Why Fascism? by Edward Conze and Ellen Wilkinson 1935
It is true to say that Fascism is a movement for the preservation by violence of the private ownership of the means of production. It is part of the puzzle of Fascism that it is also true that the Fascists are Socialist as well as capitalist... not out of any theoretical passion for Socialism, but because capitalism, as such, cannot help but produce under certain circumstances a certain Socialism out of itself. Both tendencies are real, the capitalistic and the socialistic, and the struggle between the two forms one of the main driving forces of Fascist policy.
Capitalism is in itself contradictory and thus tends to destroy itself. Capitalism can preserve itself only by furthering those processes which simultaneously destroy it. The drive behind the imperialist policies of the capitalist countries is that in order to save themselves from revolution at home, they had to expand abroad, and by penetrating into and developing the backward countries, produce the competitors which, while helping the immediate crisis, intensify the process which sent them out on their mission of imperialism.
Capitalism in the Fascist countries is in a similar dilemma. The Nazis can only drive the collectivisation, say, of agriculture and the distributive trades as far as the individualism of the peasant and the small shopkeeper allows. Their drive towards state regulation of industry tries to leave intact the initiative of the employer, but, at the same time, there are more restrictions over his right to do as he likes with his property than there have ever been in Germany before. The capitalist class is preserved... but its operations are subjected to a control which may bear hardly on the individual capitalist.
While insisting that the Nazis, and for that matter the Italian Fascists, have taken certain steps towards a planned economy, it is, of course, confusing to describe this as ‘Socialism’. The German Fascists used the word Socialism in their title for the propaganda purpose of its appeal to the masses, which has caused a confusion that has not been without its uses to them. But any of the other terms used – the corporate or totalitarian or planned state, or even ‘collectivism’ – would have better explained their general policy. But the whole question of their planning is discussed in detail in Part III.
The Corporate State in Italy: Mussolini has declared the Corporate State to be, of all his actions, ‘the most courageous, audacious and original, in other words, the most revolutionary’. Sir Oswald Mosley and Adolf Hitler, in moments of fervour or when questioned too closely about their own concrete proposals, have taken refuge in praising the Italian Corporate State as a model. But there remains a certain mystery about it. Where are these corporations, what are they doing? The Socialists declare that the whole idea is bluff, corresponding to no reality in the Italian state. Liberal savants [1] have written books to prove that the Corporate State simply does not exist, and therefore should not be introduced into other countries.
According to the speeches of the Italian Fascist leaders who are interested in economic questions, the general idea of the Corporate State is that the interests of capital and labour should be reconciled by being fused into the general interest of the state. Both are to be brought under the guidance and direction of the government, and the freedom of both is to be to that extent restricted. Compulsory arbitration is to be applied to labour disputes, and the right of the employer ‘to do what he likes with his own’ is not, in principle, admitted.
From what has already been done, the evidence of some kind of planning in the Italian economic system emerges. The first phase – until about 1929 – was the deliberate drive towards the centralisation of capital and production... Thus Fascist Italy was taking the way of all the capitalist countries towards concentration of capital. In advanced capitalist countries, like USA and Britain, this concentration has taken place without the intervention of the state. In USA it has had to be done despite state objection as expressed in the Anti-Trust Laws and prohibition of branch banking. In Italy, where capitalism was less developed anyway, the Fascist pressure was used to hurry on the process. There has been a general idea, even in Socialist circles, that such concentration of capitalism leads towards Socialism, as it is easier to nationalise a big unit than a lot of little ones. Actually, as we shall show, this centralisation only leads to an intensification of the contradictions of capitalism, at the same time as it increases the effective resistance of the capitalists to popular ownership.
Under Fascism, the Italian banks have been controlled since 1926-27. The Bank of Italy regulates all credit. No new bank can be opened without government consent. In order to protect savings each bank must hold a reserve of 40 per cent of its capital. As a certain minimum capital is required the smaller banks were thus automatically excluded and had to amalgamate. Regular government inspection takes place. In 1927 all savings banks with less than five million deposits were brought together. Their number was reduced from 204 to 105, and they were grouped into six provincial and seven regional federations. The net result of this drive was that in the first five years of the working of the new bank law 872 out of 4850 establishments were eliminated: 296 by bankruptcy, 191 by fusion and 385 by closing down.
At the same time there was also a strong effort made to secure the amalgamation of industrial concerns. Subsidies, tax remission and other benefits were offered to firms to facilitate and encourage fusion. Only once, however, was direct compulsion used against owners who were unwilling to amalgamate... this was the case of the attempt to create a marble trust by compulsion. It soon broke down through the quiet sabotage of the employers concerned. As the President of the Industrial Confederation gravely explained, ‘confidence and collaboration cannot be compelled’. The marble trust has proved a useful object lesson in the theory of ‘limits’ to both state and workers.
In 1931 the ‘ILVA’ had concentrated 90 per cent of the production of cast iron and 40 per cent of plates. The resistance of the rest of the producers had to be broken by government decree, which was issued in December 1933. In all important branches of Italian production big trusts were created. The small and weak capitalists were sacrificed.
On the whole, however, this concentration of industry has been carried through by the will of the Industrial Confederation (of employers) itself, and has only been facilitated, not created, by the state. When unanimity cannot be obtained at the conferences concerned with amalgamation, the President of the Confederation decides. Amalgamation cannot be obtained by a mere majority. Unanimity is essential. So the decision has to be left to the President if there is active opposition. Obviously if that opposition is serious some other way must be found, but if only a few small firms are creating difficulties then the President of the Confederation can decide, and the amalgamation goes through. This gives a real strength to the trusts, and makes it less easy for them to break up again.
The Economia of January 1932 commented:
National interest demands the reduction of the costs of production, and therefore of prices. In order to secure that one must eliminate the less perfect enterprises which produce at higher prices.
During the depression this process was accentuated. Between 1929 and 1933 there were 91,589 bankruptcies, which in itself forms one part of the answer to the question: ‘What happened to the middle classes in Fascist Italy?’ But these bankruptcies naturally added to the unemployment problem, so in 1932 subsidies were given to bankrupt concerns which employed a certain number of workers.
The state increased its influence as the biggest customer for its public works. In 1925-26 11.70 per cent, in 1928-29 10.77 per cent of the budget came under the head ‘economics’, as against 3.28 and 4.34 per cent respectively in Britain. [2] Between 1923 and 1934 37 milliards lire (Ł370,000,000) were spent for public works, and in 1930 150,000 workers were employed therein. But after all is said and done, Italy spends as much yearly on this as Paris.
In 1919-20 the trade unions compelled the agricultural employers to employ a minimum number of workers per hectare, depending on the fertility of the land. In the interest of the intensity of cultivation, the Fascist state has continued this policy.
The state now plays a considerable part in the financing of industry. It takes over frozen credits, shares the burden of industrial concerns whose indebtedness weighs too heavily on their bankers, and liquidates industrial concerns. These activities have been very limited, however.
This means in effect that the state comes in when it is shown that an industry cannot exist without its subsidies or credits. Subsidies must be made public, and in 1933 the Institute for Reconstruction was founded which gives credit to industry for purposes of technical re-equipment and reconstruction. The scheme amounts to a socialisation of losses. The Corporate State comes to the rescue of such private industry as finds operating in the hard conditions of the modern business world too difficult. Thus the banks are in the hands of the state for four milliard lire. Two-thirds of the iron industry is under the control of the state because of the subsidies it has received, as well as loans, remission of taxes, etc. In the oil company the state has a predominating influence amounting to 60 per cent... and actively helps its expansion to Albania, Iraq and Romania for political reasons. A list of the firms which are indebted to the state in this way would comprise the greater part of Italian industry. It is obvious that once the state starts on a policy of this kind, as in Germany and Italy, and the threat of bankruptcy and consequent unemployment, if made by a firm which is big enough to be considered, brings a subsidy, then inevitably the tax-payer becomes the milch-cow of industry. It soon becomes practically impossible for an independent firm to survive, when competitors of the independent firm are given this enormous advantage.
Naturally the result is seen in the prices charged to the consumer, so here the state has to interfere also. In 1930, and again in 1933, prices have been lowered in Italy by government decree. But as in the case of capitalist concentration, the result of the state lowering of prices only produced the same effect as the world crisis produced in the free markets of capitalism. The cost of living went down in France by 9.0 per cent, in England by 13.8 per cent, as compared with Italy’s 14.9 per cent, between the autumn of 1929 and 1932. The wholesale prices fell first, and in Italy specific government interference was necessary to compel the shopkeepers to lower the retail prices. The possibility of making bargains locally with the licensing authority to share the advantage of the lowered wholesale prices would have been very considerable. There was certain opposition to the official prices, but shops which refused to sell at the new level were closed.
Foreign trade is definitely and directly fostered by the government. Banks get, since 1930, special facilities if they give credits for export. Since 1927, up to 65 per cent of the exports on credit have been guaranteed by the National Institute of Assurances, through which the state facilities are given. Rice is an interesting example of how this system works. Italy now produces 6.0 million quintuli of rice. Of this 6.0 million 3.5 are exported. The tariffs against rice coming into Italy are put very high. Since 1931 there has been a National Office of Rice, consisting of cultivators, industrialists, merchants and representatives of labour. This fixes prices. Every merchant has to pay 14 lire per quintal as a special levy, which is used as a subsidy for exporters. This is dumping on the foreigner at the cost of the home consumer.
The Syndicates: In spite of all the talk about the Corporate State, no complete corporations actually exist in Italy, but only syndicates and confederations. The Corporate State is being built up very gradually. Italian Fascism is strongly influenced by syndicalism. In fact several former syndicalist leaders have or had leading posts in the Fascist state in connection with the syndicates. Syndicalism differs from anarchism in that it does not want to give supreme power to the individual. It is different from Marxism in that it is against state centralism. Syndicalism makes the factory the unit, not the industry.
In 1926, the capitalists were organised in six national confederations: industry, small craft trades, merchants, banks, agriculture and transport. The workers were organised into one union. The capitalists complained that this gave the workers an unfair advantage, and so in 1928 the workers were also divided into six confederations. Each confederation consists of several thousand subsidiary associations – syndicates, unions, federations, etc. In 1930, 477 associations of the workers existed and 151 employers’ associations.
The occupational associations unite a commune, or connect up the industry through several communes, or through a whole province, or they are on a national scale. All syndicates are compulsory, but there is a difference between ‘inscribed’ and represented members. Syndicates represent all the workers in the area, but not every worker need be an inscribed member. If he isn’t, he is assumed to be represented by them whether he approves or not. ‘Inscribed’ member in this sense corresponds to the actual paying member of a trade union, the ‘represented’ members to the unorganised workers in an industry who, in fact, secure the advantage of the collective agreement which the trade union makes. Of the employers, in 1931, 60 per cent in industry and 17 per cent in agriculture were inscribed members of their associations. The average for the six employers’ federations shows that 38 per cent of all employers were members. The average membership of the workers was much higher, 68 per cent industrial workers and 80 per cent agricultural workers being inscribed members, the average for the six national workers’ confederations being 56 per cent. The higher average for the workers is explained by the fact that all distributions of relief and of gifts and privileges to workers are made only to inscribed members.
The membership contribution is one-third of one per cent of the wage or salary. In Germany, the contribution to the General Federation of Trade Unions before they were suppressed averaged about two per cent for the year, but the members got very much more efficient service for their pennies.
The leadership of these syndicates and labour federations is entirely different from that in any country where the workers have any control over their organisations. The officials, about 8000 of them, are nominated from above, not elected by the workers. They do not belong to the working class. They are usually avocati, a legal title which gives something of the same social status that a PhD confers in Germany. They are not responsible either to the public opinion of their membership or of the citizens in general. There is no competition from rival unions to keep them up to the mark, and a good many complaints have been made about their account-keeping. Being a quite separate official caste they are more divorced from criticism than were the Social-Democratic officials they have replaced.
Some of these avocati are admitted, even by the workers, to be keen on their work. The more ambitious of them even claimed a share for the workers in the control of industry as that would increase their own prestige, and this led to their being restricted by a whole net of decrees by the senatorial opposition among the capitalists. When, like Rossoni, some go too far in their advocacy of the interests of the workers, like Rossoni, they are got rid of. A large number of these avocati on the other hand simply regard their jobs as sinecures to provide them with an income in their junior days; and they take good care not to offend those employers on whom their future may depend.
The fact that these avocati are of a different class from those they lead not only prevents any community of feeling arising between them and the workers, it also prevents the workers getting that interest and insight into the processes and economics of production that active trade-union work brings. All the active interest of the workers outside their daily work is canalised into the Dopolavoro (literally, ‘after-work’). Besides recreation on the Russian model, sports, cheap seats for the cinema, dancing and the like, the Dopolavoro claims to provide instruction, but the syllabus shows that apart from shorthand or technical courses to improve their skill as workers, the lectures are carefully restricted to such safe subjects as folklore, literature or history. Economics occupies no conspicuous part in the syllabuses of the Dopolavoro.
Serious differences between employers and workers are, if the syndical machinery fails, decided ultimately by a representative of the state, who is regarded as impartial, and being only concerned with the welfare of the nation. But the great majority of the labour contracts are the result of negotiations between the syndicates of employers and those of the workers. From 1926 to 1931 about 9000 of these collective agreements were concluded. The Fascists themselves admit that these are continually being violated, particularly in agriculture.
Individual cases are dealt with by the syndicate officials... usually such questions as would rank with wages in lieu of notice or holidays with pay in this country. But if cases of violation are brought before the magistrates, high fines may be, and are, imposed. However, it should be noticed that these collective agreements are not stable. They can be modified ‘whenever a considerable change of the situation has taken place’, one of those conveniently reasonable phrases that can provide such useful excuses where the employers are in a powerful position.
In 1932, out of 80,844 cases of violation of collective agreements 51,414 cases decided by the syndicates awarded 25,560,000 lire to the workers. Of the 2819 cases decided by magistrates (the more important ones of course) 3,100,000 lire were awarded to the workers, and 28,000 cases were left undecided. In 1931, as a result of a total of 75,000 collective and individual complaints about the violation of collective agreements, 120 million lire were awarded to the workers.
Collective contracts must be made public. Unpublished contracts are null and void. There are only a few purely local contracts.
There are Labour Courts for compulsory arbitration which are not bound to wait until their intervention is asked for by the parties to the dispute. Loucheur tried to introduce something of the same sort of thing in France. Compulsory arbitration courts are of course no new thing. In Germany the court with its representatives of employer and workers, with a president nominated by the state, were granted in 1921. In 1926, the Labour Courts were set up with trained judges who had specialised in labour conditions as president. These courts became very popular with the workers. England had these courts of compulsory arbitration during the war, when they were certainly not very popular, and ended any desire there might have been for their extension.
The Corporations: The corporations are the real mystery of the whole somewhat vague and haphazard Italian scheme. Do they exist? Are they beginning to be effective anywhere? There seems a good deal of doubt about their work, their usefulness, even their existence, even in Italy itself. The theory is that each corporation coincides with its entire industry and unites everybody actively connected with that industry. In 1924, the Corporation for Agriculture was intended to bring together farmers, experts and workers. In 1925, this corporation simply went out of existence, and since then there has been a good deal of discussion as to whether it ever really existed.
The sphere of the syndicates, as we have shown, is fairly clearly defined, and the existence of so many agreements bears witness to their work. They act on the usual lines of employers’ and workers’ organisations. The great national confederations, based on the territorial syndicates, which in ordinary capitalist countries would normally confront each other, are then, according to the Corporate State theory, united in a corporation coextensive with the industry, which they are then supposed to plan. Up to now whatever planning for the industry has been done has been entirely the work of the employers in the industry in collaboration with the state.
In the silk industry, for example, the National Office for Silk, which is the state organisation, the Association of Italian Silk, which is the employers’ organisation, in consultation and negotiation with the National Confederation of Agriculture, which is also an employers’ association, determine the price for silk cocoons. By now it is generally true to say of Italy that when prices have to be decided negotiations do not take place between individual firms, but between the organisations of which the individual arms are members. This method of fixing prices gives a greater stability to industry as it prevents undercutting and cut-throat competition. The price for this stability has to be paid by the consumer.
It is part of the theory of the Corporate State that not the workers direct, but their middle-class representatives, the avocati, shall have some share in the planning of the whole industry as well as in the regulation of wages and conditions. When this was attempted by the one vigorous leader of the workers, who had himself been a worker, in connection with the marble industry, the employers simply refused to carry on production.
Planning Based on War Preparation: There is by now a considerable amount of planning in the economic life of the Italian Fascist state, but what is the planning for? A survey of the facts brings Italian Fascism into line with Nazism, for the motive behind the planning in both countries is imperialistic expansion and war. This form of planning puts the power of the state behind the national industry as against foreign competition. The basic idea is that the native capitalist is not left to compete with other capitalists in the world’s markets, but that a state trust with all the resources of that state shall compete with individual foreign capitalists or combines.
While the foreign firms have not this state backing, obviously the Fascist firms will be placed in a position of advantage. The Italian shipping industry is a good example. Two hundred and fifty million lire are granted annually by the state as subsidies to the shipping lines, and in this figure subsidies to cargo vessels are not included. Since this plan was adopted the Italian shipping yards have reached fifth place among the world’s shipbuilding yards. The Italian tonnage doubled between 1926 and 1928, in a period where the world increase was from 50 to 67 million tons. [3] The shipping industry in Britain has felt this industry more keenly than any. And to add insult to injury, it has felt it most on the sea route to India. The heavily subsidised, elegant and swift motor turbine ships of Lloyd Triestino, with the added advantage of the overland routes, have reduced the length of the voyage to India to nine days open sea, 12 days from London. They are the keenest competitors of the stately English P & O lines, which of course for years have had the orthodox subsidies from the government of India as carriers of the mails.
This imperialist planning is based on high tariffs and low wages. For Fascists in Britain, who base so much of their propaganda on the high national purchasing power which Fascist planning makes possible, it will no doubt be interesting to compare the standard of living in Fascist Italy with that in the ‘corrupt democracy of Great Britain’. The consumption of meat is 20 kg per head as against 40 kg in France and 50 kg in England; 8.2 kg of sugar per head were consumed in Fascist Italy as against 43 kg in England, 35 kg in France and 34 kg in (pre-Fascist) Germany. Cotton consumption per head fell from 3.5 g (in 1913) to 2.7 g and wool products from 1070 g in 1913 to 480 g in 1926.
The real wages went down during the depression by between 10 per cent and 30 per cent for the industrial workers, taking as the basis the Fascist figures about cost of living and money wages. Agricultural wages went down between 1925 and 1932 by 40 to 50 per cent, whereas the cost of living only went down by 15 to 20 per cent. The wages are very inferior to those of the period 1919 to 1922. They rarely equal those of prewar times, although the productive power has increased by almost double since then.
The income of the working class is further reduced by a high unemployment, which between 1927 and 1929 was given as about 300,000, in 1931 as 730,000 and in 1932 as one million. Besides that, partial unemployment is very frequent, but no exact figures are available. Of the full-time unemployed, 15 to 20 per cent are employed in public works and 25 to 30 per cent get a small dole. More than 50 per cent are left to themselves.
The problem that interests the rest of the world, and particularly the workers, is whether this amount of state planning is helping Italy to ride the storms of the world crisis. Is she in fact making the best of both worlds... keeping her capitalists in happy enjoyment of their privileges and at the same time securing a modicum of industrial peace? The answer is that high tariffs and low wages do not solve the contradictions of capitalism however much planning is introduced. Planning may insulate certain shocks, and Fascism may keep down the rising discontent of the workers by its high degree of internal repression. But this cannot insulate Italy from the effects of the world depression. Italy suffers from the world crisis like other countries, and as a matter of fact the crisis began earlier there. As early as 1927 Italy was feeling the effects of the ‘economic’ blizzard because she is mainly an agrarian country, and the agrarian crisis came first.
In 1932, the traffic for passengers on the railways had gone down to 58 per cent of what it had been in 1928, and the goods traffic to 60 per cent. In 1933-34, the deficit is 45 per cent of the entire budget. More than capitalist planning is evidently needed to meet that situation.
Nazism and Nationalisation: The Nazis, of course, inherited a very different state from the one which Mussolini took over. The tradition of state control was already well established. From the paternalism under the Hohenzollerns, through the drastic control of the war years, and the extension of state aid by the various governments of the Weimar Republic, the German nation was well accustomed to the idea of the state as an active partner in the affairs of the nation.
By autumn 1931, two of the biggest German banks were virtually under state management. The Reich and the Prussian governments between them held more than half of the total capital of all German banks. [4] Under Chancellor Brüning these tendencies had been considerably extended during his last desperate drive to save the situation. His government had come to the aid of the Danat Bank and the Steel Trust. He had started the experiment of fixing prices by an order reducing the prices of certain standardised articles by 10 per cent. The involved problem of the transfer of money for reparations and war debts had built up both a tradition of, and machinery for, the continual interference of the state in foreign trade by licences to obtain currency for import and export transactions.
Foreign trade is almost completely in the hands of the state under the Nazis, though mainly as an emergency measure. The state decides the import of goods by a system of tariffs, by regulation of the currency, by the issuing of credits, and even by taking over completely the import of metals and certain other commodities not unconnected with war supplies. The continual tightening of this system to the present stage, when the foreigner who wishes to do business with Germany has practically to deal with a state department, barely covers the fact that foreign trade is the weak spot of the Nazi system. Their economic nationalism disturbs exports, and the boycott of the Jews is not without its effect. Exports fell from 5740 million in 1932 to 4800 million in 1933. By July 1934 things had become so different [5] that the amount of licenses for imports was limited to the foreign currency that came into the Reichsbank from day to day.
To counter this dangerous position the Nazi state has decided that certain products, such as coffee, oranges and similar luxuries, can be done without. Other goods usually imported must be replaced by substitutes produced at home. German industry has been set the task of supplying as many of such substitutes as possible and new ones are being invented. By treaties and quotas the state decides from which countries the goods which it licenses for imports are to be bought. This policy, of course, drives other countries into retaliation.
The export trade is further helped by subventions and by all the ingenuities of the scrip system. There are plans to compel the German industrialists to export a certain proportion of their product at dumping prices in return for the rigidly protected, in fact monopolised, home market which they enjoy under Nazi rule.
The Nazis are imitating Soviet Russia by their propaganda among friends of their regime in other countries, particularly in America. Big consumer organisations helped by Nazi money are spreading in Central Europe and America and thus providing a certain market for German goods. Nazi Germany imitates Italy in increasing the bargaining power of a state-backed capitalism against the free and competing capitalists in foreign countries, where these undercut each other in prices and service. But as has been said, this is an advantage that is not likely to remain Germany’s for long. As Soviet Russia has had an immense influence on the Nazi regime and its ideas, so the Fascist regime is having its influence on other countries. Free-trade Britain becomes a high-tariff country to counter the menace which a high state of unitary organisation brings into a chaotic world of free capitalism.
By March 1934, more than 70 per cent of the capital of all the German joint stock banks was, according to Dr Schacht, in the hands of the government. The concentration of industrial capital is also advancing rapidly under Nazi rule. Hundreds of new cartels have been formed, whose freedom from competition is enforced by the power of the state when necessary. Naturally, therefore, prices rise when the state is there to see that anyone who sells at less than the cartel price goes to prison or concentration camp. But although the state acquiesced in the increase of prices to the consumer, in those goods in which itself was the largest consumer, that is for the materials necessary for public works, prices have been fixed in the various localities from time to time. In February 1934, prices of bricks, stones and various building materials were fixed for this reason.
Nazi Unemployment Policy: The main idea behind all these measures is not state interference for any theoretical end or to form part of any generally conceived state plan. The driving need is to reduce the menacing unemployment figures. This, as Hindenburg remarked, was ‘the problem I have set them’. Goebbels in 1933 voiced the conviction not only of the Nazi leaders but of the whole nation, including their most bitter opponents, when he said: ‘If we solve the problem of unemployment we are invincible. If we fail we shall not last long.’
By March 1934, the number of unemployed workers had definitely decreased, as the following table shows million:
March 1933 5.6 million June 1933 4.9 million September 1933 3.8 million November 1933* 3.7 million December 1933 4.1 million March 1934 2.8 million * Lowest stage in 1933
Are these statistics reliable? It is usual among the opponents of the Nazis, particularly émigré writers, to regard the figures they produce as mere fakes, without any serious statistical value. This is much the same attitude as that taken by people of the opposite opinion with regard to the statistics of the Soviet Union in 1929 and 1930. It is not necessary here to prove in detail that the systematic falsification of statistics on so large a scale is technically almost impossible. We quote the words of the well-known Social-Democratic statistician, W Woytinsky (NTB, 20 January 1934):
The German official statistics appears to me to have remained faithful in the main to its tradition. It is not always ‘objective’. It may from political considerations sometimes suppress an inconvenient figure and sometimes give a curious explanation to another. Occasionally it smuggles in a more or less doubtful estimation. But never as yet could a conscious falsification be proved to exist.
Accepting therefore the Nazi figures as approximately correct, how far is this decrease due to the deliberate actions of the new regime, to what extent can they claim credit for the improvement?
An ambitious programme of public works is obviously the most spectacular way in which a new government that wants to do something about unemployment can show the quickest results... which is why the building of roads has been the main refuge of every new Minister for Labour in every industrial country. Hitler, however, in extending the grants made by his predecessors for this purpose, improved on the idea of special motor highways which had been started by Mussolini, by the plan of a complete network of strategic motor roads connecting the principal towns and frontiers, in a way which would facilitate the rapid movement of troops and war matériel. Proposals of 6000 to 7000 miles of these roads have been made, and work has been started on them.
To make this vast scheme productive, the Nazi regime has set itself deliberately to foster the motorisation of German traffic. All through the years of the Weimar Republic a bitter conflict waged between the interest of the state railways and the motor industry, which definitely prevented the development of the motor because the state always favoured its railways. The motor taxation was recognised as antiquated and penalised German production owing to the type of engine it made necessary. But chancellors, who were willing enough to do something towards bringing it up to date, could not force reform through the mighty engine of obstruction that the Reichstag, with its welter of parties, had become.
When the motor tax was reduced and its incidence altered, the number of workers in the motor industry was doubled in one year. The sale of lorries went up by 81 per cent, the export by 25 per cent. There was a strong drive towards the motorisation of agriculture; 82,000 private motor cars were sold in 1933 as against 41,000 in 1932. Germany had been the least motorised country in the Western world, so that there was considerable leeway to make up. In such cases the Nazis reaped the advantage of being able to move quickly.
The Nazi authorities have been very keen on the idea of settlements of small houses for workers on the outskirts of the big towns, each with a piece of ground attached. The idea is to give the workers something to defend in their fatherland. Hitler announced this scheme with the hope that ‘the children of the workers can now grow up in conditions which make out of them people who love their country’.
In the building industries the unemployed went down from 600,000 in February 1933 to 340,000 in February 1934. Comparative figures of the amounts spent in these suburban settlements of small houses (corresponding to the council estates in England) are instructive. In 1931, 48 million marks were spent, in 1932 only 25 million. The Nazis raised this to 110 million marks in 1933, with a project of 50,000 houses.
The use of labour camps as a means of dealing with unemployment is not an invention of the Nazi regime. Although the Social-Democrats are joining in the bitter criticism of these camps, they were disposed to regard the idea of ‘reconditioning the unemployed’ with a certain favour when they themselves had influence in the government. Roosevelt’s forestry corps, and the training camps under the British Ministry of Labour are equally parts of the general feeling that it is better for society to get the young unemployed men off the streets of the towns by any reasonably inexpensive means.
In Brüning’s time these voluntary labour camps were largely filled with lower middle-class youths who were exhorted to do something for their country if they could not find work. Hitler uses them for the unemployed workers, and has put the compulsory figure at 230,000 men, a number not greatly in excess of the Brüning figures. It was intended, however, to be real ‘test-work’. The young unemployed man who was not willing to go would receive no other assistance. This is true of the 230,000, but the idea of raising the numbers engaged on compulsory labour service to 700,000 which was planned for 1 January 1934 has been held up because of the cost, although it is admitted that the standard of food and shelter is on the lowest possible scale.
The men in these camps are employed on building roads, draining land, building dams, bringing marsh-land into cultivation, and in reafforestation... and, of course, in military drill. Nazi economists estimate that the yield of German soil could be increased by such means by a milliard marks. The enthusiasts for the labour camps declare that it ought to be possible to employ half a million men for 20 years on this work alone. The facing of the immediate financial costs is, of course, a different matter.
By an even more direct interference by the state the Nazi rulers have tried to force down their unemployment figures. Women workers have been dismissed from state and municipal employment... as women, apart from their politics, unless they could show special cases of hardship. Any workers holding two paid jobs, however badly paid both might be, were compelled to choose one, and let another worker have the other. Part-time workers have been removed from benefit. Servants as a class being removed from unemployment insurance are therefore no longer counted in the official statistics as unemployed. When one member of a family is working it is assumed that he could keep the others, and they also have disappeared from the registers. Added to these must be the not inconsiderable number of exiles, politicals in prison and concentration camps, and the numbers of known anti-Fascist workers who do not consider it prudent to call attention to their existence by applying for state aid.
It is difficult to estimate the number of people who are in these various groups, but together they must account for a considerable number of the total decrease in unemployment of which the Nazi leaders are proud. With them might also be included the ‘imposed’ workers – those who have been forced on to employers, and who share the available work, without adding to the total wages bill.
Another of the bright ideas which the Nazis can claim to have invented are in effect doses of strychnine to give industry quick little fillips such as the scheme to replace women workers by men without the hardship of dismissal, by offering marriage loans to women in employment who would guarantee to vacate their posts on marriage. The general assumption was that as far as possible a man would be given the vacant job... usually at the woman’s rate of wage. It has been estimated that about 100,000 women have, or will be, got out of industry by this means. Hitler announced that he was prepared to loan 12 million marks for these dowries, on a basis of 800 to 1000 marks for the middle-class girls, and 200 to 300 marks to working-class girls, given in the form of drafts on the local shops.
These loans form also part of Hitler’s scheme for extending the inner market for goods, and the effect was felt immediately. Whereas the number of workers in the consumption goods industries was 11 per cent more in 1933 than in 1932, the number of those occupied in the making of household goods increased by 16 per cent... an almost direct result of the buying from these marriage loans.
In the same way the subsidies and tax remissions that formed part of the agricultural policy made themselves felt. Twenty per cent more agricultural machines were sold in 1933 than in 1932. The rate of employment in this industry therefore rose from 27 per cent to 40 per cent. The sale of artificial manure rose in different areas from 20 to 200 per cent, with corresponding increases of employment in the chemical industry.
The textile industry prospered in the early months because so many people wanted to buy new uniforms and everyone wanted a swastika flag. When this first impetus was exhausted, Hitler applied a new one by designing a new uniform and urging everyone, particularly workers, to wear it at the many parades, demonstrations and festivals. The unemployed in the textile industry fell from 442,000 in February 1932 to 253,000 in the same month of 1933.
Something corresponding to war prosperity was induced in the coal, iron, steel, dyes and chemicals, motors, and rayon industries. Some 52.6 per cent more pig iron was produced in March 1934 than in March 1933. The production of iron ore has been doubled. In the mines of the Sieg, production rose from 34,000 tons in January to 81,000 in July 1933. The Ruhr iron and steel industries have been compelled to take these ores which are more expensive than the imported ones. These mines cannot compete with the ores from Sweden and Lorraine. But they would be indispensable in case of war, and are therefore being kept in production. The number of the unemployed in the production of iron and metal fell from 927,000 to 547,000 from February 1933 to 1934.
Now this increase in German employment accompanied a general trade revival all over the world. All the countries, whether Fascist or not, can show an upward curve of production to much the same degree. But a closer scrutiny of the German figures produces some interesting conclusions. [6] The inner market has been extended for raw products, or for the goods that can be bought with subsidies (such as the marriage loans), but not for the goods which are bought by wages. For during the period of Nazi rule the wages have been lowered everywhere. By the end of 1933 the whole sum of wages and salaries had gone down by 200 million marks (NTB). Krupp paid 29.86 marks per week (deductions not included) in 1933 as against 37.54 per head per week in 1932.
How then, in spite of these figures, has the inner market increased and unemployment been reduced? The answer simply is that the regime has been ingenious in finding ways to pawn the future. The marriage loans can only be spent once. Then they must be paid back, and during that time the market is contracted as it once was extended. Any increase in the wages bills caused through employers taking on workers whom they do not really need is similarly financed by drafts on future income, for the Nazi leaders have continued Papen’s method of giving discount bills on future taxation. The Reichsbahn, for example, have spent 1000 million marks on extension schemes to give employment in 1933-34, but 600 million of this has been paid for out of state drafts that will mature in 1938. But when those drafts mature, the state income will be correspondingly reduced. The temporary prosperity in the war will also have to be paid for some time. It is said that the Nazis quickly pawned the public income to 1937, and are now finding difficulty in getting confidence for the pawn tickets of 1938.
Thus the undoubted diminution in the unemployment figures has, in fact, been financed partly out of the resources of the workers, by the lowering of their standard of life, partly out of drafts on future prosperity, which, if that prosperity does not happen, will mean that the working elements in the population will have to bear that additional burden also. In April 1934, Dr Goebbels said that the German worker was receiving:
... wages which were not sufficient to maintain a standard of living corresponding to the high cultural status of our nation. The workers have undertaken this task [of lowering their standard of life] in a way which implies a mutual obligation in the whole of German reconstruction, and with a heroism without parallel.
The grim illustration, evidence of the truth of the remarks of the Minister for Propaganda, is that by September 1933, the entire retail shopkeepers had lost eight per cent of the trade of 1933, the large stores 18 per cent and the cooperatives 33 per cent. These facts are underlined by the increased mortality statistics. Hitler’s measures to deal with the situation can only be described as a distribution of distress.
1. L Rosenstock-Franck, L'économie corporative fasciste en doctrine et en fait: ses origines historiques et son évolution (Paris, 1934).
2. German Statistical Yearbook (1929).
3. Newly-Built Mercantile Vessels in 100 Registered Tons:
Year Italy Whole world Italian percentage 1923 50,000 3,330,000 1.5 1925 140,000 2,200,000 6.6 1926 220,000 1,700,000 13.0 1927 100,000 2,300,000 4.3 1928 100,000 2,700,000 3.6
4. A comparison of the bank balances of 1930 with 1932 show how this tendency towards state control of industry was growing even before the Nazis came to power. The figures are of millions of marks, and the percentages show the percentage of the whole in the three classes of banks:
1930 % 1932 % Private Banks 19,962 40.0 13,506 32.5 Cooperative Banks 5,680 11.5 4,800 11.5 Public Banks 24,300 48.6 23,300 54.7
5. The word ‘difficult’ seems to be more suitable here – MIA.
6. The index of industrial production is worth studying for the incidence of the general decrease in unemployment over industry:
General Index Producers Consumers Textiles Machines Jan 1933 62.9 53.1 77.6 83.7 31.0 Jan 1934 77.8 71.1 87.4 99.5 52.4 Dec. 1928 100 100 100 100 100