The Krupp Empire
London-born and a graduate of Oxford, TERENCE PRITTIEwas a prisoner of war in Germany from 1944 to 1945. Following his release at the end of the war, he joined the staff of the MANCHESTER GUARDIANand has been its correspondent in Germany ever since. He has broadcast repeatedly over B.B.C. and has appeared on television in both Britain and Germany. The following is the first of two excerpts drawn from his new book, GERMANY DIVIDED,which will be published by Atlantic-Little, Brown next month.
THE barons of the Ruhr have continued to be a class apart from the rest of society. An American who becomes very rich gives money to a foundation, perhaps establishes his own. He may well go into politics; or he will interest himself in art, form a famous collection, and leave it to a grateful nation. The British millionaire will buy a country house, involve himself in the affairs of the neighborhood, sit on county councils and the boards of charitable societies, mix with the landed class, perhaps move into one or the other of the British Houses of Parliament.
Rich Germans practically never do any of these things. In the Ruhr, they follow a particular pattern. They build themselves expensive but sadly tawdry villas on the outskirts of Düsseldorf, Mulheim, Duisburg, and surround them with high walls surmounted with the jagged glass which generally graces the fences of penitentiaries. (One Ruhr businessman has boasted that his front door is modeled on one of the gates of Alcatraz.) In their villas, generally miracles of bad taste, “Ruhr Baronial or “Gelsenkirchen Gothic,” the Ruhr barons remain entirely cut off from the outside world. The next-door neighbor — unless he happens to be one of their own kind — the local lord mayor, the pastor and the priest, the tradesmen, and the townspeople might, for all they care, be bush natives. They even look down on the landed class, whose members they regard as deplorable dodoes in an age of economic progress, hapless remnants clinging desperately to the vestiges of their estates. Utterly divorced from society, this class of big industrialists has a better right than any other to be regarded as antisocial.
In a social sense, its past record is wretched, and in some respects, criminal. In others, it could offer excuses. The Germans pushed their industrial revolution through at breakneck speed, in a space of about sixty years. The German industrialist was excluded from political power in the classconscious, Prussian-dominated Germany of Bismarck, the Kaiser, and the Weimar Republic. His concentration on economic power became singleminded, all-absorbing, remorseless. It is understandable, even if it is not excusable, that the industrialists treated economics as a power factor.
They built up cartels on a huge scale, in proportion to overall national wealth, in order to fix prices, ensure high profits, and move ahead into the next stage of expansion. The earlier cartels were vertical, entailing control of the means of production in a single industry. Coal was wedded to iron ore and steel, chemicals to lignite, heavy engineering to shipbuilding. But the biggest family trusts of all — Krupp, Stinnes, Flick — developed their interests horizontally too. They bought or built plants of other industries, town property, tramways, distributing and trading firms.
They linked themselves with the big commercial banks which helped to finance them; they exchanged and shared directors. It is hardly surprising to find, even before 1914, a periodical, Die Bank, worrying over this process of “rationalization” through the concentration of power. “Other banks,” it wrote, “will follow the same path, and in time the three hundred men who today govern Germany economically will be reduced to fifty, to twenty-five, or even fewer. One fine morning we shall wake up in surprise to see nothing but trusts before our eyes and to find ourselves faced with the necessity of substituting state monopolies lor private monopolies.” In I960, German bankers follow that same path in their search for a streamlined economy.
The big industrialists became even more powerful after World War I. For the 1923 inflation and the German end of the 1929 world economic crisis wrecked the smaller, independent undertakings and left the field to the big trusts. Marxist historians have even suggested that the big industrialists encouraged inflation, in order to pay off their debts with valueless Reichsmarks. This scarcely seems likely, for inflation brought unemployment and falling production, which in turn interfered with profit making. But they certainly set out to benefit from it as far as possible and to complete the process of concentration.
The big industrialists were generally completely amoral. The Krupps had sold arms to Napoleon, whom they were far too canny to regard as the liberator of their country, and to the Russian czars, with a fine disregard for German national interests. Another steel family, the Roechlings, helped the French government to build the Maginot Line. In 1923, Hugo Stinnes paid a call on a general of the French Army of Occupation, Degoutte, and asked for armed help to break the trade unions and reintroduce a ten-hour working day. But generally the big industrialists stood to gain most by wholehearted support of their own government. If this support was in pursuit of illegal objectives, so much the better. The government would pay more for their help.
INDUSTRIALISTS conventionally look for quick and easy profits. German industrialists were no exception. But it is not usual for industry to be encouraged by government to indulge in crooked dealing. That the Nazi government did this is beyond question, and this is the root of post-war doubts about German commercial probity. The Nazis knew that they could work on men who belonged to a tradition of complete ruthlessness. This tradition was conveniently discarded after 1945, even though many of the men who belonged to it returned to positions of power. What the tradition really meant could be shown by a score of examples. Let one speak for the rest — that of the Krupp coal, steel, and engineering combine.
Friedrich Krupp founded the firm at the beginning of the nineteenth century in Essen. In 1812 he tried to move his steel file and tooling shop to the left bank of the Rhine, in order to pick up fat French arms contracts. Twenty years later Krupp began to make guns, and in 1844 offered the first cast-steel barrel to the Prussian state. During the next thirty years the family firm bought up coal and iron ore mines, and in 1870 Krupp siege guns battered Paris.
In 1902 the head of the family, Friedrich Krupp the Second, died without a male heir. Four years later his daughter Bertha married Gustav von Bohlen, a counselor of the German embassy in Constantinople. Kaiser Wilhelm II, the Emperor of Germany, had counted Friedrich as one of his personal friends. He permitted — or instructed — von Bohlen to take the name of Krupp. In 1909, Gustav became chairman of the firm. In the same year Krupp produced its fifty thousandth cannon. Only a year before, it had entered a sinister form of war production when it launched the first German submarine from its Kiel shipyard.
World War I was grist for the Krupp steel mills. During its course the firm made profits of more than 400 million marks. But a lost war is bad business for armaments firms. The Allied Disarmament Commission managed to dismantle or destroy nearly half of Krupp’s twenty thousand machines. French troops moved into the Ruhr, and by an act of culpable folly fired into a crowd of Krupp workmen, killing thirteen. Simple workmen have little to do with the launching of world wars. On the other hand, the French put Gustav Krupp von Bohlen in prison. With their usual maddening lack of logic, Germans remember only the massacre.
In theory, Germany disarmed in 1919; in practice, it did nothing of the sort. Krupp went on designing and even producing guns. Within a few years Gustav was helping to finance Hitler and the Nazi Party at a time when their success was far from assured. Gustav’s son, Alfried, who became head of the firm after World War II, has suggested that his father did this merely in order to preserve the family business and that refusal to help Hitler would have resulted in the Nazis’ seizing the firm after coming into power. This could just be true. But Gustav volunteered the information that he was ready to make arms again on a big scale; he played an important part in the meeting of Naziminded industrialists at Hermann Göring’s Berlin house in February, 1933; and he took the lead after that meeting in collecting three million marks for the Nazis. It lias been estimated that lie “invested" twelve million marks in all in the Nazi cause. His performance was equivalent to offering allegiance to Lucifer, in case he should gain control over mankind.
Krupp was certain to be singled out for Allied animosity in 1945. It was not merely that Krupp built its biggest gun of all, the 80 centimeter railway gun, “Mighty Gustav”; that Krupp designed the “Tiger" tank, which remained supreme up to 1944; that Krupp churned out Held guns, anti-tank and anti-aircraft guns, and howitzers.
1 he firm employed 55,000 displaced persons, 18,000 prisoners of war, and 6000 inmates of concentration camps, who were leased as a part of the “Extermination through Work” program. It overworked and underfed them and barely troubled to pay them at all. It treated them as un-German animals; it employed hundreds of young women, shaved their hair in the shape of a cross, worked them to death.
Krupp directors have since maintained that they could not help doing all this, that refusal to use available slave labor would have meant trouble, and that workers had to be put into arms factories and exposed to murderously effective Allied bombing. Yet Krupp, of all firms, could have risked a protest to Hitler. In 1943 the Nazi state had done something unparalleled: it signed an agreement with the firm. This took the form of a law, the Lex Krupp of November 12, 1943. “Over a period of 132 years,” its text ran, “the firm of Friedrich Krupp . . . has rendered outstanding services, unique of their kind, to the armed forces of the German people.” For this reason, the document continued, “it is the wish of the Führer, Adolf Hitler, that the owner of the Krupp family property be empowered, with this property, to set up a family business with special arrangements as to succession.”
The special arrangements were that the Krupp family would not be subject to inheritance duty, that the share capital and the headship of the firm would stay in the hands of a single man, and that taxation affairs would be settled between him and the Reich Minister of Finance. Hitler signed this amazing document personally; its object was to put Krupp outside the ordinary law of the land and to make him the sworn ally, as well as the servant, of the state.
SENTENCE of death was pronounced on the family firm of Krupp in 1945 by a bespectacled British chartered accountant, Mr. Douglas Fowles, who had been appointed Allied administrator of the firm. In the brash, outsize nineteenth-century palace of the Krupp family, the Villa Hügel, Fowles told the assembled Krupp directors; “The firm of Krupp is simply going to cease to exist. We are not going to make the same mistakes that we made after World War I.” This sounded like the sober truth. The Gusstahlwerke in the heart of Essen had already been reduced to a gigantic ruin by fifty-five raids of Allied bombers. The Russians had occupied two Krupp factories in their zone of Germany, torn them to pieces, and shipped the component parts to Magnitogorsk, Semipalatinsk, and other burgeoning industrial centers of the Soviet Union. The most up-to-date Krupp plant of all, the Essen-Borbeck steel rolling mill, had been earmarked as reparations and was likewise being shipped to Russia. Krupp shipyards and steel plants lay idle, awaiting dismantling; Krupp coal mines worked at 20 per cent of capacity and under Allied control.
In 1945 Gustav Krupp von Bohlen was dying. He was semiparalyzed and did not speak for five years before his death in 1950. His son and heir, Alfried, was arrested, tried by a war crimes tribunal in Nürnberg, and sent to jail as a “substitute” for his father. His jail sentence was to run twelve years; his property was confiscated. Nine of his fellow directors went to prison too.
The trial, before an American court, had farcical elements about it. Ethically, it was absurd to try a shy, well-mannered young man (he was thirtyfive, but suffered from the retarded mental development which springs from parental overdisciplining) in the place of his father. The British prosecutor at Nürnberg remarked, “This is not a game in which a substitute can be provided for a player who is ill.” Alfried was not allowed to brief the counsel of his choice, the American lawyer Earl Carroll. Evidence was used against him which was not made available to the defense counsel whom he was forced to accept, Dr. Otto Kransbühler. Confiscation of property was almost certainly illegal, for it was not ordered even in the cases of the dependents of Hitler’s paladins, Göring and Ribbentrop.
The tide began to turn for Krupp on April 10, 1949. On that day the American Military Governor, General Lucius Clay, modified the order for the confiscation of Alfried Krupp’s property. General Clay did not do this out of love for the Krupp family. He had been warned that the Russians were preparing to claim one quarter of all Krupp property in West Germany. General Clay now ordered that zone commanders should implement the confiscation order on their own responsibility. The zone commanders hung back; they had always doubted the legality of the American court’s judgment. They did not confiscate. The Russians, as it happened, did not claim.
The next act in the process of rehabilitating the Krupp firm was likewise the work of the head of the American administration. In January, 1951, the U.S. High Commissioner — for Germany was no longer under military government —decided to release Alfried Krupp and repeal the order confiscating his property. John McCloy declared, in explanation, that confiscation of property was “repugnant to our American concepts of justice” and that he could find “no personal guilt in defendant Krupp to distinguish him above all others sentenced by the Nürnberg courts.” McCloy had to iron out a monumental muddle; in a most confused way—for Krupp properties were not even in the American zone, and Mr. McCloy forgot to consult his British and French allies — he fulfilled his task.
Alfried had to wait until March 4, 1953, before the Western powers published their master plan for the dismemberment of the Krupp combine. These were its details.
Alfried was instructed to sell his coal and steel holdings within five years, although a special commission would consider time extensions if a “fair” price were not offered. The coal and steel companies were placed under trustee-managers who were acceptable to both Krupp and the Allies. Their sale was to be carried out by a banking syndicate headed by the Rhein-Ruhr (later the Dresdner) Bank.
One engineering plant, Capito and Klein, was transferred to Alfried’s sister Irmgard, with an additional eight million marks from the sale of coal interests. His nephew Arnold was to receive eight million marks, and his brothers Berthold and Harald and his sister Waldtraut, eleven million marks each. Under a written agreement Alfried undertook never to re-enter the coal and steel industries in Germany.
The purpose of the agreement was to destroy Krupp as an “undue concentration of economicpower.” The same thing was being done to the other big coal and steel trusts, to the chemical industry, and to the banks, under Allied Law No. 75. It is not possible here to go into the details of this immense undertaking. An outline must suifice. I. G. Farben, for instance, was split into three main “successor companies” and two smaller ones. The “Big Three” commercial banks were split into nine regionally based successors. The principal coal and steel trusts were divided into twenty “unit companies,” and the biggest of the old trusts, the Vereinigte Stahlwerke, effectively ceased to exist. The official Allied purpose in implementing Law No. 75 was always the same — to leave compact, viable firms in existence which would provide a solid basis for fair and competitive German heavy industry and finance.
German critics have since maintained that the purpose of the law, as with Allied dismantling of German industry and the successive limitations placed on steel production, was to reduce German economic power and place Germany in a weak competitive position vis-à-vis other countries of the West. Of course, there was an element of truth in this. It would have been surprising if French and British industrialists, whose undertakings had been damaged or dislocated by Hitler’s war, had not been anxious to curtail that unresting German creative urge which would now be concentrated in the economic field. The German cartels, they argued, had proved themselves to be the instruments of an overweening, unbalanced economic ambition. They had sought not to develop but to dominate. They had been guilty of every unfair trading practice which had ever been invented. One example is indicative. In 1926 Germany joined the International Steel Cartel. This laid down quotas for its members. Germany deliberately exceeded its quota and paid the fines imposed without a murmur. But the German steel industry continued to expand capacity, then demanded an increased quota and threatened withdrawal from the cartel. The net result was that penalties on overproduction were cut and German output increased by four million tons during the first two years of the cartel’s existence. French output, meanwhile, remained stationary.
When the Allied plan for the “deconcentration” of Krupp was announced, there were howls of rage all over Germany. Yet it was at once obvious that the plan was full of flaws. Alfried was left in sole control of holdings with an estimated value of $140 million. (He tried to laugh this off by saying that “people are apt to put in one or two zeros too many when they talk about my fortune”; but his assets were certainly worth more than $800 million by 1960.) His family lawyers at once made it clear that they regarded the promise not to re-enter the German coal and steel industries as illegal. The Federal Government was obviously embarrassed by it. And who was to decide, anyway, what was a “fair” price for the Krupp coal and steel firms? For that matter, would any other firm have either the cash or the courage to make an offer? Cash was in short supply, and there is honor even among thieves.
The Allied plan, moreover, came years too late. The process of deconcentration was already in the act of being reversed. In November, 1953, the German Iron and Steel Federation decided that vertical trusts — controlling coal, iron ore, and steelmaking — should be reconstituted. In December, 1954, the Schuman Plan High Authority in Luxembourg gave the Mannesmann steel trust in Düsseldorf permission to reconstitute itself. Within three years this trust was producing seven million tons of coal and nearly two million tons of steel a year. It was a good deal more powerful than it was before the war.
In January, 1955, the Gütehoffnungshütte coal and steel trust re-formed. In May, 1955, the Hoesch syndicate announced that it would reabsorb its old coal mines. Two of the components of the Vereinigte Stahlwerke, Huettenwerke Phoenix and the Rheinische Roehrenwerke, combined as the Phoenix-Rheinrohr firm a year later. Of the incredibly complicated Allied deconcentration program, only two acts continued to withstand the test of time. The I. G. Farben chemical and the Vereinigte Stahlwerke steel trusts had not regrouped.
IN THE meantime there had been another turning point in the history of Krupp. On September 22, 1952, Alfried signed on as general manager Berthold Beitz, a thirty-nine-year-old businessman with no connection with the Ruhr. Beitz had a short but brilliant record in banking and insurance. Breezy-mannered, modern in outlook, and a dandy, Beitz was the exact antithesis of the shy, introspective Alfried Krupp. One friend called him “the born cutter of red tape.”Another explained his role in the words, “Beitz is introducing Krupp to the twentieth century.” Beitz quickly became the driving force behind the firm’s continuing recovery and expansion.
He believed that the Krupp empire must be maintained intact. He saw to it that this happened. Following the 1953 agreement, only one Krupp property had, up to 1959, been sold. This was the Emscher-Lippe coal mine. The cash paid for it (22 million marks, or $5 million) was immediately and more profitably invested in an engineering plant. Buyers did not come forward for the Hannover-Hannibal and Konstantin the Great coal mines, or for the Rossenray and Rheinberg coal fields, with proved reserves of more than five hundred million tons, or for the Rheinhausen steelworks, with an annual output of around two million tons. Beitz was confident that these properties would never be sold. “Without coal, iron, and steel,” he declared, “we are deprived of longterm investment. The resulting atmosphere of insecurity hamstrings our entire organization and, incidentally, West German industry as a whole.”
The American State Department and German public opinion were real clues to Beitz’s purposeful campaign to preserve the Krupp family inheritance. Why should the United States, still pouring millions of dollars into the Old World, sponsor what looked like an economic absurdity? Why should German public opinion tolerate it? Beitz coined a useful slogan: “We must all row our hardest for the West. But there is no point in tying the arms of one of your best oarsmen.”
Beitz began to pay frequent visits to Washington. He wanted a visa for Alfried Krupp (who got one in 1958). More important, Beitz wanted to interest the American government in new Krupp plans. The most spectacular was the so-called Krupp Point Four and a Half Program for the underdeveloped countries. Its essential details were the formation of German and, if necessary, international consortia in order to finance capital investment in these countries; the tenders put forward by these consortia to be Strictly competitive and involving fair profits; additional financing to come from the World Bank and the United States Export-Import Bank; initial concentration of interest on the Middle East, Africa, and Southeast Asia.
Krupp would be ready to join and lead consortia, place its technical knowledge and good will at the disposal of the United States government, map out programs based on its already great experience. Beitz’s work between 1954 and 1957 offered a fine basis for future planning. Krupp was building a 8200 million steel plant at Rourkela in India, an $80 million steel plant in Pakistan, a 820 million nickel smelting plant in Greece, a bridge over the Nile at Cairo, factories, docks, harbors, cement, and chemical plants in Iran, Iraq, Thailand, Afghanistan. The Federal Government had already subscribed over $55 million to these projects.
The slogan of the Point Four and a Half Program was devised by the firm’s intelligent American public relations adviser. He was only one living proof of Beitz’s increasing interest in a close tie-up with America. Beitz began to be seen even more often in Washington. He gave his sales booklets an increasingly transatlantic flavor. “Old Man Cheops had no labor problem when he built his pyramid. Nor will you, if you move your materials, mountains, molehills by Krupp giant tipping truck.”
In West Germany, Alfried had become the Federal Government’s unofficial industrial ambassador. His father had only been Kaiser Wilhelm’s gunsmith. In the unedifying, neoclassic barn of the Villa Hügel, on the outskirts of Essen, Alfried entertained the Negus of Ethiopia, the Shah of Iran, the heads or foreign ministers of numerous other states. Even members of the hierarchy of France’s Fourth Republic were able to find their taste in ladies’ fashions a suitable excuse for ingratiating themselves with the most powerful family of the old German industrial oligarchy. Guest of honor at mannequin shows was the French ambassador in Bonn, M. André François Poncet, whose previous services to his country had included the issue of unheeded warnings about the true character of Hitler and the vain attempt after 1945 to annex by stealth the prosperous steel and coal area of the German Saar.
THE disposal of the Emscher-Lippe coal mine had served a dual purpose: it gave apparent evidence of good faith in fulfilling the agreement, and it provided working capital at a time when Krupp was going through its first post-war phase of dynamic expansion. In December, 1956, the Konstantin the Great coal mine was sold too, but this was a very different kind of transaction. It was bought for 37.5 million marks ($9 million) by the Bochumer Verein steel firm, which resold some of the shares but retained a 52 per cent interest in it.
The Bochumer Verein firm made high-vacuum steel, and its plant capacity was roughly 1.5 million tons of steel a year. At the time of the purchase of the Konstantin coal mine, the firm had just patented a brilliantly successful process of casting big steel blocks in a vacuum (absence of air means absence of flaws, and an immensely quicker and more efficient casting process). It owned few coal-mining interests, and the purchase of Konstantin made good sense in one respect, in that it helped re-establish the vertical trust of the classic Ruhr type. But in another respect it was a surprise, for the Bochumer Verein had suffered more than most big Ruhr firms from war damage and post-war dismantling, and was notoriously short of capital.
In fact, the transaction had been planned by Krupp and his associates with considerable forethought. A large share had been bought late in 1954 in the Bochumer Verein by a close personal friend of Alfried Krupp, the Swedish industrialist Dr. Axel Wenner-Gren. It was the first time that Dr. Wenner-Gren, whose field of speculative interest was far-flung, had interested himself in a major steel firm. It was supposed that he had bought, initially, a 20 per cent to 25 per cent share in the Bochumer Verein. In reality, he had bought a 40 per cent to 42 per cent share, and in the course of the next eighteen months he bought privately and on the open market until he controlled a majority holding in the firm. The Bochumer Verein shares were placed in the hands of VIGAU, the Vermoegens Verwaltung, a cover holding company which administered Dr. WennerGren’s other financial interests in Germany.
In February, 1958, it became known that Dr. Wenner-Gren was preparing to transfer his controlling share in the Bochumer Verein to Krupp. It also became known that Krupp’s own Rheinhausen steel company (which he had agreed to sell in 1953, but which he fully intended all along to retain) had bought a 27 per cent share in the Bochumer Verein. Undercover control had been completed. Krupp openly sent Dr. Karl Hundhausen, a member of his own board of directors, to be managing director of Rheinhausen (the announcement was made three days before the Federal election of September 15, 1957, so that it should pass unnoticed), and the head offices of Rheinhausen were moved, in January, 1958, from the banks of the Rhine in Duisburg to Essen, Krupp’s headquarters.
At the end of 1958, Krupp appealed to the European Goal and Steel High Authority in Luxembourg for permission to merge the Bochumer Verein with the Rheinhausen company. Permission was readily granted.
In my own files is a letter from the Coal and Steel High Authority dated September, 1954. It points out that mergers were being allowed between German steel firms which did not “disturb the balance" of the industry and which were in no case creating combines with a steel capacity of more than two and a hall million tons a year.
The Bochumer Verein—Rheinhausen merger gave Krupp a capacity of roughly four million tons a year, or one million tons more than the next biggest single steel firm in Germany at that time, the Dortmund-Hörder Hütten-Verein. It gave Krupp just double its pre-war steel capacity.
It was significant that Krupp merged the Bochumer Verein company with Rheinhausen, although the latter was still due to be sold by March, 1959, which allowed five years from the signing of the Krupp agreement, plus a one-year automatic extension because no buyer had come forward. This was a mark of Krupp’s complete confidence that Rheinhausen would never be sold at all. Every possible step was being taken to ensure this. In America, the State Department, as well as individual senators and members of the House of Representatives, were canvassed for this purpose. In West Germany the active sympathy of the Federal Government was enlisted. In July, 1957, the Federal Government asked the Western powers to reverse the Krupp agreement. Its appeal was backed by a vigorous West German press campaign. Its arguments were straightforward: the agreement was “out of date”; it represented a forced sale by a free and independent German subject; it was not practicable, since no buyers for the Krupp properties could be found; it was a leftover of the Morgenthau Plan and the era of Allied economic oppression in Germany.
In March, 1959, Alfried Krupp appealed personally for the repeal of the sales agreement. He said, “I think that we have been very patient, but I believe that the time has now come when we must have the situation clarified. For we wish only to enjoy the same conditions as other big combines in the new European Common Market.”He gave three reasons for his view that Krupp should remain intact: past history had always shown that the living standard is highest where big industrial concentrations exist; the trend toward bigger concentrations is generally considered rational; and German combines are still much smaller than American.
The position of Krupp in 1959 showed just how futile Allied efforts to break up this outstanding concentration of economic power had proved. The firm employed 93,000 workers in its engineering and manufacturing plants. Sales in 1958 totaled 3.44 billion marks ($820 million). This figure did not include the 720 million mark ($170 million) sales of the Bochumer Verein. Exports amounted to $130 million, and a limitless field has been opened up by the firm’s pioneering work in the underdeveloped countries. In spite of the recession in the German steel industry, Krupp sales were roughly $50 million higher than in 1957. This single firm, owned by a single man, controlled 16 per cent of Germany’s total steel capacity and 6 per cent of its coal. In rough terms, it was 70 per cent to 80 per cent larger than it was before the war.
The Ruhr is the heart and hub of European as well as German industry; it primarily means coal, steel, chemicals. Here are the operative details of its structure in 1959.
The Allies have utterly failed to break up what they considered to be “undue concentrations of economic power” in the Ruhr. Their program would have needed twenty years to be implemented. Before the war, eight trusts controlled, among them, 94 per cent of German steel production and 51 per cent of hard-coal production. In 1959, after a decade of complicated Allied tinkering, eight trusts controlled 78 per cent of steel and roughly 40 per cent of coal production. Six of these trusts are pre-war survivors; the two others are former components of the Vereinigte Stahlwerke. Only one name has vanished from the pre-war list, that of Otto Wolff. This firm has not reabsorbed its old manufacturing and mining interests and has remained a coal and steel trading company, as envisaged by Allied deconcentration legislation. It is ironic that the only absentee from the list of the mighty was the only firm among them which had Jewish managerial participation.
The Allies believed in 1945 that the German chemical industry had, in effect, been reduced to a monopoly of the immense I. G. Farben trust. They planned to split it up into at least eighty independent companies, then reduced the proposed number to thirty. In the event, just five successor companies were created, but over 90 per cent of I. G. Farben interests in West Germany are today in the hands of three young giants — Farben Bayer of Leverkusen, Farbenwerke Hoechst, and Badische Anilin of Ludwigshafen. These three firms divide up fields of specialized interest, even dovetail production of different colors of dyes, cooperate with one another in all essential planning. They are independent of one another, but they can hardly be called strictly competitive.
The tendency of German trusts to spread horizontally has reasserted itself. Thyssen, Krupp, and Rheinstahl are building ships; Flick purchased a big interest in Daimler-Benz (producing the range of Mercedes cars) and entered the field of plastics in 1958; Krupp has embarked into nuclear power and aircraft production; Mannesmann is interesting itself in plastics; the richest of all the new millionaires, Rudolf Oetker, controls breweries, shipyards, hotels, banks, insurance companies, paper mills, film companies, aircraft firms, chemicals, light and heavy engineering plants, in addition to the family pudding-powder business in Bielefeld, on which he based his empire.
The Allied deconcentration programs were actuated by the belief that Germans were cartelminded and that cartels dominated the German industrial scene. All deconcentration was useless, it was thought, unless strong and effective anticartel legislation were forced on the Germans. And what happened? The Federal Government (although the Minister of Economics, Ludwig Erhard, is a genuine disciple of free competition) provided for the formation of cartels in times of economic crisis, in order to boost exports, in order to carry out a necessary rationalization of industry. I listened to Professor Erhard giving an exposition on the anticartel law in Essen to the Federation of German Industries. He adopted a pleading tone when asking its members to trust him. This was quite understandable. That assembly of sober gentlemen, mostly bull-necked and with comfortably filled waistcoats, represented the orderliness, inventiveness, and ruthless energy of the real rulers of present-day Germany.
The most serious danger inherent in this powerful class of industrialists is that it has still not fused with the rest of the community, and it retains the peculiar arrogance which springs from social isolation. As long as that remains so, the immense power of the Ruhr could once again be misapplied. And that power is greater than before and is still concentrated in the hands of a very few.