Reichswerke Hermann Göring
Encyclopedia
Reichswerke Hermann Göring was an industrial conglomerate of Nazi Germany
. It was established in July 1937 to extract and process domestic iron ores from Salzgitter
that were deemed uneconomical by the privately held steel mill
s. The state-owned Reichswerke was seen as a vehicle of hastening growth in ore mining and steel output regardless of private capitalists' plans and opinions, which ran contrary to Adolf Hitler
's strategic vision. In November 1937 Hermann Göring
obtained unchecked access to state financing and launched a chain of mergers, diversifying into military industries with the absorption of Rheinmetall
. Göring himself supervised the Reichswerke but did not own it in any sense and did not make personal profit from it directly, although at times he withdrew cash for personal expenses.
After the Anschluss
the Reichswerke absorbed Austrian heavy industries, including those owned by private German investors. The cluster of steel mills and supporting companies in Linz
became its most important asset. Nazi leadership regarded captured assets as the property of the state and were not willing to share the spoils with German businesses. After the dismemberment of Czechoslovakia
the Reichswerke absorbed between 50 and 60 per cent of Czech heavy industries. The pattern was repeated in occupied Poland, France and the Soviet Union. The Reichswerke operated captured assets as far from its base as Liepāja
in Latvia
and Donetsk
in Eastern Ukraine
. It provided one-eighth of German steel output during World War II and created a Nazi-controlled military complex that was independent of private interests. By the end of 1941 the Reichswerke became the largest company in Europe and probably in the whole world, with a capital of 2.4 billion reichsmark
and about half a million workers.
In 1942 the inefficient structure was reduced in size. Its weapons and munitions assets were integrated into the Ministry of Armaments; the mining and steel core of the Reichswerke continued operation under Göring's supervision until the end of the war, albeit at a loss. The conglomerate was dismembered by the Allies in 1944–1945, but the Salzgitter plant continued operations as Reichswerke until 1953. The Reichswerke logo, which resembled Göring's coat of arms
, remained in use by Peine+Salzgitter until the middle of 1980s.
area, recovered from the Great Depression
and reached nearly full utilization of its mills. It was dominated by privately held VS, Krupp
, Gutehoffnungshütte and Mannesmann
. Three quarters of iron ore processed in Germany was imported; domestic ore reserves in Salzgitter
area were deemed to be of too poor quality to be economical. Demand for iron and steel rose in line with the rise in military spending, further increasing dependence on imports. Influential people inside the Nazi Party, including Hitler's economic advisor Willhelm Keppler, rallied to increase domestic iron ore mining.
Iron ore became the principal problem of the Four Year Plan
(1936–1940). In October 1936 Göring learned that Stewarts & Lloyds
foundry in Corby
had successfully smelted low-grade ores; the new technology removed the barriers for Göring's plans. In December 1936 Göring announced that domestic ore, iron and steel program had become a national priority and that he would not tolerate hesitation or obstruction by private owners of the resources. Private capital raised their objections against rapid growth, and Göring settled to take ore mining under state control.
Throughout the first half of 1937 Göring rallied for self-sufficient steel industry, and against the steel barons. His radical calls improved his own political weight and silenced the opposition. Göring's aim of bringing the economy in line with Hitler's strategic plans was fully supported by Nazi press. The danger of relying on ore imports was proven by the strikes and anti-Nazi mood in Sweden and by the success of the Popular Front
in France. In July 1937 the steel barons were stunned by a decree which instituted the Reichswerke, an integrated state company tasked with surpassing the Ruhr
in finished steel output. Fearing creation of excessive industrial capacity and cutthroat competition with the state, they cautiously discussed the ways of curbing Göring's ambitions. They joined arms with Göring's adversary Hjalmar Schacht
, who denied state financing to Göring's project.
July 23, 1937 Göring announced that the Reichswerke would begin mining and processing Salzgitter
ores and that the government would take over privately held ore deposits in exchange for minority shares in the new enterprises. Paul Pleiger
became the managing director. Critics argued that the Salzgitter project would consume more steel than it could produce in three years. The Ruhr attempted a coordinated response, but wire-tapping and surveillance gave Göring advance knowledge of the steel barons' moves, and he preempted their organized action through personal threats and promises. The steel barons escaped an open confrontation with the regime but the trust between Nazi leadership and the big business was lost forever. Schacht was compelled to resign in November 1937, his function passed to Göring.
The Salzgitter project recruited workforce from all over Germany, Austria, Italy, the Netherlands and other countries. It produced first pig iron
in October 1939 and first steel in August 1940. A large metalworking plant, Stahlwerke Braunschweig, was being built nearby since March 1940; eventually it became one of the largest plants in the country, employing ten thousand workers. The majority of Salzgitter area staff, 47 thousand workers, were non-Germans. In five years, 1937 to 1942, population increased fivefold. Housing was not sufficient even for native Germans; foreign workers had to live in seventy makeshift camps. The Gestapo
ran an on-site correctional camp for the delinquent workers. Forced labor of concentration camp prisoners had not been employed until May 1944; the three camps that supplied slaves to Salzgitter contained up to 6,500 prisoners. Another local camp, Drutte, supplied slave workers for the Reichwerke's ammunition plants since 1942 (see List of subcamps of Neuengamme, Celler Hasenjagd
). Salzgitter has been the target of Allied bombings several times but damage to the plant was insignificant, its blast furnaces operated until captured by the Americans in April 1945.
After the removal of Schacht in November 1937 the Reichswerke rapidly grew while privately held steel mills of the Ruhr
were deprived of capital (their capacity remained at 16 million tons p.a. until the outbreak of World War II). In February 1938 Göring pumped up the Reichswerke capital from 5 to 400 million reichsmark. This started a chain of mergers. In April the Reichswerke moved into weapons production by absorbing Rheinmetall
. In a few following months the Reichswerke, once an insignificant German steel company, consolidated most of Austrian heavy industries, from extraction of ore to production of advanced weapons.
Göring turned his eyes to Austrian steel in 1937. The Anschluss
of March 1938 gave Göring practically unlimited access to Austrian resources. The Reichswerke's activities in Austria demonstrated that Göring regarded captured assets as state property and was not willing to share the fortunes with private German businesses – on the contrary, the Reichswerke absorbed Austrian assets that were already owned by German investors and completely eliminated the barons of Ruhr from Austrian industry. Its primary target in Austria, Alpine Montangesellshaft steel company, was 56% owned by German giant VS. Immediately after the anschluss Göring advised VS to speed up mining its Austrian ores, and again the private business refused in fear of overproduction
. The Reichswerke purchased a non-controlling share in Alpine and then wrestled complete control over the company for six months. Regulatory pressure threatened to devalue Alpine, and in March 1939 VS stepped aside. Alpine's ore resources were vital for Göring's second great project – the new vertically integrated
cluster of steel mills in Linz
which also included Eisenwerke Oberdonau
and numerous construction and shipping companies. Göring, in his functions of President of Prussia
and Chief of the Luftwaffe
, also established close ties between the Reischwerke and the oil and aircraft industries.
Relationships between the state and steel barons continued to deteriorate, and Göring used the same pattern of intimidation to extort other Austrian and later Czech assets from their past owners. The Reichswerke absorbed 50 to 60 per cent of Czech heavy industry, and a slightly lesser share in Austria. Takeover mechanism ranged from bona fide stock purchase to control by proxy through dependent local banks to outright confiscation, as was the case of British-owned Rothschild family
mill in Vitkovice
. Sudetenland
, annexed in 1938, brought the first substantial coal reserves. In Germany, the Reichswerke effectively subdued the Ruhr barons by forcing them to supply coal to Salzgitter blast furnace
s, commissioned in 1939, at below-market price. "Acquisition" of Polish coal mines allowed the Reichwerke to drop coal prices even lower.
After the outbreak of World War II the Reichswerke abandoned peacetime formalities and simply took over all "German" assets it found attractive. It declared itself "a trustee
for the German state" for the duration of the war, a white knight
saving occupied countries from "colonialism
" of big business. Settlements and compensations, when recognized, were delayed until the end of the war. But the Reichswerke's own post-war plans, developed in 1942, called for a further increase of state control over heavy industries and industrialization of the eastern territories at the expense of the Ruhr. The Reichswerke clearly favored industrial development in Central Europe, rather than Germany itself, in part because it was out of reach of allied bombers
. By 1943-1944 half of the Reichswerke iron and steel were produced in the occupied territories, the other half in Germany (including annexed Austria).
Romania
n assets, almost all of the country's coal and steel capacity, were acquired through a series of friendly arrangements and placed under joint German-Romanian control. The Soviet coal and steel industry captured in 1941–1942 became the Reichswerke's most challenging task. Hitler tasked the Reichswerke with harvesting the abandoned plants as soon as possible. Pleiger compelled the old steel barons of the Ruhr to send in their managing teams and literally "adopt" the Soviet assets. Reluctant steel barons objected but had to comply with Hitler's explicit order. Radical Nazis objected, for different reasons, but could not offer a better solution.
A fourth division was added up later for the captured Soviet assets – Kryvbas
and Donets Basin
plants and mines in Ukraine
, with lesser interests in Belarus
, Latvia
and Central Russia.
The company amassed too many plants to run them effectively. Instead of pinpointing the most promising assets, it spread the available resources over everything it had. Its managers did not feel the pressure of competition that shaped the management of private companies. Richard Overy
noted that Göring's obsession with long-term megaproject
s not only drained the economy, but was in stark contrast with the ideology of blitzkrieg
.
Inability to control the huge conglomerate became evident in 1942, and Pleiger persuaded Göring to reduce the Reichwerke to coal, iron and steel industries. The Reichswerke passed control over its weapons and munitions plants to Organisation Todt
and its successor, Ministry of Armaments. Still, the organization operated at a loss; in fact, Block A posted losses in every year of its existence, from 1939 to 1945. The French operations fared even worse.
(Luxembourg), Skoda Works
, Vitkovice Steel, Poldi Hütte (Czech), Huta Stalowa Wola
(Poland), Kryvorizhstal
(Ukraine) etc.
The Reichswerke assets in allied-occupied Austria were nationalized by the First Nationalization Law enacted by the Austrian Parliament on July 26, 1946. The ore mines in Erzberg and the steel mills in Linz, reduced to rubble by allied air raids, were reorganized into the state-owned VÖEST (now part of voestalpine
). Reconstruction of these assets became a key priority of the Marshall Plan
in Austria. Nationalization was supported by the American Department of State
and opposed by the U. S. Army generals, who rallied for privatization. Steyr-Daimler-Puch
, once owned by the Reichswerke, and controlled by the U.S. Army, became a pilot model for the private modernization advocated by Mark W. Clark. Eventually the Department of State prevailed and the Austrians were allowed to nationalize the plants at will. The Reichswerke assets in the Soviet zone of occupation were taken over by the Administration for Soviet Property in Austria
and returned to Austria for a ransom in 1955.
The Salzgitter furnaces were shut down and earmarked for dismantling that devastated the town's economy. It began in earnest in 1947 and, effectively, ended up in demolition of furnaces and foundries. Salzgitter was flooded with forty four thousand of German refugees from the East
, unemployment exceeded 30%, and the British considered physically resettling the residents in fear of a Communist uprising.
Of the thirty seven thousand displaced person
s (mostly from Poland) working in Salzgitter in 1945, many refused to be resettled, and deportations continued until mid-1950s. In February 1950 the workers stood up against demolition of their plants and eventually won the bloodless standoff with the British troops. Dismantling continued for another year, but steelmaking in Salzgitter was saved. The state-owned plant operated under the name Reichswerke until 1953, was renamed AG für Bergbau- und Hüttenbetrieb, and eventually became Salzgitter AG
. The Reichswerke logo, which resembled Göring's coat of arms, was not retired until the 1980s.
Nazi Germany
Nazi Germany , also known as the Third Reich , but officially called German Reich from 1933 to 1943 and Greater German Reich from 26 June 1943 onward, is the name commonly used to refer to the state of Germany from 1933 to 1945, when it was a totalitarian dictatorship ruled by...
. It was established in July 1937 to extract and process domestic iron ores from Salzgitter
Salzgitter
Salzgitter is an independent city in southeast Lower Saxony, Germany, located between Hildesheim and Braunschweig. Together with Wolfsburg and Braunschweig, Salzgitter is one of the seven Oberzentren of Lower Saxony...
that were deemed uneconomical by the privately held steel mill
Steel mill
A steel mill or steelworks is an industrial plant for the manufacture of steel.Steel is an alloy of iron and carbon. It is produced in a two-stage process. First, iron ore is reduced or smelted with coke and limestone in a blast furnace, producing molten iron which is either cast into pig iron or...
s. The state-owned Reichswerke was seen as a vehicle of hastening growth in ore mining and steel output regardless of private capitalists' plans and opinions, which ran contrary to Adolf Hitler
Adolf Hitler
Adolf Hitler was an Austrian-born German politician and the leader of the National Socialist German Workers Party , commonly referred to as the Nazi Party). He was Chancellor of Germany from 1933 to 1945, and head of state from 1934 to 1945...
's strategic vision. In November 1937 Hermann Göring
Hermann Göring
Hermann Wilhelm Göring, was a German politician, military leader, and a leading member of the Nazi Party. He was a veteran of World War I as an ace fighter pilot, and a recipient of the coveted Pour le Mérite, also known as "The Blue Max"...
obtained unchecked access to state financing and launched a chain of mergers, diversifying into military industries with the absorption of Rheinmetall
Rheinmetall
Rheinmetall AG is a German automotive and defence company with factories in Düsseldorf, Kassel and Unterlüß. The company has a long tradition of making guns and artillery pieces...
. Göring himself supervised the Reichswerke but did not own it in any sense and did not make personal profit from it directly, although at times he withdrew cash for personal expenses.
After the Anschluss
Anschluss
The Anschluss , also known as the ', was the occupation and annexation of Austria into Nazi Germany in 1938....
the Reichswerke absorbed Austrian heavy industries, including those owned by private German investors. The cluster of steel mills and supporting companies in Linz
Linz
Linz is the third-largest city of Austria and capital of the state of Upper Austria . It is located in the north centre of Austria, approximately south of the Czech border, on both sides of the river Danube. The population of the city is , and that of the Greater Linz conurbation is about...
became its most important asset. Nazi leadership regarded captured assets as the property of the state and were not willing to share the spoils with German businesses. After the dismemberment of Czechoslovakia
German occupation of Czechoslovakia
German occupation of Czechoslovakia began with the Nazi annexation of Czechoslovakia's northern and western border regions, known collectively as the Sudetenland, under terms outlined by the Munich Agreement. Nazi leader Adolf Hitler's pretext for this effort was the alleged privations suffered by...
the Reichswerke absorbed between 50 and 60 per cent of Czech heavy industries. The pattern was repeated in occupied Poland, France and the Soviet Union. The Reichswerke operated captured assets as far from its base as Liepāja
Liepaja
Liepāja ; ), is a republican city in western Latvia, located on the Baltic Sea directly at 21°E. It is the largest city in the Kurzeme Region of Latvia, the third largest city in Latvia after Riga and Daugavpils and an important ice-free port...
in Latvia
Latvia
Latvia , officially the Republic of Latvia , is a country in the Baltic region of Northern Europe. It is bordered to the north by Estonia , to the south by Lithuania , to the east by the Russian Federation , to the southeast by Belarus and shares maritime borders to the west with Sweden...
and Donetsk
Donetsk
Donetsk , is a large city in eastern Ukraine on the Kalmius river. Administratively, it is a center of Donetsk Oblast, while historically, it is the unofficial capital and largest city of the economic and cultural Donets Basin region...
in Eastern Ukraine
Ukraine
Ukraine is a country in Eastern Europe. It has an area of 603,628 km², making it the second largest contiguous country on the European continent, after Russia...
. It provided one-eighth of German steel output during World War II and created a Nazi-controlled military complex that was independent of private interests. By the end of 1941 the Reichswerke became the largest company in Europe and probably in the whole world, with a capital of 2.4 billion reichsmark
German reichsmark
The Reichsmark was the currency in Germany from 1924 until June 20, 1948. The Reichsmark was subdivided into 100 Reichspfennig.-History:...
and about half a million workers.
In 1942 the inefficient structure was reduced in size. Its weapons and munitions assets were integrated into the Ministry of Armaments; the mining and steel core of the Reichswerke continued operation under Göring's supervision until the end of the war, albeit at a loss. The conglomerate was dismembered by the Allies in 1944–1945, but the Salzgitter plant continued operations as Reichswerke until 1953. The Reichswerke logo, which resembled Göring's coat of arms
Coat of arms
A coat of arms is a unique heraldic design on a shield or escutcheon or on a surcoat or tabard used to cover and protect armour and to identify the wearer. Thus the term is often stated as "coat-armour", because it was anciently displayed on the front of a coat of cloth...
, remained in use by Peine+Salzgitter until the middle of 1980s.
Salzgitter
In 1935–1936 German steel industry, concentrated in the RuhrRuhr
The Ruhr is a medium-size river in western Germany , a right tributary of the Rhine.-Description:The source of the Ruhr is near the town of Winterberg in the mountainous Sauerland region, at an elevation of approximately 2,200 feet...
area, recovered from the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
and reached nearly full utilization of its mills. It was dominated by privately held VS, Krupp
Krupp
The Krupp family , a prominent 400-year-old German dynasty from Essen, have become famous for their steel production and for their manufacture of ammunition and armaments. The family business, known as Friedrich Krupp AG Hoesch-Krupp, was the largest company in Europe at the beginning of the 20th...
, Gutehoffnungshütte and Mannesmann
Mannesmann
Mannesmann AG was a German corporation with headquarters in Düsseldorf. The company was founded in 1890 originally to produce seamless steel tubes. It was traded on the Frankfurt Stock Exchange. The company had 130,860 employees worldwide and revenues of €23.27 billion.Over time, Mannesmann...
. Three quarters of iron ore processed in Germany was imported; domestic ore reserves in Salzgitter
Salzgitter
Salzgitter is an independent city in southeast Lower Saxony, Germany, located between Hildesheim and Braunschweig. Together with Wolfsburg and Braunschweig, Salzgitter is one of the seven Oberzentren of Lower Saxony...
area were deemed to be of too poor quality to be economical. Demand for iron and steel rose in line with the rise in military spending, further increasing dependence on imports. Influential people inside the Nazi Party, including Hitler's economic advisor Willhelm Keppler, rallied to increase domestic iron ore mining.
Iron ore became the principal problem of the Four Year Plan
Four year plan
The Four Year Plan was a series of economic reforms created by the Nazi Party. The main aim of the four year plan was to prepare Germany for war in four years...
(1936–1940). In October 1936 Göring learned that Stewarts & Lloyds
Stewarts & Lloyds
Stewarts & Lloyds was a steel tube manufacturer with its headquarters based at Corby, Northamptonshire, England. The company was created in 1903 by the amalgamation of two of the largest iron and steel makers in Britain, A. & J. Stewart & Menzies Ltd, Coatbridge, North Lanarkshire, Scotland and...
foundry in Corby
Corby
Corby Town is a town and borough located in the county of Northamptonshire. Corby Town is 23 miles north-east of the county town, Northampton. The borough had a population of 53,174 at the 2001 Census; the town on its own accounted for 49,222 of this figure...
had successfully smelted low-grade ores; the new technology removed the barriers for Göring's plans. In December 1936 Göring announced that domestic ore, iron and steel program had become a national priority and that he would not tolerate hesitation or obstruction by private owners of the resources. Private capital raised their objections against rapid growth, and Göring settled to take ore mining under state control.
Throughout the first half of 1937 Göring rallied for self-sufficient steel industry, and against the steel barons. His radical calls improved his own political weight and silenced the opposition. Göring's aim of bringing the economy in line with Hitler's strategic plans was fully supported by Nazi press. The danger of relying on ore imports was proven by the strikes and anti-Nazi mood in Sweden and by the success of the Popular Front
Popular Front (France)
The Popular Front was an alliance of left-wing movements, including the French Communist Party , the French Section of the Workers' International and the Radical and Socialist Party, during the interwar period...
in France. In July 1937 the steel barons were stunned by a decree which instituted the Reichswerke, an integrated state company tasked with surpassing the Ruhr
Ruhr
The Ruhr is a medium-size river in western Germany , a right tributary of the Rhine.-Description:The source of the Ruhr is near the town of Winterberg in the mountainous Sauerland region, at an elevation of approximately 2,200 feet...
in finished steel output. Fearing creation of excessive industrial capacity and cutthroat competition with the state, they cautiously discussed the ways of curbing Göring's ambitions. They joined arms with Göring's adversary Hjalmar Schacht
Hjalmar Schacht
Dr. Hjalmar Horace Greeley Schacht was a German economist, banker, liberal politician, and co-founder of the German Democratic Party. He served as the Currency Commissioner and President of the Reichsbank under the Weimar Republic...
, who denied state financing to Göring's project.
July 23, 1937 Göring announced that the Reichswerke would begin mining and processing Salzgitter
Salzgitter
Salzgitter is an independent city in southeast Lower Saxony, Germany, located between Hildesheim and Braunschweig. Together with Wolfsburg and Braunschweig, Salzgitter is one of the seven Oberzentren of Lower Saxony...
ores and that the government would take over privately held ore deposits in exchange for minority shares in the new enterprises. Paul Pleiger
Paul Pleiger
Paul Pleiger was a German state adviser and corporate general director....
became the managing director. Critics argued that the Salzgitter project would consume more steel than it could produce in three years. The Ruhr attempted a coordinated response, but wire-tapping and surveillance gave Göring advance knowledge of the steel barons' moves, and he preempted their organized action through personal threats and promises. The steel barons escaped an open confrontation with the regime but the trust between Nazi leadership and the big business was lost forever. Schacht was compelled to resign in November 1937, his function passed to Göring.
The Salzgitter project recruited workforce from all over Germany, Austria, Italy, the Netherlands and other countries. It produced first pig iron
Pig iron
Pig iron is the intermediate product of smelting iron ore with a high-carbon fuel such as coke, usually with limestone as a flux. Charcoal and anthracite have also been used as fuel...
in October 1939 and first steel in August 1940. A large metalworking plant, Stahlwerke Braunschweig, was being built nearby since March 1940; eventually it became one of the largest plants in the country, employing ten thousand workers. The majority of Salzgitter area staff, 47 thousand workers, were non-Germans. In five years, 1937 to 1942, population increased fivefold. Housing was not sufficient even for native Germans; foreign workers had to live in seventy makeshift camps. The Gestapo
Gestapo
The Gestapo was the official secret police of Nazi Germany. Beginning on 20 April 1934, it was under the administration of the SS leader Heinrich Himmler in his position as Chief of German Police...
ran an on-site correctional camp for the delinquent workers. Forced labor of concentration camp prisoners had not been employed until May 1944; the three camps that supplied slaves to Salzgitter contained up to 6,500 prisoners. Another local camp, Drutte, supplied slave workers for the Reichwerke's ammunition plants since 1942 (see List of subcamps of Neuengamme, Celler Hasenjagd
Celler Hasenjagd
The Celler Hasenjagd was a massacre of concentration camp inmates that took place in Celle, Prussian Hanover, in the last weeks of the Second World War...
). Salzgitter has been the target of Allied bombings several times but damage to the plant was insignificant, its blast furnaces operated until captured by the Americans in April 1945.
Expansion
Ruhr
The Ruhr is a medium-size river in western Germany , a right tributary of the Rhine.-Description:The source of the Ruhr is near the town of Winterberg in the mountainous Sauerland region, at an elevation of approximately 2,200 feet...
were deprived of capital (their capacity remained at 16 million tons p.a. until the outbreak of World War II). In February 1938 Göring pumped up the Reichswerke capital from 5 to 400 million reichsmark. This started a chain of mergers. In April the Reichswerke moved into weapons production by absorbing Rheinmetall
Rheinmetall
Rheinmetall AG is a German automotive and defence company with factories in Düsseldorf, Kassel and Unterlüß. The company has a long tradition of making guns and artillery pieces...
. In a few following months the Reichswerke, once an insignificant German steel company, consolidated most of Austrian heavy industries, from extraction of ore to production of advanced weapons.
Göring turned his eyes to Austrian steel in 1937. The Anschluss
Anschluss
The Anschluss , also known as the ', was the occupation and annexation of Austria into Nazi Germany in 1938....
of March 1938 gave Göring practically unlimited access to Austrian resources. The Reichswerke's activities in Austria demonstrated that Göring regarded captured assets as state property and was not willing to share the fortunes with private German businesses – on the contrary, the Reichswerke absorbed Austrian assets that were already owned by German investors and completely eliminated the barons of Ruhr from Austrian industry. Its primary target in Austria, Alpine Montangesellshaft steel company, was 56% owned by German giant VS. Immediately after the anschluss Göring advised VS to speed up mining its Austrian ores, and again the private business refused in fear of overproduction
Overproduction
In economics, overproduction, oversupply or excess of supply refers to excess of supply over demand of products being offered to the market...
. The Reichswerke purchased a non-controlling share in Alpine and then wrestled complete control over the company for six months. Regulatory pressure threatened to devalue Alpine, and in March 1939 VS stepped aside. Alpine's ore resources were vital for Göring's second great project – the new vertically integrated
Vertical integration
In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or service, and the products combine to...
cluster of steel mills in Linz
Linz
Linz is the third-largest city of Austria and capital of the state of Upper Austria . It is located in the north centre of Austria, approximately south of the Czech border, on both sides of the river Danube. The population of the city is , and that of the Greater Linz conurbation is about...
which also included Eisenwerke Oberdonau
Eisenwerke Oberdonau
Eisenwerke Oberdonau was a large steel and iron producing company, a holding of several steel works in southern Germany and Austria. Created after the Anschluss of Austria, it formed the part of the so-called Reichswerke Hermann Göring AG cartel, the main supplier of steel and iron for the German...
and numerous construction and shipping companies. Göring, in his functions of President of Prussia
Prussia
Prussia was a German kingdom and historic state originating out of the Duchy of Prussia and the Margraviate of Brandenburg. For centuries, the House of Hohenzollern ruled Prussia, successfully expanding its size by way of an unusually well-organized and effective army. Prussia shaped the history...
and Chief of the Luftwaffe
Luftwaffe
Luftwaffe is a generic German term for an air force. It is also the official name for two of the four historic German air forces, the Wehrmacht air arm founded in 1935 and disbanded in 1946; and the current Bundeswehr air arm founded in 1956....
, also established close ties between the Reischwerke and the oil and aircraft industries.
Relationships between the state and steel barons continued to deteriorate, and Göring used the same pattern of intimidation to extort other Austrian and later Czech assets from their past owners. The Reichswerke absorbed 50 to 60 per cent of Czech heavy industry, and a slightly lesser share in Austria. Takeover mechanism ranged from bona fide stock purchase to control by proxy through dependent local banks to outright confiscation, as was the case of British-owned Rothschild family
Rothschild family
The Rothschild family , known as The House of Rothschild, or more simply as the Rothschilds, is a Jewish-German family that established European banking and finance houses starting in the late 18th century...
mill in Vitkovice
Vítkovice (Ostrava)
Vítkovice is an administrative district of the city of Ostrava, capital of the Moravian-Silesian Region in the Czech Republic. Situated on the left bank of the Ostravice River in the Moravian part of the city, Vítkovice was a town in its own right until its incorporation in 1924.-History:The...
. Sudetenland
Sudetenland
Sudetenland is the German name used in English in the first half of the 20th century for the northern, southwest and western regions of Czechoslovakia inhabited mostly by ethnic Germans, specifically the border areas of Bohemia, Moravia, and those parts of Silesia being within Czechoslovakia.The...
, annexed in 1938, brought the first substantial coal reserves. In Germany, the Reichswerke effectively subdued the Ruhr barons by forcing them to supply coal to Salzgitter blast furnace
Blast furnace
A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally iron.In a blast furnace, fuel and ore and flux are continuously supplied through the top of the furnace, while air is blown into the bottom of the chamber, so that the chemical reactions...
s, commissioned in 1939, at below-market price. "Acquisition" of Polish coal mines allowed the Reichwerke to drop coal prices even lower.
After the outbreak of World War II the Reichswerke abandoned peacetime formalities and simply took over all "German" assets it found attractive. It declared itself "a trustee
Trustee
Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...
for the German state" for the duration of the war, a white knight
White knight (business)
In business, a white knight, or "friendly investor," may be a corporation or a person that intends to help another firm. There are many types of white knights...
saving occupied countries from "colonialism
Colonialism
Colonialism is the establishment, maintenance, acquisition and expansion of colonies in one territory by people from another territory. It is a process whereby the metropole claims sovereignty over the colony and the social structure, government, and economics of the colony are changed by...
" of big business. Settlements and compensations, when recognized, were delayed until the end of the war. But the Reichswerke's own post-war plans, developed in 1942, called for a further increase of state control over heavy industries and industrialization of the eastern territories at the expense of the Ruhr. The Reichswerke clearly favored industrial development in Central Europe, rather than Germany itself, in part because it was out of reach of allied bombers
Strategic bombing during World War II
Strategic bombing during World War II is a term which refers to all aerial bombardment of a strategic nature between 1939 and 1945 involving any nations engaged in World War II...
. By 1943-1944 half of the Reichswerke iron and steel were produced in the occupied territories, the other half in Germany (including annexed Austria).
Romania
Romania
Romania is a country located at the crossroads of Central and Southeastern Europe, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea...
n assets, almost all of the country's coal and steel capacity, were acquired through a series of friendly arrangements and placed under joint German-Romanian control. The Soviet coal and steel industry captured in 1941–1942 became the Reichswerke's most challenging task. Hitler tasked the Reichswerke with harvesting the abandoned plants as soon as possible. Pleiger compelled the old steel barons of the Ruhr to send in their managing teams and literally "adopt" the Soviet assets. Reluctant steel barons objected but had to comply with Hitler's explicit order. Radical Nazis objected, for different reasons, but could not offer a better solution.
Restructuring
By the end of 1941 the Reichwerke became the largest company in Europe. The conglomerate experienced a series of reorganizations; in January 1941 its assets were arranged in three divisions:- Block A - Coal, Iron and Steel (Germany, Austria, Czech, France, Luxembourg, Poland and Romania)
- Block B - Weapons and Munitions (Germany, Austria, Czech)
- Block C - River and Rail Transportation
A fourth division was added up later for the captured Soviet assets – Kryvbas
Kryvbas
Kryvbas Kryvorizkyi Iron Ore Basin) is an important economic region in central Ukraine, specializing in iron ore mining and the steel industry. It is arguably the main iron ore region of Eastern Europe...
and Donets Basin
Donets Basin
Donbas or Donbass , full rarely-used name Donets Basin , is a historical, economic and cultural region of eastern Ukraine. Originally a coal mining area, it has become a heavily industrialised territory suffering from urban decay and industrial pollution.-Geography:Donbas covers three...
plants and mines in Ukraine
Ukraine
Ukraine is a country in Eastern Europe. It has an area of 603,628 km², making it the second largest contiguous country on the European continent, after Russia...
, with lesser interests in Belarus
Belarus
Belarus , officially the Republic of Belarus, is a landlocked country in Eastern Europe, bordered clockwise by Russia to the northeast, Ukraine to the south, Poland to the west, and Lithuania and Latvia to the northwest. Its capital is Minsk; other major cities include Brest, Grodno , Gomel ,...
, Latvia
Latvia
Latvia , officially the Republic of Latvia , is a country in the Baltic region of Northern Europe. It is bordered to the north by Estonia , to the south by Lithuania , to the east by the Russian Federation , to the southeast by Belarus and shares maritime borders to the west with Sweden...
and Central Russia.
The company amassed too many plants to run them effectively. Instead of pinpointing the most promising assets, it spread the available resources over everything it had. Its managers did not feel the pressure of competition that shaped the management of private companies. Richard Overy
Richard Overy
Richard Overy is a British historian who has published extensively on the history of World War II and the Third Reich. In 2007 as The Times editor of Complete History of the World he chose the 50 key dates of world history....
noted that Göring's obsession with long-term megaproject
Megaproject
A megaproject is an extremely large-scale investment project. Megaprojects are typically defined as costing more than US$1 billion and attracting a lot of public attention because of substantial impacts on communities, environment, and budgets. Megaprojects can also be defined as "initiatives that...
s not only drained the economy, but was in stark contrast with the ideology of blitzkrieg
Blitzkrieg
For other uses of the word, see: Blitzkrieg Blitzkrieg is an anglicized word describing all-motorised force concentration of tanks, infantry, artillery, combat engineers and air power, concentrating overwhelming force at high speed to break through enemy lines, and, once the lines are broken,...
.
Inability to control the huge conglomerate became evident in 1942, and Pleiger persuaded Göring to reduce the Reichwerke to coal, iron and steel industries. The Reichswerke passed control over its weapons and munitions plants to Organisation Todt
Organisation Todt
The Todt Organisation, was a Third Reich civil and military engineering group in Germany named after its founder, Fritz Todt, an engineer and senior Nazi figure...
and its successor, Ministry of Armaments. Still, the organization operated at a loss; in fact, Block A posted losses in every year of its existence, from 1939 to 1945. The French operations fared even worse.
Liquidation
The assets of the Reichswerke were captured by Allied troops in 1943–1945. Plants located outside Germany and Austria, being "German assets", were taken over by the Allies and placed under the supervision of the national governments or, in case of Eastern Europe, the Soviet management. After numerous post-war reorganizations, these plants survived and are still the core assets of ARBEDArbed
ARBED was a major Luxembourg-based steel and iron producing company. Created in 1911 after the merger of three steel producing companies, ARBED was a major actor in the economic history of the Grand-Duchy until it merged in 2002 with two other European steel companies to create Arcelor.- Origins ...
(Luxembourg), Skoda Works
Škoda Works
Škoda Works was the largest industrial enterprise in Austro-Hungary and later in Czechoslovakia, one of its successor states. It was also one of the largest industrial conglomerates in Europe in the 20th century...
, Vitkovice Steel, Poldi Hütte (Czech), Huta Stalowa Wola
Huta Stalowa Wola
Huta Stalowa Wola is a steel mill and manufacturing company in Stalowa Wola, Poland.It was established in 1938-1939 in Second Polish Republic. It was a major part of a series of investments made by the Polish government in the years 1936–1939 to create the Central Industrial Region...
(Poland), Kryvorizhstal
Kryvorizhstal
Kryvorizhstal is Ukraine's largest integrated steel company located in the Ukrainian city of Kryvyi Rih.Bought in 2005 by Mittal Steel, the company is one of the most important businesses in Ukraine and a globally important steel producer. It is the largest steel manufacturer in Ukraine and...
(Ukraine) etc.
The Reichswerke assets in allied-occupied Austria were nationalized by the First Nationalization Law enacted by the Austrian Parliament on July 26, 1946. The ore mines in Erzberg and the steel mills in Linz, reduced to rubble by allied air raids, were reorganized into the state-owned VÖEST (now part of voestalpine
Voestalpine
Voestalpine AG is an international steel company based in Linz, Austria. The company is active in steel, automotive, railway systems, profilform and tool steel industries....
). Reconstruction of these assets became a key priority of the Marshall Plan
Marshall Plan
The Marshall Plan was the large-scale American program to aid Europe where the United States gave monetary support to help rebuild European economies after the end of World War II in order to combat the spread of Soviet communism. The plan was in operation for four years beginning in April 1948...
in Austria. Nationalization was supported by the American Department of State
United States Department of State
The United States Department of State , is the United States federal executive department responsible for international relations of the United States, equivalent to the foreign ministries of other countries...
and opposed by the U. S. Army generals, who rallied for privatization. Steyr-Daimler-Puch
Steyr-Daimler-Puch
Steyr-Daimler-Puch was a large manufacturing conglomerate based in Steyr, Austria, which was broken up in stages between 1987 and 2001. The component parts and operations continued to exist under separate ownership and new names.-History:...
, once owned by the Reichswerke, and controlled by the U.S. Army, became a pilot model for the private modernization advocated by Mark W. Clark. Eventually the Department of State prevailed and the Austrians were allowed to nationalize the plants at will. The Reichswerke assets in the Soviet zone of occupation were taken over by the Administration for Soviet Property in Austria
Administration for Soviet Property in Austria
The Administration for Soviet Property in Austria, or the USIA was formed in the Soviet zone of Allied-occupied Austria in June 1946 and operated until the withdrawal of Soviet troops in 1955. USIA operated as a de-facto state corporation and controlled over four hundred expropriated Austrian...
and returned to Austria for a ransom in 1955.
The Salzgitter furnaces were shut down and earmarked for dismantling that devastated the town's economy. It began in earnest in 1947 and, effectively, ended up in demolition of furnaces and foundries. Salzgitter was flooded with forty four thousand of German refugees from the East
Expulsion of Germans after World War II
The later stages of World War II, and the period after the end of that war, saw the forced migration of millions of German nationals and ethnic Germans from various European states and territories, mostly into the areas which would become post-war Germany and post-war Austria...
, unemployment exceeded 30%, and the British considered physically resettling the residents in fear of a Communist uprising.
Of the thirty seven thousand displaced person
Displaced person
A displaced person is a person who has been forced to leave his or her native place, a phenomenon known as forced migration.- Origin of term :...
s (mostly from Poland) working in Salzgitter in 1945, many refused to be resettled, and deportations continued until mid-1950s. In February 1950 the workers stood up against demolition of their plants and eventually won the bloodless standoff with the British troops. Dismantling continued for another year, but steelmaking in Salzgitter was saved. The state-owned plant operated under the name Reichswerke until 1953, was renamed AG für Bergbau- und Hüttenbetrieb, and eventually became Salzgitter AG
Salzgitter AG
Salzgitter AG is a German company, one of the largest steel producers in Europe with an annual output of around 7 million tonnes.The company was founded in 1937 as Reichswerke Hermann Göring,...
. The Reichswerke logo, which resembled Göring's coat of arms, was not retired until the 1980s.
Further reading
- Wysocki, Gerd (1982, in German). Zwangsarbeit im Stahlkonzern: Salzgitter und die Reichswerke "Hermann Göring," 1937-1945. Magni-Buchladen. ISBN 3922571077. The history and significance of this study is reviewed by Neumann, pp. 31–32.