Through all the ups and downs of the German economy after 1918 – rapid conversion to peacetime production in 1919–20, runaway inflation that made a nullity of the currency by 1923, monetary stabilization followed by recovery of prewar levels of production and prosperity by 1927, and then the abyss of the Great Depression that began in 1929 and worsened in 1931–32 – the German corporate world struggled with a gap between supply and demand. While Germany’s manufacturing capacities had been run down during World War I, they also had grown, even as the conflict generated new competitors abroad, strengthened old ones, and thus reduced sales prospects. Defeat in World War I then cost the country territory and population, income on lost patents and subsidiaries, access to some markets, and until 1925 the ability to protect the domestic one.¹ The depreciation of the German currency cheapened German goods and thus buoyed their sales for a while after the war, but also worsened the central problem by encouraging a “flight into real values,” that is, from cash into buildings and machinery, which left more excess output behind when inflation ended. What the nation could produce remained persistently greater than what it could sell, especially in a world increasingly inclined to erect barriers to imports.

In response, during the 1920s, German big business fixated on restoring sales and profitability through cutting costs, both those imposed upon it and those generated internally. The attack on the former category led to increasingly intense clashes with the democratic regime established in 1918–19 because the corporate world’s desire to reduce tax payments and labor costs collided with two key government policies. The first of these was the defense of the Central Work Community (Zentralarbeitsgemeinschaft or ZAG) and Stinnes–Legien Agreement of late 1918 by which business had accepted the eight-hour day and the negotiation of contracts governing wage and working conditions between unions and management on an industry-wide basis. The second was the practice of paying the war reparations mandated the following June by the Treaty of Versailles while trying at the same time to get them reduced, that is, the “fulfillment” program. Most leaders of German big business had accepted the concessions to labor and the Treaty terms under duress, seeing them as necessary to head off domestic revolution and foreign occupation. Backsliding began quickly in 1921, when the Allies finally revealed how much they expected in reparations (nominally 132 billion gold marks, but really a still formidable 50 billion or US$12.5 billion). The size of the bill prompted some of the nation’s most prominent corporate leaders to advocate defiance. Led by Hugo Stinnes, probably the nation’s wealthiest person at the time, and consisting largely of colleagues in so-called heavy industry, that is, coal, iron, and steel firms, but also including Franz Urbig, a prominent figure in the Deutsche Bank, they insisted not only that the sums involved were beyond what Germany could pay, but also that even raising lesser amounts would require repealing, in Urbig’s words, “the so-called social, but in reality purely socialist achievements of the revolution.”²

By 1922, the leaders of the newly formed National Association of German Industry (Reichsverband der Deutschen Industrie or RDI) were echoing the arguments that the burdens of both reparations and the ZAG were unsupportable and in need of revision.³ This became the fixed and retrograde position of German corporate leaders throughout the history of the Weimar Republic: Only a return to pre-1918 conditions could restore profitability and rates of productivity per worker. Leading entrepreneurs differed recurrently about tactics and tone, however, with one group of executives and trade associations favoring open confrontation with the Allies and the unions and expressing increasing antagonism toward the German parliamentary regime, and another arguing for conciliation to persuade foreigners and labor of the reasonableness of industry’s positions and its acceptance of the existing constitution and thus of the need to abandon reparations and the ZAG. The more intransigent bloc centered around heavy industrial leaders in the Ruhr region – Stinnes until he died in 1924, Fritz Thyssen, Ernst Borsig, sometimes Albert Vögler and Paul Reusch – but did not comprise all of them – Gustav Krupp von Bohlen und Halbach and Peter Klöckner were prominent exceptions – and drew additional support from the regional business association of the state of Saxony. The more temperate group consistently predominated in the presidium of the RDI, and its main protagonists were IG Farben’s Carl Duisberg, the organization’s president from 1925 to 1931; Krupp von Bohlen, Duisberg’s successor at the RDI; Carl Friedrich von Siemens of his family’s electrical firm; and, less consistently, Paul Silverberg of the brown coal industry.⁴

As these affiliations and cleavages suggest, the groups did not divide according to the conventional image of export- versus domestic-market-oriented firms or older/heavy versus newer/chemical-electrical firms.⁵ Before and during the 1920s, such lines became blurred, as changing sales interests and product portfolios pulled enterprises and their leaders in multiple directions. In consequence, membership in each group was unstable, at least at the margins. Individual executives often shifted affiliations, depending on the issue at hand or perceived circumstances or simple vacillation.⁶ Stinnes agreed with Duisberg in opposing both the right-wing, militarist Kapp Putsch of 1920 and the Allies’ London Ultimatum on reparations a year later but their respective allies diverged over accepting the Dawes and Young plans of 1924 and 1929 that revised the reparations terms; Krupp reluctantly joined in management’s lockout of striking iron workers of 1928 but otherwise rejected a hardline approach to the unions; Silverberg grew less outwardly compromising toward labor as time passed; and Hermann Bücher of Siemens’ rival General Electric (Allgemeine Elektricitäts Gesellschaft or AEG) stood with the moderates on reparations but with the hardliners toward labor.⁷ Heavy industry split sharply after 1928 between supporters and opponents of the mulish, autocratic, and protectionist Alfred Hugenberg as leader of the German National People’s Party (DNVP).⁸

Such fluctuating divisions should not obscure some common political trends within the corporate world. For one thing, its leaders shifted gradually rightward during the 1920s as many who had enrolled in the left-liberal German Democratic Party (DDP) in 1919 moved to the right-liberal German People’s Party (DVP) or from it to the nationalist DNVP. Simultaneously, fewer corporate leaders took a direct role in politics, including seats in the parliament, after the mid 1920s, opting instead for indirect representation through favored, subsidized representatives.⁹ Neither should tactical or personal differences conceal the general agreement on social and economic policy that prevailed in the upper reaches of the business world. In the course of the stabilization of the mark during 1923/24, the Republic reaffirmed the eight-hour day, albeit with a provision that employers could require up to six hours of overtime per week, and inaugurated a system of state arbitration of labor management contracts (Schlichtungswesen) that by 1932 had issued some 4,000 binding agreements. Industry simply hated the infringement on its autonomy and bargaining power that these policies represented, and corporate animosity reached fever pitch in the late 1920s, when the arbitration system’s decisions seemed partial to labor’s demands.¹⁰

Opposition to the eight-hour day and compulsory arbitration now became the centerpieces of business’s collective claim that government policy made profitability next to impossible.¹¹ From executives’ point of view, their rational and objective economic calculations of optimal shift lengths and affordable wage rates had been usurped by emotionally and politically driven “dictates” that bore no relation to measures of profitability or even the cost of living.¹² The only ways to restore reliable levels of employment and prosperity were to expel the government from economic life and to reduce public expenditures to make room for increased private investment. From the RDI’s first announced public program of December 1925 to its nearly apocalyptic statement entitled “Rise or Downfall” (Aufstieg oder Niedergang) in late 1929, this was the common lament of corporate leaders, most specialized trade associations, and nearly all prominent financiers, including such tactically and rhetorically cautious figures as Duisberg and Silverberg. Only “a return to a state-free economy” could save Germany, they chorused.¹³

This is not to say that German industry externalized all responsibility for dealing with market constraints and reacted entirely passively during the 1920s. On the contrary, large German firms developed – and mixed and matched – multiple coping strategies that stimulated a great deal of intramural activity. One such, an expansion on prewar practice, was the effort to contain the destructive effects of slackened demand through engaging in countless domestic and international market-sharing, price-fixing, and profit-pooling agreements. The 1920s may well have been the apogee of cartelization of this sort, both at home and abroad, and the largest German enterprises, especially in mining, steel, chemicals, and electrical apparatus, were deeply enmeshed.¹⁴ As defensive measures in the short run, cartels could and did prove effective in sustaining some firms and giving all participants a degree of predictability about receipts. But the deals suppressed the sort of market and price signals that prompt adaptation to changing conditions, and thus short-circuited competition that otherwise would have produced the “creative destruction” characteristic of thriving economies.¹⁵ Meanwhile, by setting prices at levels tolerable to the least efficient signatory, cartels hampered efforts to increase demand, that is, to address the central problem German business faced.

A second common response was also less effective than it seemed in dealing with Germany’s immediate economic crisis. The 1920s were also the most intense period of concentration – of consolidation of multiple enterprises into gigantic firms through mergers and acquisitions – in the German economy during the first half of the twentieth century. Although not unique to Germany, the trend there was quite pronounced.¹⁶ It transformed the cigarette industry into a virtual monopoly of the Reemtsma organization by the end of the decade.¹⁷ In banking, a takeover wave turned the Commerzbank into a national presence, with the densest branch network of any large Berlin-based bank.¹⁸ The Deutsche Bank not only followed suit with numerous provincial acquisitions, but also participated in by far the largest banking merger prior to the Depression, the fusion with the Disconto-Gesellschaft in October 1929.¹⁹ Among the most famous products of the penchant for combination were the still extant Daimler-Benz and Lufthansa companies, along with two mammoth enterprises that lasted only from 1925 to 1945, the United Steelworks (Vereinigte Stahlwerke or VS) and the IG Farben corporations, by most indices Germany’s first- and second-largest private enterprises.²⁰ By the late 1920s, the former firm controlled 50% of German raw iron output and 43% of that of crude steel, while the latter held 48% of the invested capital in the German chemical industry, dominated the output of dyes, synthetic nitrogen, and explosives, and was nearly as strong in pharmaceuticals and synthetic fibers.²¹

In every instance, the purpose of consolidation was to reduce duplication and staff, and thus to lower costs and prices and thus increase demand and profits. Yet, in almost every case, the acquirers failed to pursue the objective with sufficient urgency during the brief boom of the late 1920s that followed the currency stabilization, so overlapping or uncoordinated operations declined too slowly.²² Meanwhile, the newly formed entities carried the costs of their formation: interest on any necessary loans to fund the transactions, fees for expanded boards of directors, severance payments to redundant employees, and long waits in disposing of surplus offices and plants. Even large staff reductions made disappointing inroads on wage and salary bills because of the tendency to keep on the most experienced personnel. The Deutsche–Disconto merger probably was representative of the overall pattern. Its most recent students conclude that at 3.5 million Reichsmark, “the costs of integration were well above the short-term savings.”²³ Banking, in fact, provided a strong demonstration of the inefficacy of consolidation, since its breadth did not reverse the relative decline of the big banks’ standing among Germany’s largest corporations during the great inflation, nor remedy their subsequent undercapitalization.²⁴

Still a third corporate reaction to the gap between output and demand became a buzzword of the age: rationalization, by which practitioners meant modernization and mechanization of production processes, increased standardization of components and models, and simplification and centralization of administrative procedures. In the late 1920s, mining firms in the Ruhr closed more than 100 uneconomical pits and raised the proportion of coal cut by machines to 90%, while VS shut down multiple operations, specialized others around a limited product range, and invested nearly 300 million Reichsmark in new facilities and machinery.²⁵ Krupp poured tens of millions of Reichsmark into new iron and steel makers at Borbeck and Rheinhausen.²⁶ Across the country in Silesia, the Kokswerke corporation built 33 million Reichsmark-worth of new coal-mining and coke-making operations.²⁷ Unlike many German firms that resisted assembly-line processes and held to more traditional notions of handicraft, Siemens introduced flow manufacturing extensively and successfully.²⁸ But even among producers that might have most easily adapted to such methods, notably automobile makers, change was laggard.²⁹ Because of the expense involved and many producers’ suspicion of too much standardization à la Henry Ford, rationalization in Germany remained more talked about than carried out, more a matter for the largest enterprises than many others. Moreover, where practiced, the resulting gains in output only aggravated industry’s problems. Rationalization was expensive; it had to be paid for out of receipts that were not rising because demand was not; it ate the savings in unit costs that it achieved, especially if, as frequently was the case, the modernization expenses were booked, in whole or in substantial part, as operating costs rather than mostly depreciated over time; and the new installations that appeared usually could make profits only if operated at close to capacity, which current levels of demand seldom permitted.³⁰

Perhaps the only genuinely effective intramural strategy that emerged from the demand crisis of the 1920s was diversification – the pursuit of new sales through new products – usually through buying up their makers, and even that often did not work. Among its most visible exponents were the Haniel family’s Gutehoffnungshütte (GHH), which Paul Reusch led throughout the decade and transformed from a Ruhr coal-mining firm into a mixed-mining, machinery, and shipping operation through a chain of acquisitions mostly in and around Nuremberg and Augsburg.³¹ But the metals firms failed to develop into large consumers of GHH’s coal or offsetting earners; in fact, they drained money from mining operations.³² Across the country in Upper Silesia, Kokswerke’s failure to capitalize wisely on diversification proved even more extreme, though the flow of funds ran in the opposite direction. Beginning in the early 1920s, the mining company bought up a potash producer, a dye and lacquer firm, two chemical enterprises, and, through one of the last named, a series of providers to the photographic industry. The parent company then showed little interest in turning these into buyers of its coal. Neither did Kokswerke work to integrate or synergize the other operations. Instead, in the late 1920s Kokswerke merely milked them as cash cows to fund its expanding, and increasingly superfluous, coal and coke output.³³

An atypical case of corporate success with diversification occurred in conscious response to marketing issues, rather than ones of overcapacity. Ernst Busemann headed the German Gold and Silver Separation Institute (Deutsche Gold- und Silber-Scheideanstalt or Degussa), an inorganic chemicals firm in Frankfurt that specialized in refining precious metals, chemicals derived from wood distillation, and sodium compounds including cyanide and perborate, the active ingredient in the bestselling German detergent Persil. In the mid 1920s, he concluded that none of these product lines offered reliable prospects of future growth and began searching for new sorts of business. His program blossomed during the Depression and, coupled with vigorous rationalization of existing production units, allowed Degussa to emerge from the economic crisis almost unscathed.³⁴

Busemann’s venturesomeness was rare, and the demand shortage of the 1920s provoked remarkably little innovation or imagination on the part of the nation’s corporate magnates. “Because of their backward-looking orientation,” as Toni Pierenkemper puts it, executives exhibited much more path dependence and repetition than eagerness to pursue new undertakings for new markets.³⁵ This automatism characterized even one of the outwardly most ambitious undertakings of the age, IG Farben’s massively costly (426 million Reichsmark from 1924 to 1932) pursuit of manufacturing motor fuel from coal via hydrogenation. The effort reflected a desire to duplicate two different, but interrelated pasts: the synthesis of indigo dye from coal at the dawn of the twentieth century, and the extraction of nitrogen from the air under enormously high pressures on the eve of World War I. Now marrying the traditional feedstock to the new process to make gasoline was supposed to offset declining proceeds from both these previous breakthroughs and to generate a new, lucrative, and similarly time-bound monopoly that would not only replace the fading returns, but also solve the problem of overcapacity at the nitrogen works. As crude oil prices fell faster than production costs, however, IG’s vision retreated like the horizon, which only made chasing it more expensive, to the point that the chief reason the project survived a review in 1932 is that shutting it down by then seemed likely to cost more than letting it limp along.³⁶ Sales of pharmaceuticals and other consumer goods enabled Farben to survive the Depression, but the firm, like Kokswerke, devoted greater attention to “investing in value-destroying businesses” than recognizing and developing genuinely new earnings sources, and skepticism about the prospects of international trade reinforced this course.³⁷

Since the 1980s, discussions of the late Weimar economy have been dominated by Knut Borchardt’s thesis that the German economy suffered at the macroeconomic level from restricted access to credit, which prevented countercyclical spending in response to the Depression, and at the microeconomic level from inadequate investment that resulted from a profit squeeze caused by wages, social expenditures, and taxes that had risen faster than productivity gains.³⁸ The microeconomic side of this argument suffers from at least two major problems. The first is that the profitability figures on which Borchardt and subsequent analysts have relied are, in fact, not reliable. As Mary Nolan pointed out decades ago, standard accounting practices in the 1920s scarcely existed, so firms booked and reported items on published balance sheets as they wished and to their own advantage, and considerable inconsistency and deception resulted.³⁹ Recent research has shown that many of the balance sheets submitted to tax authorities also reflected considerable manipulation, with the result that they, too, understated corporate profits.⁴⁰

In fact, industrial investment in Germany in the late 1920s was quite high – as a percentage of gross domestic product, the volume approached or exceeded the level of 1913 in every year from 1925 to 1929.⁴¹ That firms paid for much of this with borrowed foreign funds that later were withdrawn abruptly proved debilitating in subsequent years, but loans were not the sole source of the investments and their overall supply was not insufficient. Neither does the record suggest that more capital would have been better spent, precisely because the path-dependent and backward-looking groupthink in the upper reaches of German big business barred any more imaginative course than trying to do what firms already had been doing, only more cheaply. “The problem,” in the words of three distinguished economic historians, “was not that the supply of capital in Weimar Germany was deficient; it was rather that the demand for investment was skewed toward ‘unproductive’ purposes.”⁴²

In short, the principal economic problem of the late 1920s was a widespread corporate failure to think in effective strategic terms and a tendency instead to throw good money after bad. Rationalization chased its own tail, and so did concentration. Faced with this, as the late Christopher Kobrak astutely and gently summarized, “It was hard for business to see itself as part of the problem …. Many business leaders … had difficulty … resisting the temptation to deflect self-criticism by attributing their difficulties solely to a combination of government … and worker attitudes.”⁴³ No matter that Ruhr miners were, in fact, underpaid in comparison to their counterparts in Great Britain and Belgium, or that in companies like Schering, which made chemicals and pharmaceuticals, the rising labor costs stemmed from the need for new and more sophisticated kinds of workers, not wage hikes to factory personnel.⁴⁴ Industry had its own numbers, and its own mantra.

In 1930, even Duisberg joined in lamenting the triumph of “politics” over “objectivity” and declaring that business must “progress from the sphere of warning and admonishing to that of self-defense and active deeds.”⁴⁵ The Ruhrlade, a group of twelve leading figures of diverse political inclinations in heavy industrial firms of the Ruhr and Rhineland, called in June 1931 for the Cabinet to “take the chains off of business” and allow it to function “according to the eternally valid economic laws.”⁴⁶ The following September, a “Unified Declaration of German Economic Associations” (“Gemeinsame Erklärung deutscher Wirtschaftsverbände”) attacked the government of Chancellor Brüning for following a “politically dictated economic system” and called on it to “openly and without reserve” stand up for an “individualist” alternative by ending compulsory arbitration and reducing public expenditures, wages, and salaries.⁴⁷ As they uniformly demanded emancipation from the heavy hand of the state, few industrialists or financiers appreciated the irony that they also increasingly sought and obtained the state’s help in the form of tariffs and import quotas, subsidies, special rates for railroad transport and postage, and even government bailouts of Friedrich Flick’s Gelsenkirchener Bergwerks AG and the Dresdner and Commerz banks in 1932.⁴⁸ But voters saw the contradiction, and it reinforced the fact that the economic program to which German business stubbornly wedded itself had no hope of commanding even a plurality of support from a democratic electorate, let alone a majority.

Although in general agreement upon a self-serving account of the nation’s ills and best remedies, German big business could not unite during the Depression around a suitable political force to follow through on the diagnosis.⁴⁹ The intransigents, clustered mostly in Ruhr heavy industry, clung to Alfred Hugenberg as their spokesperson, though his agrarian protectionist views alienated many other industrialists; to the goal of driving the Social Democratic Party (SPD) out of influence over government policy; and to a vision of authoritarian rule by President von Hindenburg of the sort that Paul Reusch had called for as early as 1925.⁵⁰ As support for Adolf Hitler’s National Socialists increased at the polls, some of these executives entertained the idea of including him or his party in the governing Cabinet and thus coopting Nazism’s broad following. Always a minority sentiment, this flirtation peaked around the middle of 1932 and generally came with an awareness of playing with fire. For example, Hermann Röchling, a steel magnate from the Saar region that was still under French administration, advised the recently appointed Chancellor Franz von Papen to name Hitler vice chancellor “in order to direct the danger of National Socialism into normal channels” or even chancellor if necessary, “because in the final analysis the experiment has to be made under the leadership of the present President so that nothing can happen that could be dangerous.”⁵¹ The moderates, who maintained the upper hand in the RDI, meanwhile sought to form a “bourgeois bloc” (Bürgerblock) of parties to sustain Heinrich Brüning’s Cabinet of 1930–32, to maintain dialogue with the unions and the Social Democrats to reelect Hindenburg and defeat Hitler in the presidential voting of March and April 1932, and to avoid the unpredictable consequences of his or his rather plebeian Party’s inclusion in the government. Appreciable financial support for the National Socialists was not forthcoming, except from Fritz Thyssen, virtually the only major industrial figure to back them openly.⁵² But neither was an outspoken defense of democracy.

Briefly, in the fall of 1932 most of German big business appeared to come together in support of the Papen Cabinet, not just because of broad agreement with its economic policies, but also because the Nazi Party program for the upcoming parliamentary elections included repellant elements that smacked of socialism. But Papen’s fall in December and subsequent intrigues to return to power, coupled with conflicting corporate evaluations of his successor, General Kurt von Schleicher, returned political disarray to business’s upper ranks. Uncertainty and discord assured that in January 1933 opposition from large landowners, not industry or finance, undermined Schleicher’s position with the president and opened the way for Papen to persuade Hindenburg to appoint Hitler chancellor.

Although German big business’s direct role in Hitler’s appointment was negligible, its part in the collapse of both Germany’s economy and its democracy between 1930 and 1933 – and therefore in the Nazi Führer’s rise to power – was considerable. The implacable and furious intransigence of the hardcore Ruhr magnates throughout the period from 1925 to 1932 suggests that profitability calculations and “objective” considerations were not their sole drivers. An equally powerful motivation for these executives was their offended sense of status and the deference due to it, which they nursed continuously after 1918. They therefore waged class warfare just as much as they alleged the Social Democrats did. They wanted to force acceptance of a hierarchy in which their education and expertise entitled them to acquiescence. Offended by the claims of labor representatives to equal standing in negotiations and to equal consideration in the distribution of proceeds, heavy industry’s exponents were determined to put their “inferiors” back in their place. Most leaders of other industrial sectors did not experience this vindictiveness as acutely or intensely – hence their greater patience and practicality – but were not immune to it either. Wounded vanity, combined with an uncomfortable sense of helplessness in the face of the persistent economic downturn, reinforced the consoling corporate consensus that blame for Germany’s afflictions rested exclusively on others.

Knut Borchardt touched on the heart of the matter when he wrote,

More precisely, the burdens were the heritage of defeat to which the nation needed to adapt creatively, above all through a government–business–labor partnership to shift resources toward industries with growth potential and away from those that cost-cutting could not sustain. Though the obstacles to such an undertaking were enormous, German big business demonstrated little or no appreciable initiative in this direction, preferring to blame the Allies and the homegrown political left for Germany’s miseries and to demand an unachievable rollback to pre-defeat conditions. For the German corporate world, the ironic result was a Nazi regime determined to create an economy more politicized than ever before.

Of the many issues on which the worldviews of the German business elite and the Nazi movement overlapped to varying degrees, antisemitism was among the most fraught, but the corporate world’s relative decency on the subject offered German Jews only limited prospects of defense or protection. On the one hand, by and large during Hitler’s rise to power, German big businessmen did not yearn to drive their Jewish colleagues out of economic life or regard them as foreign or accept Nazi claims that the country’s guiding economic positions and policies had become “jewified” (verjudet). Most leading entrepreneurs and executives regarded vulgar propaganda about Jews and acts of violence against them as embarrassments to the nation and counterproductive to its interests. Yet in the 1920s, on the other hand, many major business figures harbored increasing animosity toward Jews prominent in journalism and culture and became receptive to reining in their “influence.” The resulting ambivalence in corporate circles about the place of Jews in German society contributed to the weakness of anti-antisemitism in the country that helped paved the way for Hitler’s ascent and the Holocaust.¹

By 1932, the days were long gone when a prominent industrialist could speak for more than a handful of extreme nationalist executives in attributing the country’s failure to defy the Allies over reparations to the dominance of an “alien spirit” in high places, as Hugo Stinnes had done in 1920.² By the early 1930s, the Dawes and Young Plans had been adopted under the auspices of non-Jewish pragmatists named Gustav Stresemann, Carl Duisberg, Hermann Bücher, and Gustav Krupp, not just Jews such as Walther Rathenau, Carl Melchior, and Max Warburg. Although many corporate tycoons grew more eager under the impact of the Depression to shift the blame for the downturn onto others, the victors in World War I and the Weimar social welfare state seemed quite serviceable enough – and far more appropriate.

Within the business world itself, moreover, events had eroded the perception of Jewish colleagues as “alien.” The leaders of Germany’s major enterprises on the eve of Hitler’s appointment as chancellor often had served with Jews in numerous wartime capacities, had frequent contact with them in daily life, found them loyal and cooperative in cartels and interest groups, and long since, if necessary, worked out mutually satisfactory arrangements demarcating the business relationships of their respective firms. In the context of the “organized capitalism” of the Weimar era, the battle that pitted Paul Silverberg against Friedrich Flick, Jew against non-Jew, for control of Harpener Bergbau in 1932 was an almost unique occurrence. At the personal level, many Gentile chief executives also had first- or second-hand experiences with intermarriage and recognized that the ranking members of many of the most prominent “Jewish” commercial families were, in fact, second- to third-generation Christians.³

Furthermore, by any statistical measure, the prominence of Jews in the German economy – which was a result of their earlier exclusion from many other walks of life and confinement to such activities as moneylending, peddling, cattle trading, and leather processing, as well as of the relatively high premium their religious practices placed on literacy and learning – was palpably waning by the early 1930s. Between 1907 and 1927, according to one study, the share of Germany’s ninety most heavily capitalized firms in which Jews were decisively or strongly represented on the managing and supervisory boards fell from 36.5% to 31% and that on which they were modestly represented from 33.5% to 18%; conversely, the proportion of these firms with no discernable Jewish presence in governance rose from 30% to 50%.⁴ Applying these categories to the country’s 300 largest non-financial firms, another study concludes that in 1927 the respective distributions were 25%, 25%, and 50%, but by 1932 the first two groups together totaled only 35% and the share of enterprises with no significant Jewish presence had risen to 65%.⁵ Meanwhile, the incidence of Jews among the senior employees of the great joint stock banks, which are included in neither of these tabulations, fell from 11% to 7% in just the short span of 1928–30.⁶ Incomplete evidence suggests that this share continued to fall during the early 1930s, although it remained higher in the most senior ranks.⁷ In 1933, Jews bulked scarcely larger among the independent or leading personnel in German business as a whole (2–2.5%) or in industry in particular (1.3%) than in the national population (0.76%).⁸

Mortality, mergers, and mismanagement were the chief causes of the declining number of Jews in the upper reaches of German corporate life, and the effects became unmistakable after 1925. The death of Felix Deutsch in 1928 signaled not only the end of Jewish leadership at the great AEG that the Rathenau family had built, but also the passing of an entire generation of similar figures: Sally Segal at the Rütgerswerke (1925), Emil Guggenheimer at MAN (Maschinenfabrik Augsburg Nürnberg; 1925), Siegmund Seligmann at Continental (1925), Viktor Zuckerhandl at Oberschlesische Eisenindustrie (1927), Henry Nathan at the Dresdner Bank (1932), and Louis Hagen of the private banks in Cologne that financed much of Ruhr industry, A. Levy/Sal. Oppenheim (1932). Old age also removed Aaron Hirsch in the late 1920s from the management of the brass and copper giant that bore his family name.⁹

As for the merger wave, the most striking illustration of its impact is provided by the chemical industry. With the formation of the giant IG Farben combine in 1925 came the eclipse of the Gans, von Weinberg, Mendelssohn-Bartholdy, Oppenheim, and von Simson families that had dominated the Leopold Casella and Agfa firms, as well as of Julius Flechtheim, who had helped create and had managed the Köln-Rottweiler Pulverfabriken. Although he became a legal consultant to Farben, and the senior members of the other clans ascended immediately to its supervisory board, all of these men rapidly lost influence. The only one of their offspring initially allotted an important managerial role in the new colossus soon followed them into gilded marginality in 1931.¹⁰

The mismanagement that brought down fortunes and families sometimes reflected generational change at the top of firms. Unfortunate successions in the late 1920s led the Bleichroeder Bank to sell out to Gebr. Arnhold of Dresden and Hirsch Kupferwerke to come under the control of AEG.¹¹ Hans Lachmann-Mosse, the dilettantish son-in-law who inherited the great advertising and publishing empire that Rudolf Mosse had built, so frittered it away during the 1920s that the Depression simply finished off the process: The illiquid concern filed for bankruptcy protection months before the Nazis took power.¹² Sometimes, however, the origins of trouble lay in insufficient or excessive imagination on the part of veteran figures. A stubborn refusal to adjust to changing market conditions produced the Sonnemann-Simon family’s troubles with the Frankfurter Zeitung, arguably Germany’s most respected daily newspaper of the era. Nine months prior to the crash of 1929, the owners finally responded to long-falling revenues by seeking a bailout from IG Farben, which thus soon acquired 49.5% of the stock outright and a claim against another 10%.¹³ The beginning of the end of Ottmar Strauss’ role in Otto Wolff & Co. and the many supervisory boards on which he represented it lay in his accumulation of enormous personal debts through stock market speculation that came to light in 1931.¹⁴ In the most spectacular collapse of a Jewish fortune and reputation of the period, that of Ludwig Katzenellenbogen, the cause was blatant fraud. His complex of giant enterprises (Portland Cement, Schultheiss-Patzenhofer, and the Ostwerke AG) crumbled in 1931, when the banks that had financed it discovered that he had used the same collateral to borrow from each of them, without disclosing the previous debts.¹⁵

Much of the damage done to Jews’ wealth and careers stemmed, however, from a widely duplicated mistake, rather than individual failings. By the late 1920s, almost all of Germany’s leading enterprises were dangerously overextended financially because virtually none of their leaders had seen the Depression coming.¹⁶ Once it set in, Jewish executives hitherto acclaimed for ambition and daring found themselves removed for extravagance and foolhardiness. Such was the fate in 1931 of Heinrich Schöndorf at the Gentile-owned Karstadt department store chain and of Eugen Gutmann, Jakob Goldschmidt, and Curt Sobernheim, the chairmen of the Dresdner, Darmstädter, and Commerz banks, respectively. Indeed, by then the economic crisis was dislodging property as well as personnel, as the major Jewish-owned department stores (Hertie, Wertheim, Leonard Tietz) were forced to sell or mortgage most of their shares to the big banks and these, in turn, had to hand over many of theirs to the government in return for protection against their creditors.¹⁷

While all these developments were thinning the ranks of Jewish chief executives, Chancellor Heinrich Brüning’s government issued an austerity decree in September 1931 that hastened the process. By ordering all corporations to shrink their supervisory boards to no more than thirty members and by restricting the number of supervisory board seats a person could occupy to twenty-five, the Cabinet sweepingly reduced the presence of Jews in corporate governance.¹⁸ Their relatively high average age meant that they were disproportionately forced into retirement during 1932, while those who remained found the range of their corporate activity greatly circumscribed.

Of course, time and fate affected non-Jewish corporate leaders as well, but the smaller base number of Jews made the statistical impact on them relatively large between 1925 and 1932. And, of course, hundreds of Jews continued to play significant ownership, managerial, and advisory roles in Germany’s largest enterprises. More than a few outstanding family fortunes, such as those of the Schottländers and the Blumensteins, remained intact. But anything like a distinctly Jewish economic sector virtually had ceased to exist by the early 1930s in Germany, except perhaps in Upper Silesia. Even in the commercial fields where Jews remained notably “overrepresented,” for example, banking, chain store retailing, and metal and grain wholesaling, the general trends toward diversified or anonymous ownership and toward the interpenetration of Jewish and Gentile management continued.¹⁹ This fading distinctness, in fact, mirrored what was happening in German society as a whole. In the waning years of the Weimar Republic, Jews still constituted larger shares of Germany’s doctors, lawyers, bankers, stock and grain brokers, and corporate executives than of the nation’s populace. But the degree of Jews’ “overrepresentation” in German professional life had been declining, more or less parallel to the drop in their birth rate and total number, since before World War I, along with the gap between the average wealth of Germany’s Jews and that of its Catholics and Protestants.²⁰ Although these trends did little to stem envy and resentment toward Jews among shopkeepers and clerks, especially after the Depression struck, the pattern was conspicuous and well recognized within the Reich’s corporate elite.²¹

For these and other reasons, most contemporaneous and retrospective accounts venture the generalization that social acceptance and professional advancement within the German big business world were encumbered by discrimination only episodically by the late 1920s.²² Thanks to the influence of events and personal ties, the endurance of traditional standards of courtesy, the force of respect for individual merit within what professed to be a performance-oriented economic system, and the self-interest of shareholders and fellow directors in the success of their enterprises, prejudice could operate in coded and indirect fashion against the ascent of individuals at one time or another, but not find systematic expression. The reach of antisemitism did not quite stop at the office door, but its grasp did grow weaker inside the threshold.

An exceptional case, significant as a harbinger of much of what would happen after 1933, is that of IG Farben’s managerial elite. After the National Socialists began denouncing that concern as “jewified” in 1927, and Robert Ley, a chemist at the Leverkusen plant who was also the Nazi Gauleiter of Rhineland South, refused to desist, the firm fired him.²³ The dozen or so Jews on the supervisory board remained undisturbed, as did the Jewish occupants of important staff positions, notably Ernst Schwarz, the chief assistant for social policy to Carl Bosch, the managing chairman of the concern, and Edmund Pietrkowski, Bosch’s representative at the head of the chemical industry’s main interest group and on the Presidium of the National Association of German Industry. Nonetheless, a quiet purge of Farben’s managing board seems to have ensued. Whereas six Jews were serving on that body in January 1926, none remained seven years later after Kurt Meyer resigned to accept a professorship at the University of Geneva just before Hitler took power. Two of the Jews left upon reaching retirement age, and one was “kicked upstairs” to the supervisory board for failing to manage his division of the firm effectively. But the other three departed in the prime of life, including Meyer, who apparently left after a falling out with the chairman of the firm’s supervisory board and after senior colleagues advised him that the rise of the Nazis boded ill for his professional future.²⁴ The rise of the Nazis may have made similar instances of discrimination possible at other corporations under the guise of prudence, but several recent analyses of personnel policies toward Jews at the largest German banks reveal no pattern of discrimination prior to Hitler’s accession, and to date no examples of other firms behaving like Farben have turned up²⁵

Non-Jewish big businessmen nonetheless often shared, albeit to varying degrees, some of the antisemitic attitudes that pervaded German society. As the German Jewish population shrank during the 1920s, the share within it of immigrants from Eastern Europe rose to one-fifth, largely as a result of lax border controls between 1916 and 1920. This demographic shift generated a backlash against the supposed “inundation” of Germany by the backward traditions and practices of the shtetl.²⁶ Habitual German anxieties about the unwashed East waxed as a result of losses of territory to Poland at the end of World War I and the memory of the leftist risings of 1918–19 in Russia, Hungary, and Germany – in all of which Jews had figured prominently, though not nearly so decisively as right-wing propaganda claimed. “The image of the Jew as Bolshevik” imparted a new, panicky element to the insecurities that plagued the German corporate world in the 1920s and that flared anew with each economic crisis.²⁷

The result among the leaders of German big business was the prevalence of a particular mix of antisemitic aversions. It thrived, not on animosity or rivalry toward Jews one knew, but on distaste and resentment toward Jews one perceived from a distance. It focused, not on Nazism’s racist emphasis on the supposed immutable genetic defects and hatefulness of Jewry, but on the bourgeoisie’s discomfort with the “primitiveness” of newcomers from the East and sensitivity to criticism in the aftermath of the upheavals of 1918–19. From the point of view of the corporate oligarchy, the threat that “Jews” posed to “Germans” lodged neither in the economy nor primarily even in domestic politics. After 1923, only one Jew served in a Cabinet of the Republic and none in the cabinets of Prussia or the smaller states; even the German Communist Party pushed its Jewish members into the background after 1928.²⁸ As Germany’s crisis peaked in 1932, leading Jewish executives, including Oscar Wassermann and Georg Solmssen of the Deutsche Bank and the coal magnate Paul Silverberg, stood just as solidly behind President von Hindenburg and the economic policies of the Papen Cabinet as most of their non-Jewish colleagues, and proved almost as pragmatic about enlisting Nazi Party members in a national coalition government.²⁹

The menace Jews seemed to present was cultural, carried by the high representation of Jews in the fields from which attacks on traditional and national “values” and on capitalism and its standard-bearers seemed most stinging: the stage and journalism.³⁰ At the beginning of the 1930s, half the theater directors in Germany (80% of them in Berlin), three-fourths of the playwrights whose works were being produced, and a plurality of the editors of the major daily newspapers were Jews.³¹ Among business leaders determined to disclaim responsibility for the nation’s woeful condition, the urge to marginalize those who often portrayed capitalism and commerce unfavorably ran very strong – especially because these messengers had more cachet than communist cadres and were more likely to influence executives’ acquaintances and offspring.

Thus, corporate antisemitism during the final years of the Weimar Republic bore the stamps of revulsion at the changing demography of German Jewry and of a recurrent quarrel in modern industrial societies between executives proud of their capacity “to meet a payroll” and the sort of people they like to deride as “the chattering classes.” Believing themselves on the losing side of a contest for public respect, Weimar corporate magnates often countered by resorting to ethnic condescension. Because Jewry frequently produced both estimable colleagues and annoying disturbers of the deference business leaders thought they deserved and the cultural stability they prized, such a people, executives concluded, “is to be enjoyed with caution” (ist mit Vorsicht zu genießen), which was to say, kept small in number and dispersed in influence until acculturation did its work of refining and sorting.

Although attitudes of this sort seldom found written, let alone articulate expression, the private papers of Fritz Roessler, the chairman of the supervisory board of Degussa, offer a revealing exception. An erstwhile left liberal who, like many executives, drifted rightward to the DVP during the 1920s, Roessler was on friendly terms with not only the six Jews on his board, but also the members of Frankfurt’s first Jewish families, his fellow patrons of multiple cultural and philanthropic organizations. But he was simultaneously capable of snobbishly tracing his disaffection with the DDP, at least in part, to the high complement of “ambitious Jews” among its local members, and of dismissing one colleague as “a clever, somewhat Jewishly and unscrupulously talented salesman.” Like many Gentile big businessmen, he overlooked or downplayed the heritage of people whose behavior and status conformed to his standards, but reflexively tied what he perceived as brashness, boorishness, or shrewdness to ethnicity. On the basis of this common upper bourgeois ascription of a mix of crudity and agility to Jews, he concluded “that their influence grew to a frightening degree after 1918 and became a cultural danger,” hence “scarcely anyone … had any objections to pushing the Jews back strongly, to limiting or even prohibiting access to certain professions.” And yet he could not believe in even the existence of pure races, not to mention their supposed essences, destinies, missions, and qualitative rankings. He therefore rejected talk of Aryan supremacy as “absolutely without scientific basis” and ridiculed as “a fixation” the Nazi image of “a horrible conspiracy of international Jewry with Marxism.”³²

Roessler did not speak for every member of the German corporate elite in the years leading up to 1933, but his was assuredly the plurality, probably the majority, point of view.³³ Prejudice toward and limitations on some Jews might be considered advisable, but blanket persecution, exclusion, and infringements on legal rights were not. This position reconciled the conflicts that most big business leaders experienced concerning the “Jewish question.” Caught between the convenient generalizations of racism and the humanizing effects of personal contacts, between the veterinary politics (peoples = breeds) that was a commonplace of the times and the individualist precepts of entrepreneurial ideology, most executives arrived at a fateful ambivalence toward Jews in German society. That stance conceded the existence of a “Jewish problem,” but located it in a supposed inclination to specific views or behaviors. Uneasy with attacks on decent and accomplished Jews like themselves, but reluctant to defend Jews as a group, corporate leaders like Roessler often gravitated toward a speciously reasonable middle ground in public policy, one that balked at racist mysticism, but bowed to supposed reality. They thus coupled expressions of principled opposition to infringements on the livelihoods and legal status of a category of fellow citizens with acceptance of measures that would “push back” Jews’ cultural influence and hasten the convergence of their and other Germans’ income and occupational distributions, especially admissions quotas for schools and professions.³⁴

Beyond this, however, few German corporate magnates would go – not least because their snobbishness toward some Jews was duplicated by that toward rabble-rousers, whether on the left or the right, who played “on lower instincts.”³⁵ Whatever these executives thought privately of Jews, few leaders of large firms considered a debate of the Jewish place in national life worthy of a cultivated nation or likely to contribute meaningfully to solving its most pressing problems. There were exceptions, of course, notably Gottfried Dierig, the textile magnate, who later recalled welcoming the Nazis’ “declaration of war on the destructive Jewish spirit, to which I also assigned the main guilt for all our misery.”³⁶ As of yet, however, few corporate elders embraced the “redemptive” strain of antisemitism that envisioned German renewal through the elimination of Jews.³⁷ On the contrary, many of these figures continued to fear that anti-Jewish agitation “threatened to release forces that one day could turn against bourgeois society.”³⁸

That big businessmen were more repelled than attracted by the antisemitism of the Nazi movement is perhaps best indicated by Hitler’s scrupulous avoidance of that theme while seeking their support. His experience with Emil Kirdorf, a retired coal magnate with long-standing and warm ties to the Salomonsohn family of bankers, may have convinced the Führer of the need for reticence in this respect. When Kirdorf joined the Party in 1927, he told Hitler personally that he had done so only despite the Nazis’ antisemitism, and several of the fourteen industrialists whom Kirdorf assembled to speak with the Führer a few months later also explicitly challenged him on this point.³⁹ By the time Hitler met with Wilhelm Cuno, the head of the Hamburg-America Shipping Line, in September 1930, the Nazi had learned his lesson. He went out of his way to sanitize the Party’s racial program, promising that once in power he would proceed against the “Jewish predominance in the state,” not Jewish persons as such, and that there would be no violent persecution of Jews in Germany. Just over two months later, Hitler addressed the elite Hamburg National Club and ducked the subject of the Jews altogether, thus setting a pattern characteristic of his speeches to industrial audiences from then until even several months after his accession in 1933.⁴⁰ Nonetheless, the issue remained touchy between the Nazi leader and the men he was trying to win over. Early in 1932, Albert Vögler of the nation’s largest steel company made so bold as to reproach both Hitler and Hermann Göring on the subject, and a few months later, Paul Reusch of the GHH combine ordered his newspaper in Nuremberg to editorialize against Nazi race-baiting.⁴¹

Narrow-minded by the standards of later eras, the leaders of German big business in 1930–33 were generally moderate, sometimes even liberal, by the standards of their own. But almost none of the non-Jews among them – Robert Bosch and Hans Walz in Stuttgart being notable exceptions – were active anti-antisemites.⁴² The predominant views on the “Jewish question” among executives both deluded and disarmed them when confronted with Nazi racism. In the first place, because they were generally unable to take racism seriously as a remedy for complicated problems, many executives were inclined to believe that the Nazis were not serious about it. The muting of antisemitic themes in Party propaganda after 1930 and in Hitler’s speeches to industrial audiences reinforced hopes that a more “rational” attitude toward the role of Jews in national life would prevail, especially because the National Socialist German Workers’ Party (Nationalsozialistische Deutsche Arbeiterpartei, NSDAP) was unlikely to come to power except in a coalition with forces that would restrain it in this regard.⁴³ In the second place, the point at which corporate leaders drew lines between excessive and warranted discrimination against Jews had retreated far enough by 1932 to make the sturdiness of Kirdorf, Vögler, and Reusch seem a bit archaic. Because they harbored enduring anxieties about Jews as a group, however tepid by Nazi standards, most big businessmen, particularly those in the generation-in-waiting at many firms, were prepared to decry intolerance only in their own sphere of action and against particular individuals, but not to stand up against the general practice.

Such people found reassurance in the Party’s own formulations of its intentions toward Jews in Germany’s economy. To be sure, few executives had read Mein Kampf. But those who had been briefed on it knew that the Nazi Führer regarded economic activity as merely the most ancient means by which Jews supposedly had corrupted Germans and as far less important to contain than their influence in politics and culture.⁴⁴ The same scale of priorities characterized the Nazi Twenty-Five-Point Program of 1920, Göring’s and Hitler’s public pronouncements during the early 1930s, and the principal internal Party documents on the Jewish question prepared prior to January 1933, which called for numerous limitations on the rights of Jews but said scarcely anything of commercial curbs.⁴⁵

On the eve of the Third Reich, then, most German big business leaders rejected some forms of antisemitism, but not all. Ambivalence about the rights and roles of Jews in German society was not a promising basis for resisting an assault upon them.