The Portent of Stinnes

THE transition from monarchy to democracy in Germany has been marked by a phenomenon peculiar to the birth of most democracies: the rise into power of a financial aristocracy which gradually replaces the old hereditary nobility. This new feudalism is of particular import, because it ascends while the people as a whole believe that they have assumed control of their destiny; whereas, in fact, they merely retain nominal power, while the real power gradually passes into the hands of a small number of financiers. The nobility of the past had always remained subservient to the State, or to the dynasty which was above it and whose interests it served primarily. But plutocracy has nobody above it; it controls and uses the State for the furtherance of its own interests; the State is merely its instrument, the playground for its growth and development.. It is perhaps one of the greatest tragedies of the war that the masses of defeated Germany, after having freed themselves politically, should now have come under the economic control of a few men like Stinnes. Nor could a stranger paradox be conceived than this — one man emerging from a vanquished country as the world’s greatest warprofiteer and thus named ’the man for whom the war has been fought.’

‘Never have such power, capital, boldness and enterprise been concentrated in one German. To the Socialist he is a Satan who desires to “ Stinnesize” the whole nation; to the Pan-German he is a Messiah, sent to avenge and save Germany.’ This is what Maximilian Harden wrote of Stinnes. A French paper called him the ‘new Rockefeller of Germany’; others describe him as the ‘Bismarck of the new régime’; ‘Germany’s new business Kaiser’; the ‘man who grabs everything in sight’; the ‘wealthiest, most influential, bestknown, and at the same time leastknown, man in Germany,’ or ‘the man who controls Germany’s destiny.’

Hermann Brinckmeyer, in his admirable little study, Jingo Stinnes,¹describes Stinnes as follows: ‘He has the appearance of a worker and could go about in the clothes of a foreman or a miner without attracting attention. 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. His external appearance is devoid of pose; he seems heavy and solid. Clothes, habits, and bearing denote a man of simple tastes.’

Stinnes was fifty-two years old in February last: he was born at Mülheim on the Ruhr on February 22, 1870. His black beard and curved nose give him a Semitic appearance although he is of pure Protestant stock: his mother, born Coupienne, was a descendant of the French Huguenots. He owes all his wealth and power to his untiring work and unceasing energy — an irresistible impulse to do creative work. He is very distinct from the usual type of Europoan war-profiteers who may be found idling around luxurious resorts with heavy fur coats and diamond rings, or in elegant automobiles. Stinnes is an unassuming business man; he is never idle. I saw him early in November, on the night-express from Berlin to Cologne, when he went to London. He looked tired and worn out. The vast number of enterprises which he controls, from coal-mines to steamship companies, steel-mills, electrical factories, hotels, newspapers, banks, and airship lines absorb all his energy. So universal is his influence in the economic life of Germany that it would be hardly possible to spend a single day in that country without paying him tribute indirectly: either by picking up a newspaper, or by booking a room in a hotel, or by using a street-car, or by lighting an electric lamp, or by cashing a check — somewhere Stinnes will be found behind the transaction.

The Growth of Stinnes

Unlike other trust magnates, Hugo Stinnes is not altogether a self-made man. At the age of twenty he inherited from his father what was considered at that time a substantial fortune, with large interests in the coal-mining and shipping industry of the Rhine. The Stinnes family had been engaged in the coal and shipping trade for nearly a century. Its history goes back to the year 1808, when old Mathias Stinnes made himself independent as a coal dealer in the Ruhr district. It was Mathias Stinnes who made the Rhine navigable. In 1810 he bought the first coal barge on the Rhine, and in 1817 he opened the first shipping-line from Cologne to Rotterdam with a regular service of nine ships. Throughout the century the famous Stinnes boats carried coal up the Rhine and brought back grain, wine, vegetables, and iron ores.

In 1843 the first steamer, Mathias Stinnes I, plied up the Rhine; in 1845 old Stinnes died, leaving his transportation enterprises to his sons who developed the firm until the present Hugo Stinnes inherited the business. In 1848 Mathias Stinnes, Jr., founded the Mathias Stinnes Trading Corporation at Mülheim on the Ruhr, comprising a fleet of sixty barges and warehouses in Coblenz, Mainz, Mannheim, together with four iron mines and the majority stock-control of thirty-eight other mines.

The first step toward consolidation of the coal business was the foundation of the famous Rhine-Westphalia Coal Syndicate by Hugo Stinnes in 1893. This controlled a large portion of the distribution of the coal of the Ruhr district. In 1903 the Rhine Coal and Shipping Company, commonly known as the ‘Coal Bureau,’ was founded to regidate the prices and the distribution of the precious fuel. Simultaneously, Stinnes developed interests in the steel and iron trade, in mining and foundry companies to which he added electrical combines and power, gas, and water utilities of the Ruhr basin. Later, he acquired cellulose factories and paper mills; a whole chain of hotels and amusement resorts in Berlin, Hamburg, and on the Baltic; a big automobile factory; the bulk of stock of the Nord-Dcutscher-LIoyd steamship company, Bremen; various steamship-lines and warehouses in Hamburg; air-route lines in Germany and Scandinavia; the Danube navigation in Hungary and Rumania. He is financially interested in the Austrian Daimler factory and the famous Skoda Works and owns the Elbe-Mühle paper mills.

In Austria, Stinnes has recently acquired the richest ore deposits of the European continent; he has branch houses in many European ports; he owns a fleet of ocean-going vessels and has recently entered the field of South America. In Argentine he founded the Sociedad Anonima Hugo Stinnes which controls oil, farmlands, lumber-cutting enterprises, warehouses, and an import organization connected with the Stinnes steamship lines. It is rumored that he plans to inaugurate local steamship lines along the Parana River for the development of the Chaco region, a new and undeveloped virgin country. His interest in South America is partly explained through the fact that his wife was born at Montevideo, Uruguay, as was his first daughter.

Thus the Stinnes Trust is easily the biggest and most, universal commercial enterprise of Germany, if not of the world. That Stinnes also plays a leading rôle in German politics is almost inevitable, as we shall see; but there is serious danger that he may use his influence to promote his own interests. Thus the Social-Democratic Vorwärts recently launched a fierce personal attack on Stinnes, saying: ‘When Stinnes returned from London, he had nothing to say either about the purpose or the success of his trip. To-day it is known from an absolutely reliable source that Stinnes’s task in London was to put over the denationalization of the German state railroads and their barter to an English banking syndicate, in return for a gold loan in connection with the revision of reparations. His London trip was a failure in both respects. The English Government showed Stinnes the cold shoulder and the Anglo-Russian Asiatic Company in which Stinnes sought to obtain an interest, would have nothing to do with him. Instead, the business which Stinnes wanted was done by Krupp in connection with the Berlin banking house of Mendelssohn, who secured a large block of stock of the Anglo-Russian Asiatic Company.’

A report, from the London correspondent of the Frankfurter Zeitung, published on February 1, confirms the above story. It appears that Stinnes took the British Government by surprise with his proposals: pleading patriotic mot ives and referring to the financial troubles of Germany, he asked for a loan of 500 million gold marks which he would offer to the German Government. By securing this credit, he hoped to get under his control the German State Railroads and administration, which he proposed to mortgage to the British Government, without however possessing the slightest official authorization to do this. Simultaneously he submitted some gigantic schemes for the reconstruction and development of Eastern and Southeastern Europe. The British Government received these proposals ironically and with indignation and found it opportune to make an official declaration that it had not invited Stinnes to come to London. Naturally. this disclosure of Stinnes’s unscrupulous willingness to exploit Germany’s sad condition created an immense sensation!

It is very likely, however, that Stinnes is held in high esteem by Lloyd George and other personages of the English financial and industrial world, and that there exists a secret understanding between the English Government and Stinnes concerning Russia, which led the Independent Socialist leader, Herr Dittman, to demand an investigation of Stinnes’s activities in this connection by the Reichstag. Before the war, the German state railroads were estimated to be worth twenty-five billion gold marks. Should Stinnes succeed with his offer to the German Government to make a gold loan for reparations, and have the whole railroad system mortgaged to him, this would be a financial coup of tremendous consequences to the German nation. Thus far, the unions of the railroad workers seem to have succeeded in preventing Stinnes from carrying out his intended seizure of the German nation’s last and most valuable asset.

The Vertical Trust

The word Stinnes is more than a name — it embodies an idea, it stands for a new principle, a ‘ concept of marvelous strength like an edifice of steel,’ the culmination of capitalist concentration and a symbol of the modern power of organization. The ‘Vertical Trust’ of Stinnes is a new and unique phenomenon in the industrial world of the twentieth century. It is a ‘monster trust of trusts.’ Stinnes belongs to more than fifty different boards of directors; he controls 700,000 workers; his combines swallow up one enterprise after anot her. The development of the Stinnes Trust is an immense capitalist drama; it has been compared to a vast spider which spins its web wider and wider ‘over the utmost stretches of fields, forests, mountains, and valleys of Germany.’

A trust is generally defined as a ‘corporation engaged in manufacturing, possessing sufficient power to fix prices for its products, in part at least, on t he principle of monopoly.’ American trusts, like the Standard Oil or Harvester Trust, chiefly sought to unite different branches of the same line of production and thus to monopolize one particular field of industry by the elimination of competition and the crushing of the smaller dealer and consumer. Brinckmeyer describes a vertical trust as a complete and self-contained consolidation of all the successive stages of manufacture, from the production of raw material to the final distribution of the finished article. It is an industrial cycle, completely protected at both ends, with every source of supply and every stage of production in the same hands. If the Standard Oil Company acquired coaland iron-mines to manufacture its own supply of oil machinery, tanks, and pipes, controlled its own railroads to handle its tank-cars, and built its own tankers in its own shipyards, besides controlling the automobile industry in order to find a market for its gasoline, it would approximate the German idea of a vertical trust. But, fortunately, there is a law in the United States which forbids at least the formation of such trusts as these.

The Vertical Trust is not chiefly concerned with creating a monopoly through exclusion or absorpt ion of other industries. On the contrary, it welcomes competition. Its chief aim is to organize and cheapen production on a rational basis by eliminating waste and utilizing by-products as far as possible; it merely implies the economic sequence of all phases of production, from raw materials to semi-manufactured and finished products, including the transport and distribution of the latter under one single management.

Thus the basis of t he Vertical Trust is the possession of its own raw materials like coal, iron-ore, limestone, lumber and so forth, and the building-up of the industry around the sources of raw material. Once fuel is assured, the entire process of manufacture can be built up on this foundation. Expenses are greatly reduced, middlemen are avoided, and unnecessary transportation is eliminated.

The complete chain of the basic or ‘key’ industries enables the Trust to manufacture such intermediary products as iron and steel of every grade, railroad material, wires, tin, tubing, forgings, rails, coke, lime, gas, machines, screws, bridge materials, cranes, cables, passenger-, freight-, and streetcars, locomotives, buildings, wharves, and steamships. The specialized products include electrical machinery, porcelain, glass, paper. The possession of paper mills led Stinnes to the acquisition of numerous newspapers, publishing and printing firms, which, again, have enabled him to control a large part of his own advertising, to exercise a strong political influence and particularly to control public opinion and labor successfully. The possession of ships owned by the Trust led to the development of a huge transportation and export business and the establishment of branch houses in foreign countries, as Italy, Spain, Scandinavia, Soulh America, Dutch East Indies, Russia, Hungary, and Rumania.

The characteristics of the Vertical Trust are: decentralization of production, the independence of t he individual enterprises, and a complete adaptation of the single stages of production to each other. Another important and interesting feature of the Vertical Trust is explained by the highly specialized character of German industry which necessitates the rigid control of patent rights, inventions, and technical processes; these are guarded within the Trust as the most cherished secrets upon which its preponderance in a given line largely depends.

It would be too exhaustive to give a complete history of the Stinnes Trust. For it would have to include, for example, all the individual enterprises, like the German Luxembourg Mining and Smelting Company, the Gelsenkirchen Mining Company, the RhineElbe Union, and the Siemens-Schukert Electrical Company, all of which have entered the Trust.

The charter of the Hugo Stinnes Transportation and Overseas Trading Company in the commercial register of Hamburg shows how tremendous has become the scope of Stinnes’s business enterprises. The company is licensed to engage in the following activities: ‘Transportation of every kind; to build and manufacture all shipping accessories, 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 manufacture, also raw materials of 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 engage in the reshipping and storage of all these products, especially during their transmission from or to foreign countries. The company is also licensed to undertake the extraction, manufacture, and construction of every form of raw materials and manufactured articles in its own establishments.’

This list shows what Stinnes stands for in the economic life of Germany, and yet it comprises only a branch of his business. Two factors should be mentioned which have helped Stinnes to increase his power so immensely in the recent past. One is the depreciation of the German currency. This enables the employer to pay out continuously low wages to his workers on a fixed wage-scale which does not respond quickly to the changed money-value; while the prices of the finished products adapt, themselves more readily to the world-markets. This allows a large margin of profit to all industrials, and accounts to a considerable extent for the paper-money prosperity in the industries of Germany. The other factor is of a legal nature. There is a provision in German law according to which the holders of certain classes of preferred stocks may exercise a multiplied voting power. This enables industrial leaders to maintain a complete control of certain industrial enterprises, even though they may own but a small amount of stock.

It is interesting to note that Stinnes never tries to own his industrial enterprises all by himself; he always aims to get others to share in the responsibility. In order to secure an intimate relationship between producer and consumer, lie has established joint ownership among cities, communities, and private capital. In and around the city of Essen he already controls nearly all the iron, steel, gas, electricity, and water utilities; there the Vertical Trust is a reality.

Stinnes’s Control of Newspapers

During the revolutionary uprisings which took place in Germany following the Armistice in 1918, one of the most significant facts was that the wrath of the populace did not turn against banks, the wealthy people, or militarists, but chiefly against the press. Both in Berlin and Munich, the big newspaper buildings were the first to be stormed and occupied by the masses, who destroyed the printing machines and the types; for they felt instinctively that the press was the chief agency which had misled them during the war, and, at the same time, was the stronghold of the big interests which control public opinion, politics, and the destiny of the nation. The people failed, however, to gain permanent control over their press; again it was Stinnes who stepped in and bought a large number of newspapers, not only in Germany, but also in Austria, Czechoslovakia, and Hungary.

He first acquired the well-known semi-official Deutsche Allgemeine Zeitung, a government paper of high standing but small circulation, which, since the Armistice, would have ceased to exist but for his financial support. To this he added the following Berlin papers: Die Post, Deutsche Tageszeitung, Deutsche Zeitung, and the famous conservative daily, Tägliche Rundschau, edited by Count Reventlow. In Bavaria, Stinnes is said to own the influential Munich daily, Münchener Neueste Nachrichten, the München-A ugsburger Abendzeitung, humorous weeklies like the Simplizissimus and Jugend, and hosts of other papers.

His influence in Bavaria is evinced by the fact that this country, which before the war was quite democratic, has now become the stronghold of monarchism and reaction. The illustrated comic weeklies which formerly attacked reaction, clericalism, and militarism, now ridicule Germany’s democratic Constitution, the Wirth Government, or Socialism, in addition to carrying on the nationalist propaganda of hatred and revenge, in common with all Stinnes papers. In the Hungarian capital, Budapest, he owns nearly all morning and evening papers. In Vienna he owns the Allgemeine Zeitung and Der Neue Tag, two dailies with a big circulation.

In addition to the sixty or more papers owned by him, Stinnes also influences scores of others by supplying them with news from his recently acquired telegraph agencies, the Rammert Agency and the Telegraphen Union. He also owns extensive forests in Eastern Prussia which supply his paperand pulp-factories with wood and cellulose for the manufacture of printing paper. The Hugo Stinnes Book and Cellulose Company has been formed by the amalgamation of the large Büchsenstein Printing Company and the North-German Book-Binding and Publishing Company.

Whether this extensive acquisition of newspapers in Central Europe was originally intended chiefly as a moneymaking proposition and merely an incidental part of his gigantic trust scheme, or whether Stinnes desired to exercise political control and to create a public opinion favorable to his aims, is a matter of conjecture. The fact remains, of course, that the Stinnes press is a most influential political instrument in the hands of its owner. All its weight is thrown into the support of the parties of the Right, the monarchist and nationalist elements, the interests of high finance, industry, and aristocracy as against the masses and the workers. The Stinnes papers are widely read by the intellectual classes, the middleclass bourgeoisie, college students, and millions of others whom tradition or thoughtlessness makes indifferent to what they read.

In October 1921, for example, in the last municipal elect ions in Berlin, it was chiefly the Stinnes press that caused the Socialists and Democrats to loose 100,000 votes to the parties of the Right. Similarly, the Stinnes papers are fiercely opposed to the Republican form of government and to such men as the Chancellor, Dr. Wirth, the Foreign Minister, Dr. Rathenau, and others who represent, the new spirit of a democratic and peaceful Germany. Through his dominating influence over public opinion Stinnes will unquestionably become one of the most important figures in the future political life of Europe. His unique position affords him immense potentialities.

Like Lord Northcliffe, or W. R. Hearst, Stinnes has already used his control of the press to promote his personal political ambitions. He has become a member of the Reichstag, and in one way or another takes part in most of the important political decisions of the German Government.

Stinnes in Politics

It was early in the war that Stinnes entered the political field. During the occupation of Belgium and Northern France, he was frequently called to the General Headquarters as an economic adviser. His advice was in support of the policy of stripping Belgium of her factories, machinery, and raw materials. Stinnes was responsible also for the deportation of Belgian workers to be used to increase the output of munitions in Germany. And it was the hand of Stinnes that demolished the factories and the coal-mines of Northern France.

After the Armistice, when France had imposed tremendous demands of coal-delivery on Germany, Stinnes was again called upon for his advice, and summoned to Spa to testify as an expert. He insisted on the impossibility of an annual delivery of forty million tons of coal bv Germany, and worked for a refusal of the Allies’ demand. In its place, he suggested a coöperation between France and Germany, and pointed out the advantages of such a course. His speech attracted wide attention; but he failed to impress politicians like Briand and Lloyd George with his proposal for a practical solution; for, so far as the French delegate was concerned, the coal-question was ‘no longer an economic issue, but a political one.’ Germany was finally compelled to accept France’s demands.

Stinnes’s failure at Spa was sharply assailed by the German press on the ground that he had tried chiefly to safeguard his own interests and profits; that he would even have betrayed his country and welcomed the French occupation of the Ruhr district, in order to prevent the socialization of German industry which was imminent at that time. His attempt to establish a community of interest with French coaland iron-magnates was considered as aimed against the interests of German labor. Stinnes answered his critics cleverly, pointing out that he had merely tried to save the mining unions ‘from having to do a great amount of overtime work ’ and to ‘prevent unemployment in other industries.'

After the Revolution, Stinnes became a member of the State Economic Council (Reichswirtschaftsrat) in which capacity he was instrumental in defeating the socialization of German industries anti mines — an idea which was very popular in Germany, and is made a provision in the democratic Constitution.

To a man like Stinnes the proposed socialization of industry offered no insurmountable obstacle. To him, socialization simply meant participation and joint responsibility of labor. In the memorandum worked out at Essen, he suggested vertical consolidations of industry as a substitute for, or complement of, socialization, because, as he alleged, the great economic concentration and the cheapening of production within the Trust would comply with the principal demands of the Socialists. To Stinnes, trusts and socialization ‘run parallel and need not intersect each other.’ ‘As regards the forms of collectivism, you must always adapt yourself to previous experiences; under no circumstances must you underestimate the importance of the individual.’ It was with such phrases as these that Stinnes succeeded in sabotaging and sidetracking the proposed schemes of socialization. In fact, he once openly stated: If I have adopted advanced social theories, I have not forgotten myself in doing so.

So successful has Stinnes been in his dealings with Labor that there are even many Socialists who support the system which he has created. The French Socialist paper, Le Peuple, claims that he has cheapened production and set an example to French industry. The German Socialistic V orwärts thinks that Stinnes is accomplishing the ‘inevitable Marxian process of concentration of capital which will make industry ripe to be taken over by the community ’; and there are cjuite a few Socialists who view Stinnes ‘as a necessary product of evolution and a pathfinder for the State of the future (the Zukunftstaat) ’ who converts capitalism ‘into the cocoon stage from which the finished butterfly of socialistic collectivism will some day emerge’!

At present, Stinnes is the acknowledged leader of the Deutsche A olkspartei which he finances. He does not appear in public in person, but he is unquestionably the most powerful influence behind the screen. It is an impressive thing to note how, to-day, economic leaders shape the politics of a country, whereas, in the past, economic life was largely shaped by the politicians. It is true that Stinnes has not been able so far to subst itute monarchism for democracy in Germany, but he certainly uses his influence in the direction of undermining the faith in the democratic Constitution and in discrediting the democratic government.

A typical illustration of Stinnes’s hostile attitude toward democracy is the fact that he has given three of his ocean-going ships the names of Hindenburg, Tirpitz, and Ludendorff, which constitutes, and is probably meant, to be, a provocation to the democratic elements of Germany. His refusal to fly the black-red-golden emblem of the German Republic on his ships, which still fly the black-white-red flags of the monarchy in violation of the German Constitution, is another instance of his defiant attitude. In spite of his tremendous political influence, he does not really believe that the affairs of the world should be solved by the politicians and diplomats of the old type, nor does he place any reliance on the political power of the State. He wants economic and practical considerations to be the decisive factors in politics. He stated his views in an interview given to a foreign correspondent in which he said: —

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 can talk to each other without hate. There must be no more conferences at which everybody lays down his revolver at his side. This sick world can be saved only by a consultation of a few physicians behind closed doors. It would be insane on the part of Germany to declare its willingness to pay even the interest on a loan of 50,000,000,000 marks. If the Allies are figuring on any such sums, they are going to have another disappointment. France could have had material and labor for construction two years ago, and no German would have refused to deliver them. 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 exchange, and those which cannot do this. Both are bound to perish unless some form of cooperation can be agreed upon. Money is to be found, but only by giving the world an example of perfect cooperation. Every 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 other countries.

Stinnes and Russia

It is not surprising that Stinnes has turned his eyes on the immense supplies of raw materials and the trade opportunities of Russia. Preparatory to his invasion of Soviet Russia, he is conducting a comprehensive economic survey of that country through a number of German experts, according to a recent report. A delegation which left Berlin for Moscow comprised financial, economic, commercial, transportation, hotel and agricultural experts who will make a minute study of general conditions in Russia with a view to determining the nature of his operations in the Soviet Republic. ‘The delegation is reported to be headed by Dr. Fehrmann, Stinnes’s Russian adviser, and to include Jacques Kraemer, a widely known hotel proprietor who will supervise the organization of a chain of hotels, in anticipation of an early influx of trade representatives and tourists into Petrograd and Moscow.’

In the meantime, Stinnes has already made contracts with the Soviets for the delivery of his products, like machinery and so forth; in exchange for which, as the New York Times reports, the Russian crown jewels have been pawned to him for 60 per cent of their value; among them the famousOrloff diamond, estimated to be worth £240,000, and the black-pearl necklace, valued at £80,000.

It is generally thought that he sought to induce the British Government to cooperate in the resumption of trade with Soviet Russia. Subsequent events have shown that he has apparently succeeded in convincing responsible members of the British Government that the time has come to resume business with Russia. The Genoa Conference which was called on the initiative of Mr. Lloyd George is to include Germany and Russia; and surely Lloyd George means to go ahead, together with German industrials, in restoring commercial relations with the Soviets without waiting for France and the United States to join. In this sphere of Stinnes’s activities we may look forward to an interesting test: which of the two chief exponents of two diametrically opposed systems in Europe, the Communism of the Soviets or the ‘Vertical Trust’ of Stinnes, will ultimately survive?