Hugo Stinnes

H U G O S T I N N E S

B y HERMANN BRINCKMEYER

TRANS LATED F ROM TH E G ERMAN BY

L D B NE R A F R E . K U TT

NEW YORK

B H E H c . W. U B S C , I n . M C M % % I C O P Y R I G H T , 1 9 2 1 , B Y

I N C W. H U E B S C H . B . ,

P R I N T E D I N U . S . A .

. O CONTENTS

INTR OD U CTION

I . TH E P ER SONALITY OF HU GO STINNES

II . HI S ANCESTORS

III . HIS F IR ST ENTER P R ISES

HI S P T I N T W R L WAR I V. AR HE O D

- V. THE MINING TR U ST : THE RHINE E LB E U NION

- VI . TH E E LECTR O MINING TRU ST % THE SIE M ENS RHINE E LB E SCH U CK ERT U NION

’ VI I . STI NNE s AF F I LIATIONS I N G ERMANY A ND AB ROAD

VIII . STINNE S A ND THE NEW S PAP ERS

I % . STINNES IN THE P U B LIC EY E

% . STINNES A ND THE SOCIA LI%ATION OF

I TRI O 0 0 O 0 0 O NDU S ES O %

%I . TH E SIGNIF ICANCE OF STINNES IN G ERMAN ECONOMIC DEV E LOPM ENT

I NTRODUCTI ON

There is a va st diﬂere nce of opinion in

G rman Hu o h is e y about g Stinnes , but ’ name is on everybody s lips and his activ ities are the subject of constant discus sion .

o l For many pe p e he is an idol , for others

T so he is a terror abroad in the land . he

' cialists of the Vorwdrts look upon him as a necessary product of evolution and a path

th e h e ﬁnder for state of t future . According

to Marxian theory, he is converting cap italism into the cocoon stage from which th e ﬁnished butterﬂy of socialistic collee i m w tiv s ill some day emerge . He should therefore not be disturbed in his activities % Socialists may yet come to appreciate him v ii INTRODUCTION

as one of their greatest ﬁgures . Socialists of a diff erent persuasion regard him as a

loathsome vampire of the proletariat . W . von Moellendorf suspects Stinnes of being an opportunist emancipated from all moral

considerations , whereas Walter Rathenau characterizes him as a particularistic indus trial baron whose work is destroying the present system as a step towards collectiv

ism . Sentimental Rhinelanders speak of % Hugo % with the same respectful famili arity with which the Israelites may have

used the name of their leader in the desert . And undoubtedly many a simple soul pic tures this enigmatic man as a just and stern

patriarch . Stinnes is certainly no ﬁne phrase- maker

r He o dreamer . is never idle . While thou sands of brain and manual workers are of standing by in despair, and thousands the most intelligent leaders are endlessly discussing what kind of cement should be

of used in the reconstruction Germany,

this man, calm and unconcerned , is building v iii INTRODUCTION

what may be either an ediﬁce of steel des

or tined to outlast time , a Babylonian Tower that will plunge the builders into

confusion .

HUG O STINNES

CHAPTER I

TH E PERSONALITY OF H UGO STI NN E S

HU G o STINN E S has reached the age of ﬁfty . He has the appearance of a worker and could go about in the clothes of a foreman or a miner without attracting attention . He is like a piece of coal wandering about w among his o n coal mines .

His thick head is set upon a stocky trunk .

His black hair is cut close , the face is pale and expansive , the beard is black as coal , the nose is curved and the eyes are heavily underlined . A German paper recently % called him the Assyrian King . of His external appearance is devoid pose, he seems heavy and solid . He walks with a HUGO STINNES

‘ h e slight st00p and s uﬂl s along like a sailor .

Clothes , habits and bearing denote a man f % o . simple tastes His pale face , his rather tired eyes and his modest clothes make him look more like a labor secretary than a Ger % — man Rockefeller to quote a French re porter who saw him in Spa .

Stinnes never stops working . It would certainly be a mistake to assume that h e is driven by personal ambition , or money greed , or considerations of public welfare . Anyone who knows the captains of industry of the Rhine-Westphalian district in their

own . T se bailiwick, will understand him he men have an irresistible impulse to do cre wh ative work . They are the engineers o organize human activity for constructive work ; they know their building material through and through , and often go on scheming and ﬁguring in their sleep , while dreaming about new combinations . The se dyed -in -the-wool industrial leaders know nothing of rest , luxury, or enjoyment . They live and toil in the simplest surround z HUGO STI NNES

Ev n of ings . e in their rare moments leisure

they have a preoccupied air, as if their

One minds were busy with problems . can

not Klockne r imagine men like Thyssen , ,

Kirdorf or Stinnes at a cabaret . Nor will you ﬁnd them in the false heroic pose of the ’ period of Kaiser Wilhelm s romanticism . It is interesting to know that these men can ’ drive through the workingmen s quarters in their automobiles without causing resent

inf al ment . The laboring classes have an lible instinct for workers and drones . Ev en the most radical class antagonist realizes that there is something more in men like

Stinnes than the impulse to exploit , and the desire for luxury . Otherwise it would be inexplicable that even during the most agi t ated periods of revolutionary disturbance in h as the industrial section , no weapon ever been raised against them . These men are noted for their practical T is e point of view . h is the source of th ir a re strength . Their nerves are fresh and ot ﬂ s n in uenced by emotions. But thi ex 3 HUGO STINNES

elusive devotion to practical considerations

is also a source of weakness . These men

of lead a life strict routine , and are chained to their work like convicts ; they are out of the ordinary run and therefore they stand

apart ; they are the victims of their destiny . Many pages of the book of life are closed to

of them , though they are the rulers life . No power of will can carry them beyond the walls which their own labors have

built around them . They have no leisure th e and do not become patrons of arts . Nor do they aspire to the fame of a Ma

cenas . For wh at do these men toil % By this time Hugo Stinnes has made a large for tune which is increasing from day to day; his power and his inﬂuence are incalculable . Ev n e if he could take the time for it , he would ﬁnd it impossible to spend all his wealth and enjoy it . But these men do not e ven take the time f or rest which every other laborer claims . Thyssen , an old man of almost eighty years , rides to his HUGO STINNES

‘ ’ oﬂi ce r eve y morning at eight o clock, in a street car, shoulder to shoulder with his own workmen . It is quite possible that these men never stop to think why they work . Not long ago a foreman rode home with of Stinnes at the end a strenuous day . In the course of the conversation he asked %

: . him Tell me , Mr Stinnes , why do you still work so hard %% Stinnes gave him a % % : peculiar look and said For my children . Surely a curious answer % Did Stinnes

in mean it ironically, as a challenge to this qu isitiv e union man % Or was he u n con s ciou sly expressing the dynastic feeling of a family that has now been in the saddle for three generations % We know the impor tance which Hugo Stinnes attributes to the family, and especially to a family such as his . The unusual demands which he makes upon his relatives show that he expects them to live up to the family tra dition . The present activities of Hugo Stinnes HUGO STI NNES

can hardly be surveyed . His associates are

numerous and include men of great energy, f fﬁ . o experience , and e ciency Some them have had life- long experience in the man

ement of ag great organizations , but Stinnes 1 always remains in control . It is note worthy that his oldest son , Hugo, who may prove to be a greater business genius than his father, is developing an unusually inde pendent initiative . The personal fortune of Hugo Stinnes has been the subject of many conjectures , some of which are quite exaggerated . But we must not forget that the organizations which belong to him personally are rela tively few in number compared to the nu merou s stock companies , participation com c pani s , and family companies , which are included in the Stinnes Trust . Hugo Stinnes has a genius for being de tach ed and practical . Not only does he control his own organi zati on with th e

% The E d Fla a s c a t e recen l ubl he em g, o i is pap r, t y p is d o . l a whi ch represents Sti nnes In complete control of German Induc d try, German business talent, an German po 6 HUGO STINNES

highest mathematical intelligence , but he also has a sure instinct f or practical com

a i ns of bin t o in every sphere business . He recognizes economic possibilities with far reaching implications while others still ig nore them . He does not go in for over ingenious schemes ; he is always con str u c tive . He can reverse his position at any moment without running the risk of dis organizing his work . These characteristics ffi alone , - however, would not be su cient to make him a power in the Germany of to day . There is the added factor that , in

- times when others lack will power, his de termination is ﬁrm ; that in the midst of

re general instability, he has managed to main unshaken . His poise and conﬁdence are a part of his character and do not have to be paraded in public . This is the secret of his power of sugge s tion over everybody with whom he comes in contact . Hence also the secret of his t control of men and circumstances . His a titu de towards labor and labor leaders is 2 7 HUGO STINNES

e peculi a r to hims lf . His relations with the unions are conducted in a brusque tone . ‘ He does not take oﬂense at unvarnished truths or even at downright rudeness , if it is honestly meant . As soon as he perceives that his opponent has a clear and succinct m to a r u ent . point of view, he is open s g He openly attacks mere tactics or else ignores not them altogether . He is friendly to theories . Occasionally he does not mind listening for an hour or so to a theorist . He likes to analyze and refute unsound

e . th ories , in the very act of listening to them

He thinks in economic terms . When he proposes to have his employees participate in an enterprise by taking shares in it , he is guided by the thought of enlisting hither to unutilized energies . In his socialistic projects , his idea is to have business beneﬁt from the participation and joint respon ibili f s ty o labor . Nevertheless he is a busi ness aristocrat . This may be due to the fact that he does not feel that the period of collectivism has arrived, and because he 8

HUGO STINNES the eﬂi cient workmen % If these two requi

off sites are lacking , I keep my hands . This way of looking at the problem will have to be observed in the future . You must leave to the organizer what ’ — is the organizer s business leadership .

And you must see to it that - labor gets a fair reward and a good living out of the enterprise .

so Up to the present , the debate about cializing industries has not been able to e solve this problem in any other way . L

of gien , the deceased leader the German

of socialist unions , who had been in favor putting socialism into practice immediately,

a c arrived at the same conclusion , and knowledged that the interests of both em ployer and employee must be consulted . In a conversation with Stinnes he once % expressed himself as follows : It is a pity that we did not get to know each other years ago ; in that case many things in the labor movement and in industry might have % turned out diff erently . I O HUGO STINNES Stinnes has a remarkable inﬂuence upon

public opinion , yet he seldom appears in

of of public . His recent purchase a string

newspapers , which will be discussed later on , led many people to surmise that he was looking for a means of expressing his point

of of view . But his acquisition plants

of covering the whole scale production , from cellulose factories and paper mills , to printing establishments and publishing houses , would seem to indicate that he is more concerned with a large economic con solidation .

one S a con On occasion , namely at the p f erence , Stinnes did make a public declara tion . He attended the conference as an expert , and read his Opinion about the coal situation from a manuscript , in a high weak voice which was in curious contrast to his robust appearance . When he referred to certain individuals being % afﬂicted with the

of incurable illness victory, he was cau tioned by the chairman of the conference to moderate his words . Stinnes merely r r HUGO STINNES looked up brieﬂy from his manuscript and % replied : I am not here for the sake of being polite . His speech , which attracted wide attention , expressed his conviction

that the reparation problem was a a problem of European economics which could be solved only through the full coéi peration f o both the victors and the vanquished . Stinnes was speaking in terms of strict

economic necessity, and his words echoed harshly in the rareﬁed atmosphere of diplo

a macy, t ctics , and psychological subtleties

which per vaded Sp a . The men of the Stinnes family have al ways clearly foreseen the steps of industrial i evolution . Their eff orts have decisively n

e ﬂu n ce d economic development . To attain a correct estimate of Hugo Stinnes and his — s ign iﬁca n ce for he is a force to be reck — one d with it is necessary to trace the en t e rp ris e s of his family as well as his own

earlier projects . Those who bear the name of Stinnes have never been communicative

and have developed no theories . For that 1 2 HUGO STINNES reason it is much more interesting and important observe what they have done than to listen to what they have had to say . CHAPTER II

HI S A NCE STORS

TH E history of the Stinnes family reﬂects ’ a century s development of the Rhine

Westphalian industrial section , and with f it o German economic history . The Ger man development from the eighteenth to the nineteenth century was marked by

con political dissension , cramped economic ditions , small scale production , and petty politics among the guilds . But it was not long before the waves of political and economic upheaval swept over the country from the west , while technical advances in science and manufacture were making their ﬁrst appearance in obscure workshops and laboratories . of Despite the system small states, the Rhine - Ruhr district was already an eco I 4 HUGO STINNES nomic unity at the beginning of th e nine

teenth . century Coal , iron , and water tra nsportat ion formed the basis of indus trial development . Steel from the famous

Berg district , woolen goods from the manu f a ctu rin g centres , silks and linens from the industrial centres of the Rhine were known

r To of in every count y . this day the saws

of Remscheid , the locks Velbert , the rivets

- of of Altena , and the steel ware Solingen, have a traditional reputation throughout the world . The northwestern part of Germany wa s the logical place for the development of industrial leaders . Krupp , Thyssen , Kir dorf, Haniel , and Stinnes , all developed into captains of indust ry with the aid of coal and iron . Their opponents , the most important representatives of modern so

cia lism , also grew up in this region . Karl e Marx was born in Tr ves , at the junction of the Saar and the Rhine , Frederick Engels hails from the thriving Wupper ’ valley, Bebel s cradle stood in the suburbs I S HUGO STINNES

of Cologne , and Lassalle , coming from the

of eastern part Germany, reached the height f o his career in the Rhine district . 1 808 In the year , Mathias Stinnes , the son of a shipping man who h a d gone into

. ou the transportation business the Ruhr, made himself independent in Mulheim . old Hardly eighteen years , precocious , dar in off g and determined , he was a genuine

of spring the district , having grown up in the midst of the coal ﬁelds and within sight of of com the Rhine , the oldest highway i i mu n ca t on in Europe . At that time just

h revolu as at present , the French , w ose t iona ry passion had been skillfully deﬂected into ambitious dreams of e xpansion by

of Napoleon , occupied the left bank the im Rhine . French rule brought about portant changes in the Rhine lands . Petty politics and shortsighted economic policies had obstructed the Rhine at innumerable places , until the river, including the high

ru ways nning along its banks , was little more than a proliﬁc source of revenue for 1 6

HUGO STI NNES

mines on the Ruhr . Soon after, his barges

were to be seen on the Rhine . In 1 8 1 7 Mathias Stinnes was already opening the important shipping line from Cologne to

Rotterdam , with a regular service of nine

of his own ships . At the same time he began to construct his ow n equipment ; he

built his ships in his own yards . From

on then the ﬁrm expanded rapidly . By 1 8 20 66 , Mathias Stinnes owned coal barges on the Rhine and the Ruhr, which plied regu larly upstream on the Rhine to Bonn

and Coblenz , and downstream to the Dutch

maritime ports . This was bound to lead to an expansion of f the ﬁeld o activity . The barges which took the coal north and south from Miil heim were loaded with colonial goods in

Holland , and with salt in Wesel , from the royal rese rvation ; from the Ruhr district they brought ironware and textiles as well

a nd h as coal , were loaded at the upper R ine for the down trip with wine , dry vegetables,

to- grain, and ores . Mannheim, which day 1 8 HUGO STI NNES

is the reloading station for American grain, was at that time the shipping port for Ger man grain destined for America . For a long time this shipping business had to contend with various obstacles .

on The right to launch ships the Rhine , and the freight rights of the Rhine ports were still restricted , and the navigation gu ilds exercised various monopolies . The d Rhine navigation acts , which were uniﬁe 1 8 1 in 3 at Mainz, ﬁnally established free

f n dom o communicatio on the Rhine . Mathias Stinnes contributed to no small extent to this improvement by taking things into his ow n hands and by presenting clever petitions to the authorities . There were most amusing controversies between the astute and farsighted sh ipping bosses of % Miilh eim t , the subjec Stinnes , and the bureaucratic ofﬁcials of some of the govern h ment posts . Nor did Mathias Stinnes esi tate to undertake the complicated journey to Berlin whenever his interests required it . He is said to have had the same gift for over I 9 HUGO STINNES

ﬂi cia l s awing government o with which—his n . gra dson , Hugo Stinnes , is credited to day By 1 83 1 the navigation acts had cleared the Rhine for Mathias Stinnes . The out t put a the mines , as well as the whole busi

of d ex e ri ness the district , imme iately p e nced a substantial increase through the opening up of a dependable market for all products as far as the territory of the upper

Rhine and the Main . Mathias Stinnes made close connections with Mainz , Frank furt , Worms , Mannheim , Karlsruhe , and

Stras sburg . He even did not hesitate to send his ships from the Rhine to Stettin

of and Hamburg, by way the open sea . His enterprising spirit proved especially

Mii lh e im helpful to when , together with

Hugo Haniel , he undertook the develop ment and equipment of the port facilities . He also built the pontoon bridges at Cob

D s ldorf lenz and ii s e . But his main interests continued to cen tre in the Rhine . As late as the forties , ships on the river were worked by means 20 HUGO STINNES of - hand and horse power, while downstream they drifted with the current . Sails could rarely be used Though an occasional steamer had plied the Rhine before Stinnes ’ time , he was the ﬁrst to use a real tug, and thus initiated the important Rhine freight

service . It is worth mentioning that at that time the Exchequer held a long and circumstantial debate about the pros and

of cons a state towing monopoly . This plan was debated interminably, until no body any longer believed that it could be carried out . In the meanwhile , Mathias Stinnes ordered his ﬁrst steam tug from

of Dit ch borne Sr the shipyards Marie , in

London . The ﬁrst Stinnes steamer plied on 8 the Rhine in 1 43 . The Stinnes ﬂeet remains to—day the biggest and most im

on portant fleet the Rhine . It was soon found that the first tug was not powerful enough . A second tug, built in Holland and christened % Mathias Stin % of nes I , became the head of a fleet power

ful tugs . 2 1 HUGO STINNES At ﬁrst there was considerable opposi tion to the use of steam power on the

oc Rhine , as shown by an incident which % in 1 8 8 curred 4 , when the tug Mathias Stinnes I % had just begun its Rhine serv

in _ tow ice with a ﬂeet of barges . There had been great excitement among the peasants and teamsters of the middle

Rhine , who usually took charge of the ships at Cologne to tow them to the mines . They felt keenly the decrease in their

on earnings account of the use of the tugs , and one day they decided to take matters into their own hands . It was secretly whispered about that something extraor din a ry was about to take place on the

Rhine at Neuwied . The peasants and teamsters from the village of Weissentu rm opposite Neuwied had conspired to set up a number of mortars and small cannon along the waterfront at Neuwied . When the tug came along with its barges in tow, a loud bombardment took place that raised the echoes from the neighboring moun 22 HUGO STI NNES

tains . The whole Rhine was thickly cov ered with clouds of smoke . The inhabitants of We issent urm hoped that at such a reception the hated tug would at once cut loose from its haul , and turn about face , never daring to come up lh im from Mii e again . But the conspiracy must have come to the ears of the captain , for the pilot house had been closely barri caded with iron plates , and not a soul was to be seen on deck . The whole line of boats passed quietly by, despite the bom

r m n b a d e t . The peasants and teamsters had to resign themselves to their fate . But for many months the ship continued to navigate with its pilot house barricaded as a protection against further occurrences of this sort .

Mathias Stinnes , soon known as old

Matt , after having been in business for

- ﬁv e thirty years , perished in a railroad

bridge accident at Hochfeld . Every ship in the Stinnes ﬂeet bears the name of its founder in addition to the 3 2 3 HUGO STI NNES

r serial number, and is known to eve y child

of on the Rhine . The type ship , the kinds

of and quantities goods carried , have of course changed appreciably . Whereas at the beginning of the Stinnes line the old 200 wooden barges were about tons burden, the type of steel barge most in use to- day can carry a load of from 1 500 to 1 700 tons . The most powerful Stinnes tugs tow four barges with an aggregate load of

of 00 tons , equal to the capacity about 4 e freight cars , and make about a mil and a half an hour, upstream . The great role which n av igation ' pl ays in the Rhine- Ruhr district is revealed by the fact that the volume of freight , passing through the port of on Duisburg the Ruhr before the war, amounted to far over tons an nu all y, which is several million more than f the freight traffi c o Hamburg . The founder of the house of Mathias Stinnes built up three main branches of

the business ; namely, mining, the coal

. d trade, and transportation When he die , 24

HUGO STINNES

ried rich - mine , the F Ernestine mine , the

B eu st Graf mine , and the Carolus Magnus mine . In addition , it had majority stock control in 3 8 other mines . The following years revealed the solid foundations of the old ﬁrm‘ of Mathias

of Stinnes . Before long a large part the shares of the Mathias Stinnes Trading Cor

ora t ion of Mii lh eim on p the Ruhr, was f again in the hands o the family . In 1 860 the members of the family dissolved the corporation and ree' stablished the former f o . ﬁrm Mathias Stinnes , Limited Mathias

of Stinnes had left seven heirs , consisting

a nd four sons three daughters . Mathias

r . 1 8 Stinnes, J , died in 5 3 , when Gustav

of Stinnes , the second son Stinnes , Sr . , took over the management of the ﬁrm until

1 8 8 . his death, 7 Thereupon , Herman Hugo f Stinnes, the third and youngest son o

Mathias Stinnes , headed the ﬁrm until his 1 88 death in 7 . His wife was Adeline Cou ienne p , and their second son is the pres

' 22 0 r 1 8 . ent Hugo Stinnes, born Februa y , 7 26 HUGO STINNES

At its hundredth anniversary Mathias 2 1 8 Stinnes , Limited , owned tugs and 5 1 06 u barges , having, in 9 , acq ired the trad f ing and shipping corporation o H . A . Disch of Mainz . It had also acquired the mine % % n called Mathias Stin es , formerly Car

of nap , which became the most important all its mining properties . The Stinnes family has played a very important part in the organization of the

of th e Ruhr coal industry . The members family are among the founders of three im portant combines in th e Ruhr district . These are the Confederation of Mining Interests under the Jurisdiction of the

of Board Mines for Dortmund , founded in 1 8 8 5 , which has been largely responsible for the technical development of mining ; the Rhine Westphalian Coal Syndicate, 1 8 formed in 93 , which regulated the pro

of duction , price , and distribution the Ruhr coal deposits ; and the Rhine Coal 1 0 and Shipping Company, formed in 9 3 % so and known as the Coal Bureau . This 27 HUGO STINNE S called Coal Bureau and the Rhine d Westphalian Coal Syndicate , usually calle % % the Coal Syndicate , control the produc tion and distribution of coal in the entire

Ruhr district . ’ of r - h In the course a centu y s growt , the

of ﬁrm Mathias Stinnes , Limited thus

ou t com branched into transportation , merce, and mining, on an imposing scale . CHAPTER III

HI S F I RST ENTERPRI S E S

STINN E S began his career under favorable

of 0 conditions . Even in these days free p port unity Germany can show no industrial leader of the calibre of a trust magnate who has reached the pinnacle of his power

Kléickn . er by climbing up from the bottom ,

Krupp , Rathenau , Siemens , are all men who have developed their inheritances . The German industrial ﬁeld has been pretty

in well divided up . It is necessary for the dividual to grow up in it , in order to achieve importance . Anybody coming from the outside is bound to ﬁnd it diffi cult to take

ex e root in this soil . Otto Wolf is the c p tion which proves the ru le . But his success lies almost exclusively in the ﬁeld of com mer ial c enterprise . Perhaps it is due to the 29 HUGO STINNES

gigantic concentrations of modern busrness which lead to the absorption of numerous independent concerns which cannot resist

this process , that new men are more likely to reach a commanding position within this

ﬁeld . The Stinnes Trust shows numerous f examples o this . Several directors of the Stinnes enterprises have risen from labor

circles . But it is not enough to be a son or a

grandson to ensure success . Respected old B e names are constantly disappearing . sides an inheritance and a tradition behind

of - him , the industrial leader to day must ff also have a large measure of power, e i cien c y, and personality . Hugo Stinnes had the tradition and the

ra miﬁed f widely connections o his family . The inheritance in itself did not amount

to much . After a short period of com me rcial apprenticeship in Coblenz, he learnt the mining business both above and below

ground at the Wiethe mine . At the age of

nineteen he attended a school of mining . 3 0 HUGO STINNES Then he took a position in the ﬁrm of

Mathias Stinnes , Limited . After two years he did not feel himself suited there , and at the age of twenty- three he formed his own

ﬁrm under the name of Hugo Stinnes , f Limited . He also continued as director o mining operations in the family mines . The paid- in capital of his ﬁrm amounted to

marks . It is extraordinary h ow the character istics and tendencies of the old Mathias

Stinnes reappear in his grandchild . One

ﬁnds the same restless spirit , the same dar

f or ing, the same talent combinations and constructive eff ort . But the ﬁeld of ac i tiv ty f or these powers is inﬁnitely greater . Never before have the opportunities in German industry been so favorable to con

- structive business genius as they are to day .

Up to a short time ago , the organizers of gigantic trusts on the American scale were unknown in German industrial life For years there had been powerful combina tions of ﬁnance and industry under various 3 1 HUGO STINNES

leaderships , and several large ente rises , such as those of Thyssen and had

of enjoyed a period astonishing growth , due to favorable Opportunities and the daring of in those in charge . But it sounded credible to Germans before the war, that the industry of the United States should be ’ dominated by ﬁve men . Carnegie s United States Steel Corporation and Rockefeller’ s

Standard Oil Company, which deal in mil lions , were regarded by them as examples f o industrial empires . These magnates could not achieve their billion- dollar eminence without the aid of

u ns cru u unlimited stock manipulation , p lous methods in killing competition , and unbridled speculation . A dissolution of all established economic organizations , and the rapid development of absolutely new forms of organization have taken place in Germany

since the war . The extent to which this has gone is best indicated by the fact that

of American methods ﬁnancing, of pooling

of of interests , and combinations , have 3 2

HUGO STI NNES cure foundations their enterprises were based . Thus , various industrial groups entered into combinations . At ﬁrst the emphasis was laid upon common interests . Coalitions of employers and employees were formed in every branch o f indust ry in order to secure the most favorable condi tions for both parties . These defensive organizations of various units in the indus t ry were followed by consolidations into

of larger groups , which took the form syn dica te s and ca rtels . Here certain limita tions upon independent organizations were mutually accepted for the purpose of avoid

of ﬂu cta t ion s ing the slowing up sales , price , ff of . me and the e ects crises At the same ti , associations were formed for reducing the cost of production and retail prices . These consolidations brought about a general weakening of the excluded indus trial units and led to fusions , especially h wit in the industry . This was but a step removed from concentration on a large scale in that , for example, a syndicated 3 4 HUGO STINNES business on the basis of cheaper raw ma t eria l s could be operated more proﬁta b ly than other isolated concerns which the syndicated business absorbed one after the other . The system of stock companies favored this development and in many cases was necessary to make it possible . It is gen era ll b e y admitted that in former days , l n fore government regu ation was i troduced , American corporations were often none too scrupulous about the law . They introduced many new methods of stock participation

of and of pooling interests , which frequently were by no means to the advantage of the f general public . Some o these methods have come into general use and have also

s been adopted by German corporation . It is no longer a secret that the combinations of transportation systems and other indus trial interests can easily lead to a conceal of ment the actual assets of companies , and e in fact frequently do so . They also l ad to consolidations of so complicated a na ture 3 5 HUGO STINNES that they pass beyond the power of any r individual to su vey . These companies may often be compared to the numerous links of a chain which are under the control and direction of k anyone who has the ﬁrst lin in his hands .

of The system preferred shares , with mul tiple voting power, increases the possibili ties of exerting inﬂuence still more . At the

i same time the owners , desp te their com a rativel p y small capital investment , have the determining vote in all important de i c sions of the company . In this way it is easily possible , under certain circumstances , for a small group to dominate aff airs at will without much outlay of capital . These methods are justiﬁed at present on account of of o i the danger f re gn control , due to the exchange situation . But the fact t e mains that it is always possible for a small group to bring a greater and greater sec tion of industry under its control . Anyone who has the inﬂuence to put through a scheme of industrial control can 36 HUGO STINNES

do so nowadays on a much larger scal e

than ever before . And it is open to anyone

to misuse this power . Unless Germany is willing to be exposed to contingencies and

surprises of a most startling nature , she will soon have to recognize the necessity of investigating and controlling this highly

complicated situation . The movement towards consolidation is

well under way in German industry . Hugo Stinnes is one of the main forces behind

these developments . Mining, the coal busi

ness , and water transportation , form the

fulcrum from which he operates , as was the case with his grandfather Mathias

Stinnes . He runs his own mines and ore

concentration plants . He acquires ships for commerce both on inland waterways a and on the high seas . He is a coal de ler n with inter ational markets . He has his

branches on the continent and overseas .

His ships are to be seen on rivers and canals ,

on on the North Sea and the Baltic , the

Mediterranean, and on the Black Sea . 3 7 HUGO STINNES Hugo Stinnes began to exert an influence upon the construction of the entire German industrial edifice very early in his career, through the organization and the various o combinations of his companies . He is ne of the controlling figures in the consolida r tion movement in the mining indust y .

- The Rhine Westphalian coal district , which a hundred years ago was run by patri archal operating units on a small scale , in the course of the nineteenth century became the scene of large- scale capitalistic operations which frequently had recourse to unscrupulous methods . After the union of in the Ruhr district with Prussia, the d u st rial forces were increased through the

of of immigration large bodies laborers , and the appearance of more and more

of employers . Many these employers were guilty of ruthless exploitation and short sighted methods of administration, so that they were not unjustly accused of putting % the slogan Business is business , before

o every other consideration . Wild promoti n 3 8 HUGO STINNES

ﬁ and unbridled competition combined with panics to bring about uncertain times for

the mining operations . Production and price agreements and control of distribution were evolved with increasing frequency

1 8 0 on s from about 7 , as a defense again t

these tendencies . We have already seen that the Stinnes family had always been a leader in such

endeavors . It is therefore not astonishing to ﬁnd young Stinnes familiar with thi s

development . He soon played a leading role in the Rhine- Westphalian Coal Syn

now a dicate . The syndicate includes pr c

° t\cally the entire coal ouput of the Ruhr basin; and regulates production , prices , and

consumption . In the same way Hugo Stinnes is a power in the Coal Bureau the very name is indicative of the practical — spirit of this district which has been in e 1 0 or existence sinc 9 3 , having brilliantly i gan zed the market for Ruhr coal . The

Rhine Westphalian Coal Syndicate , the

Mathias i ﬁrms of Stinnes, Limited and 4 3 9 HUGO STI NNES

Hugo Stinnes , Limited , and a number of the other companies have considerable capi

tal invested in the Coal Bureau . Hugo Stinnes soon added the production of of iron and steel to the production coal . The German- Luxemburg Mining 8: Smelting

Company became his main sphere ofactivity . The district of German- Luxemburg was

developed with uncanny rapidity . At the

of ff end the nineties , the Di erdingen Blast

Furnace Company, Inc . , in Luxemburg, and the D a n nenb a u m Mining Company were combined into the Diff erdingen- Dan

n enb au m Iron Coal Company . But this company did not last and was soon liqui dated with considerable loss to the stock

- holders and creditors . The German Luxem

8: burg Mining Smelting Company, Inc . ,

of with a capital marks , was 0 1 formed in 1 9 at Bochum . This corpora tion took over the Differdingen - Dannen

baum Iron 8c Coal Company . Within the year the capital stock was raised to 2 000 1 1 0 marks , and by 9 this ﬁgure had been 40

HUGO STINNES iron wa s increased through the el dition of the blast furnaces and steel mi s of Rii melingen and St . Ingbert . Altogether the German- Luxem u rg Min ing Sr Smelting Company compi s e s estab

' lish ment s Dort mu d M l at Bochum , , ii

on m a ff heim the Ruhr, Emden , a d t Di er th dingen (Luxemburg), though last has been taken away throu gh the q u ida tion

of a resulting from the treaty p ce . The greater part of the mining e sta bl ih ment s is

He r s ituated in the Ruhr basin . the com pany owns the coal and iron- or works of

Da nnenba u m l e e nt , the mines Prinz g and

f a ctor a t Friedlicher Nachbar, the y Hasen

of min e s of r winkel , and the series B uch

Wienda l sba nk strasse at Langendreer, at

Annen , Adolf von Hansemann a Mengede, ’ lii cka u f Frie deich s G Tiefbau , Karl Erb

Fried ricl stolln at Stiepel , Kaiser at Barop,

Tremonia )ortmu n Luise Tiefbau and at d .

ir e re ste d Besides this , the company is in the Rhine-Westphalian Mining Company

to a l orod at Miilh eim (Ruhr). The t u ction 42 HUGO STINNES of the coa mines amounts to over ll tons a nnu y . The coke produced annually

0 b - amounts tons . The y prod u ct s con sst of considerable quantities of

a mmon ia ta r . , , benzol , and other products

a The pl ts at Dortmund , which have an exce t ion i p technical equipment , include

n one be six blasti ; furnaces and steel plant , i sides roll g mills , pressed steel mills , and

own foundries . It also has its plants to continue ne manufacturing process up to

ﬁn ish of the d product . All kinds materials and a cce sorie s f or the construction of rail road engi e s and rolling stock are manu fa ctu red a Dortmund . The electric estab lish ment s are equipped with all the latest im rov e m p nt s in mining technology . The Do rtmu n r works also include the Horst iron and teel works with their own blast f u rna ces i - , screw factory, a wagon spring

a f factory d a series o subsidiary factories . The ore fi r the Dortmund Union is sup plied prim rily from its own iron-o re mines on Ri of the hr, in the district the Sieg 43 HUGO STINNES

iron was increased through the addition of the blast furnaces and steel mills of Rii

melingen and St . Ingbert . Altogether the German- Luxemburg Min ing 8: Smelting Company comprises estab lish ment s m M l at Bochum , Dort und , ii

on ff heim the Ruhr, Emden, and at Di er

dingen (Luxemburg), though the last has been taken away throu gh the liquidation

of resulting from the treaty peace . The greater part of the mining establishments is

situated in the Ruhr basin . Here the com pany owns the coal and iron- ore works of

Da nnenba u m , the mines Prinz Regent and

r Friedlicher Nachbar, the facto y at Hasen

of of t h winkel , and the series mines

Wienda h l sba nk strasse at Langendreer, at

Annen , Adolf von Hansemann at Mengede,

' ’ l cka u f Frie derich s G ii Tiefbau , Karl Erb

stolln at Stiepel , Kaiser Friedrich at Barop,

Tremon ia Luise Tiefbau and at Dortmund .

Besides this , the company is interested in the Rhine-Westphalian Mining Company at Miilh eim (Ruhr). The total production 42 HUGO STINNE S of the coal mines amounts to over tons annually . The coke produced annually

b - amounts to tons . The y prod u ct s consist of considerable quantities of ammonia , tar, benzol , and other products .

The plants at Dortmund , which have an exceptional technical equipment , include

one be six blasting furnaces and steel plant , sides rolling mills , pressed steel mills , and w foundries . It also has its o n plants to coritinu e the manufacturing process up to

of the ﬁnished product . All kinds materials and accessories f or the construction of rail road engines and rolling stock are manu fa ctu r d e at Dortmund . The electric estab lish ment s are equipped with all the latest improvements in mining technology . The Dortmund works also include the Horst iron and steel works with their own blast

- furnaces , a screw factory, a wagon spring r f facto y and a series o subsidiary factories . The ore f or the Dortmund Unio—n is sup plied primarily from its own iron o re mines

of on the Ruhr, in the district the Sieg 43 HUGO STI NNES

on River, the Weser River, in Nassau , and in the Harz . n The mining sy dicate , Friedrich Wilhelm,

Miilh eim-on- - to at the Ruhr, has belonged the German- Luxemburg Mining 8: Smelt ing Company since 1 905 . This establish ment owns a large number of its own

w ar h a d mining ﬁelds , and up to the . a share in the Lorraine mines . The mine at Mii lh eim includes ﬁve blast furnaces capa

of r u tin ble p od c g tons annually . Large foundry establishments manufacture machine parts , castings and pipes . A large number of establishments with the most u p- to- date special machinery continue the of process manufacture of steel products . They specialize in mining and foundry

- machinery, so that the German Luxemburg Mining 8c Smelting Company is in a posi w n tion to supply its o technical equipment . Since 1 9 1 1 the German- Luxemburg Min ing 8z Smelting Company has been linked up with the North Sea works at Emden . The factories there are being enlarged in 44 HUGO STINNES conjunction with the recent Helling estab li sh ments . The North Sea factories are

of interested in the production coal , in the

a am co l trade , and in the sale of benzol ,

monia , and tar, through the agency of a

number of companies .

The Hohenzollern foundry, situated at

Emden , which belongs to the German

8: Luxemburg Mining Smelting Company, has its ow n mine ﬁelds in Upper Fra nkonia

and in the Upper Palatinate .

Through the North Sea works at Emden , the German- Luxemburg Mining 8: Smelt ing Company is interested in the German % % Navigation Company, Midgard , at Bre

in men , the Rhine Navigation Company, and n in the Ma nheim Towing Company, which provide it with sea and river transportation facilities .

Before the liquidation , broug ht about by of the treaty peace , extensive factories in Diff erdingen and Lorraine belonged to the German- Luxemburg Mining 8: Smelting

Company . The Diff erdingen works owned 45 HUGO STINNES

ten blast furnaces i n the i mmed i ate vi ci ni ty of the mines , as well as numerous other factories almost entirely engaged i n maa f actu ring iron girders . Since 1 9 1 1 these works had been connected with the mi ni ng and foundry establishments of Rii melingen

d . o an St Ingbert thr ugh a joint agreement . Hugo Stinnes organized and administered this gigantic enterprise with great success .

of By means the saving in freight rates , and by perfecting the management , he made it possible to concentrate upon the production of a highly developed ﬁnished article , and at the same time to make the business extraordinarily proﬁtable . The German- Luxemburg Mining 8: Smelting

Company, with more than em

lo ees of p y , thus became one the leading

of im mining establishments , the greatest portance both for the home market and for the export trade .

A second enterprise of gigantic propor

ns - tio , the Rhine Westphalian Electric Com 46

HUGO STINNES ten blast furnaces in the immediate vicinity of the mines , as well as numerous other factories almost entirely engaged in manu f actu ring iron girders . Since 1 9 1 1 these works had been connected with the mining and foundry establishments of Rii melingen

o . and St . Ingbert thr ugh a joint agreement Hugo Stinnes organized and administered this gigantic enterprise with great success .

Company, with more than em

lo ees one p y , thus became of the leading of im mining establishments , the greatest portance both for the home market and for the export trade .

A second enterprise of gigantic propor

- tions, the Rhine Westphalian Electric Com 46 HUGO STI NNES

of pany, grew up under the direction Hugo Stinnes while the German- Luxemburg Min

ing 8: Smelting Company was developing . 1 8 8 This was founded in 9 , and ﬁrst took over the management of an electrical plant

- in Essen Ruhr . From the very beginning the object of this enterprise was extraor

i il - d na r y far reaching . The Company was intended to supply the whole Rhine-West phalian industrial district with electric

power . The power plant at Essen was erected in immediate connection with the

- old Stinnes mine of Victoria Mathias . In the eastern part of the Ruhr coal basin a second modern plant was erected at the

Wien d a hlsb ank coal mine , which belongs to the German- Luxemburg Mining 8c Smelt

1 0 - ing Company . By 9 8 the Rhine West phalian Electric Company had already b e come so large that the eastern plant was combined with the Westphalian Electrical

. one . Works , Inc , under joint management

' The territory supplied by the Rhine Westphalian electrical %power stations ex 47 HUGO STINNES tends from the Dutch border on the north

s to the Ahr valley in the south , and almo t entirely includes the government distri cts of Dii s seldorf and Cologne , with all their townships . d In addition , the Company eveloped the 1 1 2 gas and water supply, and since 9 has undertaken to supply the gas for 2 5 cities and townships . The directorship of this electrical industry is ve ry interestingly or

z of ga n i e d . The ownership the Rhine Westphalian Electric Company is in the hands of both individuals and municipali

of lh eim- o - . Mii u ties The cities Essen , the

Ruhr, Ruhrort , Solingen , Gelsenkirchen, and numerous other municipalities , own shares in the Company .

In the natural course of its development , the Rhine- Westphalian Electric Company undertook to supply the Rhine- Ruhr d is t rict with a comprehensive network of

- street car systems and small gauge railroads . Thus Hugo Stinnes is inextricably asso cia ted with the Rhine- Westphalian indus 48 HUGO STINNES

t of trial distric . By virtue the many directorships which he holds , he is in close touch with every b u siness of any impor tance in this industrial section .

Besides this , he has also devoted special attention to the German seaboard . He had already anticipated the close connection of his industrial district with ocean trans

orta tion p , in founding a small establish

- on- - ment at Harburg the Elbe . This was followed by the formation of the ﬁrm of

Hugo Stinnes Shipping Company, Limited , for the purpose of going into the shipping

n business o a large scale . This ﬁrm soon owned 1 3 of its own steamers with which it carried coal , ore , wood , and grain , to various European ports . CHAPTER IV

1113 PART I N TH E W OR 1JD W A R

TH E activities of Hugo Stinnes during the period of the World War have given rise

r to a great deal of contradicto y discussion . It will be a long time before we shall be able to see what was going on behind the scenes in Germany on the industrial side

of of the war, and much what happened there may never be fully cleared up . It is generally known th at for many business men, and especially for those engaged in

ou t the major industries , the war turned to be a period of extraordinary industrial

acceleration . In a state which in normal times shows little sympathy for collectivism, it is of course to be expected that a period of war will bring ou t th e same clash of interests that characterizes a highly individualized 50 HUGO STINNES

industry, and will even sharpen these con

i s ﬂ ct still more . We must also remember that though there was an accurate plan for

r v not general milita y ser ice , even the most primitive arrangements for general indus

in tria l service war times had been prepared . So indefatigable a business man as Hugo Stinnes could not be expected to remain idle in a period of universal activity . He necessarily made the greatest possible use of every Opportunity, without reﬂecting particu larly about the unfortunate causes that had made these opportunities possible . The liquidation of industries in occupied

of ow n Belgium forms a chapter its . The

of industrial war the Entente , the blockade, and the inﬂuence exerted upon neutrals , called for counter- measures on the part of the Central Powers . The liquidation in Belgium was entrusted to the German in du st ria l leaders . Three companies were formed in th e Ruhr industrial district : the d Industrial Company, Limite , the Trans orta tion p Company, Limited , and the Min 5 1 HUGO STINNES

ing Company, Limited . All these companies 1 1 6 were formed in 9 . Among those inter est ed in these companies were Friedrich

P n ix . h O Krupp , Inc , the Company, the ff Gute Ho nung Smelters Company, and the German- Luxemburg Mining 81 Smelt

. in ing Company, Inc This last company

com cluded Hugo Stinnes . These three panics played a great part in carrying ou t the proposed measures f or taking over the l Belgian industries . They were especia ly favored in regard to the purchase and

of management Belgian factories . They further secured for themselves the exclusive

of right purchasing coal and metal mines,

and factories , and ran the Belgian gas , water, and electric works . The further

of plans these companies were , of course

of cut short by the outcome the war .

During the war, Hugo Stinnes greatly strengthened his grip upon German indus

try . He gave his special attention to the development of the trade and transporta

tion possibilities at his command . The 5 2

HUGO STINNES

been interested in the German-American

Petroleum Company of Hamburg . Stinnes

bought the Hamburg City Hall Hotel , and H f the Hotel Hamburger o . These big buildings were converted into offices and were used to house the various Boards of

Directors and their executive staffs . Additional mercantile ﬁrms in Konigs berg and Bremerhaven were added to ’ Stinnes shipping combine, together with the Baltic Navigation Company at Flens

burg . Eleven large steamers were ordered

from various German shipyards . After the

of war, the entire ocean transportation the Stinnes Trust was to be handled by the

Stinnes ﬂeet . At the same time Stinnes secured vast land holdings in East Germany with ex

of tensive forests , in the interests his mining

business . The forests were intended to provide the mining timber for the Stinnes

mines . Towards the end of the war, the Stinnes Trust also acquired interests in the

Rhine lignite deposits . Thus a mighty in 54 HUGO STINNES dust rial unit , developed and directed with great forethought , had been brought to gether under the powerful leadership of

Stinnes just before the revolution broke out . 5 CHAPTER V

TH E MINING TRUST : TH E R HIN E - E LB E -UNION I

TH E revolution in Germany after the war gravely threatened the complicated s tru c

ture of German industrial life . Ballin , the

of director the Hamburg American Line ,

saw his life work destroyed , and retired

from the scene . During this period Hugo ’ Stinnes nerves remained u nru fﬂed . The

peace treaty was signed , and important sections of the German industry were de h t a c ed from the main body . The German Luxemburg Mining 85 Smelting Company

lost all its enterprises in the southwest ,

i - including ts iron ore and coal supply . In

the last year before the war, the south western district had produced the enormous

1 Rh ine-Elbe th e n e of Gel enki ch en ine n Union is am a s r m , a d stands for a Dortm u nd factory of th e German-Luxembu rg Mi ni ng 85 Smelti ng Company HUGO STI NNE S amount of tons of pig iron for the German- Luxemburg Mining 85 Smelting

Company, and had mined tons of

60 of coal , amounting to % the entire output of the Company . The Company tried to ff retain the Di erdingen works , situated in

ore Luxemburg, but the deposits upon which these factories depended were located in Lorraine . Thus this enterprise also had to be sacriﬁced . The connection with the

' Rii melin n- plant at ge St . Ingbert was like wise destroyed . In this way the German- Luxemburg Mining 85 Smelting Company lost its entire investment in the southwest . A French group replaced the Stinnes Trust in Luxem burg and Lorraine . This was a vital blow to the Company, although the purchase price received from the French Company put considerable cash at its disposal . An important source of supply for running the factories could also be counted upon through

an agreement , made for a period of thirty years , according to which a considerable 57 HUGO STINNES proportion of the ore requirements of the German-Luxemburg Mining 85 Smelting

Company was assured .

of of As a result the loss St . Ingbert , the German- Luxemburg Mining 85 Smelting Company had to cast about f oi' new manu f a ctu ring plants in order to be able to sup ply the necessary intermediate products f of or the manufacture the ﬁnished goods . As it was impossible to erect any new buildings , the Company acquired a number of old factories . Among these were the

of B rii nin h a u s steel works the g Company,

Th om . é e Inc , and the ﬁrm of Friedrich ,

Inc . , both situated at Werdohl , as well as the ﬁrm Of Karl Berg, Inc . , at Eveking . These factories were adopted for manu f a ctu rin g bar and plate steel , as well as castings , springs , and wagon parts . Fur ther purchases included the steel roller of mills Meggen , the chain factory of Karl

' Schlie e rs of Grii ne p in the city , and the rivet factory of Knipping Brothers at

Altena . 8 HUGO STINNES But these protective extensions of the industry did not satisfy Stinnes . He de ve10ped a project capable of continuing the unprecedented growth of the German- Lux emb u r 85 g Mining Smelting Company, de spite all its adversities . His attention had been directed to the Gelsenkirchen Mining

Company, Inc . , another gigantic mining business which had also been crippled and f reduced through the treaty o peace .

The Gelsenkirchen Mining Company,

of Inc . , was the work the brothers Emil and

Adolph Kirdorf. It was founded in the 1 8 year 73 as a mining business , employing

men a thousand , and for a long time, con

ﬁned itself to coal mining . Important consolidations gradually enabled the busi ness to attain a commanding position in the

. 1 1 district In 9 3 it employed hands , and its share in the Rhine-Westphalian Coal Syndicate amounted to 1 1 tons , representing % of the whole Syn dica te The expansion of the Gelsen kirchen Mining Company, Inc . was at 59 HUGO STINNES

t 1 0 ﬁrst in a horizontal direction , but af er 9 5 it undertook to expand vertically, through a consolidation of the coal-consuming in du st rie s with the coal producers , especially through consolidations with mining syndi

- - a t cates at Aix la Chapelle and Schalk . The terms % horizontal % and % vertical as applied to trusts require a word of ex planation . A horizontal trust approximates the familiar type of American trust which is usu ally a consolidation of all the units of a particular industry, engaged in the produc tion or manufacture of a single kind or type

f of o product . The object such a trust is to produce an article as economically as possible and to exercise a monopolistic con trol over it . The Standard Oil Company is f an excellent example of this kind o trust . A vertical trust is a complete and self contained consolidation of all the succes sive stages Of manufacture from the produc tion of raw material to the ﬁnal dist rib u tion of the ﬁnished article . It is an indus trial cycle completely protected a t both 60

HUGO STINNES

1 1 of Thus in 9 3 , the cost new buildings and developments was estimated at

gold marks . The result of the war was a

catastrophe for this concern . It was forced to pay terrible penalties for its expansion

into the Minette district , another German

mining ﬁeld . It had to give up its diversi

or ﬁed enterprises and return to mining . F this reason Stinnes could count upon a friendly reception from the Gelsenkirchen Mining Company when he undertook a

rapprochement . It was a matter of sheer necessity for both Kirdorf and Stinnes to

come together . Nevertheless Kirdorf, who

has always been known for his independence , must have fou nd it very painful to combine

of his life work with that another man . ff The consolidation went into e ect in July,

1 920. The control of the two businesses

- - rests with the Rhine Elbe Union . The

of leaders this consolidation , besides Stinnes , are General Director VOgler of the German 85 Luxemburg Mining Smelting Company,

and Emil Kirdorf. 62 HUGO STINNES

The German-Luxemburg Mining 85 Smelt ing Company and the Gelsenkirchen Min ing Company have entered into an agree ment which is to hold good for eighty years . They now complement each other and ’ mutually aid each other s development . They form a mining business based upon

broad foundations , and are starting under

the most favorable auspices . Their con solidation into the Rhine- Elbe-Union is to

la st until the year 2000. CHAPTER VI

TH E E LE CTR O - MININ G TR UST % TH E SI EMEN S R H INE - E LB E - S C H UC K E R T- UNION

TH E S E tendencies to form gigantic fusion and expansions in German industry cannot be entirely ascribed to personal ambition or to the craving for power . The driving forces are of an economic nature . Before the war, Germany had an annual increase of population which amounted to more than the entire population of a large city like f Detroit or Buff alo . The amount o arable land did not keep pace with this increase . The number of emigrants was inconside r able . For this reason , an increased produc tiv ity from year to year was necessary in order to keep up the standard of mainte nance . Compared to any other country Germany had a very small number of people 64 HUGO STINNES

not engaged in productive labor . Never

th eless , the production of goods from the ’ countrys own raw materials was insu ﬂi cient

to cover the basic needs . It was therefore

essential to export on a considerable scale , either through the direct shipment of raw

materials for foreign needs , or through manufacturing indigenous and imported raw materials into ﬁnished goods for export

re- and export . In order to ensure adequate profit from this export trade , it became more and more necessary to protect the raw material , that is , to convert it at home into partly or entirely finished goods . For this purpose it was necessary to do the manufacturing at home , and to produce goods of the finest and most varied grades f o workmanship . It was essential to make the raw material yield the greatest possible increment of profit and wages before the

goods passed ou t of the country . ‘ Under these conditions it was necessary to develop this so- called continuing indus

t r y, and to foster technical improvements 6s HUGO STINNES

as carefully as possible . %uite aside from the unavoidable export of raw materials , Germany therefore tended more and more to supply foreign markets with the greatest possible number of the ﬁnest grades of l manufactured goods , chemica s , tools , ar ticles of - ff general use , dye stu s , medicines and similar goods . At the same time , it wa s necessary to increase the output and the proﬁt of the industries as much as pos sible in order to compete in the markets of the world . This development was bound to lead to consolidation , mergers and trusts . Fac tories producing the same or similar goods worked more economically and showed a grea ter yield by manufacturing according to a joint agreement and avoiding duplica tion . The consolidation of industry, and the process of building it up upon the natural foundation of raw materials in creased the productivity, saved transpor ta t ion of goods , and met the special needs

ﬁ s - ni h ed goods manufacture . German ih 66 HUGO STI NNES du stry could not aff ord to have friction and opposition between its industrial enter

Of prises . A certain amount speculation was inevitable but this did not attain large proportions . War and revolution have not improved the industrial situation of the German people . Losses in population, territory, and materials have been very great . Ex ports and imports have also been curtailed ,

a of and besides this , the heavy mortg ges the treaty of peace on which both interest and capital must be paid , weigh heavily

of upon German industry . Billions paper marks and much theoretical discussion have not been of the slightest help in ra is ing production . Germany must produce in order to live, and must produce more , better, and cheaper goods than before . Thus the combination of indust ry has become inevitable . The elasticity with which alterations and consolidations are being carried ou t is astonishing . This is partly achieved by technical and industrial 67 HUGO STINNES

of methods . The scarcity coal , for instance , has led industries to adopt lignite to an ex

tent previously considered impossible . Pe t roleu m is beginning to be utilized to

an astonishing degree . New methods of chemical production are being invented

eve ry day . The discovery and application of new methods promise very interesting m results . The expensive experiments eces sary for this development are being made in the ﬁeld where a high degree of industrial

combination has already taken place . The introduction of better industrial management and new forms of economic organization is also helping to increase and

improve production . But industrial man a ement g , plans for socializing industries ,

and industrial councils , are all schemes about which there is still very little agree

ment . In the meanwhile, the consolidation

movement is making headway . There are

very few is olated factories left . In some

r branches of indust y, isolated enterprises

have entirely disappeared . German na 68

HUGO STINNES whole manufacturing process under the same management , and to start the raw material on a cycle in which it is progres siv ely manufactured until it emerges as the

r of ﬁnished article . Eve y stage the process must be controlled and coOrdina t ed with the succeeding stage . Thus for example , the process would run from coal and ore through pig iron , steel , casting, to tools ,

- machines , and electro technical equipment . The Rhine- Elbe-Union already shows a vertical combination having many stages ;

of production the raw material , such as coal , ore o of n , and limest ne ; production i ter mediary products such as iron and steel ; production of semi- manufactured materials

- such as forged iron , cast iron , tin , wire , and tubing ; production of the ﬁnished goods such as tools , screws , rivets , springs , ironwork parts , railway material , and parts for vehicles and ships . This is an excellent example of the vertical system . The ﬁrst concern of such a system must be to make sure of its supply of the raw 70 HUGO STINNES

materials , especially of coal . Since the

end of the war, coal has acquired a scarcity

price . All the factories are ﬁghting for

one of coal . Germany, formerly the rich

- est coal bearing countries , does not possess

enough coal fuel for its industries . The

distribution is supervised by the State , but it is impossible to keep the factories sup

plied . The German factories have had to have recourse to the expensive importa

f F r tion o foreign coal . o this reason the Rhine- Elbe- Union has been straining every eff ort to secure an adequate supply of coal

for its factories . The same thing holds good for ores . Where the company has not got enough coal mines in the immediate vicinity, further mines have to be acquired . Since the German-Luxemburg Mining 85 Smelting Company acquired the Union

of Company Dortmund , it has opened sev

eral mines in the Dortmund district . As

o com en already p inted out , it sought to p sate for its own insufficient coal supply since the war, by combining with the 6 7 1 HUGO STINNES

Gelsenkirchen Mining Company, Inc . , and this company in turn found it proﬁtable to enter the combination because this would lead to the extension of the mining business , on account of the blast furnaces of the German- Luxemburg Mining 85 Smelting

Company . Each individual production stage is built up in relation to the stage above and below it in the cycle of the whole production proc

ﬁnish e d- ess . The products factories are

of assured the necessary material , while the factories that manufacture the intermedi ate products are assured of a sufﬁcient coal and ore supply from the stage below, and at the same time can easily dispose of their products to the next stage of manufacture . The geographical concentration also sim pliﬁes coOp era tion and at the same time renders the work less expensive , while the alignment of the various stages of manu facture allows the individual f actory to avoid the expensive storage of materials

and supplies . This method also avoids the 72 HUGO STINNES

- of in time robbing selection materials , the

- creased cost due to the middle man , and the uncertainty of getting the right materials . It is clear that an enterprise of this sort can produce better goods in greater volume ,

r f than an isolated facto y . The use o its own products , the decrease in its mainte nance cost , and its strategic industrial posi tion allow it to grow faster than other en i terp r ses . We are therefore witnessing a concentration race in the German industry

- r . of to day, especially in the mining indust y Only a few large enterprises remain u h

l f K r . o d o lOckne consolidated The ﬁrms ,

Stumm , Haniel , Funke , Thyssen , Stinnes , and others , are growing into gigantic com binations which are constantly drawing more closely together .

A few months after it was formed , the Rhine- Elbe -Union was enlarged through

the acquisition of the Bochum Company, engaged in mining and cast steel manu f acturin . g This plant , which represents an extensive combinati on in the Rhine-West 73 HUGO STINNES

phalian district , has been in existence for sixty years . It includes blast furnaces , steel smelters , foundries , hammer and mill works , and factories for manufacturing railroad material , as well as a large number a of subsidiary plants . As m ny as hands are employed . The Company pro cures the greater part of its raw materials

of through the operation its own mines , coke plants , quartz mines , and limestone

of - ﬁelds . It also owns a network iron ore mines in the ore district bordering on the

Sieg River . w Before the Bochum Company joined th e Rhine- Elbe-Union it went through a curi ous experience on the stock exchange . A Ber lin banker attempted to buy up the shares of the Bochum Company on the stock ex

a of change , causing series fantastic price

ﬂuctuations . When this speculator had accumulated a majority control of the Com pany, he began to look about for a pur chaser . The rumor had been spread that n s of foreig intere ts , taking advantage the 74 HUGO STI NNES

exchange situation , were seeking to acquire

the Company . The Bochum Company might easily have shared the fate of the

Ph On ix Company, and other German enter

prises . At this point , the Stinnes group decided to acquire the Company despite

the artiﬁcially high price . A purchase price was agreed upon and the speculation

came to an end . The whole episode was

f or an exception rather than the rule , Ger man industry is rarely subjected to such

purely ﬁnancial operations . The acquisition of the Bochum Company was of crucial importance to the Rhine Elbe-Union for perfecting its plan for manu fa ctu ring intermediary and ﬁnished prod

- u ct s . Its negotiations with the reﬁned steel factory of BOh le r Brothers 85 Company was

a step in the same direction .

Mining enterprises lead not only to th e

in« metal industries , but to the electrical

d st r u y as well . Both of these industrie s f had attracted the attention o Stinnes . He 75 HUGO STINNES

intended the Rhine-Westphalian Electrical Company to supply the two industrial

of provinces Rhineland and Westphalia .

of These two provinces are , course , thickly

studded with innumerable factories , elec

trical distributing stations , power houses , gas and electrical plants , railroad stations , a nd trade centres , not to mention hundreds of c muni ipalities , with their network of

railroads and street car systems , all of which 1 20 consume light and power . By 9 the Company had undergone considerable ex pa nsion through the acquisition of power houses and new districts requiring elec

ri ma t ca l service . Its supply of raw terials was covered by an agreement with the

Rhine Lignite Works at the Rodder mine . A further supply of lignite comes from the

of Rie be ck ma mines A . in Middle Ger ny, as well as from the lignite mines in

i Brunsw ck . The Stinnes Trust thus rounded off its mining interests at both ends through its consolidation with the German - Luxemburg 76

HUGO STI NNE S

1 00 9 , which played havoc with the elec t rica l of industry, threatened a number ad the larger electrical companies , which h become involved in some very risky ven tures . The great electrical company of : Siemens and the A . E . G (Allgemeine Elekt rizitéi t s- Gesellschaft) were the only ones that remained unshaken . The others , in so far as they continued to function at all , had to seek support from these two . At that time the consolidation of the

' Siemens Company with the Nii rnb erg Elec t rical Company (formerly Schuckert 85 m Company) took place . These two co pa n ies formed the subsidiary Siemens Schuckert Company f or the purpose of developing methods of high power trans f mission . A number o other companies were likewise formed in connection with the

Siemens enterprise . The Company supplies a remarkable

of number consumers , including electric

and gas companies , electric mining plants ,

of and subsidiary railroads all kinds . Among 78 HUGO STINNES these are the Fra nckonia n transmission station , the high power houses , Franken and Thuringen ; the establishment of Ku pf e rd reh Siidh a rz ; the distributing station , ;

Co . the A . G . Wiener Lokalbahn ; the Rhine Electrical Company of Mannheim ; the local Berg Railroad ; the Hamburg and Stettin

Electrical Companies , the electrical street

a r ilway systems of Elberfeld , Barmen ,

Wii rzbu r . g , and so forth The Company is also interested in machine and automobile factories , as well as in other factories at home and abroad . The products of the Siemens Company comprise electrical manufactures and equip

of ments all sorts , from incandescent lamps

to subways . It also manufactures general ih machinery, ﬁne mechanical and optical

struments of , and other instruments all

sorts , as well as automobiles and automobile

trucks .

It is noteworthy that the Stinnes Trust , as in the case of the Gelsenkirchen Mining

. ff Company, Inc , did not e ect the consolida 79 HUGO STINNES tion with the Siemens Company through

e any ﬁnancial operation , but through dir ct negotiations . Mutual necessity and the prospect of joint beneﬁts probably played quite as large a role as the personality of

Stinnes and his gift for organizing . This electro-mining company is called the % - - - - Siemens Rhine Elbe S c h u c k e r t Union . This pivotal organization re gulates the ff ﬁnancial a airs of all the related companies , and works out the plans for a joint a dminis t ra tion . But the intention is to keep the management and the administration of each

of member independent . The object the consolidation was described as follows , by the chairman of the board of directors of % the Siemens-Hals ke Company : In these days , where nothing is left to us except intelligent and highly trained workers , we must see to it that everything that we can extract from our soil does not reach the markets of the world until it has been partly or entirely manufactured by our own % labor . 80 HUGO STINNES

This huge company, with its em

lo ees p y , is in a position to experiment with

- power saving devices , radical innovations , and opportune expansions as well as to introduce methods of specialization and

one standardization . This is of the great f adva ntages o concentrated eff ort . The consolidation of the Siemens Com pany with the great mining interests having ff been e ected , it remains for us to follow the further development of its great com

El ekt rizitéit s- petitor, the Allgemeine Gesell

b e schaft . Here also we already see the ginning of vertical combination . By virtue of its connections , especially with the

- R h i n e W e s t p h al i a n industrial district , which is a large consumer, the Siemens Company will enjoy extraordinary a dv an tages in regard to its supplies as well as the

disposal of its products . It is equally cer tain that the future plans of the Stinnes

Trust , which are already looking beyond the

of of boundaries Germany, will be the great

est importance for the electrical indust ry . 8 1 HUGO STINNES

I n order to round out the company, Stinnes has also begun afﬁliations with certain metal works such as copper and

of im brass factories , which are great portance for the electrical industry, and has also become interested in aluminum plants . In addition , he has brought the automobile industry within his sphere, through the purchase of the Loeb auto mobile factory in Berlin .

According to the agreement , the members of the Siemens- Rhine- Elbe- Schuckert-Union are merged together into a homogeneous or i i an za t on 2000. g , to last until the year The time seems to have arrived when individu als can plan industrial combinations for centuries ahead . CHAPTER VII

’ STI NNE s AF F ILIATION S I N G E RMANY A ND A B R OAD

TH E Stinnes Trust has grown from the Rhine-Westphalian industrial district until f it extends over the whole o Germany .

- Through the Siemens Schuckert Company, it has gained a foothold in the most im

of portant industrial cities B avaria . At

of the time the consolidation , the combined directorates made a statement in which they pointed ou t the economic and political

of importance this event . They declared that Bavaria and Berlin are combining with Rhineland and Westphalia to form a ﬁrmly knit economic unity which is des tined to counteract every attempt at separ

of ation . The sentiment these German industrial leaders was echoed on another 83 HUGO STINNES

f occasion by the forces o labor . In the

1 20 of summer of 9 , at a conference labor union delegates from all the mines , a resolu tion was passed pledging the men to joint action with the labor organizations of the

off railroads and water highways , to cut the

of supply coal , coke and briquettes from any part of the country which should a t tempt to secede from Germany . In view of the weakness of the present

German state authority, these economic arguments are of great importance when facing the danger of isolation and secession .

Aside from its success in South Germany, the Stinnes Trust has recently obtained a strong foothold in the most important industrial sections of Prussia . It controls the importation of coal and the coal market , and shares in the distribution of machines and manures for the agricultural operations of East Prussia . It has acquired an almost monopolistic position in the manufacture of one of cellulose , the chief products of this region . All the cellulose factories of 84

HUGO STINNES

tria can no longer count on these nor on

any other foreign industries . Her mori bund excha nge does not permit her to im

port as formerly, and is allowing foreign countries to buy up Austrian industries to

an alarming extent . Yet Au s , despite her present weakness ,

tria is rich in economic possibilities . In

Upper Austria, in Salzburg and in the Tyrol , there are coal deposits ; oil seems to be pres

ent in various localities , and valuable de

of or - posits kaolin , porcelain earth , which may form the basis for a highly developed

s ﬂi ient porcelain industry . There are u c forests to support a ﬂourishing paper f making industry . The use o water power would put the electrical industry on its

feet , and the power thus developed could furnish the entire mechanical energy for industrial and transportation purposes . In

of 1 2 1 a c the spring 9 , the Stinnes Trust quired the Austrian Alpine Mining Com

pany, by buying up the stock . This com n s pany owns the Styrian mini g depo its, the 86 HUGO STI NNES

of greatest mine Europe , and used to play an important part before the war in sup plying Italy and the Balkans with iron and f . 1 1 6 o steel In 9 , the best year the mine ,

ore tons of were mined , yielding

of tons pig iron , and tons f o . rolled steel After the war, the produc 1 1 tion was greatly diminished . In 9 9 the production had dwindled to tons of ore of , yielding tons pig iron and 0 000 of s 7 , tons rolled steel , which represent

- f about one tenth o the former production .

When things were at their lowest ebb, a Viennese banker bought the majority stock control , and sold the greater part of

s n di it , with enormous proﬁt , to an Italian y

of im cate . This acquisition was great

. T e r portance for Italy h Italian indust y, with little iron to fall back upon in its own

r count y, was now in a position to secure its

iron supply from Styria . The idea was an

one im excellent , but conditions made it F r ou t . or possible to car y it Italy, with

of own hardly any coal its , could not furnish 7 87 HUGO STINNES

the necessary coke to reﬁne the ore . The Italians controlled the mine for almost two years without extracting a single ounce of iron . s ndi Besides the lack of coke , the Italian y f o . cate also faced a lack labor Formerly, any amount of Italian laborers were to be en had to run the industry, but they now t irel y abstained from coming, which is in quite natural , since no Italian could be du ce d to work to- day f or wages paid in

Austrian crowns . On the other hand , the syndicate was in no position to pay wages in Italian lire . The Austrian company formerly had oh t ained the greater part of its coke from its own coke plants in Orlau near Ostrau in

Moravia, as well as from other Moravian coke plants , and from the Ruhr coal dis trict . The States that came into existence through the fall of Austria erected trade barriers against each other, so —that the deliveries of coke from Czech o Slovakia also ceased . The deliveries from the Ger 88

HUGO STINNES

depend upon iron . Under this arrange ment the iron produced at the Styrian mines no longer has to be taken to C zech o

Slovakia , but is manufactured right in the

of country . This means a resumption the

r Austrian iron indust y, so that it can satisfy the home demand , and at the same time

f exce resume the export o iron . The p tiona l quality of Styrian iron has played an important part in handicapping Austrian iron manufactures . The iron imported after the closing down of the mine was not always of the quality which the Austrian industries required f or their high grade steel products . With the Styrian iron once more at their command , they are now again in a position to supply the market with goods of standard quality . Hugo Stinnes has been criticized in some quarters f or acquiring the Alpine Mining

Company . The transaction occurred in the

of critical days the London conference . The purchase required large ﬁnancial re sources and was looked upon a s a measure 90 HUGO STI NNES calculated to increase the diffi culty of an understand ing . It may very well be that the impression made in London was not

of ore very favorable , but the loss the de posits would cer tainly have been a much

s greater calamity . This los was actually threatened because negotiations with foreign purchasers had already begun , as in the case of the Bochum Company where the stock was almost bought up by foreign investors . Austria would not have been in a position to put this gigantic mining enterprise into

Operation again without outside help . The

' K cil ni s ch e %ei tu n of g, (the leading paper

of Cologne), discussed the importance the

st ra n u case , in relation to the economic g

of lation Germany and Austria , as follows % The post- war policy of the Entente is

r severely handicapping German indust y, and is excluding it from the world market wherever possible . It is transforming Aus

- r of tria Hunga y into a heap wreckage , and is paralyzing Upper Silesia to the point of industrial impotence . The Entente has 9 1 HUGO STINNES

abandoned the utterly helpless Balkans , and has nothing to contribute to the recon st ruction of Central Europe except insen sate reparation demands , penalties , and ‘ reprisals . It has converted the urge to the southeast which it formerly falsely ascribed to us , into an irresistible pressure . An enterprising man like Stinnes , whose fore sight and largeness of conception even his enemies will not deny, is taking a leap into the dark with the hope of transforming one of the greatest enterprises of the continent

of r into an active member European indust y . The capital involved is no triﬂe even for

Stinnes , and the risk is proportionately large . Yet this step has brought down the wrath of the Entente upon Stinnes , though none moved a ﬁnger as long as exploiters from every country in the world tried to share in the auctioning off of Austria . When we consider that Italy, a former ally, had the

a ccom ﬁrst chance , but was not able to

lish - p anything, and that Schneider Creusot , made wiser by unfortunate experiences in 92

HUGO STINNES

ff ical di iculties , for the economic advantages to both sides were obvious to everybody . But the Italian purchasers could not meet the costs . They probably hoped that their participation in the Alpine Mining Company would induce the Cze ch o- Slovaks to deliver the coke necessa ry for the smelting of the

ore Styrian in larger quantities , after they had revengefully denied it to the German

z ch o- Austrians . But the C e Slovaks were not to be disturbed in the further enjoy

of six of ment their revenge , so that seven blast furnaces of the company remained cold . And at that time French , English and American allied intere sts would not furnish coke , except at exorbitant prices . The result was that the Italians soon lost their enthusiasm for a piece of property which they had so triumphantly acquired . %

You . n sub sti , Mr Sti nes , are the right

f For ou tute or them . y have what they

lacked , namely, coal and coke . It is prob able that the thirst for vengeance will now also rapidly disappear among the Czech o 94 HUGO STINNES

Slovaks , as was the case in the sugar busi ness , when Austria began to receive sugar off from far Java , at a cheaper price than that which their Czech o- Slovak neighbors f or . were asking it Subsequently, the price of sugar in the world markets declined to such an extent that the Czech o- Slovak suga r could not be sold anyw here at their asking price . Let us hope that the same thing will happen with their coke . They will undoubtedly off er it to the Alpine Mining t Company, so that the Wes phalian coke will not have to be taken away from Ger

man industry . Next , the unemployment will decrease . More hands will be required in order to mine larger quantities of iron ore , which will also have to be smelted , after which the iron will be used in the fac

tories to manufacture machines , girders , i . n rails, tools , and other articles The creased supply will cause the price of iron

manufactures to come down . This will be followed by a general reduction of prices i and wages . Then there w ll be a gradual 95 HUGO STINNES

of resumption building activity, which will stimulate industry all along the line . In short , the industrial paralysis will cease , and ou r economic life will a gain have a healthy circulation . %

For s . this rea on , Mr Stinnes , the Aus trian press is again suddenly favorable to

of - you . This is true even the Social Demo cratic papers which have recently swung

- back to capitalism . The Social Democratic party, as you know, has been in a repentant mood ever since the complete collapse of their ambitious socialization plans at the ’ recent congress of the metal workers unions

- in Vienna . The Social Democratic faction in our national parliament is keeping close watch , and has made an interpellation in ’ a t parliament , drawing the , government s tention to the possibility of your shipping

ore the Styrian to Germany, and thus

paralyzing the Austrian iron industry . But

ou this probably merely caused y to smile , since you are after proﬁts which will be greatest if you have the raw material manu 96

HUGO STI NNES

f or taken is fraught with great risk, he has invested a gigantic sum and will have to put still more money into this mining enter prise in order to put it into complete run ning order . The speculation that preceded this step will make it extremely diffi cult to derive any proﬁt from this huge investment, but it is characteristic of Hugo Stinnes to build his business without always having in mind the question of immediate or early proﬁt .

While taking these steps in the south and

of the east , Stinnes was thinking still further ways of keeping open the economic gates of Germany . Some time before the war, he had already entered into compli cated negotiations for the purpose of con necting his enterprises with foreign sources of raw materials and foreign ﬁelds of con sumption . His purpose was to have a cen t ra lized enterprise , producing its own raw

f or ow n materials its transportation lines , and marketing its wares through its own 98 HUGO STINNES

1 20 merchandising system . In 9 he added an extensive exporting department to the Hugo Stinnes Transportation and Overseas 1 1 Trading Company, organized in 9 7, to which reference has already been made . The charter of this company in the commercial register of Hamburg is very interesting . It shows how the varied enter f prises o Hugo Stinnes are to be developed . The business is licensed to engage in the following activities : To engage in trans

ort ation p of every description , as well as to build and manufacture all shipping acces s ories , whether at home or abroad ; to deal in the products of the mining, smelting, and metal industries , the chemical and electrical industry, and agriculture ; to market articles of every stage of manu

of facture , as well as raw materials all kinds, especially provisions and cattle products , mineral , animal and vegetable oils , cotton, and other textiles in the unﬁnished state, hides , jute , wood , cellulose , paper, and all products of the intermediate industries ; to 99 HUGO STINNES engage in the re- shipping and storage of all these products , especially during their

or transmission from to foreign countries . The company is also licensed to undertake e the extraction, manufacture, and constru tion of every form of raw material and manufactured article in its own estab

lish ment s . It is diffi cult to imagine a more compre

n i e h e s v industrial organization . Stinnes now proceeds from the mining and electrical business , to become active in the most f varied forms o German business enterprise .

The Hamburg Travelers Company, which

Stinnes founded , together with the Ham burg American Line, enters the ﬁeld of travel and hotel and health resort manage ment . Steamer cabins , railroad compart ments , hotels , and health resorts are uni ﬁ ed into one system . The company owns the Esplanade Hotel in Berlin , and the hotels in Oberhof, Thuringia, which are run through the Hotel Management Com

Of . pany, Limited, Thuringia These enter 100

CHAPTER VIII

ST INN E S A ND TH E N EW SPAPERS

TH E R E was much astonishment in Germany when it became known that Hugo Stinnes , the industrial leader, had gone into the newspaper business . His ﬁrst step was to acquire the well- known D eu ts ch e Alligemeine

' ei t % ung . Stinnes is by no means the ﬁrst German industrial leader to own a news paper . I t is pretty well established that

of a number German newspaper properties , advertising concerns , and news bureaus , are under the control of the major indus

x a l a s tries . The exact connections are not w y f clear . This state o aff airs reflects upon the whole German newspaper system . In many organs of public opinion , it is true, 1 02 HUGO STINNES the reader can easily form his opinion Of the influence at work behind a newspaper . But in many cases even an experienced per difli lt son would find cu y in doing this . The policy of a newspaper may furnish no clew whatsoever, so that it is only by accident that the identity of those in control is dis

covered . This tendency has gone so far that there are now newspaper proprietors who possess a whole string of different pub lications ff , with widely di erent policies to wards political and economic questions . These papers have become pure business

enterprises , where it is quite immaterial to those in control whether the paper represents this or that shade of public

opinion . These proprietors look upon newspapers solely from the point of view of proﬁt .

o Nowadays , another development can c

a sion a ll c y be Observed . Men formerly en gaged exclusively in the newspaper and advertising business suddenly become in t erested in branches of industry that are 1 03 HUGO STINNES entirely removed from the newspaper

business .

Nevertheless , Hugo Stinnes seems to

present a special case . The policies of those papers that are demonstrably under his control in no way suggest that Hugo Stinnes is anxious to launch any propa ganda in favor of his political or eco nomic point of view . Deeds and not words reveal his inﬂuence . It is just possible that he bought these newspapers with the idea of inﬂuencing the press in his favor, and winning some of his pro s e ti e p c v opponents over to his side . But this is very unlikely .

Up to the present, the operations of Stinnes in this ﬁeld greatly resemble his

coal and electric enterprises . In both cases he proceeds from an economic and practical

of b e point view . The connecting link tween his newspapers and his coal business

out is wood . We have already pointed that he had acquired extensive forest reserves

‘ in order to assure a supply Of mining tim 104

HUGO STINNES the North German Book Binding and Pub

lish in g Company, paves the way to the

next step in the paper industry . The whole enterpris e culminates in the newspapers

which Stinnes has already bought . Here we may again Observe the same economic cycle from the raw product through the intermediate product to the ﬁnished ar

e a dminis ti le , all under the same uniform

t ra tion of , as in the case the other enter

prises of the Stinnes Trust .

% The business efficiency of Stinnes makes it seem probable that he will also attempt to bring his newspapers to the highest possible stage of technical and administra

D eu ts ch e tive perfection . Nevertheless the Allgemei ne %ei tu ng is still far from being a

of journal distinction, comparable let us

M a ti n . say, to the French It also lacks the millions of readers wh o support news

of - papers such world wide circulation .

u Judged from appearances only, it is tr e , the Deuts che Allgemei ne %ei tung is the greatest 1 06 HUGO STINNES

German newspaper . But the modest cir culation among small offi cials which this

fussy little paper formerly enjoyed , as well as under the excellent management of the

deceased Mr . Hobbing , has remained the ffi same . Editorial o ces and experts value it

f or as before its information service , but the paper has no inﬂuence on any larger f sections o the public . With all his news t paper purchases , Stinnes is s ill far from ff being a Lord Northcli e , and probably has

f on no intention o becoming e . The report that Stinnes has already pur chased sixty German papers seems to be largely exaggerated . The number probably does not exceed a dozen or so . The danger of a t ru st ifica t ion of the press certainly has possibilities which must not be underestimated Powerful personalities might easily use their economic control of the press in order to sway public opinion in certain definite directions , and to misuse their influence It is a matter f or legisla 1 07 HUGO STI NNE S tion to be beforehand in checking the dangers that might result from such a t ru stifica t ion , with its attendant conceal ment of the nature of the control behind newspapers .

HUGO STINNES tities of this important raw material through

the war . It will take years before the French coal mines can be brought back to

their former output . This explains why France was so interested in putting the de mand f or German coal deliveries into the f forefront o the discussion . But even a half- way informed opponent must have recognized the absolute impossibility of meeting the demand f or the enormous

of of amount almost tons coal ,

of as stipulated in the treaty peace . At the time not even a quarter of this amount t could be delivered . It is true that the ou put of coal from the Ruhr basin increased 1 1 1 20 considerably in 9 9 and 9 . But it was still insuffi cient to supply German industry with the necessary fuel . The hostile powers saw that Germany could not be compelled to deliver the

of amount of coal demanded , by means any peremptory command . Since the days of

San Remo, they seemed to realize that the only possible way of arriving at a real repar 1 10 HUGO STINNES ation programme was by resorting to nego tiations . There followed the conference at

Spa , which began with a fair prospect of arriving at a European understanding, though this promise ultimately failed to be realized . The negotiations took place in the Villa

Fraineu se of , the former seat the imperial headquarters . The French delegates seemed unable to dispense with the ﬂorid rhetoric which characterizes so many French po liti al c utterances . The German delegates ff were in an extraordinarily di icult position . The amount of coal demanded of them was so large that they did not wish to take the responsibility of accepting it without fur ther authorization . They therefore sum moned the German experts to Spa in order to hear their opinions . Hugo Stinnes was accordingly summoned to Spa to testify as an expert . Opinion among the German delegates was divided . On the one hand they were threatened with the occupation of the I I I HUGO STINNES

Ruhr basin , but on the other hand , they were frightened by the prospect for Ger man industry which such a n exhaustion of ’ Germany s raw materials seemed to open

U p before them . Hugo Stinnes anticipated such catastrophic results from accepting the demand of the Entente , that he used the entire force of his personality and his prestige as an expert to insist upon a re f u sa l . The delegates decided to let Stinnes present his argu ments personally, at a plenary sitting of the conference . Mr .

Hu é a , representing the Germ n miners , was also present as an expert , and was equally convinced of the serious consequences of the loss of coal to Germany, and appeared before the conference at this same sitting as the representative of the German coal miners in order to state the grounds for his adverse

Opinion . Stinnes insisted that it would be ab so lutely impossible to make an annual de

livery Of tons . He recognized the pressing need of France for reparation 1 1 2

HUGO STI NNES he looked upon Spa as still enveloped in

of an atmosphere mutual suspicion . The arguments of Stinnes before the con ference were heard with the greatest a t

tention . The delegates saw before them the

r re representative of German indust y, who j ected the gestures of diplomacy and dealt

- of with sharp edged realities . The speech

Hu é . Mr . strengthened this impression These speeches marked a departure in the

of proceedings these political negotiations .

ff r u The momentary e ect , it is t e , was not

of h very great . The guiding stars the Frenc and English statesmen were not economic

but political . It was made evident that a

or memorandum an expert Opinion , no mat

ter how carefully and thoroughly composed , makes little impression upon men of the of stamp Briand and Lloyd George , who are even likely to dismiss it without fur f ther consideration . This method o pre senting the German argu ments was out of

place , at least as far as any immediate

results are to be expected . 1 14 HUGO STINNES

Mr . John Maynard Keynes , the English

expert , was entirely right in his pessimism

about Spa . He expected no insight from Spa that would do justice to the realities of

of the situation . At the time the confer

ence at Spa , the coal question was no

as longer an economic issue, as far the l French delegate was concerned , but a po it

on ical e . If Millerand had failed to satisfy the French public , his political career would

on have ended . England the other hand , having in mind certain political steps in

Asia Minor, for which it was necessary to gain French approval , was compelled to hold back from any practical discussion . The demands of France were put through to the accompaniment of the military

o threats f Marshal Foch . The utterly impractical nature of the reparation negotiations is revealed by the fact that Fra nce already has an over

of supply coal , despite the fact that the German coal deliveries are far from reach

ing the amount demanded at Spa . At the 1 1 5 HUGO STI NNES

same time, the reconstruction work is being ff held up . A distribution of German e ort , so as to meet the actual varied require

of e not ments Franc , would have hampered

Germany as much as these coal deliveries , and would have been of much greater beneﬁt to France . The French economic body just now resembles an orga nism which has been stuff ed to the bursting point with undigestible nourishment . The attitude of Hugo Stinnes at Spa was afterwards sharply criticized in Ger

of many . He was accu sed having made such a curt refusal with the deliberate in tention of bringing about the occupation of the Ruhr basin . It was alleged that th is would have meant no diminution of his proﬁts . It was also hinted that he wanted the Ruhr basin to be in French hands , in order to escape the German h socialization schemes . The answer to t is is that Stinnes certainly cou ld have found other and less dangerous alternatives if his actions had really been determined by mere 1 1 6

HUGO STINNES

’ I posed Stinnes proposal . t was probably feared that such a coOperation would work out to the detriment of French industry on account of the superior organization of

German industries . The pessimistic calculations of Stinnes in regard to the coal deliveries have turned out to be untrue . The ﬁgures were prob ably correct , but evolution has shown that a vital organism is elastic enough to form new growths where the old growth has been cut off . Nevertheless it is true that the experiment was never carried out a c cording to the ﬁgures which Stinnes had

. ffi in mind The insu cient output , despite extra shifts , subsidies , and an increased ’ of on number laborers , Germany s part ,

ffi of and the transportation di culties France , have made it impossible to carry out com

plet ely the agreement at Spa . The common sense harmony between

employers and employees revealed at Spa, made a deep impression upon the public th e both in Germany and abroad . But 1 1 8 HUGO STI NNES eff ect of this soon disappeared in Ger many, when political and labor dissensions broke out with unprecedented severity im mediately after the occurrences at Spa . The attacks upon Stinnes came thick and fast . Among other things , he was accused of seeking to acquire inﬂuence in France in order to limit German prerogatives in the Ruhr basin, and to split labor by means . of his newspapers . A letter which Hugo Stinnes wrote to one of the men who ati f I o . tacked him , is considerable interest n 1 20 July, 9 , he wrote as follows % I ﬁnd that you have made certain ‘ prominent statements in the Arbei terzei tu ng of Essen to which I am replying because they have been made by a man who is a

of our member Own mining industry, and because these statements , unless they are contradicted , are likely to cause mischief o r in u mining community . The experts

r of the coal indust y, present at Spa, had

‘ A newspaper devoted to th e interests of labor p ublished in

Essen. 9 1 19 HUGO STINNES two objects in mind when they made their ﬁght to keep the compulsory deliveries of coal to the hostile Entente within certain limits . They wanted ﬁrst to save the Ger man mining unions from having to do a great amount of overtime work at a period when their food supply was inadequate . In the second place they did not want the unions to assume the responsibility for an even greater increase of unemployment and want in all other industries . In the discussions of the socialization commission , and in the committee of the

a rt icu State Economic Council , I called p lar attention to the fact that , contrary to

of many my associates , I did not take the stand that the abolition of the eight- hour day could be looked upon as a cure- all to remedy the present depression within what might be called a reasonable time . It is therefore outrageous of you to accuse me of having taken the opposite position . The only correct statement you make is that I declared that overtime work was essential 1 20

HUGO STINNES

through racial bias , broke down German

resistance against degrading demands . I h Ope that you will see to it that my reply to your statements is conspicuously printed i i in the Arbe terze tu ng . Good luck to you % Hugo Stinnes had every right to repu di n ate such suspicions . A expert called in to give his Opi ni on must be allowed to state

his case frankly, without being suspected of

bad motives . On this occasion , it is true , Stinnes exposed himself by ascribing mo tives inspired by racial bias to other ex

of perts who did not share his point view . Perhaps he wanted to defend himself against the impression which a French newspaper

had created , by describing Stinnes as hav

ing a Semitic appearance . On this occasion Stinnes had been characterized as % half a % professor, half a rabbi . In any case , Stinnes ’ attack upon his associates at Spa was most unfortunate .

h a s Since Spa , Stinnes been especially e oti down on politicians . After the n g a tions at the London Conference, he made a 1 22 HUGO STINNES sharp attack upon the German conduct of

on the negotiations , in the Committee

ff of Foreign A airs the German parliament . He reproached the Cabinet for having a foreign policy that was without any guid

or ing idea ﬁxed plan . Lately, an interview of Stinnes has been republished , which he is supposed to have given to a foreign correspondent . % We are merely losing time through the chatter of politicians who are wound up like automatons by parliament and the newspapers . What we need is a conference of business men who ca n talk to each other without hate . There must be no more con f erences at which eve rybody lays down his revolver at his side . This sick world can only be saved by a consultation of a few physicians behind closed doors . It would be insane on the part of Germany to de clare its willingn ess to pay even the in t e re st on a loan of marks .

on If the Allies are ﬁguring any such sums , they are going to have another disappoint 1 23 HUGO STI NNES

: ment . France could have had material

f or and labor construction two years ago, and no German would have refused to de w . s liver them France , however, a not

really interested in reparation , but was

n seeki g to humiliate Germany . At the present moment there are only two kinds of countries in the world—those which can buy raw materials because of the state of

not h . exchange , and those which can do t is Both are bound to perish unless some form

o f coOpera tion can be agreed upon . Money

is to be found , but only by giving the world

of co e ra tion r an example perfect Op . Eve y business man knows that money is to be

had , only the politicians do not seem to

know it . I am trying to save my country

from destruction , and at the same time save % the other countries . This interview is without doubt essen

t i ll For a y correct . this is the way Stinnes

thinks and speaks . He is always terse and h sure of imself, and sees things in a large way, though he is sometimes a little reck 1 24

HUGO STINNES

ently to Germans , than they now do . The three men in question had probably agreed to act as godfathers for the ships some time ago . It would have been very surprising if a man like Stinnes had allowed any psy ch ological or tactical considerations to in ﬂuence him to change the names of the ships at the last moment . CHAPTER %

STI NN E S AND TH E SOCIALI%ATION OF I ND US TR I E S

COAL and iron are the foundations of Ger con man industry . He who controls them trols the smallest business . By producing, manufacturing, and exporting them, Ger many can exchange goods with the indus tries of the world ; she can satisfy her own needs and make enough proﬁt to increase and improve the supply ; she can put her factories into more and more perfect con

l n of . VO er o e dition Mr . g , of the directors the Stinnes Trust , is quite right when he % says : With us the potato has long ago be % come a product of coal . For this reason the question of creating new economic systems always involves the control of coal and iron . Newspapers, pub 1 27 HUGO STINNES

lic meetings , and commissions have long been engrossed in plans for the develop ment of these new systems . Germany was the ﬁrst count ry to create a State Economic

r i i i crE Council , a parliamenta y nst tut on ated for the purpose of taking economic questions out of the hands of politically divided parties , and giving them to com petent representatives of the various trades and professions to evolve some suitable working basis .

re re In the State Economic Council , p sent atives of every occupation come to gether for practical work on these economic 1 20 questions . After the events at Spa in 9 , the question of socializing the mines was exhaustively discussed . The records of the proceedings read like an exciting drama which shows the conﬂict of opinions and

on interests a broad stage , not without an occasional bit of satire . In the debate over the socialization of

the mines , there was found to be a sharp

conﬂict of opinion . Hugo Stinnes , who 1 28

HUGO STINNES

of creating vertical consolidations of the

industry . The object is to utilize the raw

materials to the greatest possible extent , and to manufacture them into ﬁnished

products as effi ciently as possible . When these various vertical combinations within the industry have brough t about the great

est possible economic concentration , they are to be organized in relation to each

other on the horizontal system . The whole industry will then be t ru st iﬁed both ver tically and horizontally into a collective

unit . This will ensure the maximum serv

one ice , and will thus fulﬁll of the main

demands of socialistic orga nization . Ac

t ru stiﬁca t ion cording to Stinnes , and social

iza tion run parallel , and do not have to

intersect each other . The second proposal

is to create industrial provinces . The eco

to nomic ﬁeld is be divided , not according

- to geographical and political relations , but strictly according to a practical economic

of r point view . Within eve y uniform dis triet there will be a combination of all 1 30 HUGO STINNE S

of u the branches industry, and a joint reg of lation power production, raw material output , and manufacturing, together with the necessary transportation facilities . In forming these industrial provinces , Stinnes is developing a plan which he had already tried to put into practice before the war . Both his mining establishments in the Ruhr of district , and his development the elec t rica l business, had been planned with the idea of creating a uniform industrial dis

out of trict . To carry this form collee tivism , Stinnes also proposes to have the employees hold shares in the industry . These lines of development have been a nd fol evolved from practical experience , low out the purpose which Stinnes had in mind in establishing his enterprises and consolidating the various bra nches into h is f Trust . The importance o these consoli dations for the economic development of

Germany is indisputable . The proposal of minor stock participation is not essen tial to the development of collectivism, 1 3 1 HUGO STINNES

and may even become an impediment . The participation of the individual employee in the enterprises would merely strengthen economic individualism . Other business men demanded the participation of the of employees as a form collectivism . Socialization itself has thus far made little progress . The great unknown quantities , which the unsolved reparations problem has called forth , must ﬁrst be eliminated from world economics . No amount of negotiation so far has even succeeded in reducing these quantities to practical di

men sion s . Until this is done it is not very likely that a transformation of the present - day economic system can be accomplished through legislation . In this connection , it is interesting to hear the Opinion of French Socialists about the economic system which

Stinnes has created . A short time ago Le P eu pl e pointed out how this concentra tion had cheapened production and avoided

the waste of raw material , and referred to 1 3 2

CHAPTER %I

THE S I GNI F I CANCE OF STI NN E S I N G ERMAN E CONOMIC D E V E LOPMENT

TH E R E is no doubt about the strength of ’ Stinnes personality . But it is equally cer tain that from an economic point of view he is rapidly growing beyond a mere per i son a l ty : he is becoming his own work . The Stinnes Trust serves as a model il lustration of German t ru stiﬁcation . This diff ers in many ways from the well- known

American trust , in respect to its ori gins , its development , and its results . The untapped natural resources of America of f ere d unprecedented opportunities for proﬁt on to the trusts . In Germany, the other hand , there were already large numbers of independent business men who had sprung I 3 4 HUGO STI NNES

up as a result of the division and utilization ’ of of the country s deposits raw materials , and the advanced technical development ; so that a trust could not be formed except through a combination of individual daring

and an extraordinary gift for organization . American trust builders also have frequently made clever use of the stock exchange opera

tions , in order to gain control of various

enterprises . Large scale speculations of this sort have been rare occurrences in Ger I t many . is only quite recently that the stock exchanges of Berlin and Vienna have witnessed such sensational Operations . They will cease as soon as the exchange has been stabilized . The German concentration movement did not take place primarily through ﬁnan cial operations , but through logical con solidations of enterprises that were at the

same stage of manufacture, or were engaged

in similar manufacturing processes . Such consolidations off ered great advantages in o the running of the business, which did n t 10 I SS HUGO STI NNES

of exist in the case isolated enterprises . They led to economy and skill in the pur

chase of raw materials , and where they were built up on the basis of their own raw

materials , this feature frequently put them in the favorable position of being able to procure their material without expensive ’ - - rob middle men s costs , and without time

bing and costly transportation . They could also regulate the production of raw ma t erials according to whatever standard of

quality they required . The special forms of industrial organiza tions peculiar to mining were to the a dv a n tage of factories that handled several proc

esses at diff erent stages . The protracted dissensions in the Rhine-Westphalian Coal Syndicate had resulted from the fact that

of a large number mining industries , as

well as factories involving several processes , were members of the same syndicates and

of or cartels . The cartel form business

ganization will probably disappear entirely . An essential diff erence between German 1 36

HUGO STINNES

ff tion , and to let up in its e ort to perfect its equipment and to increase its produc

tion . This continually forces German trusts to do everything in their power to t ry to cheapen production costs and to extract

the maximum eff ort from their workmen . Another trait of the German trusts is the principle of federation basis on which they are organized , corresponding to the

characteristics of the German people . As

the Stinnes Trust shows , decentralization

is the very thing aimed at , so as to preserve and increase the independence of the in dividual enterprises and the pride of each

director in his responsibility, as well as to avoid stagnation in the office management th and in e shop .

/ 5 Germany to- day shows the most diversi ﬁed of forms consolidations in every ﬁeld . But they all have the same object in com

on mon , namely, to organize industry a more rational basis . This is essential in order to keep Germany alive . The fact that this process is taking place from within 1 3 8 HUGO STINNES

f is a sign o inner vitality . To what this

on development will lead later , cannot yet ff be foreseen . Theories di er in regard to

the eﬂi cien cy of these concentrations . The dispute between the partisans of these theories frequently takes violent forms . But in the meantime the development goes

of steadily on . Germany must course pre vent unhealthy excrescences of this de

nt v e10pme . But the development itself is bound to take place . The importance of German t rusts for the future of Germany is certainly very

So- great . called normal economic condi tions , in the period before the war, now seem almost mediaeval and provincial . The development is taking place with enormous

t of rapidi y . The pressure conditions from

or without , the actual threatened loss of

roh ibi vital industrial sections , and the p

of tion export and import , would necessarily have destroyed Germany if unsuspected forces had not been liberated and been made to unfold from within Germany I 3 9 HUGO STINNES will become a sparsely settled agricultural state unless the formation of new kinds of economic organization ca n bring about

e . greater, better, and cheap r production Trusts induce and facilitate the growth of these new economic organizations . It is worth while to observe the eff ects of t ru st i

ca tion ﬁ in the case of the Stinnes Trust . The consolidation of the Gelsenkirchen

i ni M ng Company Inc . with the German Luxemburg Mining 85 Smelting Company

u and the Boch m Company, combines a large number of similar plants engaged in

of - the production coal , iron ore , limestone ,

mi and dolo te . These raw materials are ex tracted not only for the factories belonging to the trust , but to a considerable extent for outside factories as well . This com bination makes it possible to employ cheaper and better methods of extraction because the joint management eliminates competi tion , and facilitates a better organized plan of of distribution . The expenses the Trust are also reduced through the manufacture 140

HUGO STINNES

needs of the factories at the next stages of

manufacture . Semi- manufactured products of every form and quality are successively produced

by a chain of related factories . The estab lish ments at Gelse nkirchen produce rail

road material , bar iron , tin , and tubing ; the Bochum Company manu factures rail

road material , forged iron , bar iron, and

r ni s ro cast iron . The B ii ngh a u factories p duce crude forged iron and bar iron ; the former works at Th omé e produce bar iron and rolled steel wire . The former inde pendent works at Berg manufacture b ar

of iron , various forms tin , wire, and tubing ; the German- Luxemburg Mining 85 Smelting

Company manufactures railroad material ,

- forged iron, cast iron , tins and wires . The affiliated factories of the Siemens Company also produce bar iron and wire . The ﬁnished products of the German Luxemburg Company include all kinds of tools , screws and rivets , springs , forged

parts , switches , railroad and bridge con 1 42 HUGO STINNES

s truction material , cranes, cables , railroad s and treet cars , freight cars, machines and

s nece s ship . The Company obtains all its f or t sary , materials these manufac uring processes from the series of factories e n gaged in the production of intermediary

products . The Bochum Company depends upon previous production stages of the in du stry for its manufacture of forgings and railroad material .

This foundation of raw material , semi and ﬁnished product , serves the Siemens Company for the manufacture of the most

rt . : varied a icles These include generators , motors , transformers , switchboards , ma te ria l i for installat ons , cables and conduits , telegraph and telephone apparatus, signal apparatus , measuring instruments , electro medial apparatus , hydrometers , railroad safety devices , trucks and automobiles ,

el f or artiﬁcial coal , porc ain and paper tech nical purposes , incandescent lamps , elec t rica l distributing stations , electrical equip ment for industrial power plants , for elec I 43 HUGO STI NNES t rica l h in transportation , and for c emical du st rie s ; long distance telephone apparatu s and transmission equipment , signal and switchboard equipment , and underground and hydraulic building material .

of Beginning at the bottom the scale, every stage of manufacture is undertaken

so in relation to the stage next above , that the raw material is gradually transformed into a ﬁnished product of the best possible l W qua ity . henever changes in the ﬁnished product are called for, suitably equipped factories can be installed at any of the pre

of liminary stages manufacture . The divisions in this system are not rigid . Horizontal and vertical combina tions parallel and intersect each other . Many industries are divided vertically or horizontally within themselves , and some are connected with others both horizon

of tally and vertically . Every stage manu facture , besides having its place in the pro duction scale as a whole , is itself minutely organized . This rational systematizing of I 44

HUGO STINNES

in Germany . The point is being made that the development of these trusts is not organic but is due to the tremendous pres

f of sure o external circumstances . In case a return to a period of normal economic t ac ivity in the future, it is considered very dangerous to have these trusts absorb a large number of major and minor indus tries which they will no longer be able to utilize when conditions are sta blized again . But after the factories are either a baif doned or closed down , it will still be nec essary to pay off both interest and prin cipa l on the large amounts of capital in

u n vested . This necessity will form an desirable liability which must be charged

against prices . The same rea soning a p plies to the overpayments which are often being made to- day in acquiring new prop

rti e es . These liabilities will prevent price

on reduction , and will ﬁnally be passed to

the consumer, so that the people as a whole ff will su er economic harm . I t is also claimed that there is great 146 HUGO STINNES danger of the owners of these powerful trusts misusing their inﬂuence over society and the state . It may become especially diffi cult to regulate the production of in dividual countries in the interest of inter d if national economic understan ing, these countries contain powerful , independent pyramids which stand outside of the m co monwealth . Finally it is argued that these trusts make it impossible f or important smaller d in ustries to remain independent , and that they check the initiative of the masses .

‘ T hese misgiv ings are not entirely u h

d t r s iﬁ i u stiﬁed . u t ca t on j In a dition , the movement has thus far failed to give one other necessary guarantee . Trusts will , it is true , lead to the greatest possible ration a liza tion of economics , but it has not yet been shown that these factory systems , l however technica ly perfect they may be , are working towards a true collectivism .

Of what use is it to the general public , for ns i tance, to have the best telephone system, 147 HUGO STINNES

if such necessities as houses , clothes , and food

su ﬂi cient cannot be procured in quantities , or only at exorbitant prices % And it is als o true that , up to now, every advance towards a better supply of these necessities is made

. retroactive through the fact that increased satisfaction constantly creates new wants .

th e Thus , economic pressure persists even when it is possible to satisfy all wants . As regards the relative merits of vertical or horizontal concentration , this at least seems to be certain : Under the desperate conditions of present day German indus try, the vertical trust is the most important f r e of r o th near future . The merit the ho i zonta l system lies in its internal results . This system may be compared to a com munity with an economic system which allows th e most suitable dist ribution of labor and avoids every form of industrial

of friction and waste material , while at the same time enjoying unrestricted relations with the outer world . But Germany to day cannot revive her industry by satisfy 148

HUGO STI NNES If we direct our attention to the anchor

of ages the Stinnes trust , such as Rhine

-W h land estp alia , Hamburg, Berlin , Bava ria , East Prussia , and German Austria ,

ou t and follow all their foreign connections , we shall ﬁnd that they off er valuable guar a ntees of their ability to function even in

of periods political and economic upheavals . If the German commonwealth succeeds in organically incorporating th is powerfu l trust

own into its economic structure , Hugo Stinnes will be one of the commonwealth’ s i strongest p llars .

14 D NY U SE RETURN TO D ESK FR OM W HI CH B

LOAN DEPT.

Th is b k i s d u e n th e l e e bel w or oo o ast dat stamp d o , n th e e to w h i ch en e o dat r ew d . R enew e k e u b ec i e i e e l d b oo s ar s j t to mm d at r ca l .

FEB 2 8 1966 5

MAY23 1968 1 3

’ REC D AH/C OCT 6 1975