Economic History Association

Industrial Mobilization in World War I: The Prussian Army and the Aircraft IndustryAuthor(s): John H. Morrow, Jr.Source: The Journal of Economic History, Vol. 37, No. 1, The Tasks of Economic History(Mar., 1977), pp. 36-51Published by: Cambridge University Press on behalf of the Economic History AssociationStable URL: http://www.jstor.org/stable/2119443Accessed: 10/01/2010 16:43

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Industrial Mobilization in World War I.1 The Prussian Army and the Aircraft Industry

I N August 1914 the eleven major producers for the German air ser- vice were relatively small Grossbetriebe (51 or more employees)

with a total labor force of approximately 2500. The army had not prepared a planned mobilization of the aircraft industry, although it had controlled the industry's destiny since its origin in 1909. The army monopolized the prewar aviation consumer market, partially because the airplane's experimental nature made it unfeasible for commerce, but also because the Prussian Army effectively strangled sport aviation in order to assure the industry's concentration on military aircraft. The military monopoly enabled it to preserve com- petition within the industry and to set increasingly stringent guidelines for the construction and type of military planes.

The industry's dependence on the military market did protect it somewhat from the fluctuations of the German economy. The years 1911-1914 a time of economic recession, capital shortage, and labor unrest-witnessed the aircraft industry's steady growth. The best factories fared well, already showing dividends of ten percent in 1913.

By 1914 the industry had trained a cadre of skilled workers and the largest firms, all of them joint stock or limited liability companies, had introduced serial production. The Prussian War Ministry had also drawn large industrial concerns like AEG (Allgemeine Elektrizitaets Gesellschaft) and the Gotha Railroad Factory into aircraft production in order to improve the financial state of the industry. The industry possessed substantial surplus capacity, as the best eight firms could deliver some 100 aircraft monthly, or three times their average monthly deliveries in 1913. In addition, the international situation prompted the army to order 220 airplanes from seven firms on 4 July 1914. The army and the industry were thus prepared to fight the short war expected.1

Up until August 1914 the army had not intervened directly in matters of factory organization, prices, wages, and industrial patents.

36

Journal of Economic History, Vol. XXXVII, No. 1 (March 1977). Copyright ? The Economic History Association. All rights reserved.

1 On prewar aviation see my article, "The Prussian Army and the Aircraft Industry, 1909-14," Aerospace Historian, 20 (1973), 76-83.

Industrial Mobilization 37

The exigencies of an increasingly total war would change this. The mobilization of the German aircraft industry during the war can be periodized in the following manner: (1) an initial stage from August 1914 to February 1915, when the maximum expected length of the struggle passed; (2) an interim period of haphazard policies from February 1915 until the battles of Verdun and the Somme forced a planned mobilization in the fall of 1916; (3) the Hindenburg Program from fall 1916 to July 1917; and (4) the America Program from July 1917 to the end of the war.

On 1 August 1914 the inspectorate of flying troops advised the aircraft factories to begin production at full capacity. Some manufac- turers promptly asked the war ministry for long-term contracts of three months, aid in material procurement, and exemptions of employees. The inspectorate, however, advised the ministry against long-term contracts which might prevent lowering prices as produc- tion increased; it rejected early requests for higher aircraft prices, anticipating that the industry would use the favorable state of the market for its "unjustified enrichment." Yet already in the first days of the war the companies found raw material and parts more expen- sive and difficult to obtain, and some of them had insufficient liquid assets to purchase material from subcontractors who were demanding payment in specie because the army had not yet paid them for prewar contracts.2

In the midst of mobilization a self-appointed parliamentary com- mission of seven Reichstag deputies, among them Matthias Erzberger and Cuno von Westarp, offered to help the Prussian War Ministry develop a great aircraft industry and air fleet in order to offset English naval superiority. On 5 August, at the request of the army, they hastily convened a meeting with representatives of the military and eight important aircraft, three aircraft motor, and five accessories firms. The companies agreed to continue their peacetime prices, to avoid profiteering and, most critically, to allow the army the license- free use of lesser patents. In return the army assured them of ample contracts, the exemption of "indispensable workers," and partial payment in advance of one-third the price on series of established types. In closing, the chairman of the commission expressed the hope that such a "privileged" industry would give glorious proof of its patriotism. The conference was a first sign that the army intended to

2 August Euler to Idflieg (Inspectorate of Flying Troops), 4 Aug. 1913, Vol. 262, NE (Nachlass Euler), BA (Bundesarchiv). Entwicklungsgeschichte des Flugzeugwesens, pp. 46-7, Vol. II L 234/32, MA (Militaerarchiv).

38 Morrow

use wartime exemptions and contracts to increase and extend its control of the industry.3

The firms at the conference had agreed to deliver 198 planes monthly, but the air service received only 462 new craft between 3 August and 29 November. Although War Minister Erich von Falken- hayn on 9 August ordered the deputy general commands to give prior consideration to arms, munitions, aviation, and motor vehicle firms in distributing a limited number of exemptions to men who were "abso- lutely indispensable" to industry, a continuing loss of skilled person- nel impeded production. In addition, shoddy construction and the unsuitability of certain types for wartime service were partially to blame. The collapse of the army's supply organization certainly took its toll, as unit leaders commandeered some planes directly at the factories and shipped them haphazardly to the front by rail, forgetting that Belgian railway tunnels lacked the clearance of their German counterparts.4

When the parliamentary commission reconvened on 2 September, the circumstances were less conducive to rousing patriotism. Wages, freight charges, material prices, and interest rates had risen. Never- theless, when three major firms-Albatros, LVG, and Rumpler- sought price increases of 10 to 15 percent, the war ministry refused to concede that the expenses of procuring parts and raw materials and of wage increases should significantly influence aircraft prices. The ministry agreed to pay its prewar bills and the advances on contracts in order to limit the firms' need for bank credit. It also proposed to use chambers of commerce to persuade subcontractors to accept credit and to request the help of the Imperial Office of the Interior in preventing raw material profiteering. If all else failed, it would rec- ommend consideration of price ceilings on materials.5 Despite this stated desire to prevent inflation, the war ministry never set effective ceilings on raw material prices, initially because it lacked direct control over subcontractors, and, after August 1914, because its raw material department was directed by the very industrialists who stood to profit from its operation.6

Although the army was unable to stem the rise of wages and

3 Protocols of 1st and 2nd meetings of the Commission of Parliamentary Deputies, 6 and 7 Aug. 1914, Vols. 59 and 267, NE, BA.

4 KM (War Ministry) No. 785.8.14 Al, Vol. KIO-4/2532, MA. Karl Koehler, "Auf dem Wege zur Luftwaffe," Wehrwissenschaftliche Rundschau, 16 (1966), 354-55.

5 Protocol of War Ministry meeting on aircraft industry, 2 Sept. 1914, Vol. 59, NE, BA. 6 Alfred Mueller, Die Kriegsrohstoffbewirtschaftung 1914-1918 im Dienste des deutschen

Monopolkapitals (Berlin, 1955), passim.

industrial Mobilization 39

material prices or to execute its exemption policy effectively, the industry grew. Wages in October had risen an average of 6 percent since August, although they had not kept pace with the cost of living. Raw material prices rose even faster; by September the price of raw rubber was up 100 percent, although the usual increases ranged from 10 to 30 percent.7 By October it was also evident that the exemption policy had failed, undoubtedly because of the parsimonious manner in which the deputy general commands interpreted the term "indis- pensable personnel." On 5 October the head of the war ministry's war department, General Franz von Wandel, informed the com- mands that the army had to exempt personnel that the industry considered essential because of the "special nature of aircraft con- struction" and the importance of the industry for national defense. The war ministry's aviation section established a central agency for the aircraft industry, which worked with the commands and the inspectorate on exemptions.8

There were now fourteen major firms, most of which were located in or around Berlin. Albatros, the largest, completed ten airplanes weekly; LVG, another superior company, seven. When these firms continued to request price increases in December, the war ministry responded that the industry would have to sacrifice in the war effort and that wartime profits from substantial, regular contracts offset the increase in production costs. The companies replied that the lower costs of serial production did not offset the increase in parts and materials prices. In general, however, it was evident that the largest firms profited sufficiently. LVG and Albatros even lowered the price of their aircraft from 17,100 to 16,000 marks and from 16,750 to 15,000 marks respectively. An exception, LFG, was allowed high prices (23,710 marks) only because it had to absorb the prewar losses of its predecessor, the Wright Aircraft Company, and because its shareholders included such firms as Krupp, Ludwig Loewe, and AEG. Anthony Fokker's financial position had so improved by January 1915 that he repaid all his loans and became sole owner of his factory; Fokker, however, was notoriously stingy about investing in his plant.9

7 Report of the Parliamentary Commission to Examine Contracts on War Deliveries (9th meeting), 31 Oct. 1917, p. 57, app. 4., Vol. K10-4/2540, MA. Euler to Idflieg, 9 Sept. 1914, Vol. 253, NE, BA.

8 KM No. 2089/9.14. A7L to Deputy General Commands, 5 Oct. 1914, Vol. MKr 1385, BKA (Bavarian War Archive). Report of the Commission on War Deliveries (1st meeting), 19 Dec. 1916, p. 12.

9 Report of the Commission on War Deliveries (9th meeting). 31 Oct. 1917, p. 63, app. 15.

40 Morrow

The profits from serial production made the firms reluctant to shift production to new types. When the inspectorate abruptly raised performance requirements in December, major firms protested, pointing out not only that prototype development would take months, but also that they would first have to exhaust material already pre- pared for present series. The inspectorate was forced to post lower transitional requirements, but it succeeded in keeping aircraft prices down through the new year.10

Finally, in February 1915, the army conceded that an increase in aircraft prices was necessary. The extensive induction of skilled work- ers, exemption orders notwithstanding, and the concomitant use of unskilled hands had lowered per capita output and increased losses from ruined material. The army could not afford the deterioration of standards that might result from depressed prices, so the war ministry decided to apply different standards to the aircraft industry than it did to older, well established war industries. Many of the airplane facto- ries-the smaller ones in particular-had entered the war with siza- ble deficits, and now they faced enormous expansion and the constant conversion of production to new types. Yet after the war much of their plant would be useless, so they would have to pay off as much of their wartime investment as possible during the war. The war minis- try therefore had the inspectorate increase the price of all aircraft delivered after 1 January by 3 percent.11

The price increase was a significant development in the military's more direct intervention in the industry's affairs. The inspectorate's bureaucracy expanded in order to organize production and procure- ment and to increase its surveillance of plant operation in its assess- ment of prices. In August 1914 there had been no single authority in German military aviation above the aviation units at the front and the war ministry's aviation section and the inspectorate of flying troops at home. In April 1915 the General Staff appointed a chief of field aviation, Major Herman von der Lieth-Thomsen, to command all aviation agencies. In the war ministry's opinion, the major task of Thomsen and his deputy, Major Wilhelm Siegert, was to organize the systematic mobilization of the aircraft industry.12 The inspectorate concentrated procurement, examined new designs and inventions,

Walter Froebus (LFG) to Euler, 2 Dec. 1914, Vol. 257, NE, BA. Euler correspondence with aircraft firms on expenditures, 14 and 15 Jan. 1915, Vol. 19, NE, BA. A. R. Weyl, Fokker: The Creative Years (London, 1965), p. 131.

10 Froebus to Euler, 2 Dec. 1914, Vol. 257, NE, BA. 11 Report of the Commission on War Deliveries (1st meeting), 19 Dec. 1916, pp. 9-13. 12 Hilmer von Buelow, Geschichte der Luftwaffe (Frankfort, 1934), pp. 57-8.

Industrial Mobilization 41

transmitted technical advice from the front to the factories, and issued general construction and delivery guidelines. A subordinate central aircraft acceptance commission and subcommissions supervised fabri- cation and acceptance of airplanes.

The war ministry and the inspectorate began in February to examine company books regularly in order to set aircraft prices more stringently. Despite some initial reluctance, the firms generally co- operated. Apparently this detailed surveillance enabled the army to determine that the major companies did not need price increases, because it kept the prices of their aircraft low after February until construction costs had risen considerably. The firms' gross profits per plane on serial contracts decreased through January 1917, and large firms earned 8-29 percent of the sale price of each aircraft, which was reduced by war and business taxes to net earnings of 3-12 percent of the sale price. Small companies earned less. The army considered such profits reasonable for the high risks of production, test flying, and acceptance.13

While the war ministry could exert direct control over the prices of the aircraft manufacturers, in 1915 it found itself in the ironic position of fostering increased wages for aircraft workers in order to maintain labor productivity in the face of inflation. When prewar wage agreements in the industry expired in March 1915, the aircraft industrialists refused to set a fixed table of wages. Finally negotiations between the Association of Berlin Aircraft Industrialists and the Ger- man Metalworkers and Woodworkers Unions, aided by a representa- tive from the war ministry, produced agreement. The settlement entailed the following points: a normal work week of fifty-one hours and nine hour double shifts Monday through Saturday (six hours Sunday); minimum hourly wages of 80-85 pfennigs for beginning skilled workers, 60 pfennigs for assistants above eighteen years of age, 50 pfennigs for those under 18, and 40 pfennigs for women assistants, with additional stipends of 10 pfennigs for heavy work and 5 pfennigs for night shifts; a commitment from the firms to use the unions to secure additional workers; and settlement of grievances through workers commissions or commissions of industrialists and union rep- resentatives. The contract, which was signed on 9 May, would remain in effect until an official peace or for one year, whichever came first. The workers' press praised the war ministry for its impartial and successful help.

13 Report of the Commission on War Deliveries, (1st and 9th meetings), pp. 9-13, 48-9.

42 Morrow

Only four months later, on 2 October 1915, Vorwaerts reported another wage increase in the Berlin aircraft factories. Once again, the workers had sought the mediation of the war ministry after a month of futile negotiations with the owners. On 16 September the owners, workers' foremen, union representatives, and war ministry officials set a maximum wage of 1.10 marks and increases of 5 pfennigs for single men and women and 10 pfennigs for married workers and heads of households. The raises were made conditional on an increase in aircraft prices, which the war ministry granted in early October. Once again the workers' press gave the war ministry much of the credit for the agreement.

The wages of the skilled metal and woodworkers in the aircraft industry were comparable to those paid by the Association of Berlin Metal Industrialists and placed them among the highest paid workers in Germany. Real wages in the aircraft industry declined in 1915, but by mid-1916 they were higher than at the war's beginning, while the average real wages in the war industries declined through March 1917, when they stabilized at levels some 25 percent below prewar. 14

The war ministry's role in setting higher wages and its allowance of price increases show that it had come to regard the aircraft industry as critical. Its support of wage increases, however, enabled the manufac- turers to squeeze higher aircraft prices from the army.

As the heightened competition for aerial superiority in the spring and summer of 1915 led to greater attrition, Thomsen realized that more drastic measures were necessary to increase productivity, so he proposed a further expansion of the industry. In a memorandum of 2 June he proclaimed that the state of aircraft production served neither the interests of the military nor the progress of aviation technology. Because of their relatively insignificant financial basis, the aircraft factories avoided costly tests in favor of profitable serial production. To correct this failure, he insisted that private heavy industry be attracted to aircraft production to establish new factories or invest in present ones. State factories best served to mass produce established war material; only the competition of free enterprise with the military as the directing agency could produce the best aircraft in quantity. 15

The inspectorate had decided as early as October 1914 to attract

"Die Lohnbewegung in den Betrieben der Flugzeugindustrie Berlins," Metallarbeiter Zeitung, 22 May 1915; "Teuerungszuschlag in den Johannisthaler Flugzeugbetrieben," Vor- waerts, 2 Oct. 1915; Vol. M Kr 1386, BKA. Gerhard Bry, Wages in Germany, 1871-1945 (Princeton, 1960), p. 211, Table 53.

15 Chief of Field Aviation No. 400, 5 June 1915, Vol. IL 42/14, MA.

Industrial Mobilization 43 companies from industries that lacked contracts into aircraft produc- tion. Now, in pursuance of these aims it drew companies like the Siemens Schuckert Works and the Daimler motor firm into aircraft production; it promoted the Benz motor company's acquisition and enlargement of the thriving Aviatik aircraft factory and the license production of its airplanes by the Hannover Railroad Company in order to enable the latter to enter aircraft production. It also supported the expansion of the Rumpler, LVG, and Albatros fac- tories. Through January 1917 the army loaned the airplane factories some 100 million marks at 5 percent interest for material procure- ment, wages, and plant enlargement necessary to meet specific con- tracts. These policies were successful. Although the expanding pre- war companies like Rumpler, Albatros, and LVG produced the bulk of the air service's wartime planes, factories established during the war that devoted themselves solely to aircraft production, such as Hannover, contributed much to the productive effort. On the other hand, the branches of diversified companies like AEG and Siemens Schuckert contributed relatively little numerically, using their capital instead, as Thomsen had hoped, for the design and development of large projects like multi-engined aircraft. 16

Through military contracts, loans, and encouragement of the par- ticipation of heavy industry, the aircraft industry had grown from fourteen major companies in October 1914 to twenty-six in 1916, while the companies themselves had expanded from four to ten times their original size. Monthly deliveries in 1915 averaged 246 airplanes; in 1916, 593.17 The army had attempted to control aircraft prices, but its growing need for airplanes and its inability to control wages or the prices of raw material and parts undermined its price policy.

The Hindenburg Program acknowledged the steady increase in importance of aviation through the creation of a commanding general of the air forces, Lieutenant General Ernst Wilhelm von Hoeppner, with Thomsen as his chief of staff and Siegert as inspector, and through plans for the first long range expansion of aircraft production to 1000 planes monthly. 18

The inspectorate's bureaucracy was completed with the addition of construction inspectorates located at the factories in order to super-

16 Report of the Commission on War Deliveries (9th Meeting), p. 47. Chief of Field Aviation No. 7610, app. 22, 20 Nov. 1915, Vol. II L 234/37, MA.

17 Based on annual totals in M. H. Bauer, "Aus dem deutschen Flugzeugbau, 1914-1918," Der Flieger (1953), p. 117.

18 Buelow, Luftwaffe, pp. 80-1.

44 Morrow

vise production and acceptance. All, of course, did not operate flaw- lessly. One of Anthony Fokker's detractors wondered how the con- struction inspectorate at the Fokker factory could overlook blatant examples of shoddy construction. 19 Apparently the quality of military inspectors was not always the best, as aircraft factories often lured superior engineers away from the army, but in general the apparatus seems to have functioned well.

The inspectorate was one of the few agencies that operated inde- pendently of the war ministry's new Weapons and Procurement Office (Wumba). This autonomy was supported by the high command as General Erich Ludendorff, who had helped Thomsen to promote aviation during their prewar tour of duty on the General Staff, recog- nized the special nature and importance of the air weapon. Later, in November 1917, Ludendorff would lament the plethora of procure- ment agencies that factories played off one against another; however, in the case of the aviation inspectorate, he had only himself to blame. 20

Yet another organizational step applied to the aircraft industry itself. At Siegert's insistence it formed the War Association of the German Aircraft Industry early in 1917. Although the inspectorate seems to have contemplated the formation of a limited liability com- pany, the founding assembly contented itself with a registered associ- ation. Manufacturers' complaints about difficulties with material pro- curement had become so widespread that only far-reaching measures promised any hope of salvation. The association was to secure raw, half-finished, and finished materials for the factories and to advise the inspectorate on the distribution of contracts. It served essentially to centralize raw material procurement in response to growing short- ages, but the ultimate consequence was the forced syndication (Zwangssyndizierung) of the entire industry. Employers who did not join might receive no material and thus no contracts. All of the largest companies joined.21

The inspectorate also standardized production by limiting substan- tially the number of types under construction and issuing serial contracts for licensed production. As designers often considered the

19 Siegert memorandum on construction surveillance and acceptance of military aircraft, 19 September 1916, Austro-Hungarian Aviation Documents, KA (Austrian War Archive).

20 Ernst von Wrisberg, Heer und Heimat, 1914-1918 (Leipzig, 1921), pp. 2, 159. 21 Idilieg No. 210/17 to Directors of aviation firms, 31 July 1917, Vol. IL 41/1, MA. 2nd

aircraft conference, 14 February 1917, Siemens Schuckert Works, Siemens Schuckert File, GC (Peter Grosz Collection). Otto Goebel, Deutsche Rohastoffwirtschaft im Weltrieg (Stuttgart, 1930), pp. 111, 117.

Industrial Mobilization 45

license production of another's aircraft an insult, Siegert advised them to subordinate their personal feelings while striving to develop superior aircraft so that they might be the license giver.22

The increased standardization of aircraft encouraged the army to concretize its attitude on patents, unresolved since August 1914. The inspectorate and war ministry, with the help of the parliamentary commission, attempted to persuade the firms that the necessities of wartime technological progress and industrial growth took prece- dence over peacetime patent laws and that large wartime contracts were ample compensation for the relinquishment of some patent protection and licenses. A determined effort by the older aircraft companies, however, staved off the effort to eviscerate aviation pat- ents through 1916. Though reluctant to intervene arbitrarily by decree, the war ministry was clearly ambivalent toward the law. Consequently, in February 1917 the Imperial Council (Bundesrat) modified aviation patent law so that the patent office could distribute unpublished patents if the war ministry deemed such action in the national interest. Although this step was ostensibly designed to pre- vent industrial espionage, the inventor now had no legal rights, since according to law he was protected only after announcement of the patent. The war ministry could now deal arbitrarily with inventors and decline all claims for indemnities. Of course, after the war the patent secrets were to be returned to the firms with the reinstatement of protection, but in December 1918 individuals were illegally pub- lishing patent information despite the efforts of Wumba and the inspectorate to return such material to the rightful owners.23

Despite these extensive measures the army was still powerless to slow the inflationary spiral of wages and raw material prices, which led to rapidly rising aircraft prices from the middle of 1917 to the end of the war. In wage disputes-the war ministry continued to mediate in favor of the workers. Gerald Feldman relates a confrontation of the Berlin aircraft industrialists with the unions in the fall of 1916 when, despite the existence of a tentative agreement, Count Oppersdorff of the war ministry's aviation section summoned labor and management to his office and insisted upon further concessions to the workers. When the manufacturers protested that such concessions to the 7000

22 Euler, notice in files, mid-Oct. 1916, Vol. 236, NE, BA. 23 Proceedings of the Conference on Patents, 20 Jan. 1916, Vol. 267, NE, BA. See also Vols.

59 and 267, passim. "Haftet der Lieferant eines Flugzeugs fuer Reparaturkosten des Bestel- lers," Flugsport, 9 (1917), 109-12. "Sind die Betriebserfahrungen usw. der Flugzeugfirmen vogelfrei?" Flugsport, 10 (1918), 634-35.

46 Morrow

workers in the industry would lead to new demands from the 60,000 similar workers in other Berlin war industries, Oppersdorff replied that he had to have the airplanes, regardless of the repercussions on other industries.24 By January 1917 the wages of the aircraft indus- try's skilled workers had risen 100-169 percent since August 1914, and far surpassed the rise in the cost of living, while the average increase in wages in the war industries was only 78.2 percent. The industry paid superior wages to the end of the war: the weekly wages of skilled workers in east German aircraft plants rose from 45-100 marks in 1916 to 60-110 marks in 1918, compared to 33-35 marks in 1916 and 50-55 marks in 1918 in the machine construction industry.25 Although, as Feldman indicates, the wage measures of the war minis- try demonstrated an absence of coherent and unified labor policy, in the case of the exceptions granted the airplane industry the policy stemmed partially from an appreciation of the importance of the airplane and the special nature of the industry.

The Hindenburg Program actually hastened the rate of increase of raw material prices. The average price increase of sixty-three raw materials essential to aircraft construction from August 1914 to 1 October 1916 was 98.7 percent, to 1 December 1916, 148 percent, to 1 January 1917, 184 percent, and to 1 July 1917, 232 percent. Because of the inflation, subcontractors set prices only upon delivery, which was inevitably late because of shortages and transportation difficul- ties. Consequently, aircraft prices rose quickly. For example, a G-plane ordered in October 1916 to be delivered by April 1917 cost 38,000-41,000 marks upon order; yet because of delays it might be ready in May 1917 at a price of 75,000 marks or after May at 85,000 marks-an increase of more than 100 percent.26

Because of shortages and delays, aircraft deliveries declined drasti- cally in the winter months from 900 in December 1916 to 400 in February 1917, and the delivery goal of the Hindenburg Program was not regularly approached until the summer of 1917. Monthly de- liveries from May through September 1917 were 789, 1012, 731, 927,

24 Gerald D. Feldman, Army, Industry, and Labor in Germany, 1914-1918 (Princeton, 1966), p. 126.

25 Report of the Commission on War Deliveries (9th meeting), pp. 51-2, apps. 4 and 5. Bry, Wages, p. 200, Table 49. Waldermar Zimmermann, "Die Veraenderungen der Einkommens- und Lebensverhaeltnisse der deutschen Arbeiter durch den Krieg," Die Einwirkung des Krieges auf Bevoelkerungsbewegung, Einkommen und Lebenshaltung in Deutschland (Stuttgart, 1932), p. 378.

26 On raw material prices see Euler to Idflieg, app., 23 July 1917, Vol. 265, NE, BA. On G-plane prices see unsigned document in Idflieg-KM correspondence, Feb. 1917, GC.

Industrial Mobilization 47

and 915, but by that time the army intended to double these figures again within a few months.27

The climax of the army's mobilization of the aircraft industry came in the summer of 1917. On 25 June Ludendorff, Hoeppner, Thom- sen, and Siegert decided that America's potential in technology and manpower would lead to greatly increased aerial opposition by early 1918. Ludendorff recommended the formation of fifty-seven new flying units, which would necessitate additional men, weapons, a doubling of gasoline and oil allotments and, most important, the doubling of monthly aircraft deliveries to 2000. Since the industry was considered to be operating at maximum capacity already, the memorandum on what became known as the America Program ordered the transfer of 2000 workers to the aircraft industry by 1 December 1917.

Ludendorff urgently recommended the revision of priority schedules, placing aircraft and aircraft factories in the first class of the iron and steel schedule. All forces would have to be marshalled for the task: the War Office and Wumba for the allocation of food, raw materials, and machinery; the deputy general commands and other inspectorates for skilled workers; and the construction inspectorates for the constant surveillance of the factories. The industry would receive special consideration in aluminum allotment, as it was the only raw material that it used in relatively large amounts compared to other arms industries.28

On 19 July, however, the war ministry advised that fulfilling the program would impair other arms, so it proposed a reduction to 1600 aircraft monthly. Although Ludendorff allowed that Germany's economic position might prevent completion of the program, it was decided to aim initially at the ministry's figures but to strive gradually for the upper limit. Concerned observers, the representatives of the Austro-Hungarian and Bavarian aviation inspectorates, calculated that such expansion of production was possible, but only if the mea- sures were executed "ruthlessly. "29

27 Bavarian Aviation Inspectorate's plenipotentiary to Idflieg, 9 Feb. 1917, Vol. II, No. 16, GC. Entwicklung der deutschen Luftstreitkraefte bis zum 7.8.18, p. 14, Vol. IIL 234/47, MA.

28 Chief of the General Staff No. 58034 to KM, 25 June 1917; Bavarian Engineers Inspecto- rate No. 31576, 13 July 1917, Vol. IL 41/1, MA. Erich Ludendorff, ed., Urkunden der Obersten Heeresleitung ueber Ihre Taetigkeit, 1916/18 (Berlin, 1920), p. 162.

29 J. A. Gilles, Flugmotoren 1910 bis 1918 (Frankfurt, 1971), p. 101. Austro-Hungarian n Flying Arsenal Representative at Idflieg, memorandum on production increases 21 Aug. 1917, Austro-Hungarian Aviation Documents, KA. Idflieg Nachrichtenblatt, No. 48 (24 July 1917), Vol. IL 43/41, MA.

48 Morrow

On 31 July Siegert advised the aircraft manufacturers that the execution of the program demanded the subordination of their economic considerations to the dictates of a single will. Consequently he had strengthened the association's authority by promising financial coverage for its contracts as long as necessary.

Yet one manufacturer-August Euler, the highly individualistic owner of Germany's first airplane factory and esteemed leader of the industry's prewar trade association-refused to enter the war associa- tion because it was inefficient and illegal and violated the principles of free enterprise. Although his company of 180 employees was minis- cule, his influence enabled him to assume successfully the role of gadfly. In his opinion the enormous procurement bureaucracy of some 2000 officers and men in Berlin had created in the association nothing more than an unnecessary intermediary, because delays in allocation and delivery and procurement outside the association con- tinued. The lack of a legal basis for this "forced purchasing syndicate" meant that the state would not compensate firms that were shut down, so Siegert could threaten severing contracts and ultimately closing firms to make the association subordinate to the inspectorate. But ultimately, Euler reasoned, the system of rationing and allocation was bound to collapse; utopian military formulas simply could not cope with the welter of intermediate agencies and the inevitable rise of raw material prices.

Siegert's goal, on the other hand, was victory at any cost; his slogan, "law is powerful, necessity is stronger." He denied that the associa- tion was a creature of the military; Euler, after all, had chosen not to join. Of course, Euler would receive no more contracts. The inspec- torate no longer dealt with individual firms because they could not be held responsible for prompt and careful fulfillment of orders. The largest factories had joined the association because they understood that only unification would guarantee their material supply. Without a directed economy, centralized raw material procurement, priority licenses, and mild production controls, Siegert asserted, provision of the army would disintegrate. Euler's attachment to the "free play of competition" was fine in peacetime; after three years of war, how- ever, it would destroy the normal operation of the war machine. So the army proceeded on its course, ignoring Euler and his factory, and interfering increasingly in the affairs of the industry.30

30 Idflieg No. 210/17, 31 July 1917, Vol. IL 41/1, MA. Siegert-Euler Correspondence, July-Dec. 1917, Vols. 66, 265, 272, 273, NE, BA.

Industrial Mobilization 49 The height of this interference came on 20 October 1917 when the

inspectorate negotiated the formation of the Junkers-Fokker Works with a capital of 2.6 million marks for the construction of Hugo Junkers' metal airplanes. It coupled Junkers, a scientist lacking ex- perience in mass construction and flying, with a manufacturer who possessed both-Anthony Fokker. Despite personality conflicts the union was successful and lasted until December 1918, although the craft were too difficult to mass produce.31

In general, however, the America Program faced mounting difficul- ties. The absence of a single agency efficiently coordinating all pro- curement compounded manpower, transport, food, and material shortages. The aircraft industry did not receive all of the promised skilled workers, nor were the factories always able to retain their skilled employees. Many of the workers the industry did receive were of inferior quality, suffering from insufficient food and overwork. The number of women laborers increased, although in the few factories for which figures are available it did not exceed one-quarter of the labor force. The companies did not receive their monthly allotments of raw material. By January 1918 only metal tubing and machine tools were available in sufficient amounts; all other materials for aircraft and plant construction were in increasingly short supply. In February the coal supply worsened with no prospects for amelioration. The indus- try could acquire birch wood only at exorbitant prices through mid- dlemen who completely ignored the wood prices set in December 1917 by the inspectorate and association, in conference with the War Office, the Prussian Ministry for Agriculture, and owners of private forests.32 Just as the war ministry had realized from the beginning, the German home front had summoned its last reserves in the Hin- denburg Program. Now it would have to rob Peter to pay Paul, as the successful execution of the America Program would necessitate skimping on other arms.

These shortages were complicated by accidents and incidents. Fire destroyed the North German Aircraft Works in Teltow in November 1917 and the main building of the Friedrichshafen Aircraft Company in April 1918, while the production of Junkers metal planes was delayed by the flooding of the Dillinger foundry in November 1917. Firms hoarded material, from fuselage varnish to gasoline and motor parts. Finally, on 28 January 1918, during one of the most severe strikes of the war the entire Berlin aircraft industry and two major

31 Junkers file, passim, GC. Richard Blunck, Hugo Junkers: Ein Lebenfuer Technik und Luftfahrt (Dusseldorf, 1951), pp. 105-10.

50 Morrow

Bavarian factories, Pfalz and the Bavarian Aircraft Works, stopped production completely. Other major factories, however, such as Gotha, DFW and Aviatik in Leipzig, and Fokker in Schwerin, were untouched because those cities were unaffected. The army quelled the strikes by militarizing the factories and inducting exempted workers-as many as 5 percent of each firm's work force-to remove the bulk of the unruly elements. Although fears of new strike unrest in February were not realized, the situation remained uncertain and unstable. 33

Under these circumstances, aircraft deliveries fluctuated wildly from January to July 1918-1009, 890, 1202, 930, 1189, and 1478- and did not attain the desired heights. Undaunted, Thomsen and Siegert in June 1918 planned a continuation of the America Program to 1 April 1919 in order to raise monthly production to 2300 aircraft through the exemption of more skilled workers. The inspectorate obtained 1500 men for the aircraft industry in 1918, and monthly production apparently exceeded 2000 and even attained 2200 through October 1918.34 Production of quality airplanes increased to the bitter end, though not sufficiently to meet the Allies' numerical superiority. After defeat in November 1918, some aircraft companies turned to furniture construction; others returned to railroad construc- tion; a few built civil aircraft until the Versailles treaty banned this; and a very few continued clandestine production of military aircraft. Most of them collapsed, however, by 1921, and while the manufac- turers received some 150 million marks in compensation in April 1922, the German aircraft industry disappeared-but only temporar- ily.35

From August 1914 to November 1918 the German aircraft industry delivered almost 42,000 airplanes to the Prusso-German Army- approximately 700 from August through December 1914, 3000 in 1915, 7100 in 1916, 14,000 in 1917, and 17,000 in 1918 through November.36 The inspectorate successfully harnessed the industry's

32 Bavarian Aviation Inspectorate plenipotentiary to Idflieg, monthly reports, Dec. 1917- June 1918, Sept. 1918, Vol. IL 41/1, MA. On wood prices see War Office KM HF103/9, 11 Dec 1917, Vol. 269, NE, BA.

33 Bavarian Aviation Inspectorate plenipotentiary to Idflieg, Monthly reports, Dec. 1917- June 1918. Nachrichtenblatt, 1, No. 3 (18 Nov. 1917) and No. 4 (3 Dec. 1917), Vol. IL 43/31, MA.

34 Naval Liaison Officer to Seaplane Test Command, 12 June and 28 July 1918, Vol. 6470 LU IV-28, MA Luftstreitkraefte, p. 14, Vol. IIL 234/47, MA.

35 Karl D. Seifert, Geschaeft mit dem Flugzeug (Berlin, 1960), p. 49. 36 Calculations derived from figures in Entwicklungsgeschichte, p. 150, Vol. IIL 234/32, MA

M. H. Bauer, "Aus dem deutschen Flugzeugbau 1914-1918," Der Flieger (1953), p. 117.

Industrial Mobilization 51 technological creativity, as German aircraft development kept pace with that of the Allies throughout the war. It also promoted not just the expansion but also the concentration of aircraft production. The number of companies and the amount of their share capital grew from seventeen with 3.2 million marks capital in 1914 to thirty-six with 36 million marks capital in 1918, while the largest companies employed more than 1000 workers. The profits and dividends of the best firms had risen substantially; Aviatik, for example, paid dividends of 8 percent in 1913, 20 percent in 1914, and 25-30 percent in 1917.37 The army had exercised a decisive influence on the development of the aircraft industry to their mutual benefit-it had received its planes, and the industry its profits.

Yet, despite the success of the army's mobilization of the aircraft industry, military regulation of the German economy in general was inefficient. The war ministry avoided regulating material prices, perhaps because it felt unable to challenge major industrialists in this area, and nationalization of industry was never even a remote possibil- ity because, as Thomsen's memorandum indicated in 1915, the army firmly believed in competition among private enterprises. Nationali- zation and strict price regulation were also impossible because they would have undermined the position of heavy industry, entailing far-reaching economic and social consequences. Consequently, the army could control neither wages nor the prices of finished products such as the airplane; it could only raise wages and aircraft prices in order to maintain industrial production. The Euler-Siegert dispute is particularly relevant here. The entrepreneur was certainly correct in asserting that military plans, which created an unwieldy plethora of agencies, could do nothing about basic and irremediable shortages of material and men. Yet the militarist's point cannot be ignored. These same shortages, and the controls evolved rather haphazardly over time to alleviate them, meant that a system of rationing and allocation was absolutely necessary for Germany to continue the struggle. The army could not abandon its controls, yet its social and economic attitudes prevented it from taking the final step of nationalization of the German economy. It was caught on the horns of an inescapable dilemma, irresolvable in the social and economic milieu of imperial Germany.

JOHN H. MORROW, JR., University of Tennessee, Knoxville

37 Based on company and capital figures in Mueller, Kriegsrohstofjbewirtschaftung, p. 22. Aviatik figures in Seifert, Geschaeft, pp. 23, 37.