The Economy & Class Structure of German Fascism: Chapter 11

The Reich 'Food Estate'

The less Darré understood of agriculture and of the purposes of agrarian cartelisation, the more readily he and his Nazi pals grasped the chances which this ministry, known as the ‘Food Estate’, gave them of expanding their own and their party’s power. It was the only economic position in which they could expand at that time, while the workers still remained hostile and the doors of industry, the banks and commerce were closed to them.

Darré was not in the least troubled by the fact that his industrial ‘sponsors’ would not tolerate a rise in agricultural prices because it would have contradicted their need to lower wages throughout the country, nor did he care at all that these sponsors insisted on discouraging the tendency to Germany’s agricultural self-sufficiency. The more he tempted the farmers with high prices and with prospects of good marketing of their products, the more completely could he carry through their cartelisation and the more tightly could he weave them into the net of the Reich Food Estate which for the next three years was to be the Nazis’ economic power base. Without doubt he did what was expected of him but at a price which his industrial sponsors had never dreamed of.

Darré’s handling of the Farm Inheritance Law followed in the same mold, and with it he created serious damage which could not easily be undone. The Law aimed at nothing less than taking the whole of German peasant agriculture out of the free market economy to such an extent that the farmers could no longer raise working capital for themselves. This Law — the facts concealed behind its deceptive title — was part and parcel of agrarian cartelisation to which it fitted like the handle of a knife to its blade. Cartelisation could cut down agriculture from the marketing angle, whilst the Farm Inheritance Law did the complementary job of cutting down agriculture from direct capital supply. Indeed, while taking peasant farming from the free market economy it was to be made to serve the interests of industrial capital and its accumulation based on absolute surplus value production.

The vital principle was the hard and fast limitation of the total labour costs of German production, which meant the fixing of the level of mass consumption or, in Marxist terms, the fixing of the value of the ‘socially necessary labour-time’. Six million unemployed had to be absorbed into an existing work-force of twelve million with hardly any increase in the total wage bill so that the purchasing power of the eighteen million remained almost static. To achieve this the quantity, prices and marketing of agricultural produce had to be stabilised. Therefore the amount of capital employed in the agrarian economy had also to be stabilised and the entire volume of agrarian credit and debts had to be adapted to the total of agricultural production. All this meant, in its turn, a prohibition on free sale and purchase and hereditary division of farming land.

Hugenberg had already largely prepared the blue-print for this legislation which Darré found in his new ministerial offices, together with other items of ‘national socialist’ agrarian policy. Actually the originator of this legislation was a man named Nicolai, a specialist in administrative law working in the ‘Stahlhelm’, who was killed in a road accident in spring 1933. But Darré’s execution of the Farm Inheritance Law immobilised farming capital in Germany to such an extent that the majority of peasant farmers were quite unable to muster up any more ready credit and had to pawn their actual harvests in order to pay for the barest essentials. The result was a radical forestalling of technological progress in this type of agriculture in Germany.

It is a well known fact that the economic life of the German small and medium peasant farmer is inseparably linked with its character as a family concern, — in other words, with the fact that the working children are exploited by the parents and for the parents’ advantage. The Farm Inheritance Law now ruled that all the children born to a farmer bar the first, the legal heir, were to be excluded from any inheritance in the farm, whether in kind or in a share of the mortgage — with the result that they quit the farm and were therefore no longer available to their parents as underpaid labourers. If, however, they stayed, they claimed in lieu of their inheritance compensation by increased and accumulative remuneration, and thus became more costly to employ than outside labour. Moreover, such disinherited children would wait impa­tiently for the first moment that they could leave for the towns and there they would fall victim to industrial exploitation. The extraordinary rise in the drift from the countryside was not, as the Nazis maintained, the result of alluring industrial conditions in the towns but the direct effect of the Farm Inheritance Law. It was more true to say that the drift served as a boost to industry in its production of absolute surplus value and armaments.¹

The process which, not by accident, revived the methods of early capitalism bore, in industrial fascism, its strict necessity and its equally inbuilt contradictions. For instance, at harvest-time town workers had to be forcibly mobilised and sent to the country so that agriculture could fulfill its ordained role of feeding the population with the minimum nourishment necessary to operate the mechanism of fascist exploitation. As the farmers were no longer able to pay additional labour costs, the state provided, as a replacement for their children, ‘part-time country lasses’ (Landjahrmädchen) and ‘voluntary’ harvest-helpers from the National Labour Service and from colleges. These were workers whose ever-diminishing wages were paid in kind and who had to find all their other expenses themselves.

This was only one of a whole line of agricultural illogicalities and Darré was from the first much more the dupe than the whip of German industrial fascism. He did not invent the contradictions of his agricultural policies; they were imposed on him by the industrial, operational hub of the system. It was precisely because industry politically emasculated the small-holders (the big landowners, of course, were spared) and forced them into passive obedience, that the contradictions which were bred at the centre were unloaded on the periphery with the air of mere absurdities. Agriculture was the rubbish-dump of fascist industrial policies; the wrecks caused by the antagonism of its leaders reached the agrarian backdoor with the appearance of accidental stupidities to be blamed on some clumsy oaf!

Insofar as industrial fascism has to rely on absolute surplus value production paradoxically coinciding with a high technological level, it demands submissive farmers, static agricultural production and a cartelised food market adjustable to the needs dictated by the costs and profits of industry. But in so far as industrial fascism is inflationary and militaristic because of its deficiency in capital for its absolute surplus value production, it demands currency isolation and autarchism dovetailed towards a war economy — in other words, the demands must be the exact opposite of a stationary agricultural production, rather a maximum of agricultural expansion and of market and price flexibility. However, this flexibility is again incompatible with any possible manipulation of inflation. Similarly, the military expansionism and autarchism of the whole development demands the cutting down of agricultural imports and thus the cutting of industrial exports.

Armaments production needed as large a workforce as it could get, which meant that it exhausted the reservoir of agricultural workers and thus brought upon itself the wrath of the General Staff who wanted adequate food supplies. And large-scale contradictions reproduced themselves in every detail. The Food Estate, tool of the national socialist agrarian programme, was thus from the very first a tool designed for diametrically opposing purposes; whatever steps it took in a particular matter were bound to be wrong. Correct were the wishes of whatever group happened to be politically stronger at the time and, as these groups were constantly shifting so did the direction of agricultural policy, — providing it was at all possible to ascertain which of the conflicting wishes of the strongest group were the strongest.

Thus Darré thought in the first three years that he was doing the right thing to promote autarchism and a corresponding price policy. This enraged the industrialists, or rather it filled them with secret glee that the nonsense of autarchism would soon be liquidated by the sheer force of circumstances. The men in the War Ministry, however, felt just the opposite. Then, when in September 1935 the day came when there were no more supplies of butter and eggs in the shops and a real food shortage began, it was not only the army staff who were furious but also, and above all, the industrialists, for now agriculture’s demand for foreign currency had to come out of their raw materials allowance. Even Darre’s main virtue, his stupidity, suddenly changed in their eyes to a vice which the SS attempted to investigate by a fourteen day search of his Ministry. As was to be expected, nothing was found and Darré’s honour, if not his full authority, was restored.

It was from a different side, that of industry, that he, and with him Göring, and even the Führer too, were enlightened as to how this unpleasant and totally surprising shortage of edible fats and eggs had ever been able to descend out of the clear skies of up-and-coming self-sufficiency. For Darré had not noticed that his stepping-up of autarchism, in other words making do with fewer imports, had amounted to such a diminution of the normal reserves of fat and eggs that they had been completely used up. Increasing autarchism had come to mean an increasing deficit in Germany’s stocks of food.

[Germany’s] total annual demand for edible fats was, according to the figures for 1932, 1.6 million tons consisting of about two-fifth butter, two-fifth margarine and one-fifth bacon and lard. Between production or import and Final consumption, the edible fats market — among the most complicated in the whole economic spectrum — should have held reserves sufficient for three full months, — about 400,000 tons. In 1933 the quantity produced and imported fell short by 35,000 tons below the amount required, in 1934 about 120,000 tons below and in 1935, 250,000 tons below, so that in autumn 1935 the reserves were dried up. Exactly the same had happened to the usual six-week supply which should have been held in the egg market.

After Darré had convinced himself of these embarrassing facts, it was, embarrassingly enough, Schacht to whom he had to make his confession: reasons had to be given for his sudden and urgent demand for an extra 200 million marks worth of foreign exchange to make up for the deficit. As the egg and fat supplying countries were already owed around 500 million marks by clearing account, the advance had to be in ready money because Denmark and Holland would no longer deliver on credit. Schacht allowed Darré the smallest possible advance and enlightened him as to the correct management of his ministry: earlier administrations had always made precise advance calculations in June of future agricultural imports required that autumn and they were never out by more than a few million marks. For these calculations there existed flexibility coefficients and a whole staff of specialists who understood how to use them. Viewed in this light, such surprises were beyond comprehension and, given the absolute priority of re-armament, a mobilising of foreign currency in such amounts and at such short notice was quite out of the question. The fact that Darré had long since discarded the flexibility coefficients — he had considered them as ‘liberalist lumber’ and had dismissed the specialists responsible for them as ‘supernumerary’— became known only later and simply figured as yet another small item in the growing list of national socialist incompetence.

In the tug-of-war between Darré and Schact over the tight supply of foreign currency the whole antagonism between industry and agriculture flared up again in its most vehement form. The contradictions were supposed to have been buried for good in the state-operated cartelistaion programme. But now it was the state which was involved in contradictions with itself! In the personalities of Darré and Schacht, the Food Estate and the Defence Administration confronted one another. Then, because the whole totalitarian machine appeared to be threatened by the conflict, Schacht invoked the ‘deus ex machina’, the mythological head of state. He appealed to Hitler, the Führer himself, for a final decision — feeling convinced that the verdict would be on his side. To his surprise, however, the Führer was so dedicated to the exalted concerns of his great military strategies that he would not be disturbed by such petty questions! After all, what were ministers for if they could not clear up such messes by themselves? Only after Schacht’s third, most urgent, approach did he instruct Göring to sit the two men down at one table, thrash out the matter, and let him know the outcome: a typical example of Hitler’s artfulness, both in terms of tactics and consequence.

The meeting was vividly described to us in the board-room of the ‘Führerbriefe’. The enormous Göring, resplendent in uniform, sat at the broad end of the conference table, and at the top and bottom, opposite each other, sat Darré and Schacht, suitably apart. Most of the time Darré shouted abuse and insults; Schacht tried to bring reason into the affair. The verdict was long delayed, and then, to his blank amazement and everyone else’s, the decision went in Darré’s favour. Göring allowed him half the money he had originally demanded—a sum he had been careful enough to over-estimate in the first place. It amounted to 20 million marks a month from November 1935 until March 1936, altogether 100 million marks of precious foreign currency. Thus Darré swept the board, in spite of such obvious absurdities, as, for example, importing expensive butter rather than margarine. The reason for this unexpected decision of Göring was only revealed in April 1936. Darré was no longer in such favour, and then Göring converted the long overdue upsurgence of industrial and armaments interests to secure his own victory over Schacht. He transformed his refereeship of the original dispute into his own permanent and official dictatorship over foreign currency. In autumn 1936 he was able to crown his economic career with a new appointment as executive overlord of the ‘Second Four Year Plan’.

Hitler’s stance in all this could be defined as his non-intervention in it. He saw in the dark, heard in a vacuum, never burnt his own fingers, and so was the ideal mediator for such a policy. He ruled because he did not govern, giving his official stamp of approval to whichever side won.

Göring’s dictatorship under the Second Four Year Plan again united the offices of agriculture and industry as they had been originally under Hugenberg. In autumn 1937 he announced a loan to agriculture of one billion Reichsmarks to be spread over the next four years. But compared with the immense funds made available to industry and taking into account the eleven billion marks mortgage on agriculture from 1924 to 1929 this seemed a puny amount of help from German industrial fascism. But no matter how miniscule this aid appeared, agriculture was forced to rely entirely on the credit-pump of the state, precisely because farming was excluded from the profit-making sector of fascist economy. In other words, seen from the perspective of capital, agriculture disappeared completely into the clutches of the industrial fascist state apparatus. Any stepping-up of agricultural production had to be achieved by intensified labour and the use of existing assets, since the level of investments remained static. It had to be of low-cost and of necessity meant an intensified exploitation of farm labour. It was enforced by means essentially terroristic and analogous to the brute force applied in factory labour of long hours and low pay. Göring held his cudgel over the heads of the peasant farmers in a way that Hugenberg could never have done.

But for the industrialists this had now lost its former purpose. They had wanted to restrict agriculture in order to promote their own export and expansionist interests. Now they had to restrict their exports to save Germany from starvation. And instead of compelling agriculture to throttle its productivity and marketing, they now had to face up to the difficulties which arose from this very throttling. In autumn 1935 the food crisis was still only partial, confined mainly to the shortage of fats and eggs. In autumn 1936 it had already become a generalised shortage; supplies were lacking in every sector of food distribution. This tendency for a deficiency in one sector to spread over the whole is true of every real food crisis since the effect is for the different sectors to stand in for one another. Shortage of fats and eggs leads to an over-consumption of meat, shortage of meat to over-consumption of bread, shortage of fats, eggs, meat and bread to a drastically intensified over-consumption of fish, vegetables, fruit, sugar, etc. If this process is not halted by a correspondingly large surplus of supply from one direction or another, the shortage, having started at one corner, automatically rolls on to cover the whole field. However, in Germany no supplies of the required dimension were forthcoming and the food deficit, having once become general, became more severe in each sector.

Nevertheless, so long as the shortage concerned merely produce as opposed to the sources of the produce, merely butter but not the cows, this situation was not yet tantamount to a catastrophe, for the network of food substitution means that a single good harvest can compensate in large measure for deficiencies across the whole food spectrum. But the structural weakness of German agriculture was the gaping hole in her supply of animal fodder. Given the limited arable acreage of the Reich, a choice had to be made between self-sufficiency in human foodstuffs and self-sufficiency in animal fodder. To promote both was impossible, particularly if the land was further diminished by the demands of the military, such as camps, firing ranges, fortifications like the Siegfried Line and so on. There was no room left for the planting of soya nor for sheep rearing on German territory. The trend toward self-sufficiency was concentrated on an increase of the production of human foodstuffs in the hope that the necessary fodder would be forthcoming from the south east European countries. But this hope had not yet sufficiently materialised and in the meantime the decreasing grain harvests within Germany had so intensified the fodder crisis that in 1937 the number of German cattle and thus, for the first time, the actual source and capital assets were threatened with decimation. It was nevertheless doubtful whether the dividing line between a mere produce crisis and the subsequent drastic eating away of capital would actually be crossed. For the industrial export capacity still retained sufficient potentiality to avert such vital damage. But the demands this made on German export became all the more intense; industry had to look after agriculture instead of agriculture supporting industry as had originally been planned.

Link to Chapter 12

1. In summation, the Farm Inheritance Law amounted to a program for the proletarianization of the German Peasantry. The swelling of the unemployed population by migration of former peasants to urban centers would also exert downwards pressure on wages by increasing competition on the job market. So that the sudden shortage of agricultural laborers did not result in uncultivated fields, unharvested crops, and a corresponding rise in the prices of agricultural produce, it would be necessary to somehow replenish this agricultural workforce when necessary. — Bluebird