reckoning.The outcomeof these conflicts dislocated economicfrompoliticaldom-inance within industry. This dislocation helped to bring a quick endto the coalition of labour and export, and foreclosedcertain politicaloptions after 1930. The inability of either fraction of industry to win

clear dominance lessened the political effectiveness of industry andforced it to accept a political solution in whose making it had littlesay.58The first inter-industrial conflict we shall consider is the one overthe mechanism used to regulate relations between buyers and pro-ducers of ferrous metals. This mechanism was the export rebatescheme known as the Iron ProcessingIndustries(Arbeitsgemeinschaftder Eisen VerarbeitendenIndustrie;A.V.I.) Agreement.In exchangefor not posinga politicalchallengeto thefixed andhigh priceof domes-tic iron and steel, the producersof these raw materialsrefundedto the57 Alreadyin April 1927 Reusch had called for a reversalof these policies in a memo-randum to Chancellor Marx: H.A., G.H.H., Nachlass Reusch-Politische und Wirt-schaftliche Angelegenheiten, 400 10 293/13.58The caveat here was what we might call industry's "lowest common denom-inator", that is, it would have little to say in the making of a solution to the crisis of therepublic besides that any solution would have to restore profitability to capital andeliminate the political influence of the organized working class.

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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICprocessingandfinishingindustries the difference between the domesticand worldpricesfor the portionof the iron and steel which these latterindustriesexported. While they worked,the A.V.I. agreementsboundthe export-orientedfinishing industriesboth economically and politi-cally to the heavy industry cartels. Though costly to the primary pro-ducers, these agreementswere crucial in preventing a break betweenthe two groups. Heavy industry obtained complete control over thedomestic market, including pricing,59while the finishing industriesimprovedtheir international position. Freed from pressurefrom the"left", heavy industrywas better able to deal with organized agricul-ture on its "right", and after 1929 all three could opposethe demandsof labour.60The first A.V.I. agreementwas reachedin 1925, and its impactwasimmediatelyfelt. Most representativesof the finishingindustriesin theD.D.P., the Zentrumand the D.V.P. deserted the S.P.D. and voted infavour of higher tariffs and against a Saar agreementwith France.61The finishing industries ceased opposingthe I.R.G. and, after furtherassurances, even opposed government surveillance of cartel pricepolicies. High domesticpricesbecameacceptablesince they subsidizedexports. Once again a republicangovernment failed to interpret theinterests of the bourgeoisieas a whole against its parts,62 ince indus-trialists preferredto institutionalize their internecine conflicts withintheir own organizations.As long as the economyexpanded,the A.V.I.mechanism worked. A number of processing industries therefore al-tered their initial positions and supportedthe Ruhr steel-producers'lock-outin October 1928. Withtheirsignificantinfluencein the liberalpress, they did considerabledamage to the unions' efforts.63With the onset of the Depression both partners attacked Sozial-politik rather than reconsidertheir own price structures. Initially theA.V.I. exportershad an advantage.The lower world marketpricesfell,the larger their rebates; and, since the domestic market contractedwhile theirexports actuallygrew, they becameincreasinglydependenton their rebates. Hence many were willing in I931 to join heavy in-

59In 1928, for example, the domestic price of iron was 50 to 70 per cent above theexport price.60 See Dirk Stegmann, "Deutsche Zoll und Handelspolitik, 1924-1929", in Momm-sen, Petzina and Weisbrod (eds.), Industrielles System und politische Entwicklung inder WeimarerRepublik, p. 509.61 Ulrich Nocken, "Inter-Industrial Conflicts and Alliances as Exemplified by theA.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 agree-ment on higher prices for raw iron and steel, together with more generous rebates. Amonth 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, I14-70.63Nocken, "Inter-IndustrialConflicts and Alliances", p. 699.

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dustry's opposition to Briining'scall for pricecuts. Because of the de-clining value and increased cost of alliance with organizedagriculture,the A.V.I. agreementswere importantto heavy industry.However, toretain A.V.I. support,heavy industryhad to pay ever largeramounts.This, togetherwith the temptationto expandinto theprofitablefinish-ing trades, led the steel-producers o demandrevision of the accords.4Between 1925 and 1930 heavy industry had bought a rightward driftin the politics of many finishing industries. Now a different form ofpayment was in order.In 1928 and I929 the strength of the processing industries withinthe R.D.I. wasenhancednot only by their economicvitality but alsobytheir supportof the GrandCoalition. Because of this greaterfreedomof political movement, the leadersof the steel industry were forced tobe more accommodating.Faced with an R.D.I. resolution critical ofthe steel industry Albert V6gler, a directorof the United Steelworksand a bitterfoe of Stresemann,repliedsayingthat perhapsegos playedtoo large a role in his industry, and that he and his colleagues "fullyrecognize the responsibilityto further the exports of the processingindustries through the A.V.I. agreements".65Paul Silverberg reiter-ated the point that the two fractions of industrywerecomplementaryand stressed the "absolute need for both groups to work togetherto save what [is] left of, and attempt to restore, the lost position ofthe entrepreneur".Nevertheless he chided the processing industriesfor demonstrating a certain "konjunkturpolitischen Opportunismus(opportunisticpolitical vacillation)" in their dickeringwith the politi-cal left andright.66The collapseof the GrandCoalitionin March 1930and the subsequent offensive against the S.P.D. made it crucial toattain capitalist unity.With each in pursuitof its own corporate nterests,conflictbetweenthe steel and processing industries grew as the economic situationdeterioratedin 1930. Representativesof the two groups met in Juneunder the auspicesof the R.D.I. to try to find a compromise.The tran-scriptof that meetingclearly reveals the balanceof forcesbetween thefractions and their political drift:

64 It was the smaller producersin the finishing industries who were most vulnerableto this onslaught and, united in the Esti-Bund, they complained that the A.V.I.associations and the government were affordingthem inadequate protection. Many ofthem were early supportersof the Nazis, who they believed would halt the take-over oftheir fields by the big producersand, instead, establish some kind of artisanal or petitbourgeois justice. Cf. ibid., pp. 701, 702. Poulantzas describesthis 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 complaintagainst the steel-producers was lodged on 24 May 1929. On the conflict betweenVogler 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 percent of the R.D.I.'s work relates primarilyto small and medium industry": ibid., 702, p. 38.



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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICJacob Reichert [steel industry]:Our cartels are in no way to blame; high iron pricesare 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-buildingindustry and A.V.I. negotiator]: We view the matterof wages exactly as you do, but ourwages are rigid too. However, with us sales pricesare determined by competition here and abroad. We have absolutely no mono-polistic cartels. You can maintain constant prices - we cannot. Yet for iron wemust pay 70 per cent above the world price. You must reduce your prices ... Yousay you are losing money, but G.H.H. [Gutehoffnungshiitte; Good Hope Mills] hasjust raised its dividends. To top it all, you charge your own processing subsidiariesless 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 tooaggressively, arbitrarily or one-sidedly.Reichert: Wages are the main thing, and they must be cut, from the mine itself rightthrough to the final processing mill.Kastl: Wages and prices must both drop immediately;given reparations we cannotafford to lose any share of the world market. If we want to convince the public thatwages 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 governmenta chance to act courageously and cut costs andprices.Paul Peddinghaus [spokesmanfor small-wares industry]:The big steel concerns selliron to their own processing subsidiaries cheaply, use their influence with localgovernments - even socialists - to obtain tax concessions and reduced utilitiesrates, and then underbidthe small and medium producers. [Catcalls from the floor.]Lange: Reduce your prices now, and we might be able to work together on wagereductions. After all, we employ nearly 2 million people whereas you employ onlyabout a tenth that many ... Your cartels make price rigidity possible, and to provethat wages, not cartels, are responsible for the crisis you must demonstrate flexi-bility.67By mid-193 I the iron- andsteel-producershad lost all interestin theexportmarket,which was more importantthan ever to the processingindustries.The former could simplyno longeraffordto pay the exportrebates. In 1925, 70 percent of German iron and steel was consumeddomestically, and only 30 per cent ultimately exported; in 1928 theratio was 50:50. By late 1931 it had reached25:75. By that date manysteel-producerswere operating at 25 per cent of capacity, with thedomesticmarketabsorbingonly 22 percent of what it had absorbedasrecently as 1929. Given the choice of either abandoningtheir cartel-pricing or continuing the full A.V.I. rebates, they vacillated. Heavyindustrysought a way out of the 1925 agreements; ts representativessuggested procedureswhich would have rendered most of the smaller

consumersineligiblefor refunds. Otherproposalswould have reducedthe size of rebates to the amount of the tariff, or to some proportionofthat amount; still others would have provided the A.V.I. industrieswith a fixed quota of cheap iron to divide among themselves as they67 B.A., R I3 I-V.D.E.S.I., 437, pp. 277-90. In the following months a newspaperand publicity war flared up between the two groups: ibid., pp. I70-80.

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saw fit.68ReichsbankpresidentLutherandthechancellorywere calledupon to limit the accessof exportindustriesto foreigncurrency,there-by forestalling their circumvention of the reduced rates of rebate.69The A.V.I. controversybecame a major subjectof recrimination n thepress, in parliament,and within the R.D.I.In March 1932 the R.D.I. was againcalledupon to mediateor arbi-trate. For the R.D.I. the issue became a test of the internal politicalbalance of its forces. Under the impact of the struggle against orga-nized labour and the S.P.D., the R.D.I. had swung to the right inmid-i93 . The selectionof "steel man" Kruppto replacethe retiring"chemicals man" Duisbergin September1931 illustratedthe reneweddominance of heavy industry. In May of that year Reusch had indi-cated to Krupp that the R.D.I. was ready for this change; no purgewould be necessary.70Instead heavy industry would attempt to inte-grate the demandsof the exportersinto an overall programmewhichthe former would oversee. Renewed leadership by representativesofthose heavy industries oriented towards the domestic market couldonly facilitate the move to the formation of a new capitalist bloc.Trade policy was another area of inter-industrial conflict wheredevelopments and results both served to reflect and affect relationsbetween the fractions of industry. It was also an area in which amultitude of organizations sought the supportof political parties andthe executive branch. During the period of co-operation betweenexport and labour from I925 to I930, foreign minister Stresemannand economics ministerCurtius pursueda trade-expansionpolicy bydrawing up "most-favoured nation" treaties, a policy which proveddamagingto agricultureand divisive for industry.While the dynamicbranches profitedfrom these policies, heavy industry banked on theexpansionof the internalmarket and on participationin internationalcartels. After 1925 it becameincreasinglyapparentthat this was not agood wager.71

68 At the end of 1931 the price of iron in Germany was 107 RM. per ton, while theworld 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 hadfallen to 50 RM. per ton. The various proposals, objections and supplementarydocu-mentation 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., 12Feb. 1932: H.A., G.H.H., Nachlass Reusch-Briefwechsel, 400 101 290/30b; see alsoWeisbrod, Schwerindustrie in der WeimarerRepublik, pp. 376-92.70 "Kastl and the Berlin forces [liberalsand exporters]have mademany concessions,and we can work together again. Why don't you succeed Duisberg as chairman?Youwould have the support of the entire west". Reusch to Krupp, 5 May 193 : H.A.,G.H.H., Nachlass Reusch, 400 I 290/27.71 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 profit-able and substantially more productive rural sector ... which would lower costs andsubstantially expand the internal market for German industry". This hardly hap-pened. See B.A., R I3I-V.D.E.S.I., 358, pp. 288, 289.

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GERMAN INDUSTRY DURING THE WEIMAR REPUBLICThe prototypefor fractional conflict over tradepolicy was suppliedby the protracteddispute over a treaty with Poland. After 1925 themining and steel industries, especially those of Upper Silesia, joinedwith organized agriculture in opposing a trade treaty with "low-costPoland". Heavy industry, the Agrarian League (Reichslandbund;R.L.B.) and later the Green Front together frustrated the efforts ofStresemann, Curtius and the export industries to conclude a broadagreement.72Export industrialists attempted to portray trade withPoland as essentially involving the exchange of Polish raw materialsfor German finishedgoods. KarlLange of the Associationof Machine-Builders (Verein der Deutschen MaschinenbauAnstaltern; V.D.M.)

argued that agricultural goods constituted only 13 per cent of all im-ports from Poland and that East Prussia's economic problemscouldnot be blamedon Poland. "The nation must not", he arguedin 1928,"accept the foolish argumentswhich the estate owners have fed theLangnamvereinand which they now both use against Stresemann".73Heavy industry's interest in opposing the treaty was increased bythe prospectof winning greater support from agriculturein the fightagainst the Grand Coalition and its policieson wages, taxes and socialissues. The opposition of heavy industry was not strong enough toprevent a treaty backedby the entire labour-exportcoalition, but thelines of a future autarkycoalition began to emerge.Paul Reusch wrote to a "pro-industry"member of the AgrarianLeague's executive that:

Neither I nor any of the enterprises I represent has the slightest interest in a tradetreaty with Poland. However, some eastern and central German industries badlyneed this agreement. Yet agriculture and especially the R.L.B. hotheads rejectcompletely even the most minor concessions ... This is no way for us to improveourco-operation and join ranks in our current struggle [the lock-outs] against the entiredirection of the government.74Reusch's contact in Berlin, Martin Blank, was informed by the agra-rians that if heavy industry expected "the shoulder-to-shouldersup-port of agriculture in social, fiscal, reparations and political ques-

72 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 evidentdeleterious 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 tothe D.D.P., see B.A., Nachlass Dietrich, 227, pp. 241-5. Heavy industry and the agra-rians were strong enough to keep labour and the exporters from getting all that theydesired in a Polish treaty, but not strong enough to prevent what was still a very sub-stantial agreement.73Lange's analysis of the composition of Polish trade and his attack on the estateowners are in B.A., Nachlass Silverberg, 362, pp. 77-83; for criticism of the Lang-namverein 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 Reusch-Briefwechsel, 400 IOI 290/39. Arno Panzer's argument that agriculture was entirelyon its own in WeimarGermany is nonsense: Arno Panzer, Das Ringen um die deutscheAgrarpolitik (Kiel, 1970), pp. I35-44.

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PAST AND PRESENTtions", then it would have to reverse the "slap-in-the-faceattitude"towards agriculturewhich some representativesof the dynam

abrahams weimar industry

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