In recent years Germany has witnessed the gradual establishment of a government-planned and controlled economy not designed to favor any particular class or economic interest, but to enlist industry and agriculture, capital and labor for the purpose of increasing the political power of the state. The regimented economic system pre¬ vaiam. Their anti-capitalism consisted of a vague detestation of laissez-faire economics, a fear of large corporations and a hatred of “finance capitalism” which took the form of de¬ mands to break the “servitude to interest.” Their “socialism” amounted primarily to a requirement tling today is not the product of deliberate intention, but rather the result of improvisation to meet repeated exigencies. When the National Socialists came to power they had little idea of economic planning. Their platform was a series of slogans, not a carefully thought-out progrhat individual and group economic interests should be subordinated to those of the state. As a matter of fact, the first economic measures of the regime proved to be entirely orthodox, motivated as they were by a desire to stimu¬ late private enterprise. The automobile industry was aided by aboli¬ tion of the tax on new cars. Replacement of machinery and equip¬ ment was stimulated by tax remission, and subsidies were given to 39 encourage repairs to houses and barns. These measures were supple¬ mented by relatively modest appropriations for public works. Al¬ though steps were taken to send labor back to the farms and to give employment to older workers at the expense of younger men and women employees, this type of regimentation was moderate compared to what came later. It was only after the government actively embarked on a rearma¬ ment program late in 1934 and undertook more and more projects, that measures of control became increasingly necessary. The task of equipping Germany with a complete air, naval and land armament required enormous amounts of money, men and material, particu¬ larly once the tempo of the arms race became accelerated. Huge de¬ mands were also made by the Four-Year-Plan, launched in 1936 to increase the output of domestic raw materials. New resources had to be exploited and large, expensive plants erected to make oil from coal and lignite, rubber from coal and limestone, and synthetic fibres from wood and straw. At the same time the government continued to push the construction of a comprehensive network of express highways. It also let contracts for hundreds of public buildings and launched vast projects for the rebuilding of Berlin and other major cities of the Reich. In addition, time, money and material had to be found to relieve in some measure the serious housing shortage, and at least to maintain the output of goods for peace-time consumption. Soon it developed that the available supply of goods, capital and labor was not equal to all these tasks. One measure after another had to be taken to relieve the tensions resulting from a restricted supply confronted with a growing demand. Labor, money and materials had literally to be controlled, rationed, and apportioned among vari¬ ous projects and industries according to their relative importance in the government’s opinion. In this allotment or planning, produc¬ tion for civilian use generally took last place.
THE LABOR FRONT AND ORGANIZATION OF BUSINESS
The first to be established was the Labor Front, which was im¬
mediately erected on the ruins of the old free labor unions. Its
membership includes both employers and employees, “fraternally
organized to work together in the interests of the state. In theory
membership is voluntary, but in practice it is nearly always essential
to retaining or obtaining a job. At present the Labor Front counts
well over 20,000,000 members, and its annual revenue must approx¬
imate 600,000,000 marks. The organization is built up on the basis
of the “plant community,” which includes all those active in a
single factory or business concern; all plant communities in one
branch of trade or industry then constitute a national plant com¬
munity. The actual administration is carried on by a hierarchy of
offices and officials, of whom perhaps the most important is the
representative of the Labor Front in each business enterprise. He
is often the go-between in the relations of employer and employees.
His task is to watch that capital and labor pull together in ac¬
cordance with National Socialist principles.
36
The most important function of the Labor Front is to keep work¬
ers and employers “in line,” to see that they work together and
have a proper appreciation for each other’s interests. While the
employer has the right to fix wages within narrow limits defined
by the state, the Labor Front exercises considerable influence over
other working conditions. It provides machinery for the constant
adjustment and conciliation of minor grievances, in particular of
disputes arising from the interpretation of labor contracts. One of
its departments, rather curiously called “Beauty of Work,” has been
instrumental in getting many employers to improve lighting and
sanitary facilities, to provide rest rooms, canteens and warm meals,
and facilities for sport and recreation. The standards of many con¬
cerns which were unprogressive in this respect have undoubtedly
been raised. The Labor Front stages annual competitions among
business enterprises, and the Fiihrer awards prizes every May ist to
those adjudged the most efficient and pre-eminent in the establish¬
ment of a spirit of teamwork between labor and capital. Since the
function of the Labor Front is also to develop “willing and able”
workers, it has arranged similar competitions to test the technical
skill, all-round abilities and Weltanschauung of craftsmen, laborers
and apprentices.
The most spectacular activity of the Labor Front has been its
large-scale provision for the leisure and recreation of the masses.
Its division, “Strength through Joy,” has enabled millions of Ger¬
mans to attend theatres, concerts and lectures, and to participate
in sport courses, outings and vacation trips at very low costs. It
has built a number of recreation homes and is constructing a huge
bathing resort on the Baltic Sea to provide accommodation for
thousands of workers and employees in the course of the season.
The organization has even chartered steamships for short cruises
to Scandinavia, the Canary Islands and the Mediterranean, and has
had two rather luxurious ocean liners built for this purpose. Not far
from Hannover it is constructing a huge plant designed to turn
out a light, economical, popular-priced car which will be within the
reach of many now unable to afford automobiles.
An Organization for Trade and Industry has been established to
include, on a compulsory basis, all industrial, commercial and craft
enterprises. It is organized vertically in functional groups and sub¬
groups, each representing a branch of trade or industry; horizontally
or regionally, the various branches are linked together in Chambers
37
of Commerce and Industry. The crafts have a separate organization
consisting of guilds and Chambers of Handicrafts. A national Eco¬
nomic Chamber, subordinate to the Minister of Economics, caps
the whole structure.
The general objective of this organization is to convey the wishes
and opinions of business to the authorities, and to transmit the gov¬
ernment’s orders and recommendations to business. In practice, the
latter task is the most important. In no sense can it be said to be a
legislative, or policy-making organ. It assists in the collection and
administration of export subsidies, in the application of foreign ex¬
change regulations, and helps to mobilize industry for the purpose
of carrying out the Four-Year Plan for greater self-sufficiency. At
the direction of the government it is bringing about the introduction
of a uniform cost-accounting system to permit better control of costs
and improvements in methods of production. The organization is
forbidden to regulate markets, but since 1936 it has had limited
powers of supervision over cartels and similar price or production
agreements.
THE LOT OF THE WORKER AND FARMER
The German worker views National Socialism with mixed feel¬ ings. He is no longer laboring under the constant fear of losing his job. Longer hours, and, in some cases, higher hourly pay have raised his weekly wage. Very often his wife and children have also found work and now add to the family income. If he has three or more 44 minor children, the state pays him a subsidy. He may get a longer vacation and take a trip to the seashore or the mountains which he formerly could not afford. His employer and foreman must treat him with respect; otherwise they may be punished by a so-called “court of social honor.” On the other hand, the worker has lost his right to strike and bargain collectively. He is no longer represented by leaders of his own choice. The Labor Front may do things for him, but frequently he resents its patronizing attitude and is in¬ clined to consider its officials as “not his own kind.” The employees’ council, or Vertranensrat, which exists in every enterprise with ten or more workers, was originally picked by the Labor Front steward and the plant leader. It was simply “confirmed” by the workers in 1935 and has never been re-elected. Besides, the council has but lim¬ ited consultative powers. The employee, who at first welcomed a longer working week, is now apt to tire of the over-long hours de¬ manded of him in many industries. If he is a mason or carpenter, he may suddenly be drafted for work on fortifications or other state projects; and if he was formerly a farm laborer but is now engaged in industry, he may be sent back to the land. The government may also step in to prevent him from obtaining higher wages or chang¬ ing his job. The trades people, artisans and small business men have not fared as well as they had expected. Many of them have lost their independence by being virtually conscripted for industry. Only those who remain have benefited by a greater turnover. The profits of shopkeepers, particularly in the handling of foodstuffs, have been small. Regulation of retail trade has been especially severe. The owners of small business enterprises often do not obtain a propor¬ tionate share of government orders and are in many cases illequipped to cope with the maze of official regulations. Yet mem¬ bers of the lower middle class have obtained many lucrative jobs in the party and state bureaucracy. The regime has cleverly catered to their desire for self-importance. They constitute the bulk of the SS and SA, have their uniforms, their minor posts and opportun¬ ities to exercise a modicum of authority. The German farmer enjoys a fairly stable income under National Socialism. His debt burden has been somewhat reduced and the Hereditary Homestead Law of 1933, which applies to about 700,000 medium-sized German farms, protects him against foreclosure and loss of his land. Yet the peasant, too, has his troubles. He is con45 stantly urged to produce more, but an acute shortage of labor often prevents him from obtaining the necessary help, and his inability to mortgage the land makes it difficult to procure credit for im¬ provements and purchase of machinery. The farmer often grumbles that he and his family are expected to work harder and harder without adequate compensation. If he neglects his task and proves inefficient, the government may even appoint a trustee to supervise his work or take over the management entirely. The peasant may not mind that the Hereditary Homestead Law requires him to leave his farm to a single heir, but he wonders how he can provide for his other children particularly when he can raise no money, or when so much of the arable land is frozen in “hereditary homesteads.” The Nazis once promised to break up big estates into small farms for agricultural laborers and farmers’ sons, but in practice they have decided to retain large landholdings, if only as an important and indispensable grain reservoir for the nation. Frequently the peas¬ ants’ sons have no alternative but to become simple laborers or wander off into trade or industry, thus aggravating the flight from the land.
THE BUSINESS MAN IN THE THIRD REICH
As for the wealthier classes, their experience with the system is also mixed. There has been no marked shift in the distribution of wealth. Private property is maintained in principle, although the government has no scruples about directing its use for specified purposes. Those people who live on income from their investments have been hit by the limitation on dividend payments, restrictions on rents, and semi-compulsory bond conversions. With the govern¬ ment providing more than enough work, business men and cor¬ porations no longer have such great risks, and their profits have been ample in many cases. On the other hand, they have to make heavy disbursements for taxes and social welfare. They work under a growing mass of restrictions and regulations of all sorts; their prices and raw material supplies are strictly controlled, their books and production costs closely scrutinized, and their financial reserves often mobilized for investment in the so-called Four-Year-Plan industries. The independent entrepreneur whom the Nazis profess to admire has little or no practical influence on the government. He may won46 der about the huge expenditures of the state and entertain vague fears regarding the future. Often he has condemned government measures as utterly impossible or disastrous, only to see them work out all right in practice. The older type of business executive, ad¬ dicted to private initiative, worries about the ultimate trend of gov¬ ernment control and enterprise. True, the Nazis at first “re¬ privatized” many banks and concerns in which the government had acquired a controlling interest during the depression, but in the last few years they have again taken a direct hand in industry. The huge automobile plant now being built for the Labor Front threatens to drive private industry out of the small-car field entirely. The Hermann-Goering-Werke, established by the government to make iron and steel from domestic ore, has taken over the big Alpine-Montan concern in Austria and rapidly extended its holdings to other metal¬ lurgical and machinery plants as well as transport enterprises. Today it is one of the largest industrial combines in Germany. The younger corporation executives are not so alarmed. In their opinion the days of unfettered private enterprise are beyond recall, and it matters little to them whether they direct the destinies of a private or a state corporation. Some business men are reassured, too, by the frequent assertions of government officials that economic regimentation is the product of an emergency. They hope that the country’s economic “living space” may one day be large enough, or that international trade will revive in sufficient measure, to permit the gradual relaxation of all troublesome regulations. For the present, at least, the Nazi system is not primarily inter¬ ested in raising the material welfare of the German people. Having put every one to work, the government regards as its primary task the mobilization of the country’s resources to enhance the power of the state and strengthen its position in the world. To this broad aim each class interest and social objective has been subordinated. For the Nazis power is in itself desirable. They ridicule the idea that society should have only material or even cultural aims. At the same time, they do consider power as a means of obtaining a greater share of the world’s natural wealth for Germany. In their opinion only political and economic expansion can ultimately bring about an improvement in the material lot of the German people.
