Introduction by Hadding Scott: This article was published in the Michigan Alumnus Quarterly Review of 10 December 1938. I consider it a relatively unbiased look at the National-Socialist agenda of reducing conflict between workers and employers.
1. National-Socialist Germany did not experience the labor-unrest that plagued other countries in the 1930s (because of measures taken by Germany’s National-Socialist government).
2. The Marxist leaders of German labor-unions were removed and all labor-unions subsumed under the German Labor-Front directed by Dr. Robert Ley. The German Labor-Front offered goods and services to workers in lieu of higher pay, along with the traditional insurance and legal aid.
3. The government created projects (especially rearmament, according to Heneman, but see my objection below) to employ the unemployed and to revive dormant industry.
4. The principle of aggressive pursuit of particular interests (e.g. labor against management, or management against labor), which divided the nation (“the state” says Heneman, but this is not how national-socialists think), and played into the hands of the Marxists, was replaced by the principle of cooperation based on shared national identity. The affiliation of workers with international labor was replaced by the idea of the Betriebsgemeinschaft, the works-community. Workers in any business with more than twenty employees were guaranteed representation in determining a company’s labor-policies.*
5. Labor trustees were appointed by the national chancellor (Adolf Hitler) on recommendation of the minister of labor (Franz Seldte). A labor trustee had dictatorial power to intervene as necessary for preservation of the harmonious functioning of a workplace.
6. A system of social honor courts (fifteen courts plus a supreme court in Berlin) was established for the resolution of labor-disputes. Heneman says that nine-tenths of cases brought before the social honor courts were complaints brought against management, and that convicted managers faced fines in 48% of cases and removal from their positions in 31% of cases. “It is not correct to say … that labor has been treated unfairly in these courts.”
7. While the idea is to educate labor and management to behave as a community of shared interest (thus requiring minimal intervention from the state), the state is the ultimate guarantor of the reasonable conduct of one toward the other.
The lot of workers in National-Socialist Germany was improved, not by raising their wages but by arranging for them to receive benefits and low-priced goods. The state was uniquely positioned to accomplish this, taking advantage of economy of scale and the possibility of putting unemployed men to work for the benefit of those already employed.
It can be argued that Heneman accepts an exaggerated view of the importance of rearmament in the National-Socialist economic recovery, since Hitler did not reintroduce military conscription or declare the intention to rearm at all until two years after coming to power. German rearmament was motivated mainly by the fact that other nations required to reduce armaments under the Treaty of Versailles had never done so, and were even increasing their armies. Accelerated rearmament was then taken up under Hitler’s second four-year plan as a response to the menace of the Franco-Soviet Pact. Hitler decided to rearm Germany because it was imprudent to do otherwise. For simply putting people to work, National-Socialist Germany had options other than rearmament.
I have re-edited the article insofar as I replaced the propaganda-term “Nazi” with the correct National-Socialist and the vague “socialist” with the more precise Social-Democratic, and made orthographic corrections to some German terms.
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Labor Relations in National-Socialist Germany by Harlow J. Heneman (1938)
IN RECENT YEARS when such countries as the United States, France, and Sweden have been beset by industrial strife, National-Socialist Germany has enjoyed the blessings of peace on the economic front. National-Socialists have prided themselves upon their ability to escape the labor unrest to be found elsewhere. They point to the post-1933 “new deal” in Germany’s system of employer-employee relations as an example of what can be done to reconcile the interests of economic groups. It is not without interest to review the efforts of the Hitler regime in the sphere of labor relations in order to gain some understanding of what it is the National-Socialists have accomplished. The recent alterations in the German system of labor relations will only be properly understood, however, if the motives which prompted intervention by the government and the National-Socialist party are kept in mind. The necessity for action is largely to be found in the compelling pressure of political expediency, in certain aspects of National-Socialist economic and political policy, and in the tenets of National-Socialist ideology.
Once the National-Socialists were in office it was imperative that they consolidate their position by liquidating or curbing all possible sources of opposition. Attention was directed at once to the old trade unions whose opposition to the National-Socialist movement was well known. Millions of their members had long been under Social-Democratic control, and in 1932 and 1933 many had shown an inclination to accept the political leadership of the Communist party. It was apparent to the National-Socialists, therefore, that the old labor-union organization would have to be abolished. It was deemed to be of vital importance, however, that some alternative organization be provided at once to take care of the members of the liquidated unions. As we shall see, the unions were soon eliminated, an a new organization of labor made its appearance in due time.
As for the economic motive, it was self-evident in the Germany of 1933 that something would have to be done to revive dormant industry. Party leaders believed this could be accomplished by creating jobs, by instituting a public-works program, and by heavy rearmament. It was hoped that the impetus given to Germany heavy industry by a gigantic arms program would stimulate the economy of the country all along the line. Further, arms would, so the National-Socialists believed, assure the Reich that political Freiheit and equality which had been promised the country. But it was clear that if this program was to be carried out successfully the country’s economic system would have to be “disciplined.” No obstructions could be tolerated. A way would have to be found to organize employers and employees so that relations between the two groups would be responsive to the government’s wishes.
Although there were very practical reasons for a reorientation in labor relations it must not be overlooked that philosophical grounds for a change existed as well. For years there had been an ideological war between National-Socialist theories of the state and community on one hand and the views of liberal democrats and Marxists on the other. To the National-Socialist it seemed that the individual liberty and the freedom of action available under democracy were but indications of weaknesses in the system. Under the liberal democratic state the authority of the government was subordinated in favor of the will of the individual. Accordingly, opposing economic groups took advantage of this freedom to organize for selfish purposes. The National-Socialists believed that the greater the reliance upon the principles of democracy the more pronounced the tendency would become for economic groups to intensify their respective organizations. Self-help by labor and business, if carried to its logical conclusion, would precipitate a struggle that would undermine the very foundations of the state. Further, this struggle would inevitably play into the hands of the Marxists.
Although principles of democracy were found to be “decadent” by the National-Socialists, their dislike of Marxian socialism was even more intense. The idea of the class struggle and the rule of the proletariat was anathema to the Nazis. These were teachings which, if accepted, would destroy the unity of the state by keeping its citizens in a constant turmoil. That a worker should feel primary loyalty to a proletarian colleague in a foreign country rather than to his own state was a view which Hitler emphatically rejected. The national state was uppermost in National-Socialist ideology. The National-Socialists characterized Communism as “an international Jewish disease”; and more than that by way of damnation could not be said.
National-Socialists have advanced an alternative philosophical basis for the system of employer-employee relations erected in the past five years. As might be assumed, these theories place an emphasis upon the national state and prescribe limitations upon free initiative and the use of property. The National-Socialists hold that the economic system is not an end in itself but that it must serve the common good. The economic order must no longer be thought of as a meeting ground for labor and business, each intently engaged in a struggle for selfish purposes. Rather, the world of industry and commerce must bring employees and employers together ina co-operative effort to serve the good of the national community. The basic unit in the new German industrial order is the Betriebsgemeinschaft, the “works-community,” which is to be thought of as a cell in a larger organism, the Volksgemeinschaft. Each Betriebsgemeinschaft is not complete if one part of the cell is missing. According to National-Socialist theory, the works-community is a place of employment which includes the owner or employer, or someone acting as his representative, and workers, united in the performance of productive functions under the guidance of the state. Instead of the class struggle there is common service for the Fatherland or, as the National-Socialists themselves put it, there is the realization that “Gemeinnutz geht vor Eigennutz.” It is true that the National-Socialist doctrine may be expressing an ideal that is not in accordance with the facts, but Hitlerites have said that the structure created by them in the sphere of labor relations has for its purpose the translation of their theories into practice.
Little time was lost in bringing the “blessings of National-Socialism” to the German wage-earning classes. Adolf Hitler became national chancellor at the end of January, 1933. The following May the existing trade unions were largely liquidated, and their assets were seized. The first of May was declared to be a day which no longer would be utilized to honor the international proletariat, but would be made an occasion for the commemoration of German national labor in its service for the Fatherland. A law of May 19, 1933, provided for the appointment by the national chancellor of labor trustees who were to serve as economic dictators over the districts under their jurisdiction. They were given full powers to maintain industrial peace and to regulate detailed phases of labor relations. Within a period of four months rapid strides along the road to national-socialization of employer-employee relations had been made. The early successes, as well as later progress, were possible, according to Dr. Ley, the head of the political organization of the party, because the government followed a policy based upon “a healthy combination of freedom and compulsion.” The government and the party sought success for their policies by altering German labor law and by the use of persuasion. If these measures proved ineffective, there were always the stormtroopers. By the end of 1934 the forms of the new edifice stood out quite clearly. The German Labor Front had been established, the “new social constitution” or Law for the Regulation of National Labor had been enacted, labor trustees were at work, and the social honor courts were functioning. Each of these institutions will be discussed in the pages which follow.
Prior to 1933, National-Socialist attempts to organize labor proved to be futile. But a small number of German workers had joined the National-Socialism Industrial Cell Organization (NSBO). In 1934 it was apparent that the National-Socialist organization among handicraft workers (NSHago) also was not meeting with success. With the abolition of the trade unions it seemed advisable, therefore, to provide a new organization to absorb the membership of these defunct bodies. The German Labor Front was accordingly created, and the bulk of German workers are now numbered among its members. The purposes of the Labor Front are to be found in a decree of October 24, 1934, and limitations upon its activities are implied in the provisions of the Arbeitsordnungsgesetz (AOG) or labor regulation law of January 20 of the same year. The Labor Front assumed the assets and the liabilities of the dissolved labor unions.
The leadership principle (Führerprinzip) used in National-Socialist political rule has been applied to the Labor Front as well. The leader of the Labor Front is Dr. Ley, who is also the head of the political organization of the National-Socialist party. German employers and employees are his followers. The leader commands from above, the followers obey. As a matter of practical interest, the Labor Front is controlled almost entirely through the political organization of the party. Its officials are drawn largely from the NSBO, the NSHago, the SA, and the SS(Sturmabteilung, Schutzstaffel). Very few former free trade unionists have been entrusted with office. Membership in the Labor Front is open to employers, as well as employees, who are Aryans and who are not disqualified from citizenship. Theoretically, membership is on a voluntary basis. Actually it is inexpedient not to belong to this “union of brain and brawn.” At the end of 1937 Dr. Ley was proud to announce that 24,000,000 Germans were enrolled as his followers. The bulk of these members pay dues which are determined by a scale graduated according to income. Most of the revenue of the Labor Front is derived from the low-wage-earning groups (those receiving under 200 marks per month). In talking with German workers the writer frequently encountered complaints concerning the amounts of the dues and assessments and the lack of information regarding the expenditures of the money thus obtained.
The Labor Front is not merely an organization to facilitate the party’s control over employers. It performs numerous functions for its members. Among the more important of these are its propagandist activities and its attempts to “educate” its members in accordance with National-Socialist doctrine. The Labor Front has been likened to a “training school” where German workers and businessmen can absorb the principles of the National-Socialist way of life. The Labor Front also provides a plan of insurance for its members comparable to the schemes previously available uner the labor unions. There is also a legal-aid bureau with headquarters in Berlin and with offices in each of the district bureaus of the Labor Front. The legal-aid service is divided into two branches, one for employers and one for employees. The personnel of this service is to give legal advice to members, to act as investigators and arbitrators in labor disputes, and to represent members in court if necessary. The writer was told by the head of the legal-aid bureau that it was the intention of his service to reduce the amount of labor litigation which was finding its way to the courts. If the figures he made available are correct there are thousands fewer cases coming before tribunals at present than there were in 1932.
Closely associated with the Labor Front and administered by it is the Kraft durch Freude (“strength through joy”) organization. This movement has made it possible for persons of small means to enjoy educational and recreational facilities which might ordinarily be denied them. Cruises to foreign countries, holidays by the seaside, hiking trips, and excursions are arranged for those who belong to the Labor Front. Athletic grounds have been built near places of employment, library facilities have been made available for workers, concerts have been provided for, and touring theatrical companies have been sent to workers’ communities. According to Dr. Ley, within two years approximately 52,700,000 persons had attended the 142,000 entertainments organized by the entertainment section. He has also said that in the same period more than 6,000,000 persons took advantage of the travel facilities offered. These figures, if accurate, indicate that the “strength through joy” movement is not inactive. Labor Front leaders hope that these benefits will be acceptable as substitutes for real wages, which have not risen appreciably since Hitler entered office.
The provisions of the labor law of January 20, 1934, and its amending decrees and statutes have been hailed as the bases for Germany’s “new social constitution.” This legislation must therefore be examined with some interest. Under this “constitution,” employers retain their position as managers of their enterprises, but are now known as leaders of a Betrieb or shop. Their employees are their followers. Leader and followers must co-operate for the common good of the nation. The leader must act in such a way as to safeguard the welfare of his followers, and the latter, in turn, owe him obedience and loyalty. Strikes and lockouts, although not expressly forbidden, are frowned upon and almost never occur.
According to law, employees are to participate in the management of a Betrieb through membership in a confidential council (Vertrauensrat*). Each place employing an average of twenty workers must have such a council. Council members are elected by the workers from a list of candidates prepared for them by their employer acting in co-operation with the local head of the NSBO.
To be eligible for membership on the council in his shop a worker must , among other qualifications, be a member of the Labor Front and promise to support the national state without reservation. Should there be difficulty in agreeing upon candidates or should the candidates not receive a majority vote, the members of the council may be appointed by the district labor trustee. The confidential councils meet at the request of the leader of the Betrieb or upon demand of one-half of the councilors. Decisions of the council have no validity if the labor trustee disapproves. If the councilors act in a manner disturbing to the peace of the works-community they may be unseated by action of the labor trustee or their district. Both the employer and the councilors may appeal to the labor trustee against one another’s decisions.
No single subordinate authority in Germany possesses as much power in the field of labor relations as do the labor trustees. The AOG supplants the law of May 19, 1933, but in so doing reaffirms the position of the trustees. The labor trustees are appointed by the national chancellor upon nomination by the minister of labor. Each of the regular trustees has jurisdiction over labor relatiosn in a large economic district. Up to a recent date fifteen such districts ha been created with headquarters at the following strategically located economic centers: Königsberg, Breslau, Berlin, Stettin, Hamburg, Hannover, Essen, Köln, Frankfurt am Main, Magdeburg, Weimar, Dresden, München, Karlsruhe, and Saarbrücken. The minister of labor has been given the power to appoint special labor trustees for specific purposes should it seem advisable to do so. The regular trustees are national officials with supervision over labor relations in their respective districts. Each trustee is aided by an advisory council and by a committee of experts. Representatives of business and labor in his district are members of these bodies. The council and the committee may give advice, but the trustee is not obliged to follow their suggestions. Trustees are required to keep the national cabinet, as well as the minister of labor and the minister of economic affairs, informed of political and economic conditions in their districts. In the performance of their duties they have the full co-operation of representatives of the Labor Front.
In their relations with employees and employers labor trustees exercise extensive powers. Under certain circumstances they may select the confidential councilors, and they may oust them. They may also alter the decisions of these employees’ councils. Employers, too, do not escape the attentions of the trustees. Each employer is required to post a shop ordinance (Betriebsordnung) in which is outlined the policy of his Betrieb in regard to such matters as wages, hours of work, pay for overtime, conditions of work, time for recreation, and vacations. Shop ordinances must be approved by the labor trustee, and under certain conditions the trustee may issue the ordinance for the employer. In slightly over three years more than 3,000 such ordinances were issued by labor trustees. If a social honor court, in a case regularly before it, decides that a leader of a Betrieb should be ousted from his position the labor trustee executes that decision. His approval is needed for the successor selected by the ousted Betriebsführer.
Before the social honor courts, the labor trustees act in the capacity of prosecutors. They bring cases before the courts, may present evidence, and may take cases on appeal to the national supreme honor court. Labor trustees may act in collaboration wit the chairman of a social honor court to serve as an investigational and arbitrating committee or may initiate formal court proceedings.
Members of a works-community cannot afford to take the wishes of a labor trustee lightly. An employer or employee who persistently disobeys the written orders of a labor trustee is deemed to have disturbed the peace of the Betriebsgemeinschaft and may be hailed before a social honor court. These courts have consistently held that to disregard the orders of a labor trustee is to reveal hostility to the spirit of the social constitution and is, therefore, an act to be severely punished. One writer has referred to a labor trustee as a “social political Statthalter” who must be obeyed unless one desires to run the risk of being looked upon as an enemy of the policies of the national cabinet and the Führer himself. The powers of the labor trustees are limited by the provisions of the AOG and by the policies laid down by the national cabinet in regard to wages an prices.
The social honor courts are a striking contribution made by the National-Socialists to the conduct of labor relations. Minister of Labor Franz Seldte has designated the social honor courts and the office of labor trustee “the most important creations in the sphere of National-Socialist-controlled social life.” These tribunals have not replaced the labor courts, although the activity of the older bodies has declined considerably since 1934. An honor court is to be found at the seat of each economic district under the jurisdiction of the labor trustees. In addition to the fifteen lower courts there is a national supreme honor court in Berlin. Each of the lower honor courts consists of three members. Two of these are laymen, one being a member of a confidential council and the other the leader of a works-community. They are chosen by the chairman of the court from a panel submitted to him by the Labor Front. The head of the court is a legal official of the government and is appointed by the minister of justice acting in co-operation with the minister of labor. Justices may be unseated by action of the supreme honor court. The supreme court (Reichsehrengerichtshof) is composed of one confidential councilor, one Führer of a Betrieb, both of whom are chosen as in the lower courts, a third member selected by the national cabinet, and two professional judicial officers appointed by the minister of justice in conjunction with the minister of labor.
The honor courts have jurisdiction only over cases arising under the law for the regulation of national labor. The violation of the letter or spirit of that law constitutes a violation of the social honor of the Betriebsgemeinschaft and therefore may be brought before these tribunals by the appropriate labor trustee. The AOG has indicated, by way of example, the type of act to be called a violation of social honor. A leader of a Betrieb who maliciously abuses his position of power by exploiting or mistreating his following violates social honor. Followers who purposely disturb the peace of a Betriebsgemeinschaft or who undermine the morale of fellow employees also are included in this category. Confidential councilors who divulge confidential information gained by virtue of their positions are punishable under the law. Any member of a works-community who makes baseless charges to the labor trustee or who persistently ignores or disobeys the written orders of a trustee also is a violator of social honor. Persons found guilty by the honor courts may be punished with a “warning,” a “reprimand,” a fine up to 10,000 marks, the withdrawal of the right to continue as the leader of a Betrieb or as a confidential councilor, and banishment from a given works-community or a varying length of time. As a rule whenever conflicts of jurisdiction with the regular courts arise the honor courts step aside. Should a defendant be acquitted in a regular court he may still be tried in an honor court for those acts which are alleged to be violations of the AOG.
Some commentators on the German scene have referred to the social honor courts as tribunals which are unfair in that they discriminate against workers and favor employers. In studying more than two hundred representative cases coming before these courts the writer found that nine-tenths of them were actions brought against employers or their agents. Of the employers convicted, 48 per cent were fined and 31 per cent were denied the right to continue as leaders of places of employment. Fines were imposed upon 20 per cent of the employees convicted, and 40 per cent were discharged from the place of employment. The milder penalties available under the law have not often been used. As would be expected, employers make the greater number of appeals to the supreme court. The higher court has shown a pronounced tendency to reverse the lower courts, usually by reducing the penalties. It is not correct to say, however, that labor has been treated unfairly in these courts.
In the decisions of the honor courts the view is frequently expressed that these tribunals must function less to punish severely than to educate employers and employees. It is hoped that through numerous decisions and with the passage of time the courts may aid in persuading labor and business to co-operate for the common good. The courts have said that employers and employees must become conscious of their obligations to each other and to the state. Only when they show themselves to be utterly unable to comprehend the principles of the new social and economic order should they be unconditionally rejected as members of the works-community.
The institutions and the practices introduced in the field of labor relations by the National-Socialists present a well-defined picture of the National-Socialist idea of what is desirable in this sphere. No longer is there to be employer-employee conflict on a nation-wide scale. The accepted view now is that the fundamental unit under the new social constitution is the Betriebsgemeinschaft. The maintenance of good labor relations between the leader and his following in the works-community is therefore essential. Excessive state control is not held to be desirable. However, National-Socialists do not shrink from the prospect of sudden and drastic state intervention if a Betriebsführer or a following is lax about fulfilling the role designed in the AOG. The state has retained for itself “the highest regulatory power. It indicates the purpose, it designates the goal and the meaning of the regulations, and it creates the guarantees which these regulations will enforce. The law regulating labor names the special organs of the state for these purposes: the labor trustees and the social honor courts.”
German students of political and economic problems have indicated that in the institutions described above the Reich has set an example for the world and has established practices that might be imitated elsewhere. The AOG has been called “the Magna Charta of Germany’s social policy.”
Dr. Ley has said that since 1933 a new era for workers and employers has dawned, for “where there was hopelessness and despair, there is now faith, a joyful outlook on life, and renewed hope. Formerly, there was mutual enmity, jealousy, envy, and hatred, but today everybody tries to make himself useful to his fellows, to be their loyal comrade, and to render them some small service whenever he can.” Dr. Ley cannot be accepted as an unbiased critic, however, and his views are certainly not acceptable to the International Labor Office situated at Geneva.
It is apparent that Germany’s social constitution is more interested in stressing duties and obligations than it is in protecting rights. Certainly, there is no room for freedom of action by employees under the new system. Employers are told that labor has now been made “responsible.” On the other hand, labor is asked to believe that although the old unions have disappeared and independence is a thing of the past, labor is not at the mercy of employers. The eyes of both groups must be turned toward the state. _____________________ * In postwar Germany an institution like the Vertrauensrat has been retained, but it is now called an Aufsichtsrat. The Aufsichtsrat makes decisions about hiring, firing, and wages. This body is divided evenly between representatives of the workers and representatives of management.