Germany Today – Paul Mattick


International Council Correspondence, [Vol. I] (1934-1935), No 11 (September 1935).

The catastrophic economic condition of Germany, especially in regard to raw materials and finance, leads to the conclusion that the system will soon collapse. The ability of capitalism to “muddle through” is often under-estimated by the revolutionary proletariat. The example of the war years (with certain reservations) is invoked. But, even without considering the intensification of agricultural production that has progressed greatly since the war, the raw-material situation today offers more avenues of escape than formerly. Although the actual production of artificial raw materials, such as benzine or fibre, fail to fulfill the boastful announcements mode, essential sources are available. Besides, no matter how limited the exports, with the regulation of the valuta policy the most urgent raw-material needs can be met. That these manipulations lead to constant annoyance of certain trade circles; that regular export trade suffers and the inner contradictions are intensified is obvious. All efforts to overcome the difficulties lead but to a postponement, not an overcoming of the crisis.

It must not be overlooked that the foreign exchange problem in its relation to the securing of raw materials is not confined to normal methods. Although the Reich and German industry in general has received no foreign credits till now (it remains to be seen what the outcome of England’s conciliation policy will be), yet some monopolistic firms are receiving them and thus are independent of the general credit difficulties in securing their raw materials. Thus the I.G. dye trust (I. G. Farben) reports that the concern disposed over four times as much in raw material credits in 1934 as compared to 1933, namely 28 million marks. The credit resources of I.G. are far from exhausted by this, as it can offer credit securities of enormous value in its foreign branches, partnerships, etc. For example there is the hydrogenation process in which the Rockefellers participate, used not only in coal but in making benzine out of oil as well. The big concerns, Siemens, Mannesmann, the steel trust command similar reserves for securing raw materials.

The second problem, that of finance, is subject to similar conditions. True, the domestic debt has increased enormously. From the standpoint of the respectable merchant the period of bankruptcy has been reached long ago. An indebtedness of 20 milliand marks according to the figutes of the “Reichskreditgesellschaft”, more than double that of the first half of 1934, offers a clear picture of the hazardous state of German finance. But Gambler Schacht still holds a few tricks in his hand. Though the Reichsbank and the finance ministry has vainly appealed for foreign credits to the various commissions and observers representing American and other foreign financial and government institutions in Berlin – the fact tha this debt is an internal one (because of refusal of foreign credits) constitutes Schacht’s main chance. The debts have remained within the country; the creditors are the beneficiaries of the public works and armament policy and it is possible to exert considerable pressure on them, for instance, the argument that if the large capitalists consider a large loan unsafe the previous credits become worthless. Incidentally a part of the domestic note issue, underwritten by the large concerns has been transferred to foreign institutions, though it is impossible to estimate the actual amount. However, with or without pressure, the capitalists themselves are interested in seeing a part of the short-term loans transformed into long term credits.

Of course, it is still impossible for them to perform feats of magic and the card tricks of high finance will not be sufficient to forestall eventual collapse exist. Nevertheless the resources of the various economic groups are drained and the basis of the system over the longer period is undermined.

At present the only measures contemplated are those serving the imposition of a great domestic loan, following the forced loans on the banks and insurance companies to the tune of 1,2 milliard marks, which temporarily lightened the burden. A further 70 to 90 millions is added by the change of the house rent tax into a forced loan. However this is but robbing Peter to pay Paul, for the elimination of the tax on the one hand is made up by the forced loan on the other hand, although the budget took this into consideration.

At present, then, it is planned to float a large loan at low interest, which is made attractive to the lower income classes with tax reductions. The capital market has been prepared – partly through the limiting of public works, which aroused the opposition of the profit-hungry industrialists and aggravates the unemployment problem (for which and outlet has been provided by compulsory military service); partly through manipulation of the Gold Discount Bank belonging to the Reichsbank, which is authorized to issue notes for 200 million marks. The money market appears unusually flexible. The English “Economist” points out that in spite of an interest rate of 3 1/8 to 3 3/8 % for day-to-day loans plenty is offered at 2 1/2%. Political and moral pressure is to do the rest in starting the loan the methods of floating the loan, especially as to the exact forms, so as to avoid heavy depreciation, as a loan of this magnitude cannot be floated successfully if sale and loan privileges are denied.

The third great problem is that of the foreign relations. Here, also, overestimation of the difficulties must be avoided; we must reach conclusions after sober consideration, especially in regard to war, when? and against whom?

True, the almost complete isolation of Germany was evident in the Geneva deliberations. But how important is that? What will be the results? A review of the last months, when the English white book was published, which delayed Simon and Eden’s trip; when England, France and Italy united at Geneva, when McDonald in the “New Letters” joined the anti-German front, every one thought the Ring around Germany was a firmly welded as the French defense lines on its eastern front. But the commentaries of the English press to Hitler’s speech of May 21 showed how quickly the gates could again be opened. Not all papers were as enthusiastic for Hitler as the Daily Mail of May 22 which said, “His words will bring relief and hope. Germany being ready to cooperate in the cause of peace should be welcomed warmly and met half-way. Our government should do all that is in its power to satisfy her legitimate aspirations including the return of Germany’s colonies. Hitler, after all, is the one great constructive mind that Germany has produced in this generation”. But other papers, including the Daily Herald, adopted a friendly attitude, not to speark of the hymn of praise of “Comrade” Philip Snowden. Here it becomes obvious that German policy is neither so blind nor insane and unconsciously displays more sense than it is credited with by many fanatics who are blind to the capitalism of other countries and only see the capitalism of the Nazis in the dark colors. Hitler, the spearhead of modern Germany, does not want war with a united Europe. He aims at a new bloc policy, to take advantage of the breaches in the anti-German front. That this is sound policy should be obvious. The fact that France under pretext of a few undelivered telephone posts in 1923 occupied the Ruhr, against a disarmed Germany, while in 1935 it participates in a conciliation policy with rearmed Germany, demonstrates the new international developments, show how far the conflicts of the various imperialisms are forcing new alignments. Rearmed Germany is a desirable ally for either of the main groups of powers in the next conflict. War is not iminent because of the re-establishment of German military power. Only when Germany has oriented itself in relation to international capitalism and formed the consequent alliances will the war question become acute. And this orientation of course will depend also on the German internal situation.

What is the internal political situation in Germany? In view of the widespread espionage in personal contacts as well as mail communications it is difficult to arrive at conclusions that are complete and accurate. However, what knowledge we have is based on personal observations and experiences in various parts of the Reich, on contacts with various strata and interests. The picture we have shows that National Socialism not only has not captured the broad masses as a “Weltanschauung” but that sentiment is recoiling against it. This applies to those who originally supported it or were “converted” in 1933 as well as to that group whose class interests were originally represented by it – the middle classes. Not the least opposition comes from the farmers, driven thereto by the inheritance law, all but whose first-born are disinherited. Their illusions were shattered by the failure of the settlement policy and the unlimited support given to the great landed proprietors. Unemployment in the cities closes that avenue of escape to them and they are forced into the labor camps, on road-building, and into the Reichswehr where they are not at all the loyal subjects they are usually pictured. The conditions in the camps, and in the agricultural aid (Landhilfe), where these farmer’s sons are herded together with unemployed industrial workers to work for landed proprietors and large farmers, are depicted in a number of letters recounting their experiences. Ten to twelve hours work per day with shelter and lodging of a kind already notorious among the Polish seasonal laborers in Pomerania and East Prussia in pre-war days; wages of 20 marks from which is deducted the social insurance and similar fees as well as their travel expenses, which had been advanced by the state in railroad tickets. The slaves are not only shipped regardless of their wishes, but must pay the shipping costs themselves.

The middle class in the city also feels cheated – the destruction of the mortgage and loan capitalists, the elimination of the department stores did not materialize after “clean” Aryan capitalists took over these functions. The small dealer and the tradesmen note no greater purchasing power and feel the pinch of large capital. The wholesalers are increasing prices more rapidly than the retailers can follow, as the market remains sluggish. This applies to all finished textile goods and food, especially the latter, as farmers selling milk and meat were granted much higher prices while the retailers, in view of public sentiment were granted only a small increase. At the same time this policy favors the better rationalized large concerns and intensifies the concentration of capital.

The boasted credit facilities to the middle classes, promised by the National Socialist economists, proved a similar failure. The bank statistics point to the number of single credits granted of less than 20,000 marks – The German Bank & Discount Co. estimated these loans constituted 90% of the total in 1934. But the total amount loaned to small and medium sized concerns is only about 25%. The other 75% of the total money loaned is in the hands of 10% of the borrowers. Since 1933 a further drop in small and medium loans has occured. While the total of loans from 300 to 20,000 marks has occured. While the total of loans from 300 to 20,000 marks receded from 235 million marks to 210 million – about 10% – the total loans above 20,000 marks increased from 470 million to 620 million marks – about 30%.

The beneficiaries all along the line are the large capitalists, the banks, industry and landed proprietors. Never before was a government so clearly the expression of the class rule of monopoly capitalism as the absolute leader-dictatorship of the National Socialist State. This appears in the balances of the great corporations such as I.G. Dye, Siemens, Krupp and Mannesmann Brothers. I.G. Dye, aside from invisible reserves, in 1934 earned 51 million mark dividends and extras, as well as 80 million marks by lowering of book investiments with a total of wages, including salaries, of about 200 million marks, divided among 165,000 persons – an average of 1,200 marks annually. This shows the degree of working class exploitation when it is considered that this “high” average includes the incomes of the better paid employees as well as that of executives up to Bosch and Duisberg themselves.

These income figures in the greatest chemical concern are typical of working class conditions generally. According to the statistics of the German Labor Front the average weekly wages of industrial workers amount to 21 1/2 marks, with average working hours of 43 weekly. In addition there are the increased prices for food and clothing, an increase not fully determinable because the quality of goods is deteriorating constantly in order to make the price increase appear less oppressive.

Deductions and penalties of various kinds aggravate the worker’ lot. Idle time, time spent going from one job to another, and other necessary but unproductive functions are penalized. For example, an iron foundry in April of this years, with a 60-hour week reckoned the pay of an skilled worker, including overtime, at 46.15 marks, deductions 10.20 marks, leaving a net of 35.95. To evade scale provisions skilled workers often are hired as helpers under the pretext no work in their branch is available. Within a short while they find themselves doing the work of skilled hands – at helpers’ wages. Protests are seldom made, the workers’ “representatives” are mere puppets of the employers, in the bureaus of the Labor Front the worker is sent from Pontius to Pilate and runs the risk of having his “Marxian” past thoroughly investigated. Should his protests receive support he is sure to get his walking papers from his employers at the earliest opportunity.

What goes on in the plants and factories? True, there appears to be peace, enforced by that supreme and only Nazi achievement, the espionage and stool pigeon system, and unlimited terrorism. Reports we have received of open opposition through underground channels show either individual acts of pure desperation that expired without effect or prove false upon further investigation. These acts are not to be considered general, no matter how much they may be symptoms of general sentiment, although not a general preparedness for working class action. The working class is not yet ready for concerted action. Fear is too great; nor should we labor under any illusions in regard to the illegal apparatus of the German Communist party which is so honeycombed with spies that the Russian Ochrana appears like a harmless affair by comparison. A vicious factor here are certain elements of the returned imigrants – proletarians formerly known as sincere fighters, who fled in 1933 and through their hopeless situation were reduced to slum proletarians, corrupted b conditions and frequently through blackmail are subservient to the secret police – who are welcomed with open arms by their former comrades only to betray them. Fear is further magnified by the enormous penitentiary sentences for even the smallest implication in illegal activity. Of course this terrorism is proof that the Nazi regime knows its insecurity and proves the lie in which it represents itself as being fully supported by the German masses. The press is forbidden to announce the time and place of the Fuehrer’s and the important officials’ appearances and when that knowledge is unavoidable, special precautions and protection are provided. But the clenched fist is still sunk deep in the pocket.

What now? We see that all sections of the population, excepting large capitalists and the parasites in government and incidental jobs united by the National Socialists into an unprecendented system of corruption, are dissatisfied. Despite this an immediate collapse cannot be predicted. Aside from the working class there exists the fear of “what after”, the fear of the real revolution. The concept often heard in 1933: “The gentlemen will soon declare bankruptcy, then comes the military dictatorship”, is out of date. For this concept has been realized in the dictatorship of large capital through the military. This dictatorship already extends over the Nazis, as is shown in the events of June 30, 1934, the subsequent retirement of Feder, Darre, and others as well as their satellites. The higher bureaucracy again is manned by the old heads. Although the front still shows hitler, Goering and Goebbels as well as the swastika flag, the interior is manned by others, the transformation has already occured behind the scenes. The decisive powers, who allowed the Nazis to seize power in order to suppress the working class – sometimes themselves suppressed in the confusion – now are in complete control.

One activity was left to the Nazis, that of propaganda in fields outside of economie. The seizure of economic power was paid for in this small-change. The religious warfare is not approved by Schacht, Bosch, Krupp, etc., but it is tolerated because it may be a continuous source of dissent and weakness within Nazi ranks. As to anti-Semitism it has eliminated a good deal of unwelcome competition. And, after all, the essence of Nazi ideology is the training to slave-like devotion in hierarchic order, a phase that is pleasing alike to the Catholic Church as well as to large capital.

This is sociological basis from which the new labor movement must arise. All we have so far are mere beginnings, illegal circles, limited action outside of those belonging. That this activity is hampered by the great number of factions and tendencies is regretted by many. But this is the natural process of social conflict, especially when it is considered that the traditions of several generations were destroyed in the Spring of 1933. This naturally had paralyzing effect, produced confusion, a feeling that all social laws were inoperative. Hesitation marks the new beginnings, for the essential feature of the labor organizations had been the prevention of the very things that now must be done in order to assure proletarian victory – the independent though and action of the masses. Hundreds of thousand whose leadership has been destroyed still manifest an anxious desire for “new leadership”. But the Nazi power soon eliminates any new leadership. The new organization of the working class must be born in the blood and filth of monopolistic capitalist rule, as the process of a class striving for clarity and, to them, a new goal. But the conviction that the past must not repeat itself, that the party structure of the old, large party organizations is forever through, has already captured large numbers of workers.

What causes alarm among these revolutionary workers is that so little seems to have been learned outside of Germany as a result of their experiences. This applies particularly to the supporters of Russian policy whose aim is to chain the masses in their struggle against Hitler to the chariot of Russian state policy. They recall the time when Russian politicians and leaders of the Third International issued the slogan of an enslaved Germany; when Bucharin in 1923 declared Germany to be an exploited colonial country, which justified an alliance with Russia. From this developed the quaint program of national and social deliverance that created so much havoc among workers and not only threw the mass of non-party supporters but many good proletarians into Hitler’s arms.

The German working class cannt be saved from without. True, the class struggle is international, but that merely signifies that the working class of every country must settle its scores with its class enemy. Every block policy and alliance outside results in the strangling of the development of the working class and the surrender to the ruling class.

The consciousness of solidarity with the working class of the world is an important factor for the revolutionary workers of Germany, but this solidarity should manifest itself only in their determined, uncompromising warfare against their own enemies. Economically speaking, the workers of other lands are not much better off than those of Germany. War is not the creator of all things, but it is certainly the midwife of revolution and the probability is great that only the next war will open the floodgates of revolution in Germany. But if the war comes as a crusade against Hitler it will lead to another “August 1914”. The workers will be playing into the hands of their ruling classes. It is by no means certain that Germany will be the loser for if war comes it will not be against an isolated Germany.