SINCE the era of imperialism, the keystone of the arch of capitalist Europe has been Germany. The most brilliant example of European prosperity was the period when the Kaiser reigned. So much was Germany the heart of Europe that, indeed, the pan-Germanists conceived their destiny as pre-eminently one of organizing Europe under its control. The desperate plight of Germany after the war amply testifies to the ruin of the political stability of Europe.

After the war, as before, Germany has proven itself the decisive country of Europe and, emerging defeated and despoiled, was one of those weak links in the European capitalist chain that threatened to break and plunge the whole world into communism. Had Germany turned Soviet in 1918 a new World War would have been fought on the issue of world soviets and workers' rule. Bolshevism, however, did not prevail. In Germany, the Workers' Councils could not overthrow at the critical moment the Right Wing and Centrist groups, and the revolutionary elements went down to defeat.

No country was objectively more ripe for socialism than Germany after the war. In no country were State and trust capital so highly integrated. No country was so heavily saddled with foreign debts and reparations. In no industrialist country had the income and standards of living of the masses fallen so far below the pre-war standards, nor had their savings and reserves been so entirely depleted by inflation and other measures as in Germany.

Economically as well as politically, Germany went through three main post-war phases. The first period was one of chaos and inflation, from 1918 to 1925. Politically, this was marked by the overthrow of the old ruling class and the attempt on the part of capital to check the advance of the militant workers by giving power to the Socialist bureaucracy. Economically, it meant a terrific impoverishment of the whole population and the destruction of the savings of the entire middle class. From the point of view of the bourgeoisie, however, it meant a great growth in the trustification and cartel movements which had been spreading in Germany even before the War, which had been immensely spurred on by the hostilities, and which now reached their culmination point. (*1)

The cartels established in Germany had been of many kinds, including those establishing price fixing, uniform trade conditions, quotas of production, apportionments of territories, standardizing of products, etc. Prior to the War, Germany had generally stopped at the cartel and had not advanced to the trust form, the reason being that the manufacturers were still specializing in imitating the goods of other countries, perfecting the inventions produced elsewhere and winning markets through better sales methods rather than through superior production. During the War, a complete centralization of all industry had been established by the State. The post-war chaos and inflation enabled big business to buy up practically anything cheap, and to erect at once a tremendous new trust movement based on speculation. This was best illustrated in the great Stinnes Konzern and other vertical combinations. (*2)

The basic cause for this unprecedented rise of vertical trustification was not only the currency inflation but the loss of territory under the Versailles Treaty, by which the Reich lost 26 per cent of its coal and 74 per cent of its iron ore. This meant that German business had to utilize far more efficiently than ever before the greatly decreased resources at its disposal. The result was an immense development of scientific research. "Scientific research has increased in importance with the slowing down of the rate of technical progress, the growing complexity and increase in the scale of manufacturing and distributing processes, and the gradual exhaustion of the better raw material resources. It holds the key to the technical, if not to the entire economic development of the future. In Germany the loss of territory and resources through the Treaty of Versailles, the rapid exhaustion of certain important mineral deposits, population increase, and growth in the national standard of living, have combined to emphasize the importance of science in industry." (*3)

In international politics, the victorious Versailles powers did their best to hack the German regime to pieces. The German State itself was threatened with dissolution. Its sovereignty was split up in the hands of a Rhineland Commission, a Reparations Commission, an Ambassadors' Conference in Paris, and a League of Nations. The German government was bound not to violate any of the 428 paragraphs of the Treaty of Peace. The Saar, the Ruhr, Malmy, Eupen, Holstein, parts of Prussia, Silesia, and the Tyrol were torn away from the main body. Prussia was split into two; the Ruhr was made into a field of influence for France; Alsace and Lorraine were taken outright. The rolling stock was seized and taken away. The important coal centers and iron resources were grabbed by the victors. The ally of Germany, the Austro-Hungarian Empire, was broken into bits and each fragment utilized as a spear against the side of Germany. The German fleet was sunk, the merchant marine confiscated, the foreign credits canceled; a severe blockade encircled Germany like a noose.

Immediately upon the termination of the war, the German working class, with one mighty heave, shook off the hold of the aristocracy and proclaimed the Republic. According to precedent, the aristocracy should have given way to the rule of liberal big business, but this was not to be the fate of Germany. The industrialists were entirely too unfit and too untested to become the rulers. Under the Kaiser they had been restricted to governmental posts of secondary importance; by no means did they have the standing and prestige that their fellow exploiters had secured in Western Europe.

The tragedy of the German bourgeoisie was that it had never held political power directly in its hands. Before the war, it had refused to fight the Kaiser, fearing the social revolution. When the Kaiser had fled, all that it could do was allow the power to slip through its fingers into the hands of its agents, the socialists, who, however, held it firmly to the end and saved the day for the capitalist cowards.

Wealthy property could not take over the German government after the war, neither could the old petty bourgeoisie which already, in 1848, had proven its bankruptcy, and, in the twentieth century, had followed the parties either of imperialism or of socialism. The elements that did take advantage of the situation were the skilled sections of the working class led by the newer forces of the petty bourgeoisie, the professional employee, white-collar and factory foremen elements. Although a host of workers flocked into the unions --- the total number of unionists in Germany at one time rose to almost fourteen million and maintained an average of over eight million ---they could not break the hold of this bureaucracy which secretly worked night and day in intimate relations with the Junkers to crush the revolutionary movement.

The German working class was incapable of organizing a powerful communist movement able to establish the rule of the workers. The favored position of German imperialism before the war had weakened the revolutionary spirit of the worker, making him docile and subservient to orders. His very strength was his weakness, that is, his ability to organize and to act in concert resulted in a lack of initiative and an inability to break organizational discipline at the proper time. The slogans "Ordnung und Diziplin" had penetrated into the very fibre of the German people.

The German people suffered intensely after the war and were rapidly moving towards a communist position, but the strict blockade around Germany, the threat of intervention by the victorious powers should Germany go Red, the weakness of Russian communism, and the pressure of United States capital, proved, in the long run, heavy enough to swing the scales the other way. When the opportunity came again, in 1923, in the hectic period of inflation, at a time when a newspaper cost eighty billion marks, (*4) and the most widespread misery and ruin prevailed, the communists were not able to establish themselves in power and showed that they remained essentially merely Centrists, half-way revolutionists.

The construction of a revolutionary Communist Party in Germany has proved a difficult task which the German workers, overwhelmed by superior forces, had not sufficient time to accomplish immediately after the war. Thus the German working class, the most powerful and important of all Europe, and the most strongly organized, holding the majority of the decisive industrial districts in their hand, having a high political level, disciplined through periods of war and revolution, fourteen million of them supporting the communist and socialist position, were yet unable to take power.

The second period of German post-war history ranged approximately from 1925 to 1930. It was marked politically by the coalition government, the mutual collaboration between the reformist socialists and the Liberals and Centrists under the Weimar Republic, at whose head was Hindenburg. The communist revolutionary wave now definitely had been broken, and Germany had become a vast market for foreign capital, absorbing in this period over sixteen billion reichmarks from the United States alone, completely rehabilitating its factories and industrial machinery, and emerging in more gigantic proportions than ever. At this stage the Versailles Treaty was modified by the Dawes and Young plans, thus reducing the unspeakable total of reparations Germany was to pay under the original Versailles Treaty to the merely staggering sum of over thirty-five billion marks. To secure further concessions, Germany also flirted with Russia and signed a treaty of friendly relations.

With the end of inflation, the vertical combinations represented by Stinnes broke down and collapsed. New cartels and a far stronger trustified movement sprung up, however, this time closely controlled by the government itself. The cartels now entered into a struggle with the co-operatives, who demanded a social regulation of the cartel whereby the co-operative could maintain its existence. In industry as in trade, a tremendous concentration of capital occurred, leading to the direct entrance of the State into many industries. A large increase of public utilities took place, a trustification of important industries, a consolidation of capital in trade, both through the chain store and department store systems on the one hand, and the large co-operative movement on the other.

The old individualist middle class was being rapidly driven out from economic life on every side. At the same time, it no longer could find a place in the proletariat, owing to the vast number of unemployed. Hence the hysteria and desperation of this class. No wonder Hitler, following the old Austrian Christian socialist Lueger, decided to recruit his party from these elements. "Lueger based his new party first of all on the middle class which was threatened with extinction, and thus secured a class of adherents extremely hard to shake, ready both for great sacrifices and capable of stubborn fighting." (*5)

The movement for the concentration and centralization of capital was reinforced in Germany by traditional factors as well as by the pressing problems that the country had to face. First of all was the fact that laissez faire economic habits had never flourished in Germany, the mercantilism of the sixteenth century prevailing until the nineteenth and then being superseded by an imperialism that choked all Liberal development. The State constantly intervened in industry, helping it as much as possible, but making it secondary to the interest of the State.

Germany’s general position in Central Europe also induced an apotheosis of the State, since she arose to nationhood surrounded by a steel ring of mighty world powers. Further, the world was already on the road to imperialism when Germany became industrialized, and as imperialism means essentially control by monopoly capital headed by finance, coupled with the seizure of colonies, naturally the industrialization of Germany had to leap immediately from the petty industry of the sixteenth century to the most modern trust formations possible to enable her to meet the world of competition. These modern trusts and cartels were not hampered by the prejudices of nineteenth century technique and management; they were not bothered by laissez faire presuppositions which would prevent them from integrating their concerns behind the leadership of the centralizing general staff of the State. Thus the Germans alone were adequately prepared for the World War.

After 1918, the socialists who took control held the belief that socialism would come through the rise of State capitalism. Far from disturbing big business, they did their best to aid the development of scientific laboratories and research groups already formed by the trusts. They placed no obstacles whatsoever to the great concentration of capital that followed the peace. Under Hindenburg, the socialists idealized America and posed the question of Ford versus Marx, they themselves choosing Ford and trying to adapt their trade union movement to the American Federation of Labor. In general social life as well as in economics there was an attempt to Americanize Germany; American jazz, movies, chewing gum, and ice cream became widespread fads.

"Added to these trends in Germany are the peculiarities of her problem of national resources. Practically without petroleum, with her lignite deposits rapidly vanishing, and with but scanty resources in ferrous and non-ferrous metals, the whole problem of conservation has become a matter of the greatest public concern." (*6) Deprived of natural resources by the war, the industries turned to ersatz production and synthetic combinations to replace the lack of natural resources. Lacking oil, Germany created synthetic oil from the cracking of coal. The coal industry, therefore, was transformed into a chemical one, which in turn became a power industry erected upon the bony structure of steel and based on electrical energy. In all this, there was no intimation of any desire to return to a freely competitive economic system, nor did the possibility of such a return any longer exist.

With increased rationalization, the individual sank completely into the group. The whole movement, in both its technological and organizational aspects, was based on co-operative effort and pooled labor. And to this, the socialists added their great strength. Nowhere among the German workers was there talk of sabotage or destruction of property, as there might be in Italy, France, the United States, or elsewhere. The worker went hand in hand with the trustification process and the absorption of the individual into the organization. The individual became attached to the union, association or combine, and State enterprise, whether he was a capitalist or a worker.

Under socialist influence, the middle period of the German post-war republic was also marked by the breaking down of the old traditional family and institutionalized religion. Women became more independent, the marriage age was postponed, the church lost its influence, the Passion Plays of Oberammergau deteriorated to mere pageants designed to lure the tourist trade to Germany.

The third stage of German post-war history coincided with the ushering in of the world crisis, which hit Germany with frightful force. As in the United States, production fell approximately 50 per cent below 1929 levels, and the number of registered unemployed equaled six million, signifying perhaps ten to twelve million actually unemployed. The German capitalist system was faced either with complete bankruptcy or with revolution, unless it could re-establish its position as an imperialist power. The sole way out for the German bourgeoisie was the way of fascism.

Above all, the German system had to stem the enormous financial drain on its resources arising from reparations payments, charges on private debts, and social insurance. Under the Dawes and Young plans, Germany had already paid out twelve billion marks. This she could do only so long as she could sell her goods in foreign markets and was able to receive loans from America. But in return for her magnanimous aid, America insisted upon mortgaging German railroads and public utilities, and placing its hands upon the very vitals of the nation.

During the crisis, Germany was unable to sell its goods and could pay nothing. Thus a breach was made in the Versailles Treaty by "act of God," that is, by the havoc of the crisis, rather than by the military might of Germany. This was now the opportune moment for German capitalism to break the entire Versailles Treaty to pieces. Thus, German big business had to turn its face away from pacific means of persuasion to the violent ferocity of the fascist attack to destroy the Versailles Treaty. Once the Versailles Treaty was broken, the question of the payment of private debts could be handled through diplomatic channels and arranged in accordance with the situation.

Hand in hand with this went the necessity of capital to free itself from the enormous cost of the social insurance which had been foisted upon it by the socialists. The German system no longer could tolerate reforms if it were to resume its former position. Payment of unemployment insurance to six million workers and their dependents in Germany was an intolerable act destined to deprive capital of its virility in international competition, and could result only in a stagnation of the sort that could be seen in its sister capital city, Vienna, where the city's chief achievements were co-operative bedrooms, coffee drunk with whipped cream, museums and monuments carefully dusted, soft music played in slow tempo, and the psychopathology of Freud.

The crisis threw into bankruptcy some of the larger concerns of Germany, such as the Wollkammerai in textiles, the great Dresdener Bank, etc. As it rushed to save such concerns, buying heavily of their stocks and taking direct control, the German government itself was threatened with complete bankruptcy. This in turn compelled the most powerful nations of the world, such as England and America, to go off the gold standard and to declare a moratorium of payments of debts from Germany. Such was the world division of labor that, in spite of themselves, the countries that most hated Germany were forced to save it.

On the other hand, with the advent of the crisis, the Socialist Party steadily lost ground to the communists, as the masses moved to the Left. What else could be expected in a country where the statistics demonstrated that the suicide rate was twice that of the United States and higher than that of any other country, and where a study of the yearly income of the people showed that less than 3 per cent, or one million had over five thousand marks annual income (equivalent to about $1,250), and that seventeen and one-half million people earned less than one thousand five hundred marks ($350.00) annually? As the working class movement drifted Leftward, the German capitalists were forced to resort to the violent methods of fascism which at the same time offered them the opportunity of winning the ruined middle classes which the criminal socialist and communist bureaucracies had not been able to influence and which were ready to support the new German imperialism as a way out.

Thus, in the short space of fourteen years, the German Republic burned itself out. With Hindenburg's second election as President, the whole rotten structure gave way. Hindenburg gracefully effaced himself in favor of Hitler.


It was after the war, in 1919, that Adolph Hitler determined to enter politics and joined a small organization in Munich called the German Workers Party. This was a group of men united by their refusal to accept the betrayal of the army which they felt had been stabbed in the back. There were only twenty-eight members, of whom six were active, and Hitler received membership card number 7.

The original program of Hitler was exceedingly vague. One of his principal obsessions was the ignominy of the fact that those who had gone into the army and served in the War, who had proved their heroism and nobility, should return home only to see cowards and weaklings counting heads in a democratic fashion, ignoring the strong men who had sacrificed their all at the front. He cursed the Versailles Treaty, the high cost of living, the failure to reward the veteran and the soldier. He was the incarnation of the revengefulness of the embittered soldier. And there were plenty of battered, worn-out people, impoverished and reduced in circumstances, who could listen to Hitler, each one of them yearning to strike out with clenched fist. They could be led by the soldier who was accustomed to commands and leadership.

The vague religious mysticism of Hitler and his method of impassioned appeal found a natural outlet amid the social wreckage of the great war whereby ruin and decay faced the middle class, and to which class there was no future save to rot. "Not all embittered petty bourgeois can become a Hitler, but a bit of Hitler can be found in each one of them." (*7) This was the element, led by former soldiers who could not reconcile themselves to the new situation, that composed the beginnings f National Socialism.

Hitler was prepared for his future role by his adherence to the ideology of the Christian Socialist Party in Vienna. This group was ardently Pan-Germanist. It believed that the Austrian monarchy was rotten to the core and that it was bound to collapse, first, because instead of uniting the Germans of Europe into one empire, it had divided them into two opposing monarchies; and second, because, thus divided, the Germans in Austria were not able to control the various subject nationalities that composed that "prison of the people," Austro-Hungary. The Austro-Germans were being reduced to relatively secondary place as other nationalities steadily won concessions granted to forestall their independence. This Austrian party, therefore, worked hand in glove with Berlin and yearned for organic unity between German Austria and the real Fatherland. Inspired by this Pan-Germanism, Adolph Hitler volunteered in the War. Yet the very reasons for his patriotism demonstrated that German industry could no longer be contained within national boundaries. Nationalism was choking modern industry to death; this fact could lead Hitler only to National Socialism.

Naturally, such an Austrian party would assume an anti-Semitic position, since the Jews had no special interest in Pan-Germanism, but, on the contrary, supported Franz-Josef and held an important place in the financial and economic life of the Empire, and even dominated large sections of the City of Vienna itself. The Christian Socialist Party believed it could fight the Jew by attacking Judaism, that is, the religion of the Jew. It also attacked the Jew as a Marxist and as a money-lender. But religious toleration had to be practiced in such a conglomerate Empire as the Austro-Hungarian; also, trade and money-lending were highly respectable vocations. Furthermore, the masses of people manifested a trend towards socialism. Thus it was exceedingly difficult to carry on anti-Semitic attacks, and the Party failed.

It remained for Hitler to link up the attack against the Jew with a program of race that could also be utilized to fuse Germany and Austria into one organic whole. Hitler set up the "devil Jew" as the antithesis to the godly Germanic race, and thus created a scape-goat for his world philosophy. "Thus did I now believe that I must act in the sense of the Almighty Creator: by fighting against the Jews I am doing the Lord's work." (*8)

Even in those early days, then, Hitler had conceived as an absolute principle the complete unification of the German people. The loose empire of the Hapsburgs was worthless. Parliament was nothing but a pack of rascals. It was necessary to fight to the end against democracy and the Jewish doctrine of Marxism which rejected the aristocratic principle in nature, and, in place of the eternal privilege of force and strength, set up the massed weight of dead numbers, denied the value of individuality among men, combated the importance of nationality and race, and thereby deprived humanity of the whole manner of its existence and culture. (*9) Germanic democracy was the opposite of Jewish democracy; it was the free choice of the leader who achieved responsibility and power and who backed up his decision with his life. (*10)

According to Hitler, the human race was to be divided into three categories, fighters, maintainers, and destroyers of culture. The Aryan stock alone could be considered as representing the first category. (*11)

Hitler also borrowed from the Christian Socialists the distinction between speculative capital and industrial capital. Money, stocks, bonds, bourses and exchanges, and speculative investments of all sorts became anathema to him, as they had been originally considered sinful to the Catholic Church whose devout disciple Hitler was. The cynical Mussolini knew how to use the church, the devout Hitler knelt before it; the former knew his Machiavelli, the latter was a victim of Metternich's police mysticism. This mysticism, however, could attract the decayed middle classes of Germany, although it could not win any workers to Hitler's cause.

From the very beginning, Hitler understood the necessity of reaching the masses with his propaganda. For this reason, the group of which he was a member had called itself a workers' party, and later, as the organization grew, had added to this title the term "Socialist" so as to become the National Socialist German Workers Party (N.S.D.A.P.). In this manner he was able to appeal to sections of the lower middle classes which above all desired an end to the interminable horrors prevailing in political life, and yearned for security, stability, and order. The petty proprietors had turned first to the socialists for this; when the socialists would not take power and the Communist Party proved incapable of doing so, the failure of the workingmen drove the middle class, especially the soldier groupings, to the other side. "The fairy tales that the National Socialists have saved Germany from Communism, which were broadcast for foreign consumption by official German propaganda, were not taken seriously in foreign banking circles, where it was known that, for the past ten years or so, there had no longer existed any Communist danger in Germany." (*12) In proportion as the working class lost its strength and proved incapable of establishing a suitable rule, in that proportion did the petty bourgeoisie become anti-working class.

It was highly significant that the fascist movement of Hitler should have been impelled to recognize the value of using the name "Socialist." So thoroughly had Marx's concepts penetrated into the masses of people and, in actual fact, so classically had the laws of capitalism worked out as the Marxists had predicted, that the only way to raise any mass support was to appear as a socialist offering a special brand. Here is an illustration of the excellent flexibility and demagogy that private property can display when necessary. Before it rose to power, National Socialism had to stress as much as possible its "socialistic" features.

Hitler offered to the middle classes a socialism that would relieve them of the pressure of big business by pressing down most heavily upon those still lower in the social scale. The only way of reviving the lost social dignity of the depraved middle class was evidently through the destruction of workers' organizations.

By 1920 the National Socialists were able to formulate their official program. (*13) Like the Italian fascists, they made a fetish of the nobility of labor and launched a demagogic attack against forms of capitalism. No longer were there to be any idlers in Germany. Incomes not earned by work were to be abolished. Especially speculative money-capital was to be attacked, an end must be made to the slavery of interest. The activities of the individual must not conflict with the welfare of the whole, but must proceed entirely within the frame of the community. Demands were made for ruthless treatment of those whose activities were injurious to the common interest, including usurers, profiteers, and such, who were to be punished with death, regardless of race. All trusts were to be nationalized. The profits from wholesale trade were to be shared.

Special appeals were made to particular elements of the middle class. For the soldier, the plank was inserted that, in view of the enormous sacrifice of life and property demanded by a nation in every war, personal aggrandizement in war must be regarded as a crime against the nation. Fascism demanded, therefore, ruthless confiscation of all war gains. To attract the small business man, there was included the principle that the creation and maintenance of a healthy middle class was of the utmost importance. Special attention, too, was paid to the peasantry, and demands were made for a land reform suitable to national requirements, for the passage of a law confiscating, without compensation, land for communal purposes, for the abolition of interest on land loans, and for the prevention of all speculation in land.

As to foreign policy, the National Socialists demanded the creation of the unity of all Germans to form a new Germany on the principle of self- determination for every nationality, the wiping out of the Treaty clauses that stigmatized the Germans as being responsible for the war, the complete equality of the German people in its dealing with other nations, and the restoration of colonies to Germany. Finally, they insisted that Germany be given whatever land and territories she needed for the nourishment of her people and for the settling of her superfluous population.

For the workers, a system of complete social insurance was advocated and a demand made upon the employers for an end of the latter's right recklessly and criminally to mistreat labor. The standard of health in the nation was to be protected. Child labor was to be abolished.

According to the Nazis, the German State itself was to intervene in all economic affairs. None but members of the nation could be citizens; none except those of German blood, whatever their creed, could be members of the nation. Thus the nation was to consist of three categories: citizens, subjects, and foreigners. The Jew could not be a citizen. Only Germans could be editors of the press. The old Roman law must be overthrown entirely, so that the true German spirit could be manifested in the codes.

While liberty for all religious denominations in the State was to be secured, it would be only on condition that these denominations were no danger to the State and did not militate against the moral feelings of the German race. On the question of religion and philosophy, the Party declared: "The Party as such stands for positive Christianity but does not bind itself in the matter of the creed to any particular confession. It combats the Jewish materialist spirit within and without us and is convinced that our nation can only achieve permanent health from within on the principle, the common interest before self."

The first activity of the Nazis was to join hands with the reactionary nationalists under the leadership of General Ludendorf who, in 1923, attempted to overthrow the Republic and re-establish the old order. In command in Munich was General Rittendorf, under whom Hitler and his group placed their forces. With the collapse of the putsch, Hitler was arrested in November, 1923, and sentenced to five years in jail. While the trial was taking place, the Nazi Party formed a bloc with the German People's Party, and obtained thirty-two seats in 1924. Upon his release from prison in 1925, Hitler immediately reorganized his party and inaugurated its official paper, the "Voelkische Beobachter." In the elections of 1928, although the German People's Party was practically wiped out, the Nazis were able to obtain eight hundred thousand votes and twelve seats in the Reichstag. In 1929, they combined with the German Nationalist Party to fight the Young Plan by advocating a referendum of the people. The referendum failed, although the Nazis obtained considerable support by this measure.

The tremendous crisis of German life ushered in with 1930 afforded the National Socialists their chance. As the communist forces degenerated, they proved unable to fight the fascists, but rather played directly into their hands. Hitler had nothing but contempt for the superlative cowardice which the socialist and communist leaders displayed. "One reason why it never got as far as breaking up our meetings was indubitably the extraordinary cowardice displayed by our opponents' leaders. At all critical moments these despicable creatures waited outside the halls for the result of the explosion." (*14)

The Nazis, on the other hand, employed the most radical slogans. They never tired of demonstrating the complete collapse of the Republic in freeing the people or in solving the problems of Germany. They denounced the miserable pacifism of the socialists in foreign affairs, a policy which had made Germany a football for all the other powers. They castigated the irresponsible criminality of the capitalist Liberals who threw out so many from work. They raised the slogan, "Arbeit und Brot," work and bread, insisting that every worker had a place in society that must be respected, and denouncing capitalist profiteering greed.

From this time, the Nazis adopted violent action, a move made possible, first, because of the frailness of the government and the willingness of the Hindenburg regime to utilize the Nazis (similar to the situation in Italy whereby the police and Royal Guards aided the Black Shirts); and second, because the workers were hopelessly divided by the socialist and communist misleaders in their ranks.

By now the Nazis were enthusiastically supported by the heavy industrial elements such as the immensely wealthy Thynnes trust. This concern subsidized the Nazi movement, enabling it to organize its Brown Shirts on a wholesale fashion, supplying the money for the clothes, the barracks, the arms, the food, etc. At the same time, the government mightily aided Hitler. First it forbade both the workers and the Nazis from wearing uniforms and marching in the street; after the socialists willingly obeyed, it revoked this prohibition regarding the Nazis, but retained it against the Red Front fighters of the communists. As in Italy, the situation was carefully developed to concentrate attack upon the communists, and to dally with the socialists until the proper moment for their dismissal, while the government heavily supported the fascists.

The task before the Nazis was, however, no simple one. In spite of the enormous pressure, the workers' ranks remained absolutely firm, hardly any breaking from either socialists or communists. Up to the very end, these parties received a total of fourteen million votes, coupled with a steady drift to the Left in favor of the communists. Before seizing power the Nazis had to accomplish the assimilation of the royalists and the agrarian elements, organized in the Nationalist Party under Hugenberg and in the veterans' organization, the Stahlhelm. Hitler's second objective was to break up the coalition between the Catholic Centrists, the bourgeois liberals, and the socialists. The Nazis' third aim was the consolidation of their own organizations in order to become the largest single force in the Reich. Their fourth task was to penetrate gradually into the government in order to permit them to assume power without too great upheaval.

The Nazis, now the agents of big trustified finance capital connected with the State, easily brought about a deal with the royalists. Certain sections of the monarchists held out stubbornly for the return of the Kaiser or the Crown Prince, for the restoration of the old Empire, wherein prosperity and glory had signalized the German rule. An especially difficult group to reconcile was the die-hard monarchists composed of those who had benefitted by the federalism of the former German Empire, that is, by the existence of a number of petty monarchies such as those in Bavaria, and Saxony.

Most of the royalists were content to make certain temporary concessions. If they could retain their hold of the officerships within the army, and if their large-scale agrarian interests could be preserved, there was no reason why they should not support the Nazis, particularly since the monarchy had been unpopular and since it could not be re-established without a violent revolution, which everyone wanted to avoid. True, the industrialists had done nothing to drive out the Kaiser in 1918; also true, they no longer were willing to play a servient role in German political affairs and in the administration of the State.

Federalism German industry could not tolerate for a moment. If the markets of all Germany were not sufficient, even before the war, and had compelled the industrialist to adopt a policy of Pan-Germanism, the return to the provincial autonomy of Bavaria, Saxony, or Hesse would be the last straw. The Nazis were determined to centralize completely the entire country, thus bringing about in Germany what had been accomplished in France and what Mussolini was achieving in Italy.

On this question, too, the struggle between the two elements continued for some time, often coming to blows. However, the common sense of the ruling class prevailed. Industry was given the leadership, with important concessions made to the wealthy landlords in the State apparatus, and the two finally were fused together. Hugenberg was not a candidate for President when Hitler competed with Hindenburg in the 1932 elections.

The breaking up of the Weimar coalition government also was not a difficult task. Under the blows of the world crisis, the government was patently bankrupt, and was forced into a series of extremely unpopular anti-working class measures. As the Reichstag was bound to resist these measures, the Catholic Centrist Party, supported by Hindenburg, was forced to carry on the government by means of emergency decrees of the Chancellor. Gradually parliament was placed in a secondary position in relation to the faits accomplis of the government, issued in the form of administrative orders which constantly increased the burdens of the crisis on the people. Under the Chancellorship of Bruening, the methods of dictatorship and the measures curtailing social reforms and welfare schemes were given a prominent push forward.

The socialists unofficially took responsibility for this action, since they maintained the coalition. Their chief fire was directed not against Hitler but against the communists. The organization of militants which they had formed, called the "Iron Front," composed of republicans, trade unionists and socialists, made no serious resistance to the attacks by either the government or the fascists, and calmly submitted to being disarmed and dis-uniformed. It should be remembered that the socialists were at the head of the government in Berlin, in Prussia, and in the most important sections of Germany. It was the police under the socialists who helped to beat down the communists and to disarm the Reds, while the fascists executed their raids.

As the governmental crisis increased, particularly as the foreign pressure of the Young Plan became unbearable and bankruptcy was rife, the parliamentary re'gime gave way to the temporary Bonapartist dictatorships of Von Papen and Von Schleicher, who held power until the second election of Hindenburg in 1932. The socialists refused to enter a candidate against Hindenburg on the ground that Hindenburg was the mainstay of the German Republic and the hero of the people, one who would keep intact the democracy and social reforms which had been won. No sooner was Hindenburg re-elected, however, than he allowed Hitler to become Chancellor. This was providential, for already the vote had shown that the peak of Nazi popularity had passed; it was either then or never. Once Hitler had become Chancellor, he was able to call new elections under his absolute control and to do in Germany what Mussolini had done at Rome. There was no fascist "march on Berlin," however, for the simple reason that, owing to the action of the government and the failure of the workers, Hitler had already become established in Berlin before becoming Chancellor.

The elections, of course, gave an overwhelming return to the Nazis, all the other parties of property, except the Catholic Centre, merging with them. Only the working class elements under the socialists and communists held firm. To break the power of the workers, the Reichstag fire was staged and a wholesale attack instituted against the communists. Thousands of workers were killed, hundreds of thousands either were forced to flee the country or were placed in concentration camps. The fascist "revolution" was in progress.

Nor were the socialists spared, and, when some of their leaders like Scheidemann begged Hitler to be allowed to retain their State pensions, Hitler mockingly reported this act to a huge gathering of his followers, pointing out how "these socialist swine" were interested only in maintaining their private pensions, so much so that they were willing to beg the hangman of the socialists to give them their money. The Socialist Party was shattered as a counter-revolutionary force, as it had been broken by the war as a revolutionary one.

The victory of Nazism spelled the doom of the Versailles Treaty and the authority of the League of Nations. All reparations were canceled. A moratorium was placed on the payment of interest on private debts. Instead of the pacific liberal policy of the Second Reich, new Germany began a vigorous policy to recover all the territory it had lost, and to build its own system of alliances. Fascism immediately became strong in Austria and throughout Eastern Europe, from the Baltic to the Balkans; the Saar Basin was reincorporated into Germany; the Rhine became re-militarized. The demand was raised for the return of that part of Silesia seized from Prussia after the War. While tension has increased in the Polish corridor, this has been mitigated partly by the alliance between Poland and Germany for war against the Soviet Union. Simultaneously Germany has borne down on Austria to compel Anschluss.

Hand in hand with this has gone a feverish importation of war materials, a complete re-arming of the population, and a thorough reconstruction of the army and navy. Germany has been transformed into an immense war camp, working night and day for the impending conflict. The whole nation has been mobilized as a monolithic whole in preparation for the struggle, and has become infested with a war-like ideology, borrowing heavily from Nietzsche, Spengler, and the old Pan-Germanists. just as all individual problems have become subjected to the welfare of the State, so all State problems have become subordinated to the matter of war. In order to prosecute this war, which is the very breath of life of the Nazis, all measures of their program are propagated, whether it be a theory of autarchy, a religion of paganism, a hereditary land system, or a smashing of the trade union organizations. Under the mad guidance of the fascists, the German people are plunging to destruction.


The economic principles of the German National Socialists revolve around the theory of autarchy, or self-rule. This autarchy is supposed to put an end to theories of nineteenth century competitive capital. While retaining industrial capital, the Nazis intend to wipe out the fluctuations of the market and of prices and to insure a stable order. As to their methods for accomplishing this magic, the theoreticians are extremely vague, yet enough has been said about autarchy to enable us to analyze the scientific character of these proposals.

In the first place, autarchy means the complete economic self-sufficiency of the country, not in the loose Italian fascist sense which connotes hardly more than an ability of the country to feed itself and proposes some degree of control over industry by the State, but in a far more comprehensive manner. The State is to interfere intimately with the administration of every business. Industries are to be organized not in loose corporations but in mighty trusts, connected with the State. That is, the State not merely is to control industry, but actually is to consider the productive machinery as its own property and to dominate it completely. Capitalism thus becomes State capitalism in a far more completed sense than ever before, and the industrialist must consider himself as a direct officer of the government, working according to plan.

To a certain extent the theory of autarchy makes a virtue of necessity. During the World War and afterwards, an extremely tight blockade was established around the German State. Now, too, a blockade to some extent exists and may become more severe. This is a fact which the Nazis accept and use as a strong point in support of their plans. That the fascists would be reduced to the necessity of some such theory as autarchy was obvious when, under the force of the crisis, the gold coverage for paper money in Germany fell from 24 per cent to less than 2 per cent. Autarchy would prevent this drain of gold; simultaneously it would fit in very well with the denunciation of the international financiers and credit sharks. Then, too, autarchy could be used to advocate the non-payment of foreign debts, since each nation must stand on its own feet, and the slavery of interest must be broken.

It is hard to believe that the Nazis can take seriously their denunciations of interest and the credit system, or that they can imagine that large-scale industry can flourish today except through the medium of loans and credits. Denounce speculative capital as they will, they cannot deny that it is only through the amassing of such speculative capital that private industrialists can obtain their support in founding new industries in a modern and efficient manner, or in maintaining their old functions on a higher scale. Were each capitalist to wait until he himself had accumulated the money necessary before expanding his business, expansion would be a slow and prolonged process. The centralization of capital in the hands of bankers, brokers, speculators, and such, is the normal method under capitalism by which industrial production can be increased.

The Nazis pretend that finance and money have nothing to do with industrial progress under the present system. What the Nazis really mean is that, with the bankruptcy of German economy, no foreign capital is flowing into Germany. Private industry must beg the State itself for aid; the State now becomes the chief financier and speculator par excellence.

Self-sufficiency is also extremely imperative in time of war, especially since Germany has felt that all around it there exists a steel ring and that she must rely upon her own internal strength. It is this reliance on the internal rather than the external that lends weight to the introspective mysticism of German politics and its violent race theories. The Germans are alone; they are an Ishmael among nations. They must stand alone and glory in their race.

The tenets of autarchy of the Germans are but the logical result of the imperialism of the League of Nations which Balkanized Europe and set up entirely indefeasible independent States each of which, to maintain its existence, was forced to erect large tariff walls. The World War broke up the old world division of labor; the process was continued by the Liberals of Versailles; German Fascism completes it.

Theories of self-sufficiency affirm that the government must make an effort to support those industries which are failing in international competition and which otherwise would be driven out of existence. The State, therefore, must subsidize and support a backward technique which ordinarily would be discarded. Thus, the program of self-sufficiency to a considerable extent must lead to stagnation of the productive processes. The politics of autarchy here interferes with economic progress and in this sense becomes reactionary.

In compensation for this, the autarchic State must make every effort to find substitutes for the better materials found abroad. This may lead to a great expansion of the chemical and other industries and to the devising of entirely new methods of production, such as the manufacture of rubber from plants, the making of clothes from paper, etc. These substitute products, however, are frequently inferior to products available elsewhere, and the burden falls upon the consumer who must use them. Insofar as the production of these substitutes keeps pace with a development of science, it is a cultural advance; the usual result, however, is a conservation of inferior products rather than a development of science on the basis of the use of the best available material. In this sense, too, autarchic science becomes reactionary.

It must not be supposed, however, that the German economists really believe that they can achieve complete self-sufficiency or complete economic autonomy. The imperative needs of war demand a close watch upon the latest events in every country in the world. The Germans must borrow their inventions from every nation; they must steal their ideas even from the Jews. The waging of war is a ruthless rhythm demanding the highest perfection of technique at the risk of defeat. Self-sufficiency in goods which Germany cannot produce and which she must possess in order to carry on war can imply, then, only an organized and systematic purchase of raw materials from other countries to establish a reserve for time of war.

To believe that fascism means the destruction of large-scale industry is a fatal mistake. (*15) Far from it. The chief financial backers as well as the beneficiaries have been precisely the mighty imperialist industries. It is not the petty bourgeoisie that runs the fascist movement; it is the big trusts who use the petty bourgeoisie as their tools to crush the workers; this accomplished, petty property is again reduced to insignificance.

The whole aim of the State is to increase its power in time of war. Fascism could never come into existence were it not for reasons of war. To believe that the German State wants to break down large-scale industry, so much needed by Mars, in favor of petty incomes, is to understand nothing about Germany, about National Socialism, or about the period in which we live.

The theory of self-sufficiency, if carried out elsewhere as well as in Germany, would spell a complete disruption of the world division of labor and a permanent segregation of nationalities. The world would tend to become a crazy-patch quilt of one nation in mechanical juxtaposition to another, rather than a fusing of each into one integrated and coordinated whole, every nationality contributing its cultural achievements for the use of the whole world. It would produce, especially in agricultural countries, tremendously reduced levels of living, since such countries can improve their lot only by world trade and exchange.

Nor could German autarchy terminate international competition. It could only intensify world rivalry. If Germany is striving for autarchy, it is only so that she can restrict imports as much as possible and expand her industries to the maximum in order to dump the enormous surplus products on the world market. Competition remains there, but it takes on a snarling, vicious form compatible only with efforts of war.

No matter how vehemently the Nazis may denounce competition, their theories of autarchy, with their postulate of a wholly integrated national economy acting as a mighty frictionless machine, presuppose an international competition more intensified than ever. Fascism is but a better equipment for this higher international competition.

A self-sufficient Germany would intensify international competition in other ways. All the smaller countries of Europe depend for their livelihood upon German foreign trade, which in turn dominates a major portion of the foreign economic activity of Eastern Europe. The prohibiting of imports by Germany already has thrown these countries into fierce convulsions. They have been compelled to enter into a sharper competition among themselves for the limited markets left. On the other hand, they have been reduced further to acknowledging their dependence upon the German system. German autarchy, therefore, has immensely consolidated German influence in the smaller countries of Europe. These countries had relied upon the Versailles Treaty for their protection. Now that the Versailles Treaty has broken down, and the unchallenged punishment of the German system has fallen upon them, they can do nothing but capitulate to this mighty machine in the heart of Europe.

Should these smaller countries resist capitulation, the increased economic difficulties which they will bring upon themselves will cause such intense internal antagonisms and class conflicts as to compel the ruling classes to run in fright to the protection of the strongest reactionary force in Europe, namely, German Nazism. Thus, for example, in the Baltic States, the consciousness of these small countries of their complete economic dependence on German economy has brought them into close alliance with Nazism. In short, the very Versailles Treaty which broke up Europe into small countries and was designed to spell the end of German influence, has now played directly into the hands of the German ruling class. Autarchy, therefore, far from being purely a nationalist principle of retreat from world events, has become an enormous weapon in the hands of the fascists to dominate international affairs.

Nor can autarchy stop competition within the nation. Since it must rely for its troops upon the middle class, it must permit competitive action, markets and prices to exist. What is far more important, big business remains on a capitalist basis. Fundamentally, it is not the State that controls the capitalist, it is the capitalist who uses and controls the State. The capitalist is in business for profit. His profits are inherent in surplus goods of which he must dispose. The capitalist can dispose of his surplus by selling it abroad, which means intensified international competition and maintenance of a world division of labor, or he can utilize the surplus products by storing them in the name of the State for war.

This second alternative is the peculiar contribution of the practice of autarchy. The State enters into all business, taxing the people to subsidize industries and to produce the surplus product which is mainly war material. Hence, the State does its utmost to shift economy from means of consumption to means of production, from light industry to heavy industry and large-scale production. In this way, the State intervenes to increase still further the organic composition of capital, to enhance the productivity of labor, and to add to all the contradictions of capitalism. If the State stores the surplus product merely to render the explosion of war more terrible, it also stores up the surplus labor, regimenting and militarizing the unemployed, placing them in barracks, training them ceaselessly for the coming fighting.

The economics of autarchy is intertwined with the politics of the totalitarian State. In the use of the term "totalitarian," the German here shows a great distinction between his National Socialism and Italian fascism. In Germany, the State is not merely a coordinator, organizing private petty industry into corporative associations and then seeing that both sides come together on their own initiative to work out a labor contract which the State will enforce. The mighty German industrial machine permits no such picayune trivialities. National socialism begins where Italian fascism ends, namely, with a Grand Economic Council that is part of its General Staff and that intervenes in the life of every large business corporation. The initiative and free play of the entrepreneur, in which the Italian fascist glories, do not exist in Nazi theory.

The Italians have stressed the egotistic principle of self-interest to bring both worker and capitalist into the corporations. The Germans abhor the doctrine of personal self-interest. They improve the Italian pass-word, "Everything for the State, nothing outside the State," with the Hegelian statement, "The individual is nothing, but is completely fused to the State, which is all." A sign hangs before the concentration camps of Germany: "Du bist nichts," --- you are nothing.

Such principles have permitted masses of Germans to believe that the National Socialists are really anti-capitalists. When the Hitler revolution began, the large body of petty bourgeois adherents who had believed in the socialism of the Nazi program thought that there would take place immediately public control of all industries and compulsory cartelization; the right to fire employees would be curtailed; storm troop commissars would be supreme; competition would come to an end. This was the socialism of the little fellow that was to control the big fellow and smash the proletariat.

There is no question that the phrases of the Nazis lent themselves to such interpretation and, as a matter of fact, storm troopers were placed in control of industries, directors were cursorily dismissed, and owners were dispossessed. But all this was really for the ultimate benefit of the industrialists. The Nazi State soon roughly removed its petty bourgeois agents who had invaded the premises of the industrialists. The Nazi Party was purged of its Left socialists by the wholesale executions of leaders of the storm troops and others.

A situation entirely different from that which existed before the advent of Hitler, however, has remained. Theoretically, all industry is now considered part of public property which the owners, as servants of the State, hold only in trust. What this really means is that the big business that controls the State has determined to control all the other concerns as well and to bring labor in line with their plans. The State aids in every possible way all the industrial works under its guidance; in return, these plants become the secondary arms of the military machine preparing for war.

The practice of the totalitarian State involves a policy of the most rampant and rasping nationalism. The Nazis would have one believe that liberalism never had had anything in common with nationalism, but had turned over the country to international communism. As a matter of fact, of course, nationalism sprang into prominence precisely in the era of the rise of Liberalism. German fascist nationalism is no more solid than is the French variety, although the French fight their national wars with slogans of the French democratic revolution. There is this difference, however, between the two: French nationalism played a tremendously progressive role in world history, wiping out the petty provincial restrictions of industry that had prevailed in Europe, and throwing into the discard the relations of the ancien r’egime, even creating the national unity of Germany itself. The nationalism of Liberalism partially was responsible for an enormous expansion of world trade and the complete interconnection of one nation with the other. Just the opposite is the nationalism of fascism. It is a nationalism that would render permanent a complete blockade of one country against the other. There are no liberating factors in fascism. It displays merely an invidious and unrelieved lust for conquest and mastery.


1. A statistical summary of cartelization in Germany is to be found in H. Levy: Industrial Germany, Ch. II, pp. 15-23.

2. See, R. K. Michels: Cartels, Combines and Trusts in Post-War Germany, pp. 26-27.

3. R. A. Brady: The Rationalization Movement in German Industry, p. 19.

4. This would be the equivalent of 20 billion dollars at par.

5. A. Hitler: My Battle, p. 43.

6. R. A. Brady, work cited, p. 391.

7. Leon Trotsky: "A Portrait of National Socialism," Class Struggle, official organ of the Communist League of Struggle, Vol. IV, No. I, Jan. 1934.

8. A. Hitler: My Battle, p. 25.

9. See, A. Hitler: The same, pp. 24-25.

10. The same, pp. 38, 39.

11. The same, p. 122.

As an example of the value of keeping the blood pure, Hitler cites the United States, which to him presents itself as an excellent example where the Aryan did not mix with other races!

12. P. Einzig: Germany's Default (1934), p. 27.

13. For the program, see, P. Einzig: Work cited, p. 125 and following.

14. A. Hitler: My Battle, p. 206. Certainly very few of the so-called Marxist leaders could meet the test laid down by Hitler that every leader must be ready to back up his principles with his life.

15. This is the view of Dr. Scott Nearing and similar communists.