Chapter Fourteen

The Non-Socialisation of the Ruhr

On October 22, 1946, Mr. Bevin told the British House of Commons that it had been decided to socialise the Ruhr heavy industry. As a first step, the steel and coal industries would be socialised, later chemical and engineering industries. For the time being, British control officials had been put in charge but these would soon be replaced by German trustees for a future German government.

Earlier, on August 20, 1946, Air Marshal Sir Sholto Douglas, then British Military Governor, announced to the Control Council that he had taken over all iron and steel plants in the British Zone. The object, he said, was to break up the concentration of power formerly in the hands of United Steel, to reduce the capacity of the industry to peace-time needs, to prepare the industry for re-organisation. The industries, he promised, would never be returned to their former owners.

In Berlin, we were told that the socialisation scheme had nothing to do with politics or the fact that there was a socialist government in Britain. It had been proposed in fact by the military men, purely as a security measure. It was felt, we were told, that the only way to ensure disarmament of a future Germany, was to control the industrial heart of the country, and the easiest way to do that would be to have the heavy industries run by a German government over which the Allies must maintain some sort of permanent inspectorate. One could call a government to account for breaches of agreement more easily than private firms, so ran the argument.

Mr. Bevin returned to the subject several times, as also did lesser lights in the government and the Control Commission. There could be no doubts that the British Government was pledged to socialise the key German industries.

From the very first these proposals brought forth protests from the Americans. Was not socialism the same as Nazism? Wasn't it National Socialism that we had been fighting and were pledged to destroy in Germany? Would the Ruhr industry be less dangerous in the hands of a strong German government than in the hands of private owners? What was socialised industry but a gigantic cartel – and were we not pledged to destroy cartels? A state-owned industry was the monopoly to beat all monopolies, the most dangerous form of all. Such were the arguments used by the uniformed representatives of the American trusts at U.S. Military Government headquarters.

The trump American argument, however, was a "moral" one. We are here to teach the Germans democracy aren't we? How can you British be so wicked as to want to force the Germans into socialism? Let the German people themselves decide what should be done with their industries; let them decide for socialism or free enterprise. And gradually the British knuckled under to these arguments. The top men in the Control Commission never wanted it anyway. In effect they struck a bargain with Clay in the very early days, when Clay was supporting the decartelisation law. "You call off decartelisation," they said, "and we'll call off socialisation." That's the way it worked out, even if the bargain was not as precisely phrased as that.

There were some British officials in the field who put up a fight for the government policy of socialisation. One of them was a British trade union official, Alan Flanders, head of the German section of political division. He persuaded his chief, Christian Steel, that the British were on safe grounds and could meet the German objections because all the leading political parties in the British Zone had expressed themselves in favour of socialisation. The Social Democrats and Christian Democrats had both passed resolutions to this effect. The Communists, naturally, had been demanding socialisation from the first. Only the minority party, Free Democrats, Liberal Democrats and small right wing groups were against it. Tell the Americans, the Germans themselves are demanding socialisation, he said.

That was not enough for Steel, however. Flanders was sent down to tour the British Zone and obtain declarations from the various party leaders that they were in favour of turning the Ruhr industry over to public ownership. He had no difficulties with the Social Democrats and Communists.

Adenauer, however, who had been in the meantime in close contact with the Americans, chose the moment of Flanders’ tour for a violent attack on socialisation. He demanded protection for private enterprise and help for German industry by investments from abroad, so that Germany could play her rightful role "in European recovery."

The speech was contrary to a resolution passed by the Christian Democrats a few weeks earlier. It was hailed with delight by the Americans as proof of their contention that the Germans themselves were against socialisation. Flanders spent weeks in the Zone trying to force the Christian Democrats to repudiate Adenauer's speech, or get him thrown out as leader of the party. There was a "leftist" section in the party at that time strongly opposed to Adenauer's leadership, but the smell of American dollars was already becoming too strong in the Ruhr. The industrialists were beginning to emerge from their fur-lined hideouts to give money and instructions to the Christian Democrats.

Flanders failed in his mission and returned to Berlin. Shortly afterwards he was withdrawn from Germany altogether. He was compensated for his graceful withdrawal from the fight for socialisation with an American scholarship which enabled him to go to the United States for a few months "to study trade unionism and social conditions." At the same time the only other Transport House (British Labour Party headquarters) nominee in a high political post, certainly the only other one who opposed Steel on the question of socialisation, Mr. Austin Albu, head of the Governmental Sub-Commission, was recalled to London. He was afterwards rewarded with a safe Labour seat in the House of Commons. Steel took over Albu's job, or rather combined it with his own, and moved upstairs to be chief political adviser with the rank of ambassador. The career men had won out and sent the trade union officials scuttling back home. .

Although by 1947 it was obvious that socialisation had been called off; this was strenuously denied in Berlin and London. The trustees for a future German government would be nominated "any day" we were told. In Berlin, a Control Commission spokesman said: "It is true there is a difference of opinion between ourselves and the Americans on this question, but not over the 'principle’ of socialisation. It is a difference on the final form of Germany. We envisage a central structure and feel the Ruhr trustees should hold the industries in trust for a future central government. The American view is that there must be a federal structure and the trustees should be responsible only to the Land government. In any case, they feel the Germans must be given a chance to express themselves on the subject."

The Americans soon changed their views, however, about letting the Germans decide for themselves. General Clay had a nasty shock in Land Hesse in his own Zone. In the first Land elections, Social Democrats came out on top in Land Hesse with a substantial majority, Eventually a Constitution was drawn up for submission to the electors. It contained a famous Article 41, which called for the socialisation of heavy industries and public utilities. The Americans protested against this article but the Hesse government stood firm and quoted back to the Americans countless declarations on "democracy" and the rights of the Germans to decide their own affairs where this right did not conflict with Allied occupation policies. General Clay had to give in but he insisted that the Constitution must not be voted on as a whole. Article 41 must be the subject of a separate plebiscite. This was arranged – and it was accepted by the voters of Land Hesse by over 70 per cent. of the voters, by a greater majority indeed than the rest of the constitution.

Article 41, was adopted by the Constitutional Assembly on October 29, 1946, and ratified by the electors on December 1st, 1946. The Article stated:

"As soon as the present constitution takes legal force and effect:

"(1) Coal, potash and ore mines, iron and. steel plants, power plants arid rail and trolley lines are transferred to public ownership.

"(2) The large banks and insurance companies and those enterprises of the nature specified in the foregoing paragraph 1, the seat of which is not located in Hesse, are placed under State Administration or supervision.

"Owners of a business enterprise transferred to public ownership in accordance with the foregoing paragraph 1, or any person entrusted with its management, must continue to manage it as State trustees until laws for carrying out these provisions have been enacted."

It would seem that the matter had been settled in a clear and democratic fashion. The voters knew precisely for what they were voting. It was not just a vague phrase of "socialisation" but a clearly expressed concrete proposal. The law had been debated in the constitutional assembly, voted on separately; carried with an enormous majority in the most democratic procedure. But when the time came for its application, General Clay, guardian and mouthpiece of democracy, vetoed the law. It has not yet been put into operation, over three years since it was adopted.

The reason given for demanding the special vote was that the people of Hesse should not have an item of such importance lumped together with the rest of the constitution. The electors might overlook the fact that there was such a "dangerous" paragraph. Such a law could only be passed if the majority of the voters in Hesse specifically demanded such a law. Clay was misled by his advisers into believing it would be turned down by a big majority.

When it was adopted he had to use the same arguments he used to prevent socialisation being applied to the Ruhr industries. "The people of Germany as a whole must decide such major issues," he said, conveniently forgetting that from the first day he took over in Germany, he had violently opposed anything that savored of centralism. Clay was the great Federalist, the champion of the rights of the Laender until the expression of these rights conflicted with Clay's ideas on the preservation of free enterprise and capitalism.

Clay's opposition to centralism in any form was expressed time and again in arguments with the Russians at the Control Council. Full rights of the Laender must be guaranteed, only the weakest powers could be reserved for any future central government.

When it came to socialisation of the Ruhr, Clay took the same line. At first he demanded that the British should not impose socialisation from above but let the voters decide. When the electors in North Rhein Westphalia – the Land in which the Ruhr is situated – did vote solidly for socialisation, and a law to this effect was adopted by the Landtag on August 6, 1948, Clay insisted that Germany must now be considered as a whole. Important industries and sources of raw material cannot be thought of as the property of one Land.

By that time Mr. Bevin was so deep inside the Marshall Plan bag that he meekly gave way. The Socialisation Bill was vetoed by British Military Government which in an official statement gave as its reason that it "could not approve action which might prejudice a decision by the Federal Government as to the pattern of ownership to be established for such industries."

Every repressive measure was carried out in the name of "democracy" and the Americans always cried out loudest about their concern for giving the Germans complete freedom to decide their own policies. As long as these "freedoms" were exercised to further American policies, they were permitted. Freedom of speech meant freedom to rave against Socialism, Communism and the Soviet Union. It did not mean freedom to criticise American military government. That was another matter as Herr Johannes Semmler, American approved Chief of the Economics Department of Bizonia discovered.

Semmler made a speech to his Christian Socialist Union Party, at Erlangen in January, 1948, in which he said "American food imports into Western Germany are largely corn and chicken-feed for which we Germans are paying dearly. These imports are not a gift from the Americans," he continued, "but have to be paid for in dollars earned by Germans and by the sale of German exports." Such treachery! And not from a Communist, but a solid right wing Christian Socialist and one in the best position to know what he was talking about when it came to deflating the great rosy balloon of American generosity in feeding Germany.

Semmler was immediately sacked on Clay's orders for "malicious opposition towards the occupying powers." Later he was nominated by the Bavarian Land Government to the Bizonal Economic Council, but the appointment was vetoed by General Clay, with a sharp reprimand to Bavaria. Democracy could only be tolerated when it worked in Clay's favour.

In June, 1948, Mr. Bevin was asked in the House of Commons by Mr. Platts Mills (later expelled from the Labour Party for suspected Communist sympathies) whether despite his clear statements in October, 1946, and August, 1947, Mr. Bevin had decided to abandon the socialisation of the Ruhr industries. Mr. Bevin shamefully admitted – as he has since done many times – that the British no longer control British policy. The United States' view, he said, was that ultimate ownership of the Ruhr industries should be left to the German people to decide.

If one turns back to the reports of the Council of Foreign Ministers Conference in Moscow, March, 1947, one finds Mr. Bevin angrily rejecting Molotov's proposal for a plebiscite for Germans to decide whether they wanted a centralised or federal government.

"I will not allow the German people to decide on any matter which affects the security of Great Britain," thundered Mr. Bevin.

In actual fact, if any matter affected the future economic and military security of Great Britain and the rest of Europe it was the fate of German heavy industry, but here one finds Bevin weakly succumbing to American and German big business pressure. Whether the German people had a united country with a centralised government or a split Germany with a federal government, was hardly a matter affecting British security, and it was pure demagogy on Bevin's part to say so.

If Bevin had gone back on his earlier pledges, the German people were determined to have a say, too. German workers had long memories about their former bosses and had some sense of solidarity with workers of neighbouring .countries, who had suffered under German aggression, the main-spring of which was German heavy industry. The workers demanded socialisation and put pressure on the political parties. With the rising strength of the Communists in the Ruhr, it would have been suicide for the Social Democrats to have backed down on the socialisation issue; Catholic trade unionists were also putting pressure on the Christian Democrats. A socialisation Bill was adopted by the North Rhine Westphalian Landtag, on August 9, 1948, supported by Social Democrats, Communists and some of the Christian Democrats.

Professor Noelting, Minister of Economics, gave some interesting figures during the debate, relating to the hard .coal industry. Of the total value of coal-mining assets, less than 6 per cent. had to be written off due to war damage. (Our bombing experts who claimed to have won the war by their four years of bombing the Ruhr might study Noelting's report to their advantage.) Nine per cent. of the hard coal mines were directly foreign owned, mostly by companies in Luxembourg and France, in which British and American companies had shares. Twenty per cent. of the mines were owned by United Steel, 8 per cent. by Krupp, 8.8 per cent. by the Flick combine, 5.25 per cent. by I. G. Farben. Sixty per cent. of all the hard mines were owned by great industrial trusts.

The socialisation bill, as reported above, was vetoed by General Robertson on the grounds that the Landtag was not competent to legislate on matters which affected Germany as a whole. As there was no government for Germany "as a whole" and as this was not even desired by the British and American military governors, there was in fact no way by which socialisation of the Ruhr industry could be brought about by the Germans themselves. By the time the Bonn government had been established, any matters affecting the Ruhr had been taken out of German hands in any case by the setting up of a special regime for the Ruhr.

At about the time General Robertson vetoed the socialisation bill, the Deputy Chairman of the Soviet Zone Economic Commission, Fritz Selbmann (Minister for Industry in the East German Republic) released some figures on industry in the Soviet Zone. Ninety-nine per cent. of coal production, 99 per cent. of electric power, 54 per cent. of the metallurgical industry, 41 per cent. of machine tool production, 35 per cent. of the chemical industry had been turned over to public ownership. Forty per cent. of industry as a whole was in the hands of zonal, Laender or municipal authorities.

The final blow to socialisation hopes in the West was given by the promulgation on November 10, 1948, of Law No. 75, by the British and American authorities. It dealt with the re-organisation of the German coal, iron and steel industries and paved the way for the Ruhr Authority.

Trustees for the heavy industries were appointed on behalf of the former owners, and it was stated, they would govern the iron, coal and steel industries until "the German people either through a government for the whole of Germany or through one for the western zones, decided whether these industries should be publicly or privately owned." The very form of the new set-up made it clear that no eventual public ownership was intended.

The new German Steel Trustees Association was to draw up plans for rehabilitating the former steel combines in smaller units. The trustees – many of them former Nazis and industrialists headed by Herr Dingelbacher – would be the new boards of directors. They must have no connection at all with the former owners! They must never act in the interests of the former owners. All steel-producing firms would be accepted into the new set-up. The only proviso was that they must no longer own coal or iron-ore mines.

Law 75 was followed by the Ruhr Statute which set up a 7-nation Council to control the Ruhr, with America and Britain having a controlling voice, nine out of the 15 votes. (Three votes were allotted Germany, but would be exercised by the occupying powers.) The Ruhr Authority was rushed through before France had thrown in her zone to make Trizonia out of Bizonia and so was largely an Anglo-American construction. It was condemned throughout Germany by all political parties and by the trade unions.

Even the Social Democrats on whom the British could normally rely for support condemned the Ruhr Authority and Law 75, and said they would fight for the revision of the Ruhr "Dictate” and would continue to press for socialisation of the Ruhr industries for the benefit of Germany and of Europe as a whole.

The British Zone Communist leader, Max Reimann was arrested and brought to trial for a speech in which he strongly condemned the Ruhr Authority which he described as a "colonial law." General Bishop the British Zonal Commander was so anxious to jail Reimann, that he ordered his arrest on the basis of German right wing newspaper reports of his speech.

When Reimann was brought before the Court, there was no written evidence of what he had said. Main witnesses for the prosecution were three German journalists who admitted they had taken no shorthand notes of what Reimann had said. The Communist leader demanded that the records of his speech taken by the British-controlled North-West German Radio, should be played in Court. The records, it seemed, had "most regrettably been destroyed." Most fortunate for the prosecution.

A British lawyer, Collard, who came from London to defend Reimann, described the charges as "an unwarrantable interference with freedom of speech which if sustained would mean an end to the democracy we wish to establish in Germany;" Collard concluded: "If Germans are to be sentenced on such charges, all German politicians might as well pack up and go home and leave the administration to British Military Government."

"Justice" had to be administered. It would have been too great a loss of prestige if Reimann had been acquitted. He was found guilty and sentenced to three months' imprisonment. An appeal to the Supreme Court was dismissed. Later he was released from prison to help him carry on his parliamentary duties in connection with the Bonn Constitution, but was re-imprisoned afterwards and served his full term.

The Reimann trial was a scandalous blot on British justice in Germany and was a flagrant act of political discrimination. The British encouraged West German politicians to make the most insulting and inflammatory remarks about Soviet policy and personalities; allowed them to agitate openly for the return of Germany’s lost territories; allowed them to foment nationalism and anti-Semitism, but Reimann, because he as a Communist, was arrested on a trumped-up charge and jailed with no real evidence brought against him.

At the time of writing, the Ruhr seems in a fair way of being returned if not to its former owners at least to men every bit as dangerous. Explicit formulae for defining war criminals and bringing them before the Courts, laid down in the days when Roosevelt was still representing the United States, was responsible for netting some of the important industrialists on charges of conspiring for war and crimes against humanity. By this procedure some of the top industrialists landed in jail. But for every one in jail there are twenty abroad every bit as dangerous.

A glance at the names of some of them now in key positions in Trizonia, will give an index, as to the chances of turning the Ruhr industries over to public ownership.

In Berlin, the story on socialisation is as miserable as its history in the American and British Zones. In the October, 1946, elections, the parties committed to socialisation received 68.5 per cent. of the votes. The only one of the four parties, the Liberal Democrats, which campaigned openly on a "free enterprise" ticket, came at the bottom of the list with 9.7 per cent.

After months of weary negotiations in the City Council, a socialisation bill was passed, which met with the essential approval of all but the "Liberal Democrats." For months more, one excuse after another was found for delaying approval of the bill, by the Allied Kommandatura. It was passed back and forth among the Committees, with the Russians always pressing for its acceptance, the British and American playing the usual time-wasting game. The British were in some difficulties about it because they were under pressure from the Social Democrats, who in turn could not afford to have the S.E.D. appear as the only party pushing socialisation.

Eventually Soviet impatience at the continued obstruction was expressed at a press conference by the Soviet delegate at the Kommandatura, General Kotikov, who related the whole history of the attempts to have the bill passed.

Deeply pained by such Soviet "treachery" at disclosing the affairs of the Kommandatura, the British and Americans however finally agreed to discuss the Bill once more. This time it was definitely turned down by the western powers. "Socialisation measures were approved in principle" the British spokesman told press correspondents, "but it is felt that insufficient provision has been made for compensation to German owners and shareholders."

I well remember the hurt look on the face of the spokesman when I put the question: "Under what section of Allied policy are the occupying powers obliged to defend the interests of German capitalists from the elected representatives of the German people?" Of course the answer is "Fair Play."

The bill was referred back to the City Council again and was buried under wrangling committees until the night when Colonel Howley yawned at a Kommandatura meeting and said: "Well boys, you can fight it out among yourselves. Me, I'm going home," and wrote "FINIS" to the Allied Kommandatura of Berlin. The West Berlin City Council, set up after Howley had wrecked the Kommandatura, was never unkind enough to embarrass the British and Americans with socialisation proposals.

Whether it was American military government in Hesse, British military government in North-Rhine Westphalia, or both in the case of Berlin, the pattern of the wreckers was the same. Oppose socialisation. Use every political, economic, moral argument, but at all costs save the industries for capitalism. It was the pattern everywhere of supporting reaction against progress; a pattern of supporting the trusts and fighting those who wanted to socialise and decartelise. It was the pattern of supporting the Junkers against those who wanted to carry out land reform; the pattern of keeping the big Nazis in their jobs as long as possible; it was the pattern of encouraging nationalism as long as it was of a "healthy" nature and took the form of being anti-Soviet, anti-Czech, and anti-Polish. It was a pattern which increasingly gave America the dominant voice in German affairs and which increasingly opened the way for penetration of American capital. How could they agree to socialise future profitable fields of investment? How could they decartelise enterprises in which their own capital was involved? How could they destroy a war potential needed for a future war against the Soviet Union?

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