Business and Industry in Nazi Germany

Published by EH.NET (April 2006)

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Christopher Kobrak and Per H. Hansen, editors, European Business, Dictatorship, and Political Risk, 1920-1945. New York: Berghahn Books, 2004. xiv + 261 pp. $60 (hardback), ISBN: 1-57181-629-1

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Francis R. Nicosia and Jonathan Huener, editors, Business and Industry in Nazi Germany. New York: Berghahn Books, 2004. viii + 211 pp. $25 (paperback), ISBN: 1-57181-654-2.

Reviewed for EH.NET by Thomas Ferguson, Department of Political Science, University of Massachusetts, Boston.

There is a mix of both good news and bad news to report about these two works, which are natural complements and can hardly fail to interest many readers.

First the good news. Business and Industry in Nazi Germany contains six essays by some of the best known historians working in the area. Gerald Feldman’s opening essay, “Financial Institutions in Nazi Germany: Reluctant or Willing Collaborators?” draws on his earlier studies of German banks and insurance companies. As before, he is highly critical of analysts whom he believes over-emphasize alignments between the Nazis and big business. This time, however, near the end of his essay, he strikes an oddly discordant note: “When one digs deeply enough, one discovers that financial institutions were part of the network of governmental and private institutions engaged in Germany’s imperial and racial goals” (p.33). This is eerily similar to Fritz Fischer’s basic point.

Harold James departs from roughly the same premises as Feldman. But he does not perceive much “higher unity” between the Nazis and bankers. Instead, his elegantly written study portrays the Third Reich’s money men as glumly anticipating an eventual triumph of the Nazi Party’s “populist wing”: “In conscious or unconscious calculations of how adaptation to the ‘New Germany’ would affect the financial and social standing of bankers, most financiers could only come to the conclusion that whatever happened, they were bound to lose as representatives of a world and a style of business that the new regime had declared to be obsolete and discredited” (p. 61).

Peter Hayes’s brief but fluently written essay makes similar points. He compares I.G. Farben and Degussa, on which he has written separate full length studies. While he is clear that neither scrupled at profiting from the Holocaust and acknowledges personal “inadequacies” of the two concerns’ leaders, he asserts that “well before … 1937” Nazi dominance left businesses “almost incapable of asserting their own interests against those of the state” (p. 70).

Michael Thad Allen contributes a striking essay on the SS’s organization of concentration camps. In contrast to analysts who have seen theses ventures as driven by a search for profit, he disparages purely “business” motivations in favor of more ideological considerations. But he is explicit that the explosive growth in the use of slave laborers by German corporations came at the instigation of the companies, not the SS, as employers felt increasingly squeezed by war time full employment pressures. His conclusion is provocative indeed and merits a longer look by comparative historians of slavery and serfdom, who have for decades debated the economic efficiency of violence and brutality. Mass murder, he argues, was essential to the emerging system of wartime German labor control: “Slavery was directly tied to the Holocaust and could not have functioned without the constant influx and ‘liquidation’ of prisoners” (p. 99).

The final case study is by Simon Reich. He considers the relation between the Nazi regime and foreign-owned corporations, in particular, the Ford Motor Co. He relates his experiences as an advisor to the American auto concern, when in response to several lawsuits filed in the 1990s, it sought to pin down its responsibility for actions of its German subsidiary after the Nazis came to power and, especially, during World War II. In the spirit of work he published before he went to work for Ford, Reich argues that the concern was no more than a secondary player in the German auto industry and was not perceived by the Nazis as a “German” company. As a consequence, before the war the regime actively discriminated against the company. Once the U.S. entered the war, he claims, Ford’s German executives ran the company in the interests of Germany, without direction from Detroit, so that Ford USA could not reasonably be held responsible for the sometimes appalling practices of its subsidiary.

The viewpoint of European Business, Dictatorship, and Political Risk is more panoramic. Consciously borrowing from the rhetoric of contemporary finance, it aims to explore how firms in the inter-war period dealt with “political risk.” The introduction, by the editors and Christopher Kopper, explains that the essays take as “their starting point the perceptions of business people about their political circumstances and the scope of business reaction to its changing and often hostile political environment” (p. x).

The extent to which the various essays actually do this varies widely. Myra Wilkins’s survey of the problems that faced firms in the interwar period says little about actual perceptions, but is of great interest and illustrated with a wealth of factual detail. Feldman contributes a well documented essay on collaboration between German and Italian insurers, while Hayes discusses Degussa’s successful attempt to develop homegrown, echt Deutsch carbon black, a priority for the Reich. Jana Wustenhagen outlines the travails and strategems of Schering in Argentina, while Martin Dean examines how various “multinational” Jewish firms succeeded and failed at transferring capital abroad in the face of German exchange controls.

Wifried Feldenkirchen’s essay on Siemens in Eastern Europe touches hardly at all on what that concern’s management thought it was doing or tried to do; instead it concentrates on the external details of the German giant’s business involvements in that tumultuous region. Lars Heide’s discussion of IBM is more ambitious. While it sniffs at previous studies of IBM, including Edwin Black’s IBM and the Holocaust, in fact it offers few specific criticisms of any of them. Once again, however, Heide is more impressed by what he claims was the predominant position of the Reich vis-a-vis the American giant. IBM, he argues, “was obliged to leave its business well managed by Germans and its machines that proved crucial in the management of German warfare under the sovereign control of the German government” (p. 173).

Kurt Jacobsen’s essay on how the Great Northern Telegraph Company negotiated with the Soviet Union and Japan and, more broadly, strove to stay ahead of governments intent on controlling strategic communications throws much light on an unheralded but important corner of international business history. Because of its close connection to the much discussed topic of “appeasement,” Neil Forbes’s analysis of why most British businesses sought to work with the Nazi government is one of the book’s most interesting essays. It benefits extensively from its author’s previous work in the area. Edward Kubu, Jiri Novotny, and Jiri Sousa collaborate on a chilling, well documented account of how German businesses and the Reich worked together to swallow most major multinational businesses in Czechoslovakia after 1938, while Luciano Segreto outlines the regulation of business under Fascism in Italy.

Now for the bad news. Business and Industry in Nazi Germany, contains a final essay by Volker Berghahn on “Writing the History of Business in the Third Reich: Past Achievements and Future Directions.” His well crafted piece revisits the much debated question of “the political responsibility of German businessmen under Nazism” (p. 129). His picture of the Nazis’ relation to big business differs radically from those in the other essays in these books: He suggests that a substantial number of big business leaders, in fact, enthusiastically backed the Nazis. While he continues to credit Henry Turner’s claims to have disproved what might termed the old “Nuremburg” theory of the Nazi seizure of power (p. 136), Berghahn bluntly declares that Hitler “obtained the support of both the officer corps and business soon after his seizure of power” (p. 142). More intriguingly, he goes on to propose that by “1935-1936” not only were the Jewish business leaders gone, but that “an older generation of non-Jewish entrepreneurs and senior managers,” who might have been hostile to the regime, were headed into “retirement” or “inner immigration.” Their replacements were, in many cases, he suggests, men who “envisioned the future of the world in terms of blocs or empires” and whose “dynamism and energy, as Lutz Schwerin von Krosigk has put it, ‘degenerated into brutality and who would not be impressed by anything'” (p. 143). While he does wonder whether some wartime remarks by G?ring might have raised the blood pressure of this new generation of big business leaders, his discussion points to a major qualification of conventional wisdom.

A book review can hardly pursue the far-reaching implications of Berghahn’s proposals. About all one can say is that reopening the question of the “mentalities” (the debt to Annales is acknowledged) of German big business is sure to lead in interesting directions. Given the plain evidence of support from the whole German right, including big business circles, for the German government’s disastrous scheme for a customs union with Austria in 1931, it cannot be very long before someone notices that musings about “blocs and empires” long antedated the crisis Berghahn perceives in 1935-36.[1] It may be that Friedrich Meinecke’s old suggestion (revived by Dirk Stegmann) that “Pan-Germanism” constituted a critical historical link between pre-World War I and post-World War I German expansionism was right all along.[2] At the dawn of the twenty-first century, however, it important to note that studies of perceptions of “political risk” or how the Nazis related to big business can now incorporate less elusive forms of evidence. It is now widely recognized that stock prices incorporate a great deal of information about economics and politics. While the thin, restricted German stock markets of the later thirties may throw up barriers, it may be possible to check some of the claims advanced in these books with the methodology of event analysis. I am skeptical, for example, that most German bankers really felt themselves to be trudging through the Valley of the Shadow of Death under the Nazis. The Night of the Long Knives, after all, eliminated or cowed the noisiest parts of the Party’s “populist” wing. In addition, the regime duly reprivatized the banks that in 1931 had fallen like rotten apples into state hands, while prospects of profits from “Aryanization” (documented not least by James himself) were beguiling financiers. But James might be right — and if he is, it should probably show in the stock prices of banks relative to other sectors of big business, since his argument implies a large effect unique to finance, not business as a whole. Until the work is done, we will not know for sure, but readers of Berghahn’s essay will not, perhaps, be surprised to learn that the behavior of the German stock market during the Nazis seizure of power does not appear to be consistent with the Turner thesis that underpins key claims advanced by many essays in these two books.[3] Notes: 1. On the pressure for expansion in the 1931 crisis, see especially Thomas Ferguson and Peter Temin, “Made in Germany: The German Currency Crisis of July 1931,” in Research in Economic History 21 (2003): 1-53.

2. See the discussion in Dirk Stegmann, “Zum Verhaeltnis Von Grossindustrie und Nationalsozialismus, 1930-1933,” Archiv fuer Sozialgeschichte 13 (1973): 402-03.

3. Thomas Ferguson and Joachim Voth, “Betting on Hitler: The Value of Political Connections in Nazi Germany,” London: Center for Economic Policy Research, 2005, Discussion Paper 5021. A revised version is nearing completion.

Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston. His publications include Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems (University of Chicago Press, 1995).