Rist, History of
Economic
Doctrines, pp.
Brady - Business as a System of Power
" ^^ It reflects a point of view which is consonant with that expressed in the famous "You and Industry" series of the National Association of Manufacturers.
tion of the "circulating elite," provisions are made for especially gifted outside of- the-ruling-class recruits to rise to the top. These are regarded, however, primarily as sport cases--exceptions to the rule.
69 Of course, it may be correcdy upheld that this analogy with feudalism is un- happy, because feudalism is opposed to bureaucratization and contains the essential element of personal relationship. Nevertheless, it would seem to illuminate the na- ture of the property holdings and spheres of economic control in the Third Reich.
70 James D. Mooney and Alan C. Reiley, Onward Industry! (New York, 1931), p. 342.
? GERMAN INDUSTRY
In making "business responsible to the community" through the revamped control network of the "'new social order," the Nazi leaders profess to be promoting "self-government" or "self- management" in industry. It is also interesting to note that much of the time spent by officials in German central business offices has to do with what they term problems of "fair trade practices," "fair prices," rules against "selling below cost," and the like/^
Now an inevitable corollary of making such a system of busi- ness "self-management" work is the possession of the necessary power to punish offenders. It was on this particular rock that the price and production control measures of NRA were rent asunder. The Nazis have made no such mistake. That many concerns would be liquidated when the central control apparatus possessed the necessary power to force "free riders" into line was inevitable. This accounts for many of the cases of forced liquidation of small con- cerns. But even the large and giant enterprise is not necessarily exempt from the laws of its own making, for the simple reason that domestication of warfare does not necessarily do away with the basis of conflict. It may, however, change a good many of the rules. Thus many of the largest businessmen in Germany were forced to
hand over their properties to competitors because they were Jews. And Thyssen, of the heavy industries, apparently chose to play a lone hand and got caught in a combine which he was unable to overcome. Like Schacht, at the critical point he played with the wrong crowd of "insiders," and, as has happened to many unsuc- cessful promoters in American business (Fisk, Drew, Gould), was forced outJ^
71 See in particular Marktordnungsgrundsdtze der Reichsgruppe Industrie, a primer of rules for "regulating the market" according to the new "fair trade practice rules. "
72 Insull, Mitchell, and Whitney are in a different class only because they were caught via regulatory machinery which the business community either assented to, or, opposing, had had forced on them by political forces which held that only through such controls could the business community, and with it the capitalistic system, be saved from the disaster its own malpractices were bringing down upon it. Numerous observers have found in the spectacular rise of the Hermann Goring Works proof of an inherent Nazi tendency towards "Socialization," Nothing could be farther from the truth, as the party-approved Berliner Tageblatt, Dec. 2, 1938 ("Vom Wachstum des 'Reichswerke'-Konzerns") has pointed out at some length. Kurt Lachmann in "The Hermann Goring Works," Social Research (Feb. , 1941), pp. 24-40, finds the
company a new version of the postwar Stinnes or Haniel groups, and a type of "in- dustrial empire building" which bears a dose "resemblance to the amassing of lands and fortunes by the feudal lords of the seventeenth century. " The analogy is intrigu-
49
? GERMAN INDUSTRY
None of these considerations are inconsistent with the point made that, under the Nazis, previous trends in the evolution of centralized business control were carried on, with the principal dif- ference residing in the facts that under the new regime they could be brought to their logical conclusions more swiftly, more ruth- lessly, and more rationally than theretofore, and that all economic issues must now be openly decided in a political frame of reference.
But how far has the war altered the picture? Under the decree of October 26, 1936, giving Field Marshall Hermann Goring dicta-
ing, but actually the combination represents a somewhat "privitized" regrouping of industrial properties previously owned by the Reich, Prussia, various municipalities, properties taken over from the governments of conquered Austria (e. g. , Steyr- Daimler-Puch A. G. , Maschinen- und Waggon-Fabrik A. G. Simmering, and Donau- Dampt-Shiffahrts-Gesellschaft) Czechoslovakia (e. g. , Skoda), Poland, Roumania (most important of which is the Reshitza iron works), Norway, and--more recently--Bel- gian, Dutch, and French concerns.
German banks and "the industrialists" participated in the founding and expansion of the combination, though to what extent is unknown. It is significant, however, that the primary purpose of the new industrial complex--leaving aside liquidation of Goring's private debts--was the exploitation of low-grade domestic iron ores at government expense, for delivery to Krupp, Vereinigte Stahlwerke, and others, as raw steel for fulfilling armament contracts with fixed but generous profit allowances. Its subsequent expansion into a unified vertical combination and the regrouping of its holdings along functional lines (i) mining and smelting, (2) munitions and ma- chine building, (3) shipping on rivers and canals, is entirely in keeping with past practices of German industrial concentration. Private control is greater, and private interests are served more clearly, under the new regrouping than was the case of the properties before they were brought together in the new combination. It is very difficult, if not at present entirely impossible, to evaluate the status of other such public or semi-public corporate enterprises. Neumann, op. cit. , pp. 298-304, inter- prets the Goring set-up as a party combine with heavy-industry participation. Fig- ures are produced in this book.
The Labor Front now does the biggest travel business in the world. Ley recently announced plans for the mass production of cheap farm tractors to be produced, ap- parently, along lines similar to the Labor Front-financed "Peoples Car" plant at Fallersleben (now producing tanks). The Labor Front has also taken over some 9,000 consumer cooperatives in Germany, and is also, through the Labor Front Bank (which collects around 500,000,000 marks annually in dues), possessor of one of the largest European banking systems (Business Week, March 15, 1941, p. 96). On the Labor Front combine, see Neumann, op. cit. , p. 304.
Goring, Funk (head of the Reichsbank) and other leading Nazi officials have also organized a continental -wide oil trust, capitalized at $32,000,000. PM (March 4), 1941. On the Continental Oil Corporation, see Neumann, op. cit. , pp. 276-77, 356-68, 396-98.
Certain only is this, that (a) these trusts are privately directed by Nazi officials acting in collaboration with private interests for non-democratic purposes, and (b) that they are being organized on an European-wide basis. See Albert T. Lauterbach, "German Plans for a New Economic Order in Europe," in Germany's Challenge to America's Defense (Planning Pamphlet No. 4 of the National Economic and Social Planning Association).
50
? GERMAN INDUSTRY
torial power to carry through the Second Four Year Plan, all eco-
nomic activities in Germany were brought into six special groups:
(1) ProductionofGermanRawMaterialsandSemi-Manufactures (2) AllocationofRawMaterials
(3) EmploymentofLabor
(4) Agricultural Production
Price Policies
(6) ForeignExchangeSupply.
On July 13, 1937, section (2) was dissolved, and there was created
in its place two divisions, those of Foreign Trade and of Iron and
Steel Utilization. Since that date the plan has apparently under-
gone many--and possibly in some respects far-reaching--changes.
Its general purpose called for exhaustive detail on the present and
potential resources of the Reich, and for ways and means of mo-
bilizing these to the fullest extent and with the maximum speed. An
observer, present in Germany during the elaboration of the various
phases of the Plan, details the functions of the new machinery as
^3
1. Supplyofdetailedinformationforachievingproductionpotentials, including data on working conditions. Envisaged were: possible elim- ination of dual and overlapping capacities; amalgamation and co- ordination of plants and enterprises, mainly in an effort to save on transport and distribution costs; a report was made on how far labor hours could be increased, based on the fact that there were no new or unemployed workers to be absorbed; detailed data on obsolescence, which had already made itself prominent in mining and the steel industry (having become very much worse since 1937, particularly in the railroad industry). Particular emphasis was placed upon the development of synthetic or Ersatz industries.
2. The direction of the maximum of the available potential into mili- tary uses. A final and amazing estimate was made of just how far con- sumption--and more important--production of capital equipment for home use could be cut so that arms and exports would benefit.
3. Estimates of various national costs and subsidies involved in the use of admittedly poorer raw materials and minerals which exist at home, when substituted for better materials imported from abroad. Particular attention was paid to iron and lumber, but re-use of old materials also received a good deal of attention.
73 The author of these remarks, anonymous for obvious reasons, was in an un- usually fortunate position for observation of the whole plan as it was unfolded from 1936 on. His summary checks in the main with every bit of evidence I have been able to obtain from other sources.
(5)
follows:
51
? GERMAN INDUSTRY
4. The financial end of operations: for the first year it was planned that 80 percent of the costs involved would be carried by private in- dustry, of which 30 percent was to be based on existing assets, and 50 percent handled through new financing (stocks and bonds): banks would supply 8 percent and the government 12 percent by subsidy.
5. A detailed plan for possible markets abroad, and a statement of why Germany was having difficulties in foreign markets (mostly attribu- table to lowered qualities).
6. Unified control by staff under the direction of Field Marshall Her- mann Goring.
Great as these and subsequent changes have been, yet the Second Four Year Plan seems clearly, and in all leading particulars, to have been directly in line with the First Four Year Plan. Although the earlier plan (1932-36) had as its declared objective the aboli- tion of unemployment and the creation of German self-sufficiency, it was during this period that all the important Nazi social, eco- nomic and legal organizations were established, the basic new price and marketing controls elaborated, the foundations for remili- tarization laid and the task of rearming actually begun. The Second Four Year Plan (1936-40) bridged the gap between a militarized peace and full belligerent status, but involved little more than further elaboration and strengthening of previous machinery, to- gether with a more deliberate reorientation of all efforts toward the impending war. The Third Four Year Plan (sometimes referred to as the Second Four Year Plan in the Nazi literature) looks towards the dual objectives of still more complete coordination of civil and belligerent control efforts on the one hand, and towards the reor- ganization of occupied territories with a view to the "organic" in- corporation into the imperial network of the German dominated "new order in Europe" on the other.
Thus the Four Year Plans have followed a fairly consistent pat- tern from the beginning. Tracing what little may be learned about them from their inception, it seems that there is little, at bottom, to distinguish them from other war plans of the First World War, particularly those of Hohenzollern Germany, except the much higher levels of organization and control and the greatly expanded perspectives of imperial aggression. So far as industrial and business organization is concerned, practically every significant idea elab- orated in the new system is to be found, at least in germinal form,
52
? GERMAN INDUSTRY
in the Central Purchasing Corporation (Zentraleinkaufsgesellschaft --ZEG) and the series of semi-autonomous "mixed" control com- mittees and compulsory syndicates which dominated the war con- trol measures in Germany from 1 9 5 on through to the cessation of
1
hostilities/*
The Four Year Plans appear thus as straight-line development
from these predecessor plans. Both anticipated the whole of eco- nomic activity coordinated to the needs of the war, with separate all-inclusive planning and control bodies for each important trade, industry, or functional activity (e. g. , price control), and with all these dovetailed through an appropriate machinery. The First World War supplied experimental results on a big scale. Marshal Goring is bringing all the isolated strands together on a new and more comprehensive basis. Now business leaders are sitting down with governmental officials, military chieftains, and imperial party leaders, and are working out policies governing all economic activi- ties in the entire Reich.
But the larger significance of these business-government rela- tionships is found in the fact that during the between-wars inter- lude there was no fundamental departure from the basic organiza- tional patterns of the World War. Many of the forced syndicates, notably those in coal, lignite, and potash, continued in force. The war stepped up the speed of cartelization tremendously, but the postwar period carried on the process. The "mixed" corporations, some of which sprang into existence during the war, continued to dot the economic landscape, particularly in the fields of power, gas, coal, iron and steel, and shipping. War-type price controls, pro- duction controls, internal and external market allocations, pooling of patents, technical innovations such as standardization and typi- fication (of assembled products) were not given up. Rigidity of con- trol was in many respects relaxed, and there was certainly a marked decline in the role of the government and the military.
Yet certain leading ideas remained, first of a completely coor- dinated economic system, based upon the full "cooperative" par- ticipation of the upper business baronry in politico-economic decisions; this was in turn to be divided into all-inclusive "self-
74 See "Kriegswirtschaftslehre und Kriegswirtschaftspolitik," Handworterbuch der Staatswissenschaft (4th ed. , Jena, 1928), V, 984-1022.
53
? GERMAN INDUSTRY
governing" trade and industrial central policy-controlling bodies, which should be endowed with legal or quasi-legal power to en- force decisions in the name of the state, and which, finally, would be guaranteed successful results through an elaborate system of governmental subsidies, allowances, and guarantees. In the inter- lude of peace, business leaders had acquired the habit of looking back at the experience of the war as the training ground and the ger- minal source of ideas for the coordinative efforts which time and circumstance were persuading them to extend to the outermost reaches of the German economic system.
At the critical juncture the Nazi solution, with its abolition of trade unions and its wholesale destruction of democratic institu- tions, seemed a necessary and logical fulfillment of these processes of growth. Therefore, though not without some occasional mis- givings, German business leaders embraced it. Now they face the prospect of being able to expand their private economic empires, by the aid, advice, and consent of the new German-dominated to- talitarian system which they expect shortly to extend to the outer- most bounds of Europe and Africa, upon a continental and inter- continental basis.
How far such expansion will mean further modification of part capitalistic forms of organization remains to be seen. Regimenta- tion through the instrumentality of the state will doubtless con- tinue, but there is as yet no reason for believing that it will depart far from the present principles of "self-government in business" " which did so much to bring the regimentation on. But it is impor-
ts The wartime control of industry rests today: a) with the general deputies under the Four Year Plan, primarily concerned with nationalization (now coordinated by Wilhelm Fanger, president of the Mannesman combine and leader of the national group industry); b) with the Reichsstellen for raw-material allocation. The Reichs- stellen are now merely raw-material allocation offices; however, they are slowly being dissolved and their functions taken over by the existing cartels or by newly created cartels (coal and cellulose, wool and steel). See Economist, April 4, 1942 (radio broad- cast from Germany); c) with the national Price Commissioner; d) with the general commissioner for labor supply; e) with the Reichsbank (for capital issues); f) with the Wehrwirtschaft (Riistungsamt) of the Supreme Command of the Armed Forces, which is represented especially in the combing-out commission for the adequate dis- tribution of labor; g) with the National Economic Chamber; h) the supreme au- thority is vested in the ministerial council for the defense of the nation. This has i) delegated a large part of its authority to the minister of economics, W. Funk, as gen- eral commissioner for economic affairs. See Neumann, op. cit. , p. 252, and the scheme, P- 253-
54
? GERMAN INDUSTRY
tant to note that given this principle fused with the companion Nazi ideology of class and racial predation it follows from extension of the old patterns over the new terrain that Wirtschaft and Krieg become but two internally related phases of the many faceted and inherently expansionist Herrenstaat.
55
? Chapter II
THE FASCIST SYSTEM OF COLLATERAL SYNDICATES
THE ROLE and significance of the Fascist Confederation of Indus- tries is inextricably bound up with the development of Fas- cism and the unfolding of its appropriate institutional expression, the Corporate State. This is true because, at bottom, it is not only fair but also entirely accurate to speak of Fascism as a "revolution from the right," or, more simply, as "counterrevolution. " ^ And in counterrevolution the forces centered around the more compactly organized, possessing classes must of necessity choose the issues and shape--with whatever compromises the Realpolitik of Domination
may enforce--the course of future events.
But why should such vigorous and sweeping counterrevolution-
ary action occur first in Italy, one of the least industrialized amongst the capitalistic states? There is an interesting historical analogy here with the contemporary situation in Russia, which helps to throw the Italian situation at the end of the war into sharp relief. In Fascism capitalistic institutions were able to triumph; in Com- munism they faced defeat. Yet both Italy and Russia were among the "weakest links" in the chain of capitalist nations. In each case, at a critical point the pendulum seems barely to have swung the way it did. It is probably not too far from the truth to say that had Russia not turned Socialist in 1917 it would have adopted some form of "Fascism," and had Italy in 1922 not fallen unexpectedly to the Fascists it would have become a Socialist state (though the "March on Rome" came after the high tide of postwar revolution- ary Socialism).
iSee Carl Schmidt, The Plough and the Sword (New York, 1938), Chapter III, "Counterrevolution. "
? THE FASCIST SYSTEM
Both countries were primarily agricultural. ^ In both, rural life was characterized by deep contrasts between vast estates owned by politically powerful and immensely wealthy families on the one hand, and an overwhelming majority of more or less propertyless, poverty-stricken, ignorant, and repressed peasantry on the other. In both, important feudal carry-overs survived intact down to the outbreak of the World War. In neither had Parliamentary institu- tions or the first grudging concessions to popular sovereignty seri- ously affected the vast proportion of the population. Both were still political patchworks, and in neither had largely borrowed, nation- alistic sentiments penetrated far beneath the thin upper layers of class-conscious jingoism. ^
In both, the level of industrialization was, comparatively speak- ing, low, and what industrial nuclei had developed were highly localized. Of these, most were foreign transplantations, represent- ing primarily English, French, and German capital. What local capital was involved in each case came largely from the great land- owning families, with which rising industrial, trading, and finance capital was, consequently, closely associated from the beginning. * Industrialization came comparatively late, and in both cases, once begun, the pace of growth and development was unsually swift. At a time when industrial technique of its own momentum was be-
2 See the summary given in Robert Michels, Italien von Heute (Leipzig, 1930), pp. 19-20, of Bakunin's description of Italian social classes in 1870. It needs only minor alterations to be held valid for Italy of 1914 or 1940.
3 "Before the World War Italian nationalism was the concern of a group of snob- bish writers rather than of serious thinkers. Every effort was made to adapt the philosophy of the German imperialist Treitschke, or that of French prototypes such as Maurras and Barr^s, to Italian conditions. " William Ebenstein, Fascist Italy (New York, 1939), p. 4. "The state has been dominated by classes. But now we begin to conceive of the state as an emanation of the entire nation. The state is the active organ of the entire nation, for the entire nation. " E. Corradini (founder of the Na- tionalist Association) // volere d'ltalia (Naples, 1911), p. 175. The lack at that time of any deeply felt national or articulate and cohesive social ideologies among the two peoples goes far to explain why, of all the soldiers fighting in the World War, the Italians and the Russians were equally and by all odds the worst. The slaughter of the Masurian Lakes was paralleled by the demoralizing catastrophe of Caporetto --a catastrophe which appears to have been repeated in but slightly different form on the plains below the Guadarramas during the Spanish Civil War.
4 The more important and more highly organized latifondi were located in the rich Po Valley. At the two ends of the Valley are to be found the more important in- dustrial and commercial centers of Italy. The great landowners constituted the social and economic aristocracy in the great cities where industrial undertakings first struck root. From the same closely knit social circles came the leadership for the great em- ployers' associations in both agriculture and industry.
67
? THE FASCIST SYSTEM
coming large-scale, and capitalism of its own native driving power was resorting everywhere to monopoly devices, this forced-draft growth tended at once to sharpen the social cleavages and to strengthen and unify the forces of antidemocratic reaction. By the "accidents of history" monopoly forms of capitalism, mercantilistic sentiments, and feudal social institutions were in both immediately juxtaposed.
In Russia proletarian forces won the throw of the die; in Italy, property. For the spread of the Socialist-Communist state Russia lacked industrialism; for the dominance of capitalist institutions and controls Italy lacked a widespread business system. Russia undertook to solve her problem by a backward step into NEP, in order to lead more easily into the industrialization program of the Socialist Five Year Plan. Italy devised the Corporate System. ^ And the Corporate System is to be understood as that morganatic alli- ance between organized, Italian, patrimonial capitalism and the type of feudal controls long advocated by the Papacy, from which it was hoped to find at once an end to class war and full defense of the existing social-economic status quo.
ANTECEDENTS OF THE CORPORATE STATE
Without dipping farther into the historical background than is necessary to make clear the component elements out of which this apparently novel "experiment" was compounded, attention may be focused on three factors of unique importance; ^ (a) the "social program" of the Catholic hierarchy; (b) the rise and peculiar com- position of the pre-Fascist labor movement; and (c) the strategic power of the closely cooperating central associations of industry and agriculture.
The social program of the Catholic hierarchy. --This was evolved as means for counteracting the rise of class-conscious trade unions dominated by left wing and materialistic--in particular by Marx-
5 The essence of the Fascist corporate system is found in hierarchical implementa- tion of patrimonial class domination by monopolistically oriented and compactly organized vested-interest groups.
6 The "Nationalist" movement, though important, can be ignored for our present purposes. Like Fascism, which it preceded, it was not in itself a causal or contributory force, but the result of such force. Nor was its strength, as expressed in numbers or influence, of much importance.
58
--
? THE FASCIST SYSTEM
59
ian--social philosophies. It may be divided into three phases: from the first third of the 19th century to the delivery of the Papal Encyclical Rerurri Novarum in 1891; from Rerum Novarum to the inauguration of the Fascist system in 1922; after the Papal Ency- clical in commemoration of Rerum Novarum, delivered in 1931 and known as Quadragesimo AnnoJ Beginning, in the first phase, as a general criticism of conditions created out of the capitalistic milieu, the papal position had shifted until by 1931 it not only for- mally endorsed Mussolini's fascism per se, but also recommended the formula as a panacea for all other industrial countries as well.
In the first phase. Catholic writers took their place among vari- ous proponents who hoped to solve the issues of class conflict and industrialism by recourse to doctrines inspired by Christianity. ^ Le Play, the French engineer, hoped to transform the employer into a benevolent master who would care for his workmen as father to his children. Protestant writers such as Kingsley, Carlyle, and Ruskin wanted something less patriarchal, but saw in various forms of class collaboration good Tory means for turning the lion of indus- trial capitalism into the lamb of social harmony. The leading Cath- olic writers, however, went straight to the Middle Ages--the period in which the Church dominated the whole of European society for their inspiration.
Under one form or another a series of Catholic spokesmen ^ ad- vocated recrudescence of the medieval conception of a corporatively organized society. Many of these initial expositions were the work of French emigres returning to the homeland following the Treaty of Vienna in 1815 and the inauguration of the Holy Alliance. On the
7 The intervening period, 1922 to 1931, might, in turn, be divided into two inter- vals: a period of partial and at times bitter conflict between church and state reach- ing from the inauguration of Fascism to the Lateran Accord in 1929; and from the Lateran Accord, which recognized Catholicism as the official religion in return for Papal support of Fascist leadership in the upbuilding of the new Roman Empire, to recommendation of corporate ideas by the papacy as'the solution of the "Social question" in general. Most notable of its successes has been the "clerical fascism" of the ill-starred Austrian totalitarians, Dollfuss and Schuschnigg, and the system of General Franco which emerged from the Spanish Civil War.
8 See "Doctrines Inspired by Christianity," in C. Gide and C.
Rist, History of Economic Doctrines, pp. 483-514.
9 An early representative of these was Philip Buchez, Essai d'un traite complet de philosophic, du point de vue du catholicisme et du progres (Paris, 1838-40), and Abb^ de Lamennais, La Question du travail (1848).
? 6o THE FASCIST SYSTEM
other wing a few were highly reminiscent of the social-communism
advocated so vehemently by the early church fathers/^ since they
appeared in large part as attacks on the institution of private prop-
erty and in defense of workers' rights to a fair wage and a decent
standard of living. But Catholic writers of a more "practical" turn
of mind advocated simply mixed or collateral syndicates in which
the principles of hierarchy would dominate and the employer would
play the role of "leader" or "master" to his flock. The model was the
Church/^ and "the corporations which would be set up under the
aegis of religion would aim at making all their members contented
with their lot, patient in toil, and disposed to lead a tranquil, happy
^2
life. "
Though never entirely free of important schismatic differences,
the Social-Catholic movement maintained almost from the begin- ning a fairly coherent reform program. Prior to the revolutionary upheavals of 1848 it was predominantly antiliberal, generally op- posing both laissez faire and free competition on the grounds that the doctrines of the Physiocrats and the early French liberals on the one hand and the socially irresponsible practices of certain traders and manufacturers on the other largely accounted for the French Revolution, its tempestuous aftermath, the rise of anticlericalism, and the spread of class antagonisms. The "free thinking" bour- geoisie were distrusted almost as much as the popular democracy for which it appeared inevitably to prepare the way. ^^
The events of 1 848 convinced Catholic thinkers that socialism, as the residuary legatee of liberal and democratic doctrines, was the
10 Such as Tertullian, St. Ambrose, St. Cyprian, Gregory of Nazianze. See the pro- gram of Vicomte de Villeneuve-Bargemont as outlined by Thomas Parker Moon, The Labor Problem and the Social Catholic Movement in France (New York, 1921), pp. 19-25. See also Paul K. Grosser, Ideologies and American Labor, New York, 1941.
11 "The corporation is simply the model of the Ghurch. Just as for the Ghurch all the faithful are equal in the sight of God, so here. But equality ends there. For the rest of it is a hierarchy. " Quoted by Gide and Rist, op. cit. , p. 500, from Segur- Lamoignon, L'Association catholique, July 13, 1894.
12 Gide and Rist, loc. cit. , quoted from the Encyclical of Leo XII, December 28, 1878, called Quod Apostolici.
13 Veuillot, a clerical journalist, was opposed to the "free thinking bourgeoisie" but held that, while misery must be destroyed, "poverty is a divine institution" and charity the true social science. He proposed a Holy Roman Democracy to parallel the Holy Roman Empire; the latter, of course, was to lead the former by authorita- tive principles and both were to be hierarchically directed from above. The Confed- eration of Italian Industries was later to refer to its own program, patterned along these lines, as "authoritarian democracy. " Moon, op. cit. , p. 30.
? THE FASCIST SYSTEM 61
greatest of all the Church's enemies. Moderates like Melun and Le Play lost out, and, under the stimulus of the official patronage of Napoleon the Third, the movement began to take more definite shape around three leading objectives; first, to overcome the radical- ization of the working classes through an ideological conquest of the "workers' souls"; second, to transform the employer from a hard- hearted profit seeker into an aristocratic and paternal "leader" of his men; and third, to revive the medieval guild or corporate form of organization.
The first objective called for universal indoctrination with official Catholic Christianity, the second for various forms of benevolent social legislation, and the third for integral or mixed syndicalism. Under Count Albert De Mun and Count La Tour du Pin, these three phases were forged into an effective political program which was shortly taken up abroad--particularly in Germany under the leadership of Baron Wilhelm Emmanuel von Ketteler
soon received official papal blessing.
Industrial organization, De Mun held, should take the form of
"the Catholic Guild, which is neither a trade-union, nor a tribunal of arbitration, but a center of Christian activity where the interest of the profession is superior to private interest, where antagonism between capitalist and workingman gives way to patronage exercised in a Christian spirit and freely accepted. . . . It is always the same thought: limit competition, associate common interests, impose upon the employer the duty of patronage, uplift labor and the con- dition of the laborer. " ^*
Contemporaneously with De Mun's agitation (in the seventies and eighties), a great deal of interest in programs for class collabora- tion was aroused by the "experiment" of the French spinning firm of Harmel at Val-des-Bois. In the words of a very sympathetic ob- server, the "Christian Guild" of the Harmels was evolved as follows:
The simple principle of union by itself was considered inadequate; it tended to create labor-unions hostile to capital and bent on class war- fare. The principle of democratic control of industry would logically lead to the elimination of the employer. The principle of capitalistic paternalism, if taken alone, was inadequate because it failed to awaken any vital response among the workingmen. The Harmels attempted to
14 Ibid. , pp. 99-100.
--and which
--
? 62 THE FASCIST SYSTEM
make a Christian synthesis of these principles. In the first place, the workers were permitted, nay encouraged, to form various associations
a men's club, a woman's association, a girls' society, a mutual benefit society. Democratic control was practiced in the management of these associations, and was represented by elected shop-committees, but was not carried to the extreme. The Guild Board, an elective council of workingmen, was consulted on such questions as shop-management and wage-schedules, but had no sovereign authority in these matters; the policy of the employers was to act with democratic advice and consent, but not to abdicate their authority. The third principle, paternalism, received expression in manifold efforts on the part of the employers to promote the material and moral welfare of the workingmen, to foster and guide even the institutions controlled by the workers. The paternal influence may be seen in the fact that one of the employers acted as chairman of the Guild Board, and the supervision of general guild in-
terests was entrusted to a committee composed of the members of the firm, the chaplain, the school-director, and representatives of the vari- ous workingmen's associations. In this fashion the three principles of association, democratic control, and capitalist paternalism were com- bined and balanced in a complex organism consisting of first, employ- ers, second, the general committee of employers and representatives of the workingmen's institutions, third the workingmen's Guild Board, fourth, shop committees, fifth, various economic, social and religious associations among the work-people. ^^
Here is a precis not only for much of the social legislation that was to follow, but also for the more benevolent type of company union as well as the more violently counterrevolutionary Fascist syndicates of the Mussolini regime. Gone completely was the attitude of hos- tility toward capitalist and employer wherever he could be per- suaded to add to his entrepreneurial functions those of father and leader to his employees. And also, by the same token, gone com- pletely was the hostility to labor organization wherever workers could be gathered into associations, governed and directed by em- ployer interests from above in a fixed hierarchy of command and subordination and deliberately modeled after the pattern of the
Universal Church.
Until late in the century the papacy had paid relatively little at-
tention to the Social-Catholic movement. The general idea, of course, of universal guild organization under the benevolent super- vision of the Church has never been abandoned. From time to time
15 Ibid. , pp. 1 14-15.
? THE FASCIST SYSTEM
references had been made to guilds in various papal utterances, such as, for example, Humanum genus in 1854, Quod Apostolici mu- neris in 1878, and Aeterni Patris in 1879. But it was with the ency- clical letter of Pope Leo XIII on "The Condition of Labor" (Rerum Novarum)in1891 thatrecrudescenceofthecorporateorganization of society became the official doctrine. The Encyclical was directed specifically at the Socialists, and in condemning their social doc- trines Leo XIII saw fit for the first time to commit the Church to full support of capitalistic institutions. Social inequality, private ownership of the means of production, free competition, laissez faire, the accumulation of great wealth, and the rest, were justified as "just" and according to the "laws of nature. " Conversely, "class war" was declared "irrational," since "in a state it is ordained by nature that these two classes (the rich and the poor) should exist in harmony and agreement. " The employer was to treat his labor "justly" and render him that which was due. The multitudes must, he said, be kept "within the line of duty. " Organization along lines of medieval guilds provided at once the ideal solution for social con- flict, an offset for the greed of the poor, and a solvent for the cupid- ity of the rich. ^^
Various Catholic Social-Action groups took up the new program with great enthusiasm. Shortly, some of these groups began to look forward to the "corporative reorganization of society" ^^ as a whole. All masters and men were to be organized, preferably, in mixed syn- dicates, consisting of both employers and labor, or collateral syndi- cates, in which the two groups would be organized separately for purposes of group collaboration. ^^ The state was not to interfere
16 See in particular, Rerum Novarum, paragraphs 53 to 65, inclusive, reproduced in full in Henry George, The Condition of Labor, an Open Letter to Pope Leo XIII (New York, 1891), pp. 121-57.
17 "We must direct all our private initiative and concentrate public attention upon this one reform--the corporative reorganization of society. " Cited by Gide and Rist, History of Economic Doctrines, p. 497, from Programme de I'oeuvre des cercles ouvriers, April, 1894.
18 "In 1894 the Congress of Catholic Circles which met at Rheims declared that, 'without minimizing the difficulties which stand in the way of extending the mixed syndicats, the formation of such syndicats must be our chief aim. ' In 1904, Father Rutten, one of the leaders of the Belgian Catholic Syndical movement, in a report on the syndicalist movement writes as follows: 'We do not despair of the mixed syndicat, which in theory we certainly think is nearest perfection. But we must not blind ourselves to facts, and whether we will or no we have to admit that at the present moment the mixed syndicat in ninety industries out of every hundred seems
63
? THE FASCIST SYSTEM
with such autonomous associations except to see that they were duly protected and did not use their pooled strength to the detriment of the general community. They were, in short, to be self-governing associations for the promotion of class collaboration. ^^
In the subsequent period of organization, the idea of collateral syndicates, sometimes referred to as ''integral syndicalism," defi- nitely gained the upper hand. It is interesting to note that this idea was taken over unaltered to form the basis of the Fascist system of organization by social-economic categories.
The early years of Fascist rule found Mussolini and the Pope fre- quently at swords' points. But just as accession to power stilled the former's lingering radicalism, so the immense ideological strength of the latter amongst the mass of the Italian peasantry coupled to the expansive power of the papal hierarchy blunted the anticlerical edge of Fascist propaganda. In the Lateran Accord of 1929 Fascism adopted the papacy on condition that the papacy concede popular allegiance to the objectives of Fascism and the State and Empire in which those objectives were embodied. ^^
It was hardly to be expected that the Accord, widely acclaimed as it was, would settle all the issues at dispute. Quadragesimo Anno was condemned by many Fascists for some of its implied criticisms of their system. But in the main the document possesses historical sig- nificance primarily for its wholesale acceptance of the tenets under- lying the Fascist social program.
"Harmony between ranks in society" now became the dominant theme: "Now this is the primary duty of the state and of all good citizens," the Pontiff declared, "to abolish conflict between classes with divergent interests, and thus foster and promote harmony be- tween the various ranks of society. " ^^ Instrumental to this objec- tive "must be therefore the reestablishment of vocational groups,"
quite Utopian. ' " Gide and Rist, op. cit. , pp. 76, 498, quoted from Duchesne, Syndicats ouvriers beiges (1906).
19 This early statement of the principle becomes explicable when it is recalled that Rerum Novarum was directed against Socialism as much for its apotheosis of the power of the state in opposition to private capitalism as for its support of heretical social and moral principles.
20 For the text of the Lateran Accord, see Walter C. Langsam and
Documents and Readings in the History of Europe Since ipi8 (Chicago, 1939), pp. 557-66.
21 All quotations are from copy of the text reproduced in Langsam and Eagan, op. cit. , pp. 567-72.
64
J.
M. Eagan,
? THE FASCIST SYSTEM
for "as nature induces those who dwell in close proximity to unite into municipalities, so those who practice the same trade or profes- sions, economic or otherwise, combine into vocational groups. "
While such organization of social-economic categories is to be "autonomous," Pius definitely rejected "free competition" and the past "errors of the 'Individualistic' school" as "the true guiding prin- ciples of economics. " They had their place, to be sure, but "it is very necessary that economic affairs be once more subjected to and gov- erned by a true and efEective guiding principle. " This the state is alone competent to determine, and in taking notice of "special syn- dical and corporative organization . . . inaugurated . . . within recent times," the Encyclical declares that "little reflection is re- quired to perceive the advantages of the institution [Fascist institu- tion] thus summarily described: ^^ peaceful collaboration of the classes, repression of Socialist organizations and efforts, the moder- ating influence of a special ministry. " Fixity of status and occupa- tion, the outlawing of strikes and lockouts, and the location of the ultimate powers of umpire and reconciliation in a theologically ac- ceptable totalitarian state assured to His Holiness that "social har- mony" and "class collaboration" of which Leo XIII had dreamed forty years before.
There was some bitter -^ to be taken with the sweet, but in the
22 "The state here grants legal recognition to the syndicate or union, and thereby confers on it some of the features of a monopoly, for in virtue of this recognition, it alone can represent respectively Workingmen and employers, and it alone can con- clude labor contracts and labor agreements. Affiliation to the syndicate is optional for everyone; but in this sense only can the syndical organization be said to be free, since the contribution to the union and other special taxes are obligatory for all who be- long to a given branch, whether workingmen or employers, and the labor-contracts drawn up by the legal syndicate are likewise obligatory. It is true that it has been authoritatively declared that the legal syndicate does not exclude the existence of un- recognized trade associations.
"The corporations are composed of representatives of the unions of workingmen and employers of the same trade or profession, and as true and genuine organs and institutions of the state, they direct and coordinate the activities of the unions in all matters of common interest. " Quadragesimo Anno, Langsam, op. cit. , p. 569. This language is practically identical with that employed in the official propaganda min- istry of the Fascist party. Cf. The Law of April 21, 192'j, known as the Labour Char- ter, reproduced in Langsam, op. cit. , pp. 519-25.
23 In particular that "concentration of power" which "has led to a threefold strug- gle for domination" for power within the dictatorship, for control over the state, and amongst the states, which leads to war. Also, "the intermingling and scandalous con- fusing of the duties and offices of civil authority and of economics" which not only degrades "the majesty of the state" but leads to "economic imperialism. " Quadra- gesimo Anno, loc. cit.
65
? 66 THE FASCIST SYSTEM
light of subsequent events it would appear that the rapprochement between the papacy and the New Roman Empire has been growing steadily closer. ^* Even the Axis accord does not seem to be wholly unwelcome in papal circles. ^'^
The composition of the pre-Fascist labor movement. --There is no need here to recapitulate the voluminous expository and argu- mentative literature on this phase of the Italian corporate-state background. 2<< It will suffice to indicate in rough outline a few of the peculiarities of the Italian labor movement which made it so readily and generally adaptable to the type of controls which the organized "right" sought, under Fascism, to place on it.
1. Though of comparatively recent origin, the labor movement in Italy had begun to form central federations and confederations early in its history. There was practically no such thing as a labor move- ment in any part of the country before 1874. Yet by 1890 first efforts were already being made to federate. After a number of reverses, these efforts had succeeded, at the outbreak of the war, in bringing the vast bulk of organized labor into three great confederations: The General Confederation of Labor (CGL), with about 321,000 members; the Catholic Italian Confederation of Labor (CIL), with around 103,000 members; and the Italian Syndicalist Association (USI), with some 100,000 members. ^^ By 1920, after a period of de- cline during the war, membership had risen until the CGL and the CIL were able to claim a membership of 2,150,000 and 1,205,447, respectively. This represents not only an unusually high level of
24 In the Abyssinian venture it was commonly believed that the papacy lent its financial support, and in the Spanish Civil War it allied itself openly on II Duce's side.
25 The new totalitarian system in process of formation in France appears to enjoy papal blessing. Only belatedly, and then only under considerable pressure, was re- proof for the utterances of Father Coughlin forthcoming.
26 To mention but a few, favorable summaries are given in the semi-official volume by Fausto Pitigliani (now in exile). The Italian Corporative State (London, 1933); Michael T. Florinsky, Fascism and National Socialism (New York, 1936); Benito Mussolini, The Corporate State (Florence, 1936); various publications (in mimeo- graph) of the Italian Library of Information; and Michels, Italien von Heute. Criti- cal summaries are found in Ebenstein, Fascist Italy; Gaetano Salvemini, Under the Axe of Fascism (New York, 1936); George Seldes, Sawdust Caesar (New York, 1935); and Carl T. Schmidt, The Corporate State in Action (New York, 1939).
27 I find no two authorities who agree on these figures. The data for the CGL and the USI are taken from Freedom of Association (Series A, No. 31, International Labor Office, Geneva), IV, 4-5. The figures for the CIL are from Wladimir Woytinsky, Die Welt in Zahlen (Berlin, 1926). II, 123.
? THE FASCIST SYSTEM 67
unionization, but also an unusually high degree of centralized direc- tion. On this footing trade unionism loomed large.
2. Membership was drawn primarily from agricultural and hand- icraft labor. Data taken from official sources,^^ showed 453,000 in- dustrial workers belonging to trade unions in 1912 for 408,000 agricultural workers. Subsequent years did not greatly alter the pic- ture. ^^ Even as late as 1921 probably not more than one-third of organized Italian labor could be classified as "industrial. " ^^ The strength of the labor movement, in other words, was much less than it appeared to be. The reasons were as follows:
(a) Themovementwaswidelyscatteredgeographically,andthe typical unit was small, localized, provincial, and more or less inde- pendent and self-contained.
(b) Organized agricultural labor was property minded: its prin- cipal grievance was the perpetuation of the system of metayagej and its members were neither very conscious of their own class nor conscious of having a great deal in common with the industrial workers.
(c) Thepositionofthelargenumberofhandicraftandshopem- ployees was not greatly different. Their lingering feudal attach- ments and partially articulated middle-class sentiments made them at best poor and unreliable partners in a militant, class-conscious struggle for political power. ^^
3. A third and even more fatal weakness in the Italian labor move- ment was centered in more or less irreconcilable doctrinal differ-
28 Woytinsky, op. cit. , II, 124; cited from Annuario Statistico Italiano, Series 2, VII (1917-18), 330.
29 The war years were an exception; there was then a tendency for agricultural members to increase over industrial membership, indicating a relatively heavier war draft on the latter group.
30 Even the most militant and class-conscious of the central associations, the CGL, had 294,000 out of 1,206,000 members listed as attached to agriculture. In addition, many other crafts, e. g. , the bulk of those listed as textile workers (78,000 in 1921) should really be called agricultural laborers. For another viewpoint on agricultural workers and trade unionism in Italy consult the writings of Ignazio Silone, who has developed the subject in detail and who takes a somewhat different position.
81 The number included in this category must have been numerically more im- portant than Woytinsky's figures indicate. It is possible that when due allowance is made for those listed under industrial categories who worked as handicraftsmen the number would be as large or larger than those properly classed as industrial workers. In addition, close to 100,000 workers were employed in governmental or semigovern- mental (railways, post and telegraph, etc. ) activities and who were, consequendy, at least partially controlled by governmental authorities under dvil-service regulations.
? 68 THE FASCIST SYSTEM
ences. The largest of the three more important general groups, the General Confederation of Labor, was led, perhaps more clearly than any other continental trade-union group, by politically minded socialists of the more orthodox (not revisionist, as in Germany) school. The second largest group, the Italian Confederation of La- bor, followed the line laid down by Rerum Novarum and was, con- sequently, in the main quite hostile to the CGL. Its mixed-syndicates program bears a very close resemblance to the "company union" in the United States, and its alternative, integral syndicates, was erected on the substitute foundation of organized "class collaboration.
tion of the "circulating elite," provisions are made for especially gifted outside of- the-ruling-class recruits to rise to the top. These are regarded, however, primarily as sport cases--exceptions to the rule.
69 Of course, it may be correcdy upheld that this analogy with feudalism is un- happy, because feudalism is opposed to bureaucratization and contains the essential element of personal relationship. Nevertheless, it would seem to illuminate the na- ture of the property holdings and spheres of economic control in the Third Reich.
70 James D. Mooney and Alan C. Reiley, Onward Industry! (New York, 1931), p. 342.
? GERMAN INDUSTRY
In making "business responsible to the community" through the revamped control network of the "'new social order," the Nazi leaders profess to be promoting "self-government" or "self- management" in industry. It is also interesting to note that much of the time spent by officials in German central business offices has to do with what they term problems of "fair trade practices," "fair prices," rules against "selling below cost," and the like/^
Now an inevitable corollary of making such a system of busi- ness "self-management" work is the possession of the necessary power to punish offenders. It was on this particular rock that the price and production control measures of NRA were rent asunder. The Nazis have made no such mistake. That many concerns would be liquidated when the central control apparatus possessed the necessary power to force "free riders" into line was inevitable. This accounts for many of the cases of forced liquidation of small con- cerns. But even the large and giant enterprise is not necessarily exempt from the laws of its own making, for the simple reason that domestication of warfare does not necessarily do away with the basis of conflict. It may, however, change a good many of the rules. Thus many of the largest businessmen in Germany were forced to
hand over their properties to competitors because they were Jews. And Thyssen, of the heavy industries, apparently chose to play a lone hand and got caught in a combine which he was unable to overcome. Like Schacht, at the critical point he played with the wrong crowd of "insiders," and, as has happened to many unsuc- cessful promoters in American business (Fisk, Drew, Gould), was forced outJ^
71 See in particular Marktordnungsgrundsdtze der Reichsgruppe Industrie, a primer of rules for "regulating the market" according to the new "fair trade practice rules. "
72 Insull, Mitchell, and Whitney are in a different class only because they were caught via regulatory machinery which the business community either assented to, or, opposing, had had forced on them by political forces which held that only through such controls could the business community, and with it the capitalistic system, be saved from the disaster its own malpractices were bringing down upon it. Numerous observers have found in the spectacular rise of the Hermann Goring Works proof of an inherent Nazi tendency towards "Socialization," Nothing could be farther from the truth, as the party-approved Berliner Tageblatt, Dec. 2, 1938 ("Vom Wachstum des 'Reichswerke'-Konzerns") has pointed out at some length. Kurt Lachmann in "The Hermann Goring Works," Social Research (Feb. , 1941), pp. 24-40, finds the
company a new version of the postwar Stinnes or Haniel groups, and a type of "in- dustrial empire building" which bears a dose "resemblance to the amassing of lands and fortunes by the feudal lords of the seventeenth century. " The analogy is intrigu-
49
? GERMAN INDUSTRY
None of these considerations are inconsistent with the point made that, under the Nazis, previous trends in the evolution of centralized business control were carried on, with the principal dif- ference residing in the facts that under the new regime they could be brought to their logical conclusions more swiftly, more ruth- lessly, and more rationally than theretofore, and that all economic issues must now be openly decided in a political frame of reference.
But how far has the war altered the picture? Under the decree of October 26, 1936, giving Field Marshall Hermann Goring dicta-
ing, but actually the combination represents a somewhat "privitized" regrouping of industrial properties previously owned by the Reich, Prussia, various municipalities, properties taken over from the governments of conquered Austria (e. g. , Steyr- Daimler-Puch A. G. , Maschinen- und Waggon-Fabrik A. G. Simmering, and Donau- Dampt-Shiffahrts-Gesellschaft) Czechoslovakia (e. g. , Skoda), Poland, Roumania (most important of which is the Reshitza iron works), Norway, and--more recently--Bel- gian, Dutch, and French concerns.
German banks and "the industrialists" participated in the founding and expansion of the combination, though to what extent is unknown. It is significant, however, that the primary purpose of the new industrial complex--leaving aside liquidation of Goring's private debts--was the exploitation of low-grade domestic iron ores at government expense, for delivery to Krupp, Vereinigte Stahlwerke, and others, as raw steel for fulfilling armament contracts with fixed but generous profit allowances. Its subsequent expansion into a unified vertical combination and the regrouping of its holdings along functional lines (i) mining and smelting, (2) munitions and ma- chine building, (3) shipping on rivers and canals, is entirely in keeping with past practices of German industrial concentration. Private control is greater, and private interests are served more clearly, under the new regrouping than was the case of the properties before they were brought together in the new combination. It is very difficult, if not at present entirely impossible, to evaluate the status of other such public or semi-public corporate enterprises. Neumann, op. cit. , pp. 298-304, inter- prets the Goring set-up as a party combine with heavy-industry participation. Fig- ures are produced in this book.
The Labor Front now does the biggest travel business in the world. Ley recently announced plans for the mass production of cheap farm tractors to be produced, ap- parently, along lines similar to the Labor Front-financed "Peoples Car" plant at Fallersleben (now producing tanks). The Labor Front has also taken over some 9,000 consumer cooperatives in Germany, and is also, through the Labor Front Bank (which collects around 500,000,000 marks annually in dues), possessor of one of the largest European banking systems (Business Week, March 15, 1941, p. 96). On the Labor Front combine, see Neumann, op. cit. , p. 304.
Goring, Funk (head of the Reichsbank) and other leading Nazi officials have also organized a continental -wide oil trust, capitalized at $32,000,000. PM (March 4), 1941. On the Continental Oil Corporation, see Neumann, op. cit. , pp. 276-77, 356-68, 396-98.
Certain only is this, that (a) these trusts are privately directed by Nazi officials acting in collaboration with private interests for non-democratic purposes, and (b) that they are being organized on an European-wide basis. See Albert T. Lauterbach, "German Plans for a New Economic Order in Europe," in Germany's Challenge to America's Defense (Planning Pamphlet No. 4 of the National Economic and Social Planning Association).
50
? GERMAN INDUSTRY
torial power to carry through the Second Four Year Plan, all eco-
nomic activities in Germany were brought into six special groups:
(1) ProductionofGermanRawMaterialsandSemi-Manufactures (2) AllocationofRawMaterials
(3) EmploymentofLabor
(4) Agricultural Production
Price Policies
(6) ForeignExchangeSupply.
On July 13, 1937, section (2) was dissolved, and there was created
in its place two divisions, those of Foreign Trade and of Iron and
Steel Utilization. Since that date the plan has apparently under-
gone many--and possibly in some respects far-reaching--changes.
Its general purpose called for exhaustive detail on the present and
potential resources of the Reich, and for ways and means of mo-
bilizing these to the fullest extent and with the maximum speed. An
observer, present in Germany during the elaboration of the various
phases of the Plan, details the functions of the new machinery as
^3
1. Supplyofdetailedinformationforachievingproductionpotentials, including data on working conditions. Envisaged were: possible elim- ination of dual and overlapping capacities; amalgamation and co- ordination of plants and enterprises, mainly in an effort to save on transport and distribution costs; a report was made on how far labor hours could be increased, based on the fact that there were no new or unemployed workers to be absorbed; detailed data on obsolescence, which had already made itself prominent in mining and the steel industry (having become very much worse since 1937, particularly in the railroad industry). Particular emphasis was placed upon the development of synthetic or Ersatz industries.
2. The direction of the maximum of the available potential into mili- tary uses. A final and amazing estimate was made of just how far con- sumption--and more important--production of capital equipment for home use could be cut so that arms and exports would benefit.
3. Estimates of various national costs and subsidies involved in the use of admittedly poorer raw materials and minerals which exist at home, when substituted for better materials imported from abroad. Particular attention was paid to iron and lumber, but re-use of old materials also received a good deal of attention.
73 The author of these remarks, anonymous for obvious reasons, was in an un- usually fortunate position for observation of the whole plan as it was unfolded from 1936 on. His summary checks in the main with every bit of evidence I have been able to obtain from other sources.
(5)
follows:
51
? GERMAN INDUSTRY
4. The financial end of operations: for the first year it was planned that 80 percent of the costs involved would be carried by private in- dustry, of which 30 percent was to be based on existing assets, and 50 percent handled through new financing (stocks and bonds): banks would supply 8 percent and the government 12 percent by subsidy.
5. A detailed plan for possible markets abroad, and a statement of why Germany was having difficulties in foreign markets (mostly attribu- table to lowered qualities).
6. Unified control by staff under the direction of Field Marshall Her- mann Goring.
Great as these and subsequent changes have been, yet the Second Four Year Plan seems clearly, and in all leading particulars, to have been directly in line with the First Four Year Plan. Although the earlier plan (1932-36) had as its declared objective the aboli- tion of unemployment and the creation of German self-sufficiency, it was during this period that all the important Nazi social, eco- nomic and legal organizations were established, the basic new price and marketing controls elaborated, the foundations for remili- tarization laid and the task of rearming actually begun. The Second Four Year Plan (1936-40) bridged the gap between a militarized peace and full belligerent status, but involved little more than further elaboration and strengthening of previous machinery, to- gether with a more deliberate reorientation of all efforts toward the impending war. The Third Four Year Plan (sometimes referred to as the Second Four Year Plan in the Nazi literature) looks towards the dual objectives of still more complete coordination of civil and belligerent control efforts on the one hand, and towards the reor- ganization of occupied territories with a view to the "organic" in- corporation into the imperial network of the German dominated "new order in Europe" on the other.
Thus the Four Year Plans have followed a fairly consistent pat- tern from the beginning. Tracing what little may be learned about them from their inception, it seems that there is little, at bottom, to distinguish them from other war plans of the First World War, particularly those of Hohenzollern Germany, except the much higher levels of organization and control and the greatly expanded perspectives of imperial aggression. So far as industrial and business organization is concerned, practically every significant idea elab- orated in the new system is to be found, at least in germinal form,
52
? GERMAN INDUSTRY
in the Central Purchasing Corporation (Zentraleinkaufsgesellschaft --ZEG) and the series of semi-autonomous "mixed" control com- mittees and compulsory syndicates which dominated the war con- trol measures in Germany from 1 9 5 on through to the cessation of
1
hostilities/*
The Four Year Plans appear thus as straight-line development
from these predecessor plans. Both anticipated the whole of eco- nomic activity coordinated to the needs of the war, with separate all-inclusive planning and control bodies for each important trade, industry, or functional activity (e. g. , price control), and with all these dovetailed through an appropriate machinery. The First World War supplied experimental results on a big scale. Marshal Goring is bringing all the isolated strands together on a new and more comprehensive basis. Now business leaders are sitting down with governmental officials, military chieftains, and imperial party leaders, and are working out policies governing all economic activi- ties in the entire Reich.
But the larger significance of these business-government rela- tionships is found in the fact that during the between-wars inter- lude there was no fundamental departure from the basic organiza- tional patterns of the World War. Many of the forced syndicates, notably those in coal, lignite, and potash, continued in force. The war stepped up the speed of cartelization tremendously, but the postwar period carried on the process. The "mixed" corporations, some of which sprang into existence during the war, continued to dot the economic landscape, particularly in the fields of power, gas, coal, iron and steel, and shipping. War-type price controls, pro- duction controls, internal and external market allocations, pooling of patents, technical innovations such as standardization and typi- fication (of assembled products) were not given up. Rigidity of con- trol was in many respects relaxed, and there was certainly a marked decline in the role of the government and the military.
Yet certain leading ideas remained, first of a completely coor- dinated economic system, based upon the full "cooperative" par- ticipation of the upper business baronry in politico-economic decisions; this was in turn to be divided into all-inclusive "self-
74 See "Kriegswirtschaftslehre und Kriegswirtschaftspolitik," Handworterbuch der Staatswissenschaft (4th ed. , Jena, 1928), V, 984-1022.
53
? GERMAN INDUSTRY
governing" trade and industrial central policy-controlling bodies, which should be endowed with legal or quasi-legal power to en- force decisions in the name of the state, and which, finally, would be guaranteed successful results through an elaborate system of governmental subsidies, allowances, and guarantees. In the inter- lude of peace, business leaders had acquired the habit of looking back at the experience of the war as the training ground and the ger- minal source of ideas for the coordinative efforts which time and circumstance were persuading them to extend to the outermost reaches of the German economic system.
At the critical juncture the Nazi solution, with its abolition of trade unions and its wholesale destruction of democratic institu- tions, seemed a necessary and logical fulfillment of these processes of growth. Therefore, though not without some occasional mis- givings, German business leaders embraced it. Now they face the prospect of being able to expand their private economic empires, by the aid, advice, and consent of the new German-dominated to- talitarian system which they expect shortly to extend to the outer- most bounds of Europe and Africa, upon a continental and inter- continental basis.
How far such expansion will mean further modification of part capitalistic forms of organization remains to be seen. Regimenta- tion through the instrumentality of the state will doubtless con- tinue, but there is as yet no reason for believing that it will depart far from the present principles of "self-government in business" " which did so much to bring the regimentation on. But it is impor-
ts The wartime control of industry rests today: a) with the general deputies under the Four Year Plan, primarily concerned with nationalization (now coordinated by Wilhelm Fanger, president of the Mannesman combine and leader of the national group industry); b) with the Reichsstellen for raw-material allocation. The Reichs- stellen are now merely raw-material allocation offices; however, they are slowly being dissolved and their functions taken over by the existing cartels or by newly created cartels (coal and cellulose, wool and steel). See Economist, April 4, 1942 (radio broad- cast from Germany); c) with the national Price Commissioner; d) with the general commissioner for labor supply; e) with the Reichsbank (for capital issues); f) with the Wehrwirtschaft (Riistungsamt) of the Supreme Command of the Armed Forces, which is represented especially in the combing-out commission for the adequate dis- tribution of labor; g) with the National Economic Chamber; h) the supreme au- thority is vested in the ministerial council for the defense of the nation. This has i) delegated a large part of its authority to the minister of economics, W. Funk, as gen- eral commissioner for economic affairs. See Neumann, op. cit. , p. 252, and the scheme, P- 253-
54
? GERMAN INDUSTRY
tant to note that given this principle fused with the companion Nazi ideology of class and racial predation it follows from extension of the old patterns over the new terrain that Wirtschaft and Krieg become but two internally related phases of the many faceted and inherently expansionist Herrenstaat.
55
? Chapter II
THE FASCIST SYSTEM OF COLLATERAL SYNDICATES
THE ROLE and significance of the Fascist Confederation of Indus- tries is inextricably bound up with the development of Fas- cism and the unfolding of its appropriate institutional expression, the Corporate State. This is true because, at bottom, it is not only fair but also entirely accurate to speak of Fascism as a "revolution from the right," or, more simply, as "counterrevolution. " ^ And in counterrevolution the forces centered around the more compactly organized, possessing classes must of necessity choose the issues and shape--with whatever compromises the Realpolitik of Domination
may enforce--the course of future events.
But why should such vigorous and sweeping counterrevolution-
ary action occur first in Italy, one of the least industrialized amongst the capitalistic states? There is an interesting historical analogy here with the contemporary situation in Russia, which helps to throw the Italian situation at the end of the war into sharp relief. In Fascism capitalistic institutions were able to triumph; in Com- munism they faced defeat. Yet both Italy and Russia were among the "weakest links" in the chain of capitalist nations. In each case, at a critical point the pendulum seems barely to have swung the way it did. It is probably not too far from the truth to say that had Russia not turned Socialist in 1917 it would have adopted some form of "Fascism," and had Italy in 1922 not fallen unexpectedly to the Fascists it would have become a Socialist state (though the "March on Rome" came after the high tide of postwar revolution- ary Socialism).
iSee Carl Schmidt, The Plough and the Sword (New York, 1938), Chapter III, "Counterrevolution. "
? THE FASCIST SYSTEM
Both countries were primarily agricultural. ^ In both, rural life was characterized by deep contrasts between vast estates owned by politically powerful and immensely wealthy families on the one hand, and an overwhelming majority of more or less propertyless, poverty-stricken, ignorant, and repressed peasantry on the other. In both, important feudal carry-overs survived intact down to the outbreak of the World War. In neither had Parliamentary institu- tions or the first grudging concessions to popular sovereignty seri- ously affected the vast proportion of the population. Both were still political patchworks, and in neither had largely borrowed, nation- alistic sentiments penetrated far beneath the thin upper layers of class-conscious jingoism. ^
In both, the level of industrialization was, comparatively speak- ing, low, and what industrial nuclei had developed were highly localized. Of these, most were foreign transplantations, represent- ing primarily English, French, and German capital. What local capital was involved in each case came largely from the great land- owning families, with which rising industrial, trading, and finance capital was, consequently, closely associated from the beginning. * Industrialization came comparatively late, and in both cases, once begun, the pace of growth and development was unsually swift. At a time when industrial technique of its own momentum was be-
2 See the summary given in Robert Michels, Italien von Heute (Leipzig, 1930), pp. 19-20, of Bakunin's description of Italian social classes in 1870. It needs only minor alterations to be held valid for Italy of 1914 or 1940.
3 "Before the World War Italian nationalism was the concern of a group of snob- bish writers rather than of serious thinkers. Every effort was made to adapt the philosophy of the German imperialist Treitschke, or that of French prototypes such as Maurras and Barr^s, to Italian conditions. " William Ebenstein, Fascist Italy (New York, 1939), p. 4. "The state has been dominated by classes. But now we begin to conceive of the state as an emanation of the entire nation. The state is the active organ of the entire nation, for the entire nation. " E. Corradini (founder of the Na- tionalist Association) // volere d'ltalia (Naples, 1911), p. 175. The lack at that time of any deeply felt national or articulate and cohesive social ideologies among the two peoples goes far to explain why, of all the soldiers fighting in the World War, the Italians and the Russians were equally and by all odds the worst. The slaughter of the Masurian Lakes was paralleled by the demoralizing catastrophe of Caporetto --a catastrophe which appears to have been repeated in but slightly different form on the plains below the Guadarramas during the Spanish Civil War.
4 The more important and more highly organized latifondi were located in the rich Po Valley. At the two ends of the Valley are to be found the more important in- dustrial and commercial centers of Italy. The great landowners constituted the social and economic aristocracy in the great cities where industrial undertakings first struck root. From the same closely knit social circles came the leadership for the great em- ployers' associations in both agriculture and industry.
67
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coming large-scale, and capitalism of its own native driving power was resorting everywhere to monopoly devices, this forced-draft growth tended at once to sharpen the social cleavages and to strengthen and unify the forces of antidemocratic reaction. By the "accidents of history" monopoly forms of capitalism, mercantilistic sentiments, and feudal social institutions were in both immediately juxtaposed.
In Russia proletarian forces won the throw of the die; in Italy, property. For the spread of the Socialist-Communist state Russia lacked industrialism; for the dominance of capitalist institutions and controls Italy lacked a widespread business system. Russia undertook to solve her problem by a backward step into NEP, in order to lead more easily into the industrialization program of the Socialist Five Year Plan. Italy devised the Corporate System. ^ And the Corporate System is to be understood as that morganatic alli- ance between organized, Italian, patrimonial capitalism and the type of feudal controls long advocated by the Papacy, from which it was hoped to find at once an end to class war and full defense of the existing social-economic status quo.
ANTECEDENTS OF THE CORPORATE STATE
Without dipping farther into the historical background than is necessary to make clear the component elements out of which this apparently novel "experiment" was compounded, attention may be focused on three factors of unique importance; ^ (a) the "social program" of the Catholic hierarchy; (b) the rise and peculiar com- position of the pre-Fascist labor movement; and (c) the strategic power of the closely cooperating central associations of industry and agriculture.
The social program of the Catholic hierarchy. --This was evolved as means for counteracting the rise of class-conscious trade unions dominated by left wing and materialistic--in particular by Marx-
5 The essence of the Fascist corporate system is found in hierarchical implementa- tion of patrimonial class domination by monopolistically oriented and compactly organized vested-interest groups.
6 The "Nationalist" movement, though important, can be ignored for our present purposes. Like Fascism, which it preceded, it was not in itself a causal or contributory force, but the result of such force. Nor was its strength, as expressed in numbers or influence, of much importance.
58
--
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59
ian--social philosophies. It may be divided into three phases: from the first third of the 19th century to the delivery of the Papal Encyclical Rerurri Novarum in 1891; from Rerum Novarum to the inauguration of the Fascist system in 1922; after the Papal Ency- clical in commemoration of Rerum Novarum, delivered in 1931 and known as Quadragesimo AnnoJ Beginning, in the first phase, as a general criticism of conditions created out of the capitalistic milieu, the papal position had shifted until by 1931 it not only for- mally endorsed Mussolini's fascism per se, but also recommended the formula as a panacea for all other industrial countries as well.
In the first phase. Catholic writers took their place among vari- ous proponents who hoped to solve the issues of class conflict and industrialism by recourse to doctrines inspired by Christianity. ^ Le Play, the French engineer, hoped to transform the employer into a benevolent master who would care for his workmen as father to his children. Protestant writers such as Kingsley, Carlyle, and Ruskin wanted something less patriarchal, but saw in various forms of class collaboration good Tory means for turning the lion of indus- trial capitalism into the lamb of social harmony. The leading Cath- olic writers, however, went straight to the Middle Ages--the period in which the Church dominated the whole of European society for their inspiration.
Under one form or another a series of Catholic spokesmen ^ ad- vocated recrudescence of the medieval conception of a corporatively organized society. Many of these initial expositions were the work of French emigres returning to the homeland following the Treaty of Vienna in 1815 and the inauguration of the Holy Alliance. On the
7 The intervening period, 1922 to 1931, might, in turn, be divided into two inter- vals: a period of partial and at times bitter conflict between church and state reach- ing from the inauguration of Fascism to the Lateran Accord in 1929; and from the Lateran Accord, which recognized Catholicism as the official religion in return for Papal support of Fascist leadership in the upbuilding of the new Roman Empire, to recommendation of corporate ideas by the papacy as'the solution of the "Social question" in general. Most notable of its successes has been the "clerical fascism" of the ill-starred Austrian totalitarians, Dollfuss and Schuschnigg, and the system of General Franco which emerged from the Spanish Civil War.
8 See "Doctrines Inspired by Christianity," in C. Gide and C.
Rist, History of Economic Doctrines, pp. 483-514.
9 An early representative of these was Philip Buchez, Essai d'un traite complet de philosophic, du point de vue du catholicisme et du progres (Paris, 1838-40), and Abb^ de Lamennais, La Question du travail (1848).
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other wing a few were highly reminiscent of the social-communism
advocated so vehemently by the early church fathers/^ since they
appeared in large part as attacks on the institution of private prop-
erty and in defense of workers' rights to a fair wage and a decent
standard of living. But Catholic writers of a more "practical" turn
of mind advocated simply mixed or collateral syndicates in which
the principles of hierarchy would dominate and the employer would
play the role of "leader" or "master" to his flock. The model was the
Church/^ and "the corporations which would be set up under the
aegis of religion would aim at making all their members contented
with their lot, patient in toil, and disposed to lead a tranquil, happy
^2
life. "
Though never entirely free of important schismatic differences,
the Social-Catholic movement maintained almost from the begin- ning a fairly coherent reform program. Prior to the revolutionary upheavals of 1848 it was predominantly antiliberal, generally op- posing both laissez faire and free competition on the grounds that the doctrines of the Physiocrats and the early French liberals on the one hand and the socially irresponsible practices of certain traders and manufacturers on the other largely accounted for the French Revolution, its tempestuous aftermath, the rise of anticlericalism, and the spread of class antagonisms. The "free thinking" bour- geoisie were distrusted almost as much as the popular democracy for which it appeared inevitably to prepare the way. ^^
The events of 1 848 convinced Catholic thinkers that socialism, as the residuary legatee of liberal and democratic doctrines, was the
10 Such as Tertullian, St. Ambrose, St. Cyprian, Gregory of Nazianze. See the pro- gram of Vicomte de Villeneuve-Bargemont as outlined by Thomas Parker Moon, The Labor Problem and the Social Catholic Movement in France (New York, 1921), pp. 19-25. See also Paul K. Grosser, Ideologies and American Labor, New York, 1941.
11 "The corporation is simply the model of the Ghurch. Just as for the Ghurch all the faithful are equal in the sight of God, so here. But equality ends there. For the rest of it is a hierarchy. " Quoted by Gide and Rist, op. cit. , p. 500, from Segur- Lamoignon, L'Association catholique, July 13, 1894.
12 Gide and Rist, loc. cit. , quoted from the Encyclical of Leo XII, December 28, 1878, called Quod Apostolici.
13 Veuillot, a clerical journalist, was opposed to the "free thinking bourgeoisie" but held that, while misery must be destroyed, "poverty is a divine institution" and charity the true social science. He proposed a Holy Roman Democracy to parallel the Holy Roman Empire; the latter, of course, was to lead the former by authorita- tive principles and both were to be hierarchically directed from above. The Confed- eration of Italian Industries was later to refer to its own program, patterned along these lines, as "authoritarian democracy. " Moon, op. cit. , p. 30.
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greatest of all the Church's enemies. Moderates like Melun and Le Play lost out, and, under the stimulus of the official patronage of Napoleon the Third, the movement began to take more definite shape around three leading objectives; first, to overcome the radical- ization of the working classes through an ideological conquest of the "workers' souls"; second, to transform the employer from a hard- hearted profit seeker into an aristocratic and paternal "leader" of his men; and third, to revive the medieval guild or corporate form of organization.
The first objective called for universal indoctrination with official Catholic Christianity, the second for various forms of benevolent social legislation, and the third for integral or mixed syndicalism. Under Count Albert De Mun and Count La Tour du Pin, these three phases were forged into an effective political program which was shortly taken up abroad--particularly in Germany under the leadership of Baron Wilhelm Emmanuel von Ketteler
soon received official papal blessing.
Industrial organization, De Mun held, should take the form of
"the Catholic Guild, which is neither a trade-union, nor a tribunal of arbitration, but a center of Christian activity where the interest of the profession is superior to private interest, where antagonism between capitalist and workingman gives way to patronage exercised in a Christian spirit and freely accepted. . . . It is always the same thought: limit competition, associate common interests, impose upon the employer the duty of patronage, uplift labor and the con- dition of the laborer. " ^*
Contemporaneously with De Mun's agitation (in the seventies and eighties), a great deal of interest in programs for class collabora- tion was aroused by the "experiment" of the French spinning firm of Harmel at Val-des-Bois. In the words of a very sympathetic ob- server, the "Christian Guild" of the Harmels was evolved as follows:
The simple principle of union by itself was considered inadequate; it tended to create labor-unions hostile to capital and bent on class war- fare. The principle of democratic control of industry would logically lead to the elimination of the employer. The principle of capitalistic paternalism, if taken alone, was inadequate because it failed to awaken any vital response among the workingmen. The Harmels attempted to
14 Ibid. , pp. 99-100.
--and which
--
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make a Christian synthesis of these principles. In the first place, the workers were permitted, nay encouraged, to form various associations
a men's club, a woman's association, a girls' society, a mutual benefit society. Democratic control was practiced in the management of these associations, and was represented by elected shop-committees, but was not carried to the extreme. The Guild Board, an elective council of workingmen, was consulted on such questions as shop-management and wage-schedules, but had no sovereign authority in these matters; the policy of the employers was to act with democratic advice and consent, but not to abdicate their authority. The third principle, paternalism, received expression in manifold efforts on the part of the employers to promote the material and moral welfare of the workingmen, to foster and guide even the institutions controlled by the workers. The paternal influence may be seen in the fact that one of the employers acted as chairman of the Guild Board, and the supervision of general guild in-
terests was entrusted to a committee composed of the members of the firm, the chaplain, the school-director, and representatives of the vari- ous workingmen's associations. In this fashion the three principles of association, democratic control, and capitalist paternalism were com- bined and balanced in a complex organism consisting of first, employ- ers, second, the general committee of employers and representatives of the workingmen's institutions, third the workingmen's Guild Board, fourth, shop committees, fifth, various economic, social and religious associations among the work-people. ^^
Here is a precis not only for much of the social legislation that was to follow, but also for the more benevolent type of company union as well as the more violently counterrevolutionary Fascist syndicates of the Mussolini regime. Gone completely was the attitude of hos- tility toward capitalist and employer wherever he could be per- suaded to add to his entrepreneurial functions those of father and leader to his employees. And also, by the same token, gone com- pletely was the hostility to labor organization wherever workers could be gathered into associations, governed and directed by em- ployer interests from above in a fixed hierarchy of command and subordination and deliberately modeled after the pattern of the
Universal Church.
Until late in the century the papacy had paid relatively little at-
tention to the Social-Catholic movement. The general idea, of course, of universal guild organization under the benevolent super- vision of the Church has never been abandoned. From time to time
15 Ibid. , pp. 1 14-15.
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references had been made to guilds in various papal utterances, such as, for example, Humanum genus in 1854, Quod Apostolici mu- neris in 1878, and Aeterni Patris in 1879. But it was with the ency- clical letter of Pope Leo XIII on "The Condition of Labor" (Rerum Novarum)in1891 thatrecrudescenceofthecorporateorganization of society became the official doctrine. The Encyclical was directed specifically at the Socialists, and in condemning their social doc- trines Leo XIII saw fit for the first time to commit the Church to full support of capitalistic institutions. Social inequality, private ownership of the means of production, free competition, laissez faire, the accumulation of great wealth, and the rest, were justified as "just" and according to the "laws of nature. " Conversely, "class war" was declared "irrational," since "in a state it is ordained by nature that these two classes (the rich and the poor) should exist in harmony and agreement. " The employer was to treat his labor "justly" and render him that which was due. The multitudes must, he said, be kept "within the line of duty. " Organization along lines of medieval guilds provided at once the ideal solution for social con- flict, an offset for the greed of the poor, and a solvent for the cupid- ity of the rich. ^^
Various Catholic Social-Action groups took up the new program with great enthusiasm. Shortly, some of these groups began to look forward to the "corporative reorganization of society" ^^ as a whole. All masters and men were to be organized, preferably, in mixed syn- dicates, consisting of both employers and labor, or collateral syndi- cates, in which the two groups would be organized separately for purposes of group collaboration. ^^ The state was not to interfere
16 See in particular, Rerum Novarum, paragraphs 53 to 65, inclusive, reproduced in full in Henry George, The Condition of Labor, an Open Letter to Pope Leo XIII (New York, 1891), pp. 121-57.
17 "We must direct all our private initiative and concentrate public attention upon this one reform--the corporative reorganization of society. " Cited by Gide and Rist, History of Economic Doctrines, p. 497, from Programme de I'oeuvre des cercles ouvriers, April, 1894.
18 "In 1894 the Congress of Catholic Circles which met at Rheims declared that, 'without minimizing the difficulties which stand in the way of extending the mixed syndicats, the formation of such syndicats must be our chief aim. ' In 1904, Father Rutten, one of the leaders of the Belgian Catholic Syndical movement, in a report on the syndicalist movement writes as follows: 'We do not despair of the mixed syndicat, which in theory we certainly think is nearest perfection. But we must not blind ourselves to facts, and whether we will or no we have to admit that at the present moment the mixed syndicat in ninety industries out of every hundred seems
63
? THE FASCIST SYSTEM
with such autonomous associations except to see that they were duly protected and did not use their pooled strength to the detriment of the general community. They were, in short, to be self-governing associations for the promotion of class collaboration. ^^
In the subsequent period of organization, the idea of collateral syndicates, sometimes referred to as ''integral syndicalism," defi- nitely gained the upper hand. It is interesting to note that this idea was taken over unaltered to form the basis of the Fascist system of organization by social-economic categories.
The early years of Fascist rule found Mussolini and the Pope fre- quently at swords' points. But just as accession to power stilled the former's lingering radicalism, so the immense ideological strength of the latter amongst the mass of the Italian peasantry coupled to the expansive power of the papal hierarchy blunted the anticlerical edge of Fascist propaganda. In the Lateran Accord of 1929 Fascism adopted the papacy on condition that the papacy concede popular allegiance to the objectives of Fascism and the State and Empire in which those objectives were embodied. ^^
It was hardly to be expected that the Accord, widely acclaimed as it was, would settle all the issues at dispute. Quadragesimo Anno was condemned by many Fascists for some of its implied criticisms of their system. But in the main the document possesses historical sig- nificance primarily for its wholesale acceptance of the tenets under- lying the Fascist social program.
"Harmony between ranks in society" now became the dominant theme: "Now this is the primary duty of the state and of all good citizens," the Pontiff declared, "to abolish conflict between classes with divergent interests, and thus foster and promote harmony be- tween the various ranks of society. " ^^ Instrumental to this objec- tive "must be therefore the reestablishment of vocational groups,"
quite Utopian. ' " Gide and Rist, op. cit. , pp. 76, 498, quoted from Duchesne, Syndicats ouvriers beiges (1906).
19 This early statement of the principle becomes explicable when it is recalled that Rerum Novarum was directed against Socialism as much for its apotheosis of the power of the state in opposition to private capitalism as for its support of heretical social and moral principles.
20 For the text of the Lateran Accord, see Walter C. Langsam and
Documents and Readings in the History of Europe Since ipi8 (Chicago, 1939), pp. 557-66.
21 All quotations are from copy of the text reproduced in Langsam and Eagan, op. cit. , pp. 567-72.
64
J.
M. Eagan,
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for "as nature induces those who dwell in close proximity to unite into municipalities, so those who practice the same trade or profes- sions, economic or otherwise, combine into vocational groups. "
While such organization of social-economic categories is to be "autonomous," Pius definitely rejected "free competition" and the past "errors of the 'Individualistic' school" as "the true guiding prin- ciples of economics. " They had their place, to be sure, but "it is very necessary that economic affairs be once more subjected to and gov- erned by a true and efEective guiding principle. " This the state is alone competent to determine, and in taking notice of "special syn- dical and corporative organization . . . inaugurated . . . within recent times," the Encyclical declares that "little reflection is re- quired to perceive the advantages of the institution [Fascist institu- tion] thus summarily described: ^^ peaceful collaboration of the classes, repression of Socialist organizations and efforts, the moder- ating influence of a special ministry. " Fixity of status and occupa- tion, the outlawing of strikes and lockouts, and the location of the ultimate powers of umpire and reconciliation in a theologically ac- ceptable totalitarian state assured to His Holiness that "social har- mony" and "class collaboration" of which Leo XIII had dreamed forty years before.
There was some bitter -^ to be taken with the sweet, but in the
22 "The state here grants legal recognition to the syndicate or union, and thereby confers on it some of the features of a monopoly, for in virtue of this recognition, it alone can represent respectively Workingmen and employers, and it alone can con- clude labor contracts and labor agreements. Affiliation to the syndicate is optional for everyone; but in this sense only can the syndical organization be said to be free, since the contribution to the union and other special taxes are obligatory for all who be- long to a given branch, whether workingmen or employers, and the labor-contracts drawn up by the legal syndicate are likewise obligatory. It is true that it has been authoritatively declared that the legal syndicate does not exclude the existence of un- recognized trade associations.
"The corporations are composed of representatives of the unions of workingmen and employers of the same trade or profession, and as true and genuine organs and institutions of the state, they direct and coordinate the activities of the unions in all matters of common interest. " Quadragesimo Anno, Langsam, op. cit. , p. 569. This language is practically identical with that employed in the official propaganda min- istry of the Fascist party. Cf. The Law of April 21, 192'j, known as the Labour Char- ter, reproduced in Langsam, op. cit. , pp. 519-25.
23 In particular that "concentration of power" which "has led to a threefold strug- gle for domination" for power within the dictatorship, for control over the state, and amongst the states, which leads to war. Also, "the intermingling and scandalous con- fusing of the duties and offices of civil authority and of economics" which not only degrades "the majesty of the state" but leads to "economic imperialism. " Quadra- gesimo Anno, loc. cit.
65
? 66 THE FASCIST SYSTEM
light of subsequent events it would appear that the rapprochement between the papacy and the New Roman Empire has been growing steadily closer. ^* Even the Axis accord does not seem to be wholly unwelcome in papal circles. ^'^
The composition of the pre-Fascist labor movement. --There is no need here to recapitulate the voluminous expository and argu- mentative literature on this phase of the Italian corporate-state background. 2<< It will suffice to indicate in rough outline a few of the peculiarities of the Italian labor movement which made it so readily and generally adaptable to the type of controls which the organized "right" sought, under Fascism, to place on it.
1. Though of comparatively recent origin, the labor movement in Italy had begun to form central federations and confederations early in its history. There was practically no such thing as a labor move- ment in any part of the country before 1874. Yet by 1890 first efforts were already being made to federate. After a number of reverses, these efforts had succeeded, at the outbreak of the war, in bringing the vast bulk of organized labor into three great confederations: The General Confederation of Labor (CGL), with about 321,000 members; the Catholic Italian Confederation of Labor (CIL), with around 103,000 members; and the Italian Syndicalist Association (USI), with some 100,000 members. ^^ By 1920, after a period of de- cline during the war, membership had risen until the CGL and the CIL were able to claim a membership of 2,150,000 and 1,205,447, respectively. This represents not only an unusually high level of
24 In the Abyssinian venture it was commonly believed that the papacy lent its financial support, and in the Spanish Civil War it allied itself openly on II Duce's side.
25 The new totalitarian system in process of formation in France appears to enjoy papal blessing. Only belatedly, and then only under considerable pressure, was re- proof for the utterances of Father Coughlin forthcoming.
26 To mention but a few, favorable summaries are given in the semi-official volume by Fausto Pitigliani (now in exile). The Italian Corporative State (London, 1933); Michael T. Florinsky, Fascism and National Socialism (New York, 1936); Benito Mussolini, The Corporate State (Florence, 1936); various publications (in mimeo- graph) of the Italian Library of Information; and Michels, Italien von Heute. Criti- cal summaries are found in Ebenstein, Fascist Italy; Gaetano Salvemini, Under the Axe of Fascism (New York, 1936); George Seldes, Sawdust Caesar (New York, 1935); and Carl T. Schmidt, The Corporate State in Action (New York, 1939).
27 I find no two authorities who agree on these figures. The data for the CGL and the USI are taken from Freedom of Association (Series A, No. 31, International Labor Office, Geneva), IV, 4-5. The figures for the CIL are from Wladimir Woytinsky, Die Welt in Zahlen (Berlin, 1926). II, 123.
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unionization, but also an unusually high degree of centralized direc- tion. On this footing trade unionism loomed large.
2. Membership was drawn primarily from agricultural and hand- icraft labor. Data taken from official sources,^^ showed 453,000 in- dustrial workers belonging to trade unions in 1912 for 408,000 agricultural workers. Subsequent years did not greatly alter the pic- ture. ^^ Even as late as 1921 probably not more than one-third of organized Italian labor could be classified as "industrial. " ^^ The strength of the labor movement, in other words, was much less than it appeared to be. The reasons were as follows:
(a) Themovementwaswidelyscatteredgeographically,andthe typical unit was small, localized, provincial, and more or less inde- pendent and self-contained.
(b) Organized agricultural labor was property minded: its prin- cipal grievance was the perpetuation of the system of metayagej and its members were neither very conscious of their own class nor conscious of having a great deal in common with the industrial workers.
(c) Thepositionofthelargenumberofhandicraftandshopem- ployees was not greatly different. Their lingering feudal attach- ments and partially articulated middle-class sentiments made them at best poor and unreliable partners in a militant, class-conscious struggle for political power. ^^
3. A third and even more fatal weakness in the Italian labor move- ment was centered in more or less irreconcilable doctrinal differ-
28 Woytinsky, op. cit. , II, 124; cited from Annuario Statistico Italiano, Series 2, VII (1917-18), 330.
29 The war years were an exception; there was then a tendency for agricultural members to increase over industrial membership, indicating a relatively heavier war draft on the latter group.
30 Even the most militant and class-conscious of the central associations, the CGL, had 294,000 out of 1,206,000 members listed as attached to agriculture. In addition, many other crafts, e. g. , the bulk of those listed as textile workers (78,000 in 1921) should really be called agricultural laborers. For another viewpoint on agricultural workers and trade unionism in Italy consult the writings of Ignazio Silone, who has developed the subject in detail and who takes a somewhat different position.
81 The number included in this category must have been numerically more im- portant than Woytinsky's figures indicate. It is possible that when due allowance is made for those listed under industrial categories who worked as handicraftsmen the number would be as large or larger than those properly classed as industrial workers. In addition, close to 100,000 workers were employed in governmental or semigovern- mental (railways, post and telegraph, etc. ) activities and who were, consequendy, at least partially controlled by governmental authorities under dvil-service regulations.
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ences. The largest of the three more important general groups, the General Confederation of Labor, was led, perhaps more clearly than any other continental trade-union group, by politically minded socialists of the more orthodox (not revisionist, as in Germany) school. The second largest group, the Italian Confederation of La- bor, followed the line laid down by Rerum Novarum and was, con- sequently, in the main quite hostile to the CGL. Its mixed-syndicates program bears a very close resemblance to the "company union" in the United States, and its alternative, integral syndicates, was erected on the substitute foundation of organized "class collaboration.
