Wages in Germany 1871-1945 BYCERHARD BRY Rutgers University ASSISTED BY BOSCHAN A STUDY BY THE NATIONAL BUREAU OF ECONOMIC BESEARCH, NEW YORK PUBLISHED BY PRINCETON UNIVERSITY PRESS, PRINCETON 1960 Copyright ©1960,by Princeton University Press All Rights Reserved • L.C. CARD 60—5762 Printedin the United States of America WAGES IN GERMANY 1871-1945 NATIONAL BUKEAU OF ECONOMIC RESEARCH NUMBER 68, GENERALSERIES 2,005,943 •NatienaJ- Thn'eau ofjcpriomic• Inc. —.—t - Bry,Gerhard. Wages in Germany, 1871-1945, by Gerhard Bry, ascdsted by Charlotte Boschan. Princeton J,1 Princeton shy Press, 1960. nv!1486 p.dlagrt, tables.24 cm.(National Bureau of Eco' nomtc Receareb. General series, no. 68) "A study by the National Bureau of Ecenomle Research, New York." Elbilographlcal footnotes. 1. Wages—Germany. x. Titla (Series) 1105029.B7 331.2943 604762 MATERIALSUEMfiTTED RY PUBIJSH!R. NATIONAL BUREAU OF ECONOMIC RESEARCH 1960 OFI'ICERS George B. Roberts, Chairman ArthurF. Burns, President Theodore W. Schultz, Vice-President Murray Shields, Treasurer Solomon Fabricant, Director of Research Geoffrey H. Moore, Associate Director of Research William J. Carson, Executive Director DIRECTORS AT LARGE Wallace J. Campbell, Nationwide Insurance Solomon Fabricant, New York University Crawford H. Greenewalt, E. I. du Pont de Nemours & Company Gabriel Hauge, Manufacturers Trust Company Albert J. Hettinger, Jr., Lazard Frères and Company H. W. Laidler, League for industrial Democracy Shepard Morgan, Norfolk, Connecticut George B. Roberts, Larchmont, New York Harry Scherman, Book-of-the-Month Club Boris Shishkin,American Federation of Labor and Congress of Industrial Organizations George Soule, Washington College J. Raymond Walsh, New York City Joseph H. Witlits, The Educational Survey, University of Pennsylvania Leo Wolman, Columbia University Donald B. Woodward, Vick Chemical Company Theodore 0. Yntema, Ford Motor Company DIRECTORS BY UNIVERSITY APPOINTMENT V. W. Bladen, Toronto Walter W. Heller, Minnesota Arthur F. Burns, Columbia Maurice W. Lee, North Carolina Melvin 0. de Chazeau, Cornell Lloyd G. Reynolds, Yale Frank W. Fetter, Northwestern T. W. Schultz, Chicago H. M. Groves, Wisconsin Jacob Viner, Princeton Gottfried Haberler, Harvard Willis J. Winn, Pennsylvania DIRECTORS APPOINTED BY OTHER ORGANIZATIONS Percival F. Brundage, American Institute of Certified Public Accountants Harold G. Haicrow, American Farm Economic Association Theodore V. Ho user, Committee for Economic Development Stanley H. Ruttenberg, American Federation of Labor and Congress of Industrial Organizations Murray Shields, American Management Association Willard L. Thorp, American Economic Association W. Allen Wallis, American Statistical Association Harold F. Williamson, Economic History Association DIRECTORS EMERITI Oswald W. Knauth, Beaufort, South Carolina N. I. Stone, New York City RESEARCH STAFF Moses Abramovitz Milton Friedman Geoffrey H. Moore Gary S. Becker Raymond W. Goldsmith Roger F. Murray Gerhard Bry Millard Hastay Ralph L. Nelson Arthur F. Burns Daniel M. Holland 0. Warren Nutter Phillip Cagan Thor Hultgren Richard T. Selden Morris A. Copeland F. Thomas Juster Lawrence H. Seltzer Frank 0. Dickinson C. Harry Kahn Robert P. Shay James S. Earley John W. Kendrick George J. Stigler Richard A. Easterlin Simon Kuznets Leo Wolman Solomon Fabricant Ruth P. Mack Herbert B. Woolley use Mintz RELATION or THE ToTHE Woiuc AND PUBLICATIONS op Tas NATIONAL BUREAU OF ECONOMIC RESEARCH 1. TheobjectoftheNationalBureau of Economic Research is to ascertain and to present to the public important economic facts and their interpretation in a scientific and impartial manner. The Board of Directors is charged with the responsibility of ensuring that the work of the National Bureau is carried on in strict conformity with this object. 2. To this end the Board of Directors shall appoint one or more Directors of Research. 3. The Director or Directors of Research shall submit to the members of the Board, or to its Executive Committee, for their formal adoption, all specific proposals concern- ing researches to be instituted. 4. No report shall be published until the Director or Directors of Research shall have submitted to the Board a summary drawing attention to the character of the data and their utilization in the report, the nature and treatment of the problems involved, the main conclusions, and such other information as in their opinion would serve to deter- mine the suitability of the report for publication in accordance with the principles of the National Bureau. 5. A copy of any manuscript proposed for publication shall also be submitted to each member of the Board. For each manuscript to be so submitted a special committee shall be appointed by the President, or at his designation by the Executive Director, consisting of three Directors selected as nearly as may be one from each general division of the Board. The names of the special manuscript committee shall be stated to each Director when the summary and report described in paragraph (4) are sent to him. It shall be the duty of each member of the committee to read the manuscript. If each member of the special committee signifies his approval within thirty days, the manu- script may be published. If each member of the special committee has not signified his approval within thirty days of the transmittal of the report and manuscript, the Director of Research shall then notify each member of the Board, requesting approval or dis- approval of publication, and thirty additional days shall be granted for this purpose. The manuscript shall then not be published unless at least a majority of the entire Board and a two-thirds majority of those members of the Board who shall have voted on the proposal within the time fixed for the receipt of votes on the publication proposed shall have approved. 6. No manuscript may be published, though approved by each member of the special committee, until forty-five days have elapsed from the transmittal of the summary and report. The interval is allowed for the receipt of any memorandum of dissent or reser- vation, together with a brief statement of his reasons, that any member may wish to express; and such memorandum of dissent or reservation shall be published with the manuscript if he so desires. Publication does not, however, imply that each member of the Board has read the manuscript, or that either members of the Board in general, or of the special committee, have passed upon its validity in every detail. 7. A copy of this resolution shall, unless otherwise determined by the Board, be printed in each copy of every National Bureau book. (Resolution adopted October 25, 1926 and revised February 6, 1933 and February 24, 1941) TO THEA PREFACE THE title of this book might suggest that the study is concerned with matters past and far away. In some sense this is, of course, true. But the limitation to a specific time and country is less stringent and less significant than it might appear. The major characteristics of wage behavior, as observed during the three-quarters of a century under review, reappear during the more recent past. And wage behavior in industrial Germany is shown to have had much in common with that observed in the United States and Great Britain during corresponding phases of their deyelopment. So far as topical interest is concerned, the study deals with money and real wage trends in the course of economic growth and development; with the late and slight response of wage rates to downturns in economic activity; with wages during creeping, marching, and galloping inflation. These topics are, of course, the focus of much current economic thinking. The value of the book, however, lies not only in the description of wage phenomena common to industrial countries. The bulk of the study is devoted to German experience, and what are perhaps its most interesting portions deal with German wages during two World Wars and the Great Inflation, against the background of the German institutional setting and economic thinking of these periods. The study reflects the continuing interest of the National Bureau in the economics of wage behavior. It complements Daniel Creamer's Behavior of Wage Rates during Business Cycles (1950), Clarence D. Long's Wages and Earnings in the United States, 1860—1890 (1960), and Albert Rees' Real Wages in Manufacturing, 1890—19 14 (in press). All of these investiga- tions, in addition to making available more reliable series of money and real wages, are designed to clarify the important short-term and long- term relationships between wages, output, and general economic condi- tions. Economists seeking to ascertain basic characteristics of economic behavior are deeply concerned with the degree of generality that can be claimed for their findings and hypotheses. Are the observed phenomena limited to a particular set of institutions, or do they reflect ubiquitous and generally valid relationships? Evidence from more than one country and more than one historical period is helpful in deciding such an issue. The present study will, it is hoped, in this fashion contribute to our understand- ing of wage behavior. LEO WOLMAN ix AUTHOR'S ACK NOWLEDGMENTS Iknown, long years ago, how much effort the writing of this book would entail, I might never have begun it; and had I not had the generous help of many friends and colleagues, I might never have finished it. It gives me pleasure to recount my debts. Of all my obligations, the largest is that to Leo Wolman. It was he who suggested this project, and who watched over its development every step of the way—advising, encouraging, prodding. I find itdifficult adequately to express my thanks to him. Geoffrey H. Moore read the manuscript with meticulous attention, making acute observations which helped to improve both content and organization.His practical assistance was invaluable. Daniel Creamer read several drafts of the manuscript and made many helpful comments. Harold Barger, at a critical juncture, gave me reassurance and con- structive advice.