To Arms

by Hew Strachan

  The propaganda emanating from Tirpitz’s Imperial Naval Office both reinforced and eased their fears. In 1907 Tirpitz described with extraordinary accuracy the pattern and long-term effects on Germany of a British blockade. But in stressing the threat, he was developing the case for the navy’s expansion, not for amassing sufficient food for a long war. At one level his success in achieving the former was evidence of the seriousness attached to the latter. But at another, and particularly as the fleet grew both in size and as a burden on the exchequer, the navy had to acquire a more positive rationale. Tirpitz was just as capable of stressing Britain’s dependence on overseas trade, and therefore Britain’s, not Germany’s, vulnerability to blockade. It was this dimension to Tirpitzian thought that underpinned the complacency of the president of the Imperial Statistical Office at the first meeting of the standing committee on wartime supplies on 11 June 1906.107

  Food would, of course, not be the only commodity whose importation would be checked by a British blockade. Delbrück flagged the issue of raw materials at the May 1914 conference. But the stockpiling of metals and chemicals in peacetime carried a direct challenge to the economic liberalism espoused both by Delbrück himself and by his predecessor as minister of the interior, Bethmann Hollweg. In 1908 the latter rejected a proposal to amass stocks in peacetime on the grounds of cost. In 1912 the former recoiled from a suggestion that an economic general staff be formed precisely because of its connotations for state intervention. Procuring raw materials in excess of industry’s peacetime needs and planning for their allocation in the event of war implied the subordination of individual enterprise to state direction. Similar calculations determined Bethmann Hollweg’s reluctance to ban the export of arms in 1913.108

  However, if economic liberalism was sufficient explanation for the refusal of the German civil authorities to consider the establishment of the KRA in advance of war itself, it was not in the case of the army. In 1905–6 the Imperial Naval Office reported that 922 firms in the Ruhr, employing a total of 400,000 workers, said that their business was dependent on imported raw materials. Germany produced only a fraction of its requirement for nickel, manganese, aluminium, copper, wool, and flax; all of its rubber, cotton, jute, saltpetre, and oil was imported. The firms considered by the navy in 1905 held, on average, sufficient stocks of imported raw materials for three months production; 20 per cent had enough for six to eight months, and only 2 per cent for more than twelve months. A second survey, conducted by the Interior Ministry in 1913, found little change. Furthermore, these figures almost certainly put a favourable gloss on the true position. They did not take account of the fact that firms included orders which had been placed with the trade although the goods themselves had yet to arrive in Germany. Imports peaked in the autumn, and thus a war which broke out in late summer would coincide with the period when real stocks were at their lowest.109 All the prewar indications seemed to suggest that German industrial productivity would fall for lack of raw materials long before the German population would starve through the shortage of imported food.

  Therefore, the central conundrum must be the insouciance of the chief of the general staff concerning raw materials. Moltke, in his pre-war injunctions about shell supplies, stressed sustained production during the war rather than the amassing of stocks before it. His neglect of raw materials—as opposed to food supplies—seems bizarrely at odds with his own expectations concerning the length and nature of the next war.110

  Part of the explanation is, once again, institutional: Moltke did not see it as his job to sort out industry’s problems for it. But much the most important reason was that the raw materials position was, in reality, not as dire as either the pre-war propaganda of the navy or the post-war explanations of German historians (anxious in many cases to play down any suggestion that Germany was preparing for war) suggested. The naval survey was one devoted to all types of industry in the Ruhr; it failed to distinguish between those producing for the home market and those for export. The blockade would eliminate the need for raw materials dedicated to the latter. Secondly, it did not distinguish between the munitions industries and the rest. Moltke’s preoccupation was only with the former; provided they continued to secure the raw materials they needed, then the German armies could carry on fighting. Finally, the navy failed to take account of the fact that many raw materials—including nickel and chrome—were imported from overseas because they were cheaper than those produced in Germany. If Germany’s foreign trade was blocked, then the economic viability of mining those metals available within Germany itself would increase.

  The navy’s presumption was that the blockade would be total and immediate in its effects; this was not the army’s view. Moltke, as his decision not to invade Holland testifies, hoped to continue importing through the border neutrals. The German market seemed too important to the United States for the latter to allow itself to be excluded from it.111 In particular, Germany’s most significant import for military purposes, iron ore, seemed relatively impervious to maritime intervention. Its main suppliers were Sweden and France. But the trade with the former was conducted through the Baltic, and was therefore not so vulnerable to the Royal Navy’s attentions. French supplies might be temporarily cut off by hostilities, but they could then fall to Germany by right of conquest.

  Most important of all to Moltke’s calculations was the scale of Germany’s own stocks of raw materials. Germany may have increased its imports of iron ore by 350 per cent between 1900 and 1913,112 but well over half of its consumption was domestically produced, and that proportion could increase significantly if rising demand increased the profitability of domestic extraction. In terms of coal Germany was completely self-sufficient. Its production had increased from 34,485.5 million tonnes in 1871 to 190,109.4 million tonnes in 1913. Furthermore, coal was the single most important raw material in the chemical industry, a sector in which Germany was the world’s leader.113

  None of this, however, should be taken as confirmation that the army was complacent about the problems of wartime production. Stockpiling on a narrow base—that is to say, of the imported raw materials vital for munitions production—was fostered by the Ministry of War in 1913. The immediate consequences of this effort were absorbed by the race to equip the new formations sanctioned in the army laws of 1912 and 1913. The fact that these were ready for war in 1914 is evidence that Delbrück’s belated efforts were not without some immediate consequences.114

  Most revealing of how appearances belied reality was the position of Germany’s major private armaments manufacturer, Krupp. In 1913 Krupp was reported as holding sufficient raw materials for two months’ production; on the outbreak of war its stocks of iron ore totalled 420,000 tonnes against an annual consumption in 1912–13 of 2.5 million tonnes. But between 1888 and 1913 Krupp had been buying up its own iron-ore fields: thus, although high extraction costs had depressed actual production, Krupp had reserves in hand. The combination of these and the continuation of supplies of iron ore from Sweden and France meant that the firm’s output of armaments was never threatened during the war. In 1914, of the specialist metals which it imported, Krupp had sufficient nickel for two years and sufficient chrome ore for one. Domestic production of both increased during the war, and Krupp imported further nickel from Norway and more chrome ore from Serbia. It covered two-thirds of its copper requirement during the war from existing stocks. By the expectations of the day Krupp was ready for a long war.115

  The effect of the pre-war thinking on supplies of food and of raw materials was that Germany responded to the British blockade before it was even effective. On 3 August an agreement was drawn up between the Ministry of the Interior and the Hamburg-Amerika Line, putting the organization of the latter at the disposal of the former for the import of foodstuffs and raw materials.116 In the British view Germany was more worried about its raw-material stocks than the situation warranted. By October there was clear evidence of Germany’s bid to increase its indirect trade via its bo
rder neutrals. Norway’s export of pig iron to Germany quadrupled between 1913 and 1914. Between August and December 1913 Germany had imported 729 tons of iron ore a month from Sweden; over the same period in the following year monthly imports totalled 2,310 tons. German imports of Swedish aluminium, which had been non-existent in 1913, totalled 5,511 tons in the last four months of 1914.117 In addition, Germany overran France’s main iron-ore fields in Longwy-Briey, thus doubling its reserves at a stroke.118 Symbolic of the abundance at its disposal was Germany’s inefficiency in the exploitation of the occupied zone: total production of iron ore in the Aubon area during the war was 46 per cent of that achieved in the comparable period before the war.119

  Therefore, Rathenau’s visit to Scheüch was not an isolated act by a determined individual; it was effective precisely because it fitted into an existing context. Furthermore, part of that context were the views developed and espoused by Rathenau himself in the years immediately preceding the war: his own long-term perspective was Rathenau’s best answer to the accusation that in the hectic days of August 1914 the ideas he expressed were not his own but those of Moellendorff.

  As an industrialist, Rathenau was keenly aware of the economic rivalry between Germany and Britain. He therefore shared the expectations of those who feared a long war, who saw the blockade as a key element in its outcome, and who believed that national mobilization and the control and distribution of resources would be pivotal to its conduct.120 In July 1912 he had advocated the idea of a German-led European customs union, Mitteleuropa, as a counterweight to the other main economic blocs in the world—the United States and the British empire. For Rathenau the war was an opportunity for the reordering of Germany’s position on the international economic stage.121 It was also the moment for a radical domestic restructuring which would produce a more rational division of resources and labour within German industry. Together with Moellendorff and others (including Kurt Riezler), Rathenau favoured a modified form of collectivism. He rejected the economic liberalism of the older generation in favour of greater state regulation. The KRA was thus not simply a wartime expedient but a stepping-stone to a new economic order. It built on pre-war demands for an economic general staff, and it projected its continuation into the post-war world.122

  The rhetoric of the KRA was therefore socialist. But the criticism most frequently levelled at it was its imprisonment by capitalism. Its ethos, according to Otto Goebel, was more that of a private company than was suggested by Moellendorff’s corporatist vision.123 Rathenau’s opponents saw the KRA as the creature of AEG’s own interests, and observed with cynicism the transfer of staff (including Moellendorff) from one to the other. But the truth was that practicality had to be the parent of compromise. The state lacked both the credit to finance the acquisition of raw materials and the power to direct the work of industry. Put negatively, the KRA was therefore a paradox, built on competing principles—those of collectivism on the one hand and of industrial self-government on the other.124 Put positively, it was both a product and a promoter of the Burgfrieden, an attempt to pioneer a third way, which would end the polarity between capitalism and socialism by combining the best of both.125

  The KRA itself was a state-run government department staffed largely by personnel seconded from industry. Its tasks were administrative, and embraced the collection of statistics, the maintenance of accounts, and (reflecting Rathenau’s original concern) the management of Belgian resources. It initiated the policy of developing substitutes for those vital commodities that were increasingly unobtainable. It pioneered the imposition of price controls from the autumn of 1914. What it could not do, given the scale of the problem, was undertake the detailed work of managing the distribution and allocation of raw materials to specific industrial sectors.126

  To do this it created Kriegsrohstoff-Gesellschaften (war raw-materials companies—normally abbreviated to Kriegsgesellschaften) for each category of raw material. The first of these was that for the metal industry, established on 2 September. Wool and chemicals soon followed. These, especially the first, were giants. The Kriegsmetall Aktiengesellschaft reckoned it had about 30,000 firms under its aegis. The tasks of reporting on metal stocks every two months and of fixing allowances of raw materials on a half-yearly basis were delegated to local intermediaries, Metall-Vermittlungsstellen or Metall-Beratungsstellen; although they encouraged convergence and centralization, these subordinate organizations had still swollen in number to about seventy by 1918.127 At the opposite end of the scale, in cases where the handling and distribution of an individual raw material was not too great, Abrechnungstellen (clearing offices) were established rather than separate companies. Most Kriegsgesellschaften were established as joint stock companies, some as limited liability companies. The businessmen who ran the companies provided the initial capital at a fixed rate of interest (in most cases 4 per cent, but in some 5 per cent). No dividends were payable, and any profits accrued by the companies at the war’s end reverted to the Reich. The job of the companies was to acquire the use of raw materials, either by requisition within Germany and its occupied territories or by importation from neutrals and allies. However, the ownership of the raw materials remained vested in individuals and not in the Reich: what was controlled by the Kriegsgesellschaften were the uses to which the materials were put. It was the responsibility of the companies to allocate resources according to the needs of their consumers. But those consumers were in many cases also the directors of the Kriegsgesellschaften, and were thus in a strong position to favour the interests of their own enterprises. They derived personal advantages from price control and efficient distribution. What Rathenau had done was to take the principle of cartelization and the German penchant for large company size, and put them at the centre of the war economy.

  The workings of free enterprise, or—as the small firms who were not directly represented on the boards of the Kriegsgesellschaften saw it—of big business, were subject to three controls. First, the Reich could withdraw its guarantees which underwrote the companies’ debts. These were often massive in relation to their share issue. In 1915 the Kriegsmetall Aktiengesellschaft had a share issue of 6 million marks, but a debt of 300 million; in the case of the Kriegswollbedarf Aktiengesellschaft the ratio of shares to debt never fell below 6:100 between 1916 and 1918, and on occasion rose as high as 6:150.128 Secondly, central or local government commissioners served on the boards of the individual companies. Thirdly, the KRA itself, acting in the name of the government, had the final say in all decisions.

  By the end of the war the KRA was a massive organization, employing over 20,000 people and divided into twenty-five departments with over 100 sections. There were 200 Kriegsgesellschaften.129 The formation of such an important new governmental department could not be accomplished without generating bureaucratic friction, particularly at the outset. The amount of booty captured in Belgium and north-eastern France was exaggerated, and disappointment fostered suspicions that rival organizations had been favoured. An official report of 28 December 1914, commenting on these tensions, observed that the source of the problem was that nobody knew who owned the expropriated materials. Business organizations, like the chambers of commerce and the industrial associations, ranged themselves against the government’s agencies, the KRA and the general staff. Clarity was not served by the friction between the latter two departments.130

  The KRA was a creature of the army. Its legal basis was the Prussian law of siege of 1851, which appropriated emergency powers to the government in the event of war. It was subordinated to the Prussian War Ministry. This carried advantages: its philosophy was shaped by the collectivist needs of the war economy, not the more liberal patterns of peacetime thinking. Its relations with the War Ministry remained cordial and supportive throughout its existence. But its status also made the KRA vulnerable to the interventions both of OHL (which under Hindenburg and Ludendorff after 1916 took an increasing role in the war economy) and of the deputy commanding generals of corp
s areas (who were the local military commanders under the law of siege). Furthermore, it made the KRA specifically Prussian rather than German. Although the war ministries of Bavaria, Saxony, and Württemberg were quick to recognize the KRA, it had always to be wary of the accusation that it was acting in the interests of Prussian industry. Finally, the KRA was not recognized by the navy, which insisted that firms supply it with raw materials without having to be part of the KRA structure.

  Nor did creation of the KRA in itself end the responsibility of the Ministry of the Interior for economic matters. On the very day that Rathenau saw Scheüch, Delbrück attended the first meeting of the war committee of German industry, formed three days previously by the central association of German manufacturers (Centralverb and Deutscher Industrieller) and the manufacturers’ league (Bund der Industrieller). He established a formal liaison between his department and the committee, as did the Prussian Ministry for Trade and Industry and the Imperial Naval Office. Although there were overlaps in personnel between the KRA and the war committee of German industry, the latter’s agenda was different. Formed on the initiative of Heinrich Class of the Pan-German League and Alfred Hugenberg of Krupp, it was dominated by the banks and heavy industry: these were the people who were already manufacturing munitions, or who might do so. Their interests were those of capitalism; they wanted to regulate labour and to contest government bans on exports. Thus, the committee became the focus of liberal economic thought. It sought, in a resolution passed in December 1915, to hive off responsibility for trade, manufacturing, and industry from the secretary of state for the interior. By creating a separate ministry, business would be given a more powerful voice and German war production could be wrested from the growing grip of collectivism represented by the KRA.131