i 
 
HUGO STINNES 
 
HUGO STINNES 
 
 By 
 HERMANN BRINCKMEYER 
 
 TRANSLATED FROM THE GERMAN BY 
 
 ALFRED B. KUTTNER 
 
 NEW YORK 
 
 B. W. HUEBSCH, Inc. 
 
 MCMXXI 
 
Copyright, 1921, bt 
 B. W. HuEBscH, Inc. 
 Printed in U. S. A. 
 
 • «■ 
 « •/ » • • 
 
 » r • r » 
 
CONTENTS 
 
 CHAP. '^^I? 
 
 INTRODUCTION VÜ 
 
 I. THE PERSONALITY OF HUGO STINNES . I 
 
 II. HIS ANCESTORS I4 
 
 III. HIS FIRST ENTERPRISES 29 
 
 ■ IV. HIS PART IN THE WORLD WAR .... $0 
 V. THE MINING TRUST: THE RHINE-ELBE- 
 UNION 56 
 
 VI. THE ELECTRO-MINING TRUST: THE SIE- 
 MENS - RHINE - ELBE - SCHUCKERT - 
 
 UNION 64 
 
 VII. STINNES* AFFILIATIONS IN GERMANY AND 
 
 ABROAD 83 
 
 VIII. STINNES AND THE NEWSPAPERS . . . I02 
 
 IX. STINNES IN THE PUBLIC EYE .... IO9 
 X. STINNES AND THE SOCIALIZATION OF 
 
 INDUSTRIES 127 
 
 XI. THE SIGNIFICANCE OF STINNES IN GERMAN 
 
 ECONOMIC DEVELOPMENT .... I34 
 
 A p^ r'y ^\ 1 
 
INTRODUCTION 
 
 There is a vast difference of opinion in 
 Germany about Hugo Stinnes, but his 
 name is on everybody's lips and his activ- 
 ities are the subject of constant discus- 
 sion. 
 
 For many people he is an idol, for others 
 he is a terror abroad in the land. The so- 
 cialists of the Vorwärts look upon him as a 
 necessary product of evolution and a path- 
 finder for the state of the future. According 
 to Marxian theory, he is converting cap- 
 italism into the cocoon stage from which 
 the finished butterfly of socialistic collec- 
 tivism will some day emerge. He should 
 therefore not be disturbed in his activities! 
 
 Socialists may yet come to appreciate him 
 
 vii 
 
INTRODUCTION 
 
 as one of their greatest figures. Socialists 
 of a different persuasion regard him as a 
 loathsome vampire of the proletariat. W. 
 von Moellendorf suspects Stinnes of being an 
 opportunist emancipated from all moral 
 considerations, whereas Walter Rathenau 
 characterizes him as a particularistic indus- 
 trial baron whose work is destroying the 
 present system as a step towards collectiv- 
 ism. Sentimental Rhinelanders speak of 
 "Hugo" with the same respectful famili- 
 arity with which the Israelites may have 
 used the name of their leader in the desert. 
 And undoubtedly many a simple soul pic- 
 tures this enigmatic man as a just and stern 
 patriarch. 
 
 Stinnes is certainly no fine phrase-maker 
 or dreamer. He is never idle. While thou- 
 sands of brain and manual workers are 
 standing by in despair, and thousands of 
 the most intelligent leaders are endlessly 
 discussing what kind of cement should be 
 used in the reconstruction of Germany, 
 
 this man, calm and unconcerned, is building 
 
 viii 
 
INTRODUCTION 
 
 what may be either an edifice of steel des- 
 tined to outlast time, or a Babylonian 
 Tower that will plunge the builders into 
 confusion. 
 
HUGO STINNES 
 
 CHAPTER I 
 
 THE PERSONALITY OF HUGO STINNES 
 
 Hugo Stinnes has reached the age of fifty. 
 He has the appearance of a worker and 
 could go about in the clothes of a foreman 
 or a miner without attracting attention. 
 He is like a piece of coal wandering about 
 among his own coal mines. 
 
 His thick head is set upon a stocky trunk. 
 His black hair is cut close, the face is pale 
 and expansive, the beard is black as coal, 
 the nose is curved and the eyes are heavily 
 underlined. A German paper recently 
 called him the "Assyrian King.'* 
 
 His external appearance is devoid of pose, 
 he seems heavy and solid. He walks with a 
 
_ HUGO STINNES 
 
 slight stoop and shuffles along like a sailor. 
 Clothes, habits and bearing denote a man 
 of simple tastes. "His pale face, his rather 
 tired eyes and his modest clothes make him 
 look more like a labor secretary than a Ger- 
 man Rockefeller" — to quote a French re- 
 porter who saw him in Spa. _ 
 
 Stinnes never stops working. It would 
 certainly be a mistake to assume that he is 
 driven by personal ambition, or money 
 greed, or considerations of public welfare. 
 Anyone who knows the captains of industry 
 of the Rhine-Westphalian district in their 
 own bailiwick, will understand him. These 
 men have an irresistible impulse to do cre- 
 ative work. They are the engineers who 
 organize human activity for constructive 
 work; they know their building material 
 through and through, and often go on 
 scheming and figuring in their sleep, while 
 dreaming about new combinations. These 
 dyed-in-the-wool industrial leaders know 
 nothing of rest, luxury, or enjoyment. 
 They live and toil in the simplest surround- 
 
HUGO STINNES 
 
 ings. Even in their rare moments of leisure 
 they have a preoccupied air, as if their 
 minds were busy with problems. One can- 
 not imagine men Hke Thyssen, Klöckner, 
 Kirdorf or Stinnes at a cabaret. Nor will 
 you find them in the false heroic pose of the 
 period of Kaiser Wilhelm's romanticism. It 
 is interesting to know that these men can 
 drive through the workingmen's quarters in 
 their automobiles without causing resent- 
 ment. The laboring classes have an infal- 
 lible instinct for workers and drones. Even 
 the most radical class antagonist realizes 
 that there is something more in men like 
 Stinnes than the impulse to exploit, and the 
 desire for luxury. Otherwise it would be 
 inexplicable that even during the most agi- 
 tated periods of revolutionary disturbance 
 in the industrial section, no weapon has 
 ever been raised against them. 
 
 These men are noted for their practical 
 point of view. This is the source of their 
 strength. Their nerves are fresh and are 
 not influenced by emotions. But this ex- 
 
 I 
 
HUGO STINNES 
 
 elusive devotion to practical considerations 
 is also a source of weakness. These men 
 lead a life of strict routine, and are chained 
 to their work like convicts; they are out of 
 the ordinary run and therefore they stand 
 apart; they are the victims of their destiny. 
 Many pages of the book of life are closed to 
 them, though they are the rulers of life. 
 No power of will can carry them beyond 
 the walls which their own labors have 
 built around them. They have no leisure 
 and do not become patrons of the arts. 
 Nor do they aspire to the fame of a Mae- 
 cenas. 
 
 For what do these men toil.? By this 
 time Hugo Stinnes has made a large for- 
 tune which is increasing from day to day; 
 his power and his influence are incalculable. 
 Even if he could take the time for it, he 
 would find it impossible to spend all his 
 wealth and enjoy it. But these men do not 
 even take the time for rest which every 
 other laborer claims. Thyssen, an old 
 man of almost eighty years, rides to his 
 
 4 
 
HUGO STINNES 
 
 office every morning at eight o'clock, in 
 a street car, shoulder to shoulder with 
 his own workmen. It is quite possible 
 that these men never stop to think why 
 they work. 
 
 Not long ago a foreman rode home with 
 Stinnes at the end of a strenuous day. In 
 the course of the conversation he asked 
 him: "Tell me, Mr. Stinnes, why do you 
 still work so hard?" Stinnes gave him a 
 peculiar look and said: "For my children." 
 Surely a curious answer! Did Stinnes 
 mean it ironically, as a challenge to this in- 
 quisitive union man.? Or was he uncon- 
 sciously expressing the dynastic feeling of a 
 family that has now been in the saddle for 
 three generations.? We know the impor- 
 tance which Hugo Stinnes attributes to 
 the family, and especially to a family such 
 as his. The unusual demands which he 
 makes upon his relatives show that he 
 expects them to live up to the family tra- 
 dition. 
 
 The present activities of Hugo Stinnes 
 
 5 
 
HUGO STINNES 
 
 can hardly be surveyed. His associates are 
 numerous and include men of great energy, 
 experience, and efficiency. Some of them 
 have had life-long experience in the man- 
 agement of great organizations, but Stinnes 
 always remains in control.^ It is note- 
 worthy that his oldest son, Hugo, who may 
 prove to be a greater business genius than 
 his father, is developing an unusually inde- 
 pendent initiative. 
 
 The personal fortune of Hugo Stinnes 
 has been the subject of many conjectures, 
 some of which are quite exaggerated. But 
 we must not forget that the organizations 
 which belong to him personally are rela- 
 tively few in number compared to the nu- 
 merous stock companies, participation com- 
 panies, and family companies, which are 
 included in the Stinnes Trust. 
 
 Hugo Stinnes has a genius for being de- 
 tached and practical. Not only does he 
 control his own organization with the 
 
 1 The Red Flag, a socialist paper, recently published a poem 
 which represents Stinnes in complete control of German indui- 
 try, German business talent, and German politics. 
 
 6 
 
HUGO STINNES 
 
 highest mathematical intelligence, but he 
 also has a sure instinct for practical com- 
 binations in every sphere of business. He 
 recognizes economic possibilities with far- 
 reaching implications while others still ig- 
 nore them. He does not go in for over- 
 ingenious schemes; he is always construc- 
 tive. He can reverse his position at any 
 moment without running the risk of dis- 
 organizing his work. These characteristics 
 alone, however, would not be sufficient to 
 make him a power in the Germany of to- 
 day. There is the added factor that, in 
 times when others lack will-power, his de- 
 termination is firm; that in the midst of 
 general instability, he has managed to re- 
 main unshaken. His poise and confidence 
 are a part of his character and do not have 
 to be paraded in public. 
 
 This is the secret of his power of sugges- 
 tion over everybody with whom he comes 
 in contact. Hence also the secret of his 
 control of men and circumstances. His at- 
 titude towards labor and labor leaders is 
 2 7 
 
HUGO STINNES 
 
 peculiar to himself. His relations with the 
 unions are conducted in a brusque tone. 
 He does not take offense at unvarnished 
 truths or even at downright rudeness, if it 
 is honestly meant. As soon as he perceives 
 that his opponent has a clear and succinct 
 point of view, he is open to argument. He 
 openly attacks mere tactics or else ignores 
 them altogether. He is not friendly to 
 theories. Occasionally he does not mind 
 listening for an hour or so to a theorist. 
 He likes to analyze and refute unsound 
 theories, in the very act of listening to them. 
 He thinks in economic terms. When he 
 proposes to have his employees participate 
 in an enterprise by taking shares in it, he 
 is guided by the thought of enlisting hither- 
 to unutilized energies. In his socialistic 
 projects, his idea is to have business benefit 
 from the participation and joint respon- 
 sibility of labor. Nevertheless he is a busi- 
 ness aristocrat. This may be due to the 
 fact that he does not feel that the period of 
 
 collectivism has arrived, and because he 
 
 8 
 
HUGO STINNES 
 
 knows that formal democracy breaks down 
 in actual human relations, or perhaps he 
 cannot help himself. As long as there is a 
 general belief that reforms can be brought 
 about by the mere fiat of theorists, he will 
 probably continue to subject every new 
 theory to the acid test of practical appli- 
 cation. 
 
 During the recent debate in Germany 
 about socializing all industries, Stinnes was 
 frequently consulted. His position was 
 that he did not reject collectivism but ob- 
 jected to having it established by decree. 
 He did not dispute the theory but openly 
 stated his conviction: **As regards the 
 form of collectivism, you will always have 
 to adapt yourselves to previous experience. 
 Under no circumstances must you under- 
 estimate the importance of the individual." 
 He always proceeds from the simplest ex- 
 perience: *'When I am about to start a 
 new enterprise I always ask two preliminary 
 questions . In the first place, where is the 
 man to organize it.? Secondly, where are 
 
 9 
 
HUGO STINNES 
 
 the efficient workmen ? If these two requi- 
 sites are lacking, I keep my hands off. 
 This way of looking at the problem 
 will have to be observed in the future. 
 You must leave to the organizer what 
 is the organizer's business — leadership. 
 And you must see to it that labor gets a 
 fair reward and a good living out of the 
 enterprise/' 
 
 Up to the present, the debate about so- 
 cializing industries has not been able to 
 solve this problem in any other way. Le- 
 gien, the deceased leader of the German 
 socialist unions, who had been in favor of 
 putting socialism into practice immediately, 
 arrived at the same conclusion, and ac- 
 knowledged that the interests of both em- 
 ployer and employee must be consulted. 
 In a conversation with Stinnes he once 
 expressed himself as follows: "It is a pity 
 that we did not get to know each other 
 years ago; in that case many things in the 
 labor movement and in industry might have 
 turned out differently." 
 
 lO 
 
HUGO STINNES 
 
 Stinnes has a remarkable influence upon 
 public opinion, yet he seldom appears in 
 public. His recent purchase of a string of 
 newspapers, which will be discussed later 
 on, led many people to surmise that he was 
 looking for a means of expressing his point 
 of view. But his acquisition of plants 
 covering the whole scale of production, 
 from cellulose factories and paper mills, to 
 printing establishments and publishing 
 houses, would seem to indicate that he is 
 more concerned with a large economic con- 
 solidation. 
 
 On one occasion, namely at the Spa con- 
 ference, Stinnes did make a public declara- 
 tion. He attended the conference as an 
 expert, and read his opinion about the coal 
 situation from a manuscript, in a high weak 
 voice which was in curious contrast to his 
 robust appearance. When he referred to 
 certain individuals being "afflicted with the 
 incurable illness of victory," he was cau- 
 tioned by the chairman of the conference 
 
 to moderate his words. Stinnes merely 
 
 II 
 
HUGO STINNES 
 
 looked up briefly from his manuscript and 
 replied: "I am not here for the sake of 
 being pohte." His speech, which attracted 
 wide attention, expressed his conviction 
 that the reparation problem was a problem 
 of European economics which could be 
 solved only through the full cooperation 
 of both the victors and the vanquished. 
 Stinnes was speaking in terms of strict 
 economic necessity, and his words echoed 
 harshly in the rarefied atmosphere of diplo- 
 macy, tactics, and psychological subtleties 
 which pervaded Spa. 
 
 The men of the Stinnes family have al- 
 ways clearly foreseen the steps of industrial 
 evolution. Their efforts have decisively in- 
 fluenced economic development. To attain 
 a correct estimate of Hugo Stinnes and his 
 significance — for he is a force to be reck- 
 oned with — it is necessary to trace the en- 
 terprises of his family as well as his own 
 earlier projects. Those who bear the name 
 of Stinnes have never been communicative 
 and have developed no theories. For that 
 
 12 
 
HUGO STINNES 
 
 reason it is much more interesting and 
 important to observe what they have done 
 than to listen to what they have had to 
 say. 
 
CHAPTER II 
 
 HIS ANCESTORS 
 
 The history of the Stinnes family reflects 
 a century's development of the Rhine- 
 Westphahan industrial section, and with 
 it of German economic history. The Ger- 
 man development from the eighteenth to 
 the nineteenth century was marked by 
 political dissension, cramped economic con- 
 ditions, small scale production, and petty 
 politics among the guilds. But it was not 
 long before the waves of political and 
 economic upheaval swept over the country 
 from the west, while technical advances in 
 science and manufacture were making their 
 first appearance in obscure workshops and 
 laboratories. 
 
 Despite the system of small states, the 
 Rhine -Ruhr district was already an eco- 
 
 14 
 
HUGO STINNES 
 
 nomic unity at the beginning of the nine- 
 teenth century. Coal, iron, and water 
 transportation formed the basis of indus- 
 trial development. Steel from the famous 
 Berg district, woolen goods from the manu- 
 facturing centres, silks and linens from the 
 industrial centres of the Rhine were known 
 in every country. To this day the saws of 
 Remscheid, the locks of Velbert, the rivets 
 of Altena, and the steel-ware of Solingen, 
 have a traditional reputation throughout 
 the world. 
 
 The northwestern part of Germany was 
 the logical place for the development of 
 industrial leaders. Krupp, Thyssen, Kir- 
 dorf, Haniel, and Stinnes, all developed 
 into captains of industry with the aid of 
 coal and iron. Their opponents, the most 
 important representatives of modern so- 
 cialism, also grew up in this region. Karl 
 Marx was born in Treves, at the junction 
 of the Saar and the Rhine, Frederick 
 Engels hails from the thriving Wupper 
 valley, Bebel's cradle stood in the suburbs 
 
 IS 
 
HUGO STINNES 
 
 of Cologne, and Lassalle, coming from the 
 eastern part of Germany, reached the height 
 of his career in the Rhine district. 
 
 In the year 1808, Mathias Stinnes, the 
 son of a shipping man who had gone into 
 the transportation business on the Ruhr, 
 made himself independent in Mülheim. 
 Hardly eighteen years old, precocious, dar- 
 ing and determined, he was a genuine off- 
 spring of the district, having grown up in 
 the midst of the coal fields and within sight 
 of the Rhine, the oldest highway of com- 
 munication in Europe. At that time just 
 as at present, the French, whose revolu- 
 tionary passion had been skillfully deflected 
 into ambitious dreams of expansion by 
 Napoleon, occupied the left bank of the 
 Rhine. French rule brought about im- 
 portant changes in the Rhine lands. Petty 
 politics and shortsighted economic policies 
 had obstructed the Rhine at innumerable 
 places, until the river, including the high- 
 ways running along its banks, was little 
 
 more than a prolific source of revenue for 
 
 16 
 
HUGO STINNES 
 
 the states that bordered upon it. From 
 Bingen to Bonn a merchant had to cross 
 the border eight times, and from Germers- 
 heim to Rotterdam one had to pay duty at 
 no less than 32 stations. At that time the 
 aboHtion of duties and border restrictions 
 was already under way, but the period of 
 the Continental blockade soon intervened. 
 Export on any large scale was restricted 
 and the importation of raw materials was 
 heavily penalized. It was of little benefit 
 to Mülheim on the Ruhr to receive the 
 status of a city from the French, in 1808. 
 The atmosphere was not cleared until 18 15, 
 when the Congress of Vienna decided to 
 incorporate the city with Prussia. 
 
 Thus, Mathias Stinnes had no easy time 
 of it when he formed his company. On the 
 Ruhr, it is true, he was not handicapped so 
 much by existing conditions as on the 
 Rhine. He bought his first coal barge, to- 
 gether with a quantity of coal, in 18 10 for 
 the price of 1240 German dollars. During 
 the next decade he bought additional coal 
 
 17 
 
HUGO STINNES 
 
 mines on the Ruhr. Soon after, his barges 
 were to be seen on the Rhine. In 1817 
 Mathias Stinnes was already opening the 
 important shipping hne from Cologne to 
 Rotterdam, with a regular service of nine 
 of his own ships. At the same time he 
 began to construct his own equipment; he 
 built his ships in his own yards. From 
 then on the firm expanded rapidly. By 
 1820, Mathias Stinnes owned 66 coal barges 
 on the Rhine and the Ruhr, which plied 
 regularly upstream on the Rhine to Bonn 
 and Coblenz, and downstream to the Dutch 
 maritime ports. 
 
 This was bound to lead to an expansion 
 of the field of activity. The barges which 
 took the coal north and south from Mül- 
 heim were loaded with colonial goods in 
 Holland, and with salt in Wesel, from the 
 royal reservation; from the Ruhr district 
 they brought ironware and textiles as well 
 as coal, and were loaded at the upper Rhine 
 for the down trip with wine, dry vegetables, 
 
 grain, and ores. Mannheim, which to-day 
 
 18 
 
HUGO STINNES 
 
 is the reloading station for American grain, 
 was at that time the shipping port for Ger- 
 man grain destined for America. 
 
 For a long time this shipping business 
 had to contend with various obstacles. 
 The right to launch ships on the Rhine, 
 and the freight rights of the Rhine ports 
 were still restricted, and the navigation 
 guilds exercised various monopolies. The 
 Rhine navigation acts, which were unified 
 in 183 1 at Mainz, finally estabUshed free- 
 dom of communication on the Rhine. 
 Mathias Stinnes contributed to no small 
 extent to this improvement by taking 
 things into his own hands and by presenting 
 clever petitions to the authorities. There 
 were most amusing controversies between 
 the astute and farsighted shipping bosses of 
 Mülheim, the ''subject" Stinnes, and the 
 bureaucratic officials of some of the govern- 
 ment posts. Nor did Mathias Stinnes hesi- 
 tate to undertake the complicated journey 
 to Berlin whenever his interests required it. 
 He is said to have had the same gift for over- 
 
 19 
 
HUGO STINNES 
 
 awing government officials with which his 
 grandson, Hugo Stinnes, is credited to-day. 
 
 By 1 83 1 the navigation acts had cleared 
 the Rhine for Mathias Stinnes. The out- 
 put at the mines, as well as the whole busi- 
 ness of the district, immediately experi- 
 enced a substantial increase through the 
 opening up of a dependable market for all 
 products as far as the territory of the upper 
 Rhine and the Main. Mathias Stinnes 
 made close connections with Mainz, Frank- 
 furt, Worms, Mannheim, Karlsruhe, and 
 Strassburg. He even did not hesitate to 
 send his ships from the Rhine to Stettin 
 and Hamburg, by way of the open sea. 
 His enterprising spirit proved especially 
 helpful to Mülheim when, together with 
 Hugo Haniel, he undertook the develop- 
 ment and equipment of the port facilities. 
 He also built the pontoon bridges at Cob- 
 lenz and Düsseldorf. 
 
 But his main interests continued to cen- 
 tre in the Rhine. As late as the forties, 
 
 ships on the river were worked by means 
 
 20 
 
HUGO STINNES 
 
 of hand- and horse-power, while downstream 
 they drifted with the current. Sails could 
 rarely be used. Though an occasional 
 steamer had plied the Rhine before Stinnes' 
 time, he was the first to use a real tug, and 
 thus initiated the important Rhine freight 
 service. It is worth mentioning that at 
 that time the Exchequer held a long and 
 circumstantial debate about the pros and 
 cons of a state towing monopoly. This 
 plan was debated interminably, until no- 
 body any longer believed that it could be 
 carried out. In the meanwhile, Mathias 
 Stinnes ordered his first steam tug from 
 the shipyards of Ditchborne & Marie, in 
 London. The first Stinnes steamer plied 
 on the Rhine in 1843. The Stinnes fleet 
 remains to-day the biggest and most im- 
 portant fleet on the Rhine. 
 
 It was soon found that the first tug was 
 not powerful enough. A second tug, built 
 in Holland and christened *' Mathias Stin- 
 nes I," became the head of a fleet of power- 
 ful tugs. 
 
 21 
 
HUGO STINNES 
 
 At first there was considerable opposi- 
 tion to the use of steam power on the 
 Rhine, as shown by an incident which oc- 
 curred in 1848, when the tug "Mathias 
 Stinnes I" had just begun its Rhine serv- 
 ice with a fleet of barges in tow. There 
 had been great excitement among the 
 peasants and teamsters of the middle 
 Rhine, who usually took charge of the 
 ships at Cologne to tow them to the mines. 
 They felt keenly the decrease in their 
 earnings on account of the use of the tugs, 
 and one day they decided to take matters 
 into their own hands. It was secretly 
 whispered about that something extraor- 
 dinary was about to take place on the 
 Rhine at Neuwied. The peasants and 
 teamsters from the village of Weissenturm 
 opposite Neuwied had conspired to set up 
 a number of mortars and small cannon 
 along the waterfront at Neuwied. When 
 the tug came along with its barges in tow, 
 a loud bombardment took place that raised 
 
 the echoes from the neighboring moun- 
 
 22 
 
HUGO STINNES 
 
 tains. The whole Rhine was thickly cov- 
 ered with clouds of smoke. 
 
 The inhabitants of Weissenturm hoped 
 that at such a reception the hated tug 
 would at once cut loose from its haul, and 
 turn about face, never daring to come up 
 from Mülheim again. But the conspiracy 
 must have come to the ears of the captain, 
 for the pilot house had been closely barri- 
 caded with iron plates, and not a soul was 
 to be seen on deck. The whole line of 
 boats passed quietly by, despite the bom- 
 bardment. The peasants and teamsters 
 had to resign themselves to their fate. 
 But for many months the ship continued 
 to navigate with its pilot house barricaded 
 as a protection against further occurrences 
 of this sort. 
 
 Mathias Stinnes, soon known as "old 
 Matt," after having been in business for 
 thirty-five years, perished in a railroad 
 bridge accident at Hochfeld. 
 
 Every ship in the Stinnes fleet bears the 
 
 name of its founder in addition to the 
 3 23 
 
HUGO STINNES 
 
 serial number, and is known to every child 
 on the Rhine. The type of ship, the kinds 
 and quantities of goods carried, have of 
 course changed appreciably. Whereas at 
 the beginning of the Stinnes line the old 
 wooden barges were about 200 tons burden, 
 the type of steel barge most in use to-day 
 can carry a load of from 1500 to 1700 tons. 
 The most powerful Stinnes tugs tow four 
 barges with an aggregate load of 6,000 
 tons, equal to the capacity of about 400 
 freight cars, and make about a mile and a 
 half an hour, upstream. The great role 
 which navigation plays in the Rhine-Ruhr 
 district is revealed by the fact that the 
 volume of freight, passing through the port 
 of Duisburg on the Ruhr before the war, 
 amounted to far over 20,000,000 tons an- 
 nually, which is several million more than 
 the freight traffic of Hamburg. 
 
 The founder of the house of Mathias 
 Stinnes built up three main branches of 
 the business; namely, mining, the coal 
 
 trade, and transportation. When he died, 
 
 24 
 
HUGO STINNES 
 
 in the year 1845, he left a firm of such wide 
 ramifications and many-sided connections 
 that his successor might well experience 
 difficulty in keeping the business together. 
 Several successors attempted to do this but 
 failed. His son Mathias, Jr., popularly 
 called ''Little Mathias,'' had all he could 
 do to keep the great firm going. The older 
 Mathias had left detailed instructions as 
 to the future policy of the business, and the 
 close bonds that united the numerous mem- 
 bers of the family forestalled any tendency 
 to a division of interests. Nevertheless it 
 was found necessary in 1848 to convert the 
 firm of Mathias Stinnes, Limited into a 
 stock company, called the " Mathias Stinnes 
 Trading Corporation of Mülheim on the 
 Ruhr," in order to assure its continued 
 existence. At that time the Rhine and 
 Ruhr fleets together comprised 60 coal 
 barges. The firm had warehouses in Cob- 
 lenz, Mainz, Mannheim, and Emmerich. 
 It mined coal on four of its own mines 
 known respectively, as the Victoria-Mathias 
 
 25 
 
HUGO STINNES 
 
 mine, the Friedrich-Ernestine mine, the 
 Graf Beust mine, and the Carolus Magnus 
 mine. In addition, it had majority stock 
 control in 38 other mines. 
 
 The following years revealed the solid 
 foundations of the old firm of Mathias 
 Stinnes. Before long a large part of the 
 shares of the Mathias Stinnes Trading Cor- 
 poration of Mülheim on the Ruhr, was 
 again in the hands of the family. In i860 
 the members of the family dissolved the 
 corporation and reestablished the former 
 firm of Mathias Stinnes, Limited. Mathias 
 Stinnes had left seven heirs, consisting of 
 four sons and three daughters. Mathias 
 Stinnes, Jr., died in 1853, when Gustav 
 Stinnes, the second son of Stinnes, Sr., 
 took over the management of the firm until 
 his death, 1878. Thereupon, Herman Hugo 
 Stinnes, the third and youngest son of 
 Mathias Stinnes, headed the firm until his 
 death in 1887. His wife was Adeline 
 Coupienne, and their second son is the pres- 
 ent Hugo Stinnes, born February 22, 1870. 
 
 26 " 
 
HUGO STINNES 
 
 At its hundredth anniversary Mathias 
 Stinnes, Limited, owned 21 tugs and 85 
 barges, having, in 1906, acquired the trad- 
 ing and shipping corporation of H. A. Disch 
 of Mainz. It had also acquired the mine 
 called "Mathias Stinnes," formerly Car- 
 nap, which became the most important of 
 all its mining properties. 
 
 The Stinnes family has played a very 
 important part in the organization of the 
 Ruhr coal industry. The members of the 
 family are among the founders of three im- 
 portant combines in the Ruhr district. 
 These are the Confederation of Mining 
 Interests under the Jurisdiction of the 
 Board of Mines for Dortmund, founded in 
 1858, which has been largely responsible 
 for the technical development of mining; 
 the Rhine - Westphalian Coal Syndicate, 
 formed in 1893, which regulated the pro- 
 duction, price, and distribution of the 
 Ruhr coal deposits; and the Rhine Coal 
 and Shipping Company, formed in 1903 
 
 and known as the "Coal Bureau." This so- 
 
 27 
 
HUGO STINNES 
 
 called "Coal Bureau" and the Rhlne- 
 Westphalian Coal Syndicate, usually called 
 the *'Coal Syndicate," control the produc- 
 tion and distribution of coal in the entire 
 Ruhr district. 
 
 In the course of a century's growth, the 
 firm of Mathias Stinnes, Limited thus 
 branched out into transportation, com- 
 merce, and mining, on an imposing scale. 
 
CHAPTER III 
 
 HIS FIRST ENTERPRISES 
 
 Stinnes began his career under favorable 
 conditions. Even in these days of free op- 
 portunity Germany can show no industrial 
 leader of the calibre of a trust magnates/ 
 who has reached the pinnacle of his power 
 by climbing up from the bottom. Klöckner, f 
 Krupp, Rathenau, Siemens, are all men who/ 
 have developed their inheritances. The 
 German industrial field has been pretty 
 well divided up. It is necessary for the in- 
 dividual to grow up in it, in order to achieve 
 importance. Anybody coming from the 
 outside is bound to find it difficult to take 
 root in this soil. Otto Wolf is the excep- 
 tion which proves the rule. But his success 
 lies almost exclusively in the field of com- 
 mercial enterprise. Perhaps it is due to the 
 
 29 
 
HUGO STINNES 
 
 gigantic concentrations of modern business 
 which lead to the absorption of numerous 
 independent concerns which cannot resist 
 this process, that new men are more likely 
 to reach a commanding position within this 
 field. The Stinnes Trust shows numerous 
 examples of this. Several directors of the 
 Stinnes enterprises have risen from labor 
 circles. 
 
 But it is not enough to be a son or a 
 grandson to ensure success. Respected old 
 names are constantly disappearing. Be- 
 sides an inheritance and a tradition behind 
 him, the industrial leader of to-day must 
 also have a large measure of power, effi- 
 ciency, and personality. 
 
 Hugo Stinnes had the tradition and the 
 widely ramified connections of his family. 
 The inheritance in itself did not amount 
 to much. After a short period of com- 
 mercial apprenticeship in Coblenz, he learnt 
 the mining business both above and below 
 ground at the Wiethe mine. At the age of 
 nineteen he attended a school ot mining. 
 
 30 
 
HUGO STINNES 
 
 Then he took a position in the firm of 
 Mathias Stinnes, Limited. After two years 
 he did not feel himself suited there, and at 
 the age of twenty-three he formed his own 
 firm under the name of Hugo Stinnes, 
 Limited. He also continued as director of 
 mining operations in the family mines. 
 The paid-in capital of his firm amounted to 
 50,000 marks. 
 
 It is extraordinary how the character- 
 istics and tendencies of the old Mathias 
 Stinnes reappear in his grandchild. One 
 finds the same restless spirit, the same dar- 
 ing, the same talent for combinations and 
 constructive effort. But the field of ac- 
 tivity for these powers is infinitely greater. 
 Never before have the opportunities in 
 German industry been so favorable to con- 
 structive business genius as they are to-day. 
 
 Up to a short time ago, the organizers of 
 gigantic trusts on the American scale were 
 unknown in German industrial life. For 
 years there had been powerful combina- 
 tions of finance and industry under various 
 
 31 
 
HUGO STINNES 
 
 leaderships, and several large enterprises, 
 such as those of Thyssen and Kirdorf, had 
 enjoyed a period of astonishing growth, due 
 to favorable opportunities and the daring 
 of those in charge. But it sounded in- 
 credible to Germans before the war, that 
 the industry of the United States should be 
 dominated by five men. Carnegie's United 
 States Steel Corporation and Rockefeller's 
 Standard Oil Company, which deal in mil- 
 lions, were regarded by them as examples 
 of industrial empires. 
 
 These magnates could not achieve their 
 billion-dollar eminence without the aid of 
 unlimited stock manipulation, unscrupu- 
 lous methods in killing competition, and 
 unbridled speculation. A dissolution of all 
 established economic organizations, and the 
 rapid development of absolutely new forms 
 of organization have taken place in Germany 
 since the war. The extent to which this 
 has gone is best indicated by the fact that 
 American methods of financing, of pooling 
 of interests, and of combinations, have 
 
 32 
 
HUGO STINNES 
 
 already been adopted in Germany, and are 
 undergoing further development. 
 
 At the height of the trust period in 
 America, the London Economist estimated 
 that the five magnates. Rockefeller, Harri- 
 man, Morgan, Vanderbilt, and Gould, were 
 worth over three billion dollars and con- 
 trolled over thirty billion dollars, which 
 represents the greater part of the total 
 American capital invested in banks, rail- 
 roads, and industries. This gave them a 
 very considerable control of the industrial 
 life of the United States. 
 
 A large consolidation movement of Ger- 
 man industry got under way in the nine- 
 ties. The freedom of trade in the nineteenth 
 century had promoted a concentration of 
 power in industry, commerce, and also in 
 agriculture, which led to strong opposition 
 from the smaller business interests, as well 
 as to a fierce competitive struggle between 
 those in control. But a small cycle of indus- 
 trial crises sufficed to make even the most 
 solid business men recognize on what inse- 
 
 33 
 
HUGO STINNES 
 
 cure foundations their enterprises were 
 based. Thus, various industrial groups 
 entered into combinations. At first the 
 emphasis was laid upon common interests. 
 Coalitions of employers and employees 
 were formed in every branch of industry in 
 order to secure the most favorable condi- 
 tions for both parties. These defensive 
 organizations of various units in the indus- 
 try were followed by consolidations into 
 larger groups, which took the form of syn- 
 dicates and cartels. Here certain limita- 
 tions upon independent organizations were 
 mutually accepted for the purpose of avoid- 
 ing the slowing up of sales, price fluctations, 
 and the effects of crises. At the same time, 
 associations were formed for reducing the 
 cost of production and retail prices. 
 
 These consolidations brought about a 
 general weakening of the excluded indus- 
 trial units and led to fusions, especially 
 within the industry. This was but a step 
 removed from concentration on a large 
 scale in that, for example, a syndicated 
 
 34 
 
HUGO STINNES 
 
 business on the basis of cheaper raw ma- 
 terials could be operated more profitably 
 than other isolated concerns which the 
 syndicated business absorbed one after the 
 other. 
 
 The system of stock companies favored 
 this development and in many cases was 
 necessary to make it possible. It is gen- 
 erally admitted that in former days, be- 
 fore government regulation was introduced, 
 American corporations were often none too 
 scrupulous about the law. They introduced 
 many new methods of stock participation 
 and of pooling of interests, which frequently 
 were by no means to the advantage of the 
 general public. Some of these methods 
 have come into general use and have also 
 been adopted by German corporations. It 
 is no longer a secret that the combinations 
 of transportation systems and other indus- 
 trial interests can easily lead to a conceal- 
 ment of the actual assets of companies, and 
 in fact frequently do so. They also lead to 
 consolidation« of »o complicated a nature 
 
 35 
 
HUGO STINNES 
 
 that they pass beyond the power of any 
 individual to survey. 
 
 These companies may often be compared 
 to the numerous links of a chain which 
 are under the control and direction of 
 anyone who has the first link in his hands. 
 The system of preferred shares, with mul- 
 tiple voting power, increases the possibili- 
 ties of exerting influence still more. At the 
 same time the owners, despite their com- 
 paratively small capital investment, have 
 the determining vote in all important de- 
 cisions of the company. In this way it is 
 easily possible, under certain circumstances, 
 for a small group to dominate aff^airs at 
 will without much outlay of capital. These 
 methods are justified at present on account 
 of the danger of foreign control, due to 
 the exchange situation. But the fact re- 
 mains that it is always possible for a small 
 group to bring a greater and greater sec- 
 tion of industry under its control. 
 
 Anyone who has the influence to put 
 through a scheme of industrial control can 
 
 36 
 
HUGO STINNES 
 
 do so nowadays on a much larger scale 
 than ever before. And it is open to anyone 
 to misuse this power. Unless Germany is 
 willing to be exposed to contingencies and 
 surprises of a most startling nature, she will 
 soon have to recognize the necessity of 
 investigating and controlling this highly 
 complicated situation. 
 
 The movement towards consolidation is 
 well under way in German industry. Hugo 
 Stinnes is one of the main forces behind 
 these developments. Mining, the coal busi- 
 ness, and water transportation, form the 
 fulcrum from which he operates, as was 
 the case with his grandfather Mathias 
 Stinnes. He runs his own mines and ore- 
 concentration plants. He acquires ships 
 for commerce both on inland waterways 
 and on the high seas. He is a coal dealer 
 with international markets. He has his 
 branches on the continent and overseas. 
 His ships are to be seen on rivers and canals, 
 on the North Sea and the Baltic, on the 
 Mediterranean, and on the Black Sea. 
 
 37 
 
HUGO STINNES 
 
 Hugo Stinnes began to exert an influence 
 upon the construction of the entire German 
 industrial edifice very early in his career, 
 through the organization and the various 
 combinations of his companies. He is one 
 of the controlling figures in the consolida- 
 tion movement in the mining industry. 
 The Rhine-Westphalian coal district, which 
 a hundred years ago was run by patri- 
 archal operating units on a small scale, 
 in the course of the nineteenth century 
 became the scene of large-scale capitalistic 
 operations which frequently had recourse 
 to unscrupulous methods. After the union 
 of the Ruhr district with Prussia, the in- 
 dustrial forces were increased through the 
 immigration of large bodies of laborers, 
 and the appearance of more and more 
 employers. Many of these employers were 
 guilty of ruthless exploitation and short- 
 sighted methods of administration, so that 
 they were not unjustly accused of putting 
 the slogan *' Business is business,'' before 
 every other consideration. Wild promotion 
 
 38 
 
HUGO STINNES 
 
 and unbridled competition combined with 
 panics to bring about uncertain times for 
 the mining operations. Production and 
 price agreements and control of distribution 
 were evolved with increasing frequency 
 from about 1870 on, as a defense against 
 these tendencies. 
 
 We have already seen that the Stinnes 
 family had always been a leader in such 
 endeavors. It is therefore not astonishing 
 to find young Stinnes familiar with this 
 development. He soon played a leading 
 role in the Rhine-Westphalian Coal Syn- 
 dicate. The syndicate now includes prac- 
 tically the entire coal ouput of the Ruhr 
 basin, and regulates production, prices, and 
 consumption. In the same way Hugo 
 Stinnes is a power in the Coal Bureau — 
 the very name is indicative of the practical 
 spirit of this district — which has been in 
 existence since 1903, having brilliantly or- 
 ganized the market for Ruhr coal. The 
 Rhine - Westphalian Coal Syndicate, the 
 firms of Mathias Stinnes, Limited and 
 4 39 
 
HUGO STINNES 
 
 Hugo Stinnes, Limited, and a number of 
 the other companies have considerable capi- 
 tal invested in the Coal Bureau. 
 
 Hugo Stinnes soon added the production 
 of iron and steel to the production of coal. 
 The German-Luxemburg Mining & Smelting 
 Company became his main sphere of activity. 
 
 The district of German-Luxemburg was 
 developed with uncanny rapidity. At the 
 end of the nineties, the Differdingen Blast 
 Furnace Company, Inc., in Luxemburg, 
 and the Dannenbaum Mining Company 
 were combined into the Differdingen-Dan- 
 nenbaum Iron & Coal Company. But this 
 company did not last and was soon liqui- 
 dated with considerable loss to the stock- 
 holders and creditors. The German-Luxem- 
 burg Mining & Smelting Company, Inc., 
 with a capital of 1,000,000 marks, was 
 formed in 190 1 at Bochum. This corpora- 
 tion took over the Differdingen- Dannen- 
 baum Iron & Coal Company. Within the 
 year the capital stock was raised to 25,000,- 
 000 marks, and by 1910 this figure had been 
 
 40 
 
HUGO STINNES 
 
 increased to 60,000,000 marks. The Ger- 
 man-Luxemburg Mining & Smelting Com- 
 pany has an interest in the Saar-Mosel 
 Mining Company and thus procures the 
 coal for the Differdingen plant at a con- 
 siderable freight saving. 
 
 Soon after this, the German-Luxemburg 
 Mining & Smelting Company was further 
 increased by the addition of the Union, a 
 technically highly developed corporation 
 engaged in the mining and iron and steel 
 business at Dortmund. On this occasion 
 the capital was again increased so that it 
 now reached 100,000,000 marks. In this 
 way the German-Luxemburg Mining & 
 Smelting Company developed into the Dif- 
 ferdingen Smelting Company, whose main 
 business consisted in exporting to Frank- 
 furt, Belgium, and countries oversea; it 
 thus became a counterpart of the Rhine- 
 Westphalian industrial district. Several 
 mines were added as the basis for a coal 
 supply for the Dortmund works. In order 
 to utilize the Saar coal, the production of 
 
 41 
 
HUGO STINNES 
 
 iron was increased through the addition of 
 the blast furnaces and steel mills of Rü- 
 melingen and St. Ingbert. 
 
 Altogether the German-Luxemburg Min- 
 ing & Smelting Company comprises estab- 
 lishments at Bochum, Dortmund, Mül- 
 heim on the Ruhr, Emden, and at Differ- 
 dingen (Luxemburg), though the last has 
 been taken away through the liquidation 
 resulting from the treaty of peace. The 
 greater part of the mining establishments is 
 situated in the Ruhr basin. Here the com- 
 pany owns the coal and iron-ore works of 
 Dannenbaum, the mines Prinz Regent and 
 Friedlicher Nachbar, the factory at Hasen- 
 winkel, and the series of mines of Bruch- 
 strasse at Langendreer, Wiendahlsbank at 
 Annen, Adolf von Hansemann at Mengede, 
 Glückauf Tiefbau, Karl Friederich's Erb- 
 stoUn at Stiepel, Kaiser Friedrich at Barop, 
 Luise Tiefbau and Tremonia at Dortmund. 
 
 Besides this, the company is interested in 
 
 the Rhine-Westphalian Mining Company 
 
 at Mülheim (Ruhr). The total production 
 
 42 
 
HUGO STINNES 
 
 of the coal mines amounts to over 5,000,000 
 tons annually. The coke produced annually 
 amounts to 1,300,000 tons. The by-prod- 
 ucts consist of considerable quantities of 
 ammonia, tar, benzol, and other products. 
 The plants at Dortmund, which have an 
 exceptional technical equipment, include 
 six blasting furnaces and one steel plant, be- 
 sides rolling mills, pressed steel mills, and 
 foundries. It also has its own plants to 
 continue the manufacturing process up to 
 the finished product. All kinds of materials 
 and accessories for the construction of rail- 
 road engines and rolling stock are manu- 
 factured at Dortmund. The electric estab- 
 lishments are equipped with all the latest 
 improvements in mining technology. The 
 Dortmund works also include the Horst 
 iron and steel works with their own blast 
 furnaces, a screw factory, a wagon-spring 
 factory and a series of subsidiary factories. 
 The ore for the Dortmund Union is sup- 
 plied primarily from its own iron-ore mines 
 on the Ruhr, in the district of the Sieg 
 
 43 
 
HUGO STINNES 
 
 River, on the Weser River, in Nassau, and 
 in the Harz. 
 
 The mining syndicate, Friedrich Wilhelm, 
 at Mülheim-on-the-Ruhr, has belonged to 
 the German-Luxemburg Mining & Smelt- 
 ing Company since 1905. This establish- 
 ment owns a large number of its own 
 mining fields, and up to the war had a 
 share in the Lorraine mines. The mine at 
 Mülheim includes five blast furnaces capa- 
 ble of producting 220,000 tons annually. 
 Large foundry establishments manufacture 
 machine parts, castings and pipes. A large 
 number of establishments with the most 
 up-to-date special machinery continue the 
 process of manufacture of steel products. 
 They specialize in mining and foundry 
 machinery, so that the German-Luxemburg 
 Mining & Smelting Company is in a posi- 
 tion to supply its own technical equipment. 
 
 Since 191 1 the German-Luxemburg Min- 
 ing & Smelting Company has been lihked 
 up with the North Sea works at Emden. 
 The factories there are being enlarged in 
 
 44 
 
HUGO STINNES 
 
 conjunction with the recent Helling estab- 
 hshments. The North Sea factories are 
 interested in the production of coal, in the 
 coal trade, and in the sale of benzol, am- 
 monia, and tar, through the agency of a 
 number of companies. 
 
 The Hohenzollern foundry, situated at 
 Emden, which belongs to the German- 
 Luxemburg Mining & Smelting Company, 
 has its own mine fields in Upper Frankonia 
 and in the Upper Palatinate. 
 
 Through the North Sea works at Emden, 
 the German-Luxemburg Mining & Smelt- 
 ing Company is interested in the German 
 Navigation Company, "Midgard,'' at Bre- 
 men, in the Rhine Navigation Company, and 
 in the Mannheim Towing Company, which 
 provide it with sea and river transportation 
 facilities. 
 
 Before the liquidation, brought about by 
 the treaty of peace, extensive factories in 
 Dififerdingen and Lorraine belonged to the 
 German-Luxemburg Mining & Smelting 
 Company. The Differdingen works owned 
 
 45 
 
HUGO STINNES / 
 
 ten blast furnaces in the immediate vicinity 
 of the mines, as well as numerous other 
 factories almost entirely engaged in manu- 
 facturing iron girders. Since 191 1 these 
 works had been connected with the mining 
 and foundry establishments of Rümelingen 
 and St. Ingbert through a joint agreement. 
 Hugo Stinnes organized and administered 
 this gigantic enterprise with great success. 
 By means of the saving in freight rates, 
 and by perfecting the management, he 
 made it possible to concentrate upon the 
 production of a highly developed finished 
 article, and at the same time to make the 
 business extraordinarily profitable. The 
 German-Luxemburg Mining & Smelting 
 Company, with more than 40,000 em- 
 ployees, thus became one of the leading 
 mining establishments, of the greatest im- 
 portance both for the home market and 
 for the export trade. 
 
 A second enterprise of gigantic propor- 
 tions, the Rhine-Westphalian Electric Com- 
 
 46 
 
HUGO STINNES 
 
 pany, grew up under the direction of Hugo 
 Stinnes while the German-Luxemburg Min- 
 ing & Smelting Company was developing. 
 This was founded in 1898, and first took 
 over the management of an electrical plant 
 in Essen-Ruhr. From the very beginning 
 the object of this enterprise was extraor- 
 dinarily far-reaching. The Company was 
 intended to supply the whole Rhine- West- 
 phalian industrial district with electric 
 power. The power plant at Essen was 
 erected in immediate connection with the 
 old Stinnes mine of Victoria-Mathias. In 
 the eastern part of the Ruhr coal basin a 
 second modern plant was erected at the 
 coal mine Wiendahlsbank, which belongs 
 to the German-Luxemburg Mining & Smelt- 
 ing Company. By 1908 the Rhine- West- 
 phalian Electric Company had already be- 
 come so large that the eastern plant was 
 combined with the Westphalian Electrical 
 Works, Inc., under one joint management. 
 The territory supplied by the Rhine- 
 Westphalian electrical power stations ex- 
 
 47 
 
HUGO STINNES 
 
 tends from the Dutch border on the north 
 to the Ahr valley in the south, and almost 
 entirely includes the government districts 
 of Düsseldorf and Cologne, with all their 
 townships. 
 
 In addition, the Company developed the 
 gas and water supply, and since 19 12 has 
 undertaken to supply the gas for 25 cities 
 and townships. The directorship of this 
 electrical industry is very interestingly or- 
 ganized. The ownership of the Rhine- 
 Westphalian Electric Company is in the 
 hands of both individuals and municipali- 
 ties. The cities of Essen, Miilheim-on-the- 
 Ruhr, Ruhrort, Solingen, Gelsenkirchen, 
 and numerous other municipalities, own 
 shares in the Company. 
 
 In the natural course of its development, 
 the Rhine-Westphalian Electric Company 
 undertook to supply the Rhine-Ruhr dis- 
 trict with a comprehensive network of 
 street-car systems and small gauge railroads. 
 
 Thus Hugo Stinnes is inextricably asso- 
 ciated with the Rhine-Westphalian indus- 
 
 48 
 
HUGO STINNES 
 
 trial district. By virtue of the many 
 directorships which he holds, he is in close 
 touch with every business of any impor- 
 tance in this industrial section. 
 
 Besides this, he has also devoted special 
 attention to the German seaboard. He had 
 already anticipated the close connection 
 of his industrial district with ocean trans- 
 portation, in founding a small establish- 
 ment at Harburg-on-the-Elbe. This was 
 followed by the formation of the firm of 
 Hugo Stinnes Shipping Company, Limited, 
 for the purpose of going into the shipping 
 business on a large scale. This firm soon 
 owned 13 of its own steamers with which 
 it carried coal, ore, wood, and grain, to 
 various European ports. 
 
CHAPTER IV 
 
 HIS PART IN THE WORLD WAR 
 
 The activities of Hugo Stinnes during the 
 
 period of the World War have given rise 
 
 to a great deal of contradictory discussion. 
 
 It will be a long time before we shall be 
 
 able to see what was going on behind the 
 
 scenes in Germany on the industrial side 
 
 of the war, and much of what happened 
 
 there may never be fully cleared up. It 
 
 is generally known that for many business 
 
 men, and especially for those engaged in 
 
 the major industries, the war turned out 
 
 to be a period of extraordinary industrial 
 
 acceleration. In a state which in normal 
 
 times shows little sympathy for collectivism, 
 
 it is of course to be expected that a period of 
 
 war will bring out the same clash of interests 
 
 that characterizes a highly individualized 
 
 50 
 
HUGO STINNES 
 
 industry, and will even sharpen these con- 
 flicts still more. We must also remember 
 that though there was an accurate plan for 
 general military service, not even the most 
 primitive arrangements for general indus- 
 trial service in war times had been prepared. 
 
 So indefatigable a business man as Hugo 
 Stinnes could not be expected to remain 
 idle in a period of universal activity. He 
 necessarily made the greatest possible use 
 of every opportunity, without reflecting 
 particularly about the unfortunate causes 
 that had made these opportunities possible. 
 
 The liquidation of industries in occupied 
 Belgium forms a chapter of its own. The 
 industrial war of the Entente, the blockade, 
 and the influence exerted upon neutrals, 
 called for counter-measures on the part of 
 the Central Powers. The liquidation in 
 Belgium was entrusted to the German in- 
 dustrial leaders. Three companies were 
 formed in the Ruhr industrial district: the 
 Industrial Company, Limited, the Trans- 
 portation Company, Limited, and the Min- 
 
 51 
 
HUGO STINNES 
 
 ing Company, Limited. All these companies 
 were formed in 19 16. Among those inter- 
 ested in these companies were Friedrich 
 Krupp, Inc., the Phönix Company, the 
 Gute Hoffnung Smelters Company, and 
 the German-Luxemburg Mining & Smelt- 
 ing Company, Inc. This last company in- 
 cluded Hugo Stinnes. These three com- 
 panies played a great part in carrying out 
 the proposed measures for taking over the 
 Belgian industries. They were especially 
 favored in regard to the purchase and 
 management of Belgian factories. They 
 further secured for themselves the exclusive 
 right of purchasing coal and metal mines, 
 and factories, and ran the Belgian gas, 
 water, and electric works. The further 
 plans of these companies were, of course, 
 cut short by the outcome of the war. 
 
 During the war, Hugo Stinnes greatly 
 strengthened his grip upon German indus- 
 try. He gave his special attention to the 
 development of the trade and transporta- 
 tion possibilities at his command. The 
 
 52 
 
HUGO STINNES 
 
 Hamburg shipping trade formed a combina- 
 tion with the metal industries. At this 
 time Albert Ballin made the following state- 
 ment: "The Hamburg American Line in- 
 tends to consolidate its interests more defi- 
 nitely and completely than hitherto, with 
 the capitalistic groups of our key indus- 
 tries and our banking system." 
 
 Stinnes acquired an interest in various 
 oversea steamship lines and mercantile 
 firms. In 191 8 he became interested in the 
 Woermann Line and in the German East- 
 African Line. He established close connec- 
 tions with the Hamburg American Line and 
 the North German Lloyd Line. Before 
 this, the Stinnes Trust had already taken 
 over several importing firms, among them 
 the coal business of H. W. Heidmann at 
 Hamburg, together with its wharves and 
 steamers. In the fall of 1917, Stinnes 
 formed the Hugo Stinnes Ocean Navigation 
 and Trading Company, Inc. His son is 
 especially active in this company. 
 
 Since the middle of 1918, Stinnes has also 
 
 53 
 
HUGO STINNES 
 
 been interested in the German-American 
 Petroleum Company of Hamburg. Stinnes 
 bought the Hamburg City Hall Hotel, and 
 the Hotel Hamburger Hof. These big 
 buildings were converted into offices and 
 were used to house the various Boards of 
 Directors and their executive staffs. 
 
 Additional mercantile firms in Königs- 
 berg and Bremerhaven were added to 
 Stinnes' shipping combine, together with 
 the Baltic Navigation Company at Flens- 
 burg. Eleven large steamers were ordered 
 from various German shipyards. After the 
 war, the entire ocean transportation of the 
 Stinnes Trust was to be handled by the 
 Stinnes fleet. 
 
 At the same time Stinnes secured vast 
 land holdings in East Germany with ex- 
 tensive forests, in the interests of his mining 
 business. The forests were intended to 
 provide the mining timber for the Stinnes 
 mines. Towards the end of the war, the 
 Stinnes Trust also acquired interests in the 
 Rhine lignite deposits. Thus a mighty in- 
 
 54 
 
HUGO STINNES 
 
 dustrial unit, developed and directed with 
 great forethought, had been brought to- 
 gether under the powerful leadership of 
 Stinnes just before the revolution broke out. 
 
CHAPTER V 
 
 THE MINING TRUST: THE RHINE-ELBE-UNION^ 
 
 The revolution in Germany after the war 
 gravely threatened the complicated struc- 
 ture of German industrial life. Ballin, the 
 director of the Hamburg American Line, 
 saw his life work destroyed, and retired 
 from the scene. During this period Hugo 
 Stinnes' nerves remained unruffled. The 
 peace treaty was signed, and important 
 sections of the German industry were de- 
 tached from the main body. The German- 
 Luxemburg Mining & Smelting Company 
 lost all its enterprises in the southwest, 
 including its iron-ore and coal supply. In 
 the last year before the war, the south- 
 western district had produced the enormous 
 
 ^ Rhine-Elbe is the name of a Gelsenkirchen mine, and Union 
 stands for a Dortmund factory of the German-Luxemburg 
 Mining & Smelting Company. 
 
 s6 
 
HUGO STINNES 
 
 amount of 750,000 tons of pig iron for the 
 German-Luxemburg Mining & Smelting 
 Company, and had mined 1,000,000 tons of 
 coal, amounting to 60% of the entire output 
 of the Company. The Company tried to 
 retain the Differdingen works, situated in 
 Luxemburg, but the ore deposits upon 
 which these factories depended were located 
 in Lorraine. Thus this enterprise also had 
 to be sacrificed. The connection with the 
 plant at Riimelingen-St. Ingbert was like- 
 wise destroyed. 
 
 In this way the German-Luxemburg 
 Mining & Smelting Company lost its entire 
 investment in the southwest. A French 
 group replaced the Stinnes Trust in Luxem- 
 burg and Lorraine. This was a vital blow 
 to the Company, although the purchase 
 price received from the French Company 
 put considerable cash at its disposal. An 
 important source of supply for running the 
 factories could also be counted upon through 
 an agreement, made for a period of thirty 
 years, according to which a considerable 
 
 57 
 
HUGO STINNES 
 
 proportion of the ore requirements of the 
 German-Luxemburg Mining & Smelting 
 Company was assured. 
 
 As a result of the loss of St. Ingbert, the 
 German-Luxemburg Mining & Smelting 
 Company had to cast about for new manu- 
 facturing plants in order to be able to sup- 
 ply the necessary intermediate products 
 for the manufacture of the finished goods. 
 As it was impossible to erect any new 
 buildings, the Company acquired a number 
 of old factories. Among these were the 
 steel works of the Brüninghaus Company, 
 Inc., and the firm of Friedrich Thomee, 
 Inc., both situated at Werdohl, as well as 
 the firm of Karl Berg, Inc., at Eveking. 
 These factories were adopted for manu- 
 facturing bar and plate steel, as well as 
 castings, springs, and wagon parts. Fur- 
 ther purchases included the steel roller 
 mills of Meggen, the chain factory of Karl 
 Schliepers in the city of Grüne, and the 
 rivet factory of Knipping Brothers at 
 Altena. 
 
 58 
 
HUGO STINNES 
 
 But these protective extensions of the 
 industry did not satisfy Stinnes. He de- 
 veloped a project capable of continuing the 
 unprecedented growth of the German-Lux- 
 emburg Mining & Smelting Company, de- 
 spite all its adversities. His attention had 
 been directed to the Gelsenkirchen Mining 
 Company, Inc., another gigantic mining 
 business which had also been crippled and 
 reduced through the treaty of peace. 
 
 The Gelsenkirchen Mining Company, 
 Inc., was the work of the brothers Emil and 
 Adolph Kirdorf. It was founded in the 
 year 1873 as a mining business, employing 
 a thousand men, and for a long time, con- 
 fined itself to coal mining. Important 
 consolidations gradually enabled the busi- 
 ness to attain a commanding position in the 
 district. In 1913 it employed 55,000 hands, 
 and its share in the Rhine-Westphalian 
 Coal Syndicate amounted to 10,000,000 
 tons, representing 11% of the whole Syn- 
 dicate. The expansion of the Gelsen- 
 kirchen Mining Company, Inc. was at 
 
 59 
 
HUGO STINNES 
 
 first in a horizontal direction, but after 1905 
 it undertook to expand vertically, through 
 a consolidation of the coal-consuming in- 
 dustries with the coal producers, especially 
 through consolidations with mining syndi- 
 cates at Aix-la-Chapelle and at Schalk. 
 
 The terms "horizontal" and ** vertical" 
 as applied to trusts require a word of ex- 
 planation. A horizontal trust approximates 
 the familiar type of American trust which is 
 usually a consolidation of all the units of a 
 particular industry, engaged in the produc- 
 tion or manufacture of a single kind or type 
 of product. The object of such a trust is 
 to produce an article as economically as 
 possible and to exercise a monopolistic con- 
 trol over it. The Standard Oil Company is 
 an excellent example of this kind of trust. 
 A vertical trust is a complete and self- 
 contained consolidation of all the succes- 
 sive stages of manufacture from the produc- 
 tion of raw material to the final distribu- 
 tion of the finished article. It is an indus- 
 trial cycle completely protected at both 
 
 60 
 
HUGO STINNES 
 
 ends, with every source of supply and 
 every stage of production in the same hands. 
 If the Standard Oil Company acquired coal 
 and iron mines to manufacture its own sup- 
 ply of oil machinery, tanks, and pipes, con- 
 trolled its own railroads to handle its tank 
 cars, and built its own tankers in its own 
 shipyards, besides controlling the automo- 
 bile industry in order to find a market for 
 its gasoline, it would approximate the Ger- 
 man idea of a vertical trust. 
 
 Besides its mines and ore fields, the 
 Gelsenkirchen Mining Company, Inc., soon 
 included blast furnaces, steel works, wire 
 factories, and similar plants. This company 
 laid great stress upon the extension of its 
 ore basis. As the interest charges were 
 unusually heavy, the Kirdorf brothers were 
 compelled to pay especial attention to the 
 reduction of production costs. They skill- 
 fully foresaw the necessity of technical 
 improvements, and their enterprise became 
 distinguished for its gigantic buildings and 
 
 the modern methods constantly introduced. 
 
 6i 
 
HUGO STINNES 
 
 Thus in 1913, the cost of new buildings and 
 developments was estimated at 6o,cx)0,ooo 
 gold marks. The result of the war was a 
 catastrophe for this concern. It was forced 
 to pay terrible penalties for its expansion 
 into the Minette district, another German 
 mining field. It had to give up its diversi- 
 fied enterprises and return to mining. For 
 this reason Stinnes could count upon a 
 friendly reception from the Gelsenkirchen 
 Mining Company when he undertook a 
 rapprochement. It was a matter of sheer 
 necessity for both Kirdorf and Stinnes to 
 come together. Nevertheless Kirdorf, who 
 has always been known for his independence, 
 must have found it very painful to combine 
 his life work with that of another man. 
 The consolidation went into effect in July, 
 1920. The control of the two businesses 
 rests with the Rhine-Elbe-Union. The 
 leaders of this consolidation, besides Stinnes, 
 are General Director Vogler of the German- 
 Luxemburg Mining & Smelting Company, 
 
 and Emil Kirdorf. 
 
 62 
 
HUGO STINNES 
 
 The German-Luxemburg Mining & Smelt- 
 ing Company and the Gelsenkirchen Min- 
 ing Company have entered into an agree- 
 ment which is to hold good for eighty years. 
 They now complement each other and 
 mutually aid each other's development. 
 They form a mining business based upon 
 broad foundations, and are starting under 
 the most favorable auspices. Their con- 
 solidation into the Rhine-Elbe-Union is to 
 last until the year 2000. 
 
CHAPTER VI 
 
 THE ELECTRO-MINING TRUST: THE SIEMENS- 
 RHINE-ELBE-SCHUCKERT-UNION 
 
 These tendencies to form gigantic fusion 
 and expansions in German industry cannot 
 be entirely ascribed to personal ambition or 
 to the craving for power. The driving 
 forces are of an economic nature. Before 
 the war, Germany had an annual increase of 
 population which amounted to more than 
 the entire population of a large city like 
 Detroit or Buffalo. The amount of arable 
 land did not keep pace with this increase. 
 The number of emigrants was inconsider- 
 able. For this reason, an increased produc- 
 tivity from year to year was necessary in 
 order to keep up the standard of mainte- 
 nance. Compared to any other country 
 
 Germany had a very small number of people 
 
 64 
 
HUGO STINNES 
 
 not engaged in productive labor. Never- 
 theless, the production of goods from the 
 country's own raw materials was insufficient 
 to cover the basic needs. It was therefore 
 essential to export on a considerable scale, 
 either through the direct shipment of raw 
 materials for foreign needs, or through 
 manufacturing indigenous and imported 
 raw materials into finished goods for export 
 and re-export. In order to ensure adequate 
 profit from this export trade, it became 
 more and more necessary to protect the 
 raw material, that is, to convert it at 
 home into partly or entirely finished goods. 
 For this purpose it was necessary to do the 
 manufacturing at home, and to produce 
 goods of the finest and most varied grades 
 of workmanship. It was essential to make 
 the raw material yield the greatest possible 
 increment of profit and wages before the 
 goods passed out of the country. 
 
 Under these conditions it was necessary 
 to develop this so-called continuing indus- 
 try, and to foster technical improvements 
 
 65 
 
HUGO STINNES 
 
 as carefully as possible. Quite aside from 
 the unavoidable export of raw materials, 
 Germany therefore tended more and more 
 to supply foreign markets with the greatest 
 possible number of the finest grades of 
 manufactured goods, chemicals, tools, ar- 
 ticles of general use, dye-stuffs, medicines 
 and similar goods. At the same time, it 
 was necessary to increase the output and 
 the profit of the industries as much as pos- 
 sible in order to compete in the markets of 
 the world. 
 
 This development was bound to lead 
 to consolidation, mergers and trusts. Fac- 
 tories producing the same or similar goods 
 worked more economically and showed a 
 greater yield by manufacturing according 
 to a joint agreement and avoiding duplica- 
 tion. The consolidation of industry, and 
 the process of building it up upon the 
 natural foundation of raw materials in- 
 creased the productivity, saved transpor- 
 tation goods, and met the special needs of 
 
 finished-goods manufacture. German in- 
 
 66 
 
HUGO STINNES 
 
 dustry could not afford to have friction 
 and opposition between its industrial enter- 
 prises. A certain amount of speculation 
 was inevitable but this did not attain large 
 proportions. 
 
 War and revolution have not improved 
 the industrial situation of the German 
 people. Losses in population, territory, 
 and materials have been very great. Ex- 
 ports and imports have also been curtailed, 
 and besides this, the heavy mortgages of 
 the treaty of peace on which both interest 
 and capital must be paid, weigh heavily 
 upon German industry. Billions of paper 
 marks and much theoretical discussion 
 have not been of the slightest help in rais- 
 ing production. Germany must produce in 
 order to live, and must produce more, 
 better, and cheaper goods than before. 
 
 Thus the combination of industry has 
 become inevitable. The elasticity with 
 which alterations and consolidations are 
 being carried out is astonishing. This is 
 partly achieved by technical and industrial 
 
 ^1 
 
HUGO STINNES 
 
 methods. The scarcity of coal, for instance, 
 has led industries to adopt lignite to an ex- 
 tent previously considered impossible. Pe- 
 troleum is beginning to be utilized to 
 an astonishing degree. New methods of 
 chemical production are being invented 
 every day. The discovery and application 
 of new methods promise very interesting 
 results. The expensive experiments neces- 
 sary for this development are being made 
 in the field where a high degree of industrial 
 combination has already taken place. 
 
 The introduction of better industrial 
 management and new forms of economic 
 organization is also helping to increase and 
 improve production. But industrial man- 
 agement, plans for socializing industries, 
 and industrial councils, are all schemes 
 about which there is still very little agree- 
 ment. In the meanwhile, the consolidation 
 movement is making headway. There are 
 very few isolated factories left. In some 
 branches of industry, isolated enterprises 
 
 have entirely disappeared. German na- 
 
 68 
 
HUGO STINNES 
 
 tional industry is gradually becoming a 
 multicellular, but unified industrial body. 
 The art of management is becoming an 
 exact science, and the whole process ot 
 production is becoming an organized cycle 
 under the direction of a single mind. 
 
 This development has made most prog- 
 ress among the consolidated industries, 
 where the horizontal and vertical systems 
 of industrial organization were first invented 
 and applied. The horizontal system seeks 
 to apply the most rational and highly spe- 
 cialized methods to some particular stage 
 of the manufacturing process after it has 
 been brought together under a unified 
 management and carries the process of 
 standardization to the furthest possible 
 stage. Thus the competitive struggle be- 
 tween factories engaged in the same process 
 is either lessened or altogether abolished, 
 and the technical connection with the next 
 stage of manufacture is made with much 
 less waste and friction. 
 
 The vertical system seeks to unite the 
 
 69 
 
HUGO STINNES 
 
 whole manufacturing process under the 
 same management, and to start the raw 
 material on a cycle in which it is progres- 
 sively manufactured until it emerges as the 
 finished article. Every stage of the process 
 must be controlled and coordinated with 
 the succeeding stage. Thus for example, 
 the process would run from coal and ore 
 through pig iron, steel, casting, to tools, 
 machines, and electro-technical equipment. 
 
 The Rhine-Elbe-Union already shows a 
 vertical combination having many stages; 
 production of the raw material, such as coal, 
 ore, and limestone; production of inter- 
 mediary products such as iron and steel; 
 production of semi-manufactured materials 
 such as forged iron, cast-iron, tin, wire, 
 and tubing; production of the finished 
 goods such as tools, screws, rivets, springs, 
 ironwork parts, railway material, and parts 
 for vehicles and ships. This is an excellent 
 example of the vertical system. 
 
 The first concern of such a system must 
 
 be to make sure of its supply of the raw 
 
 70 
 
HUGO STINNES 
 
 materials, especially of coal. Since the 
 end of the war, coal has acquired a scarcity 
 price. All the factories are fighting for 
 coal. Germany, formerly one of the rich- 
 est coal-bearing countries, does not possess 
 enough coal fuel for its industries. The 
 distribution is supervised by the State, but 
 it is impossible to keep the factories sup- 
 plied. The German factories have had to 
 have recourse to the expensive importa- 
 tion of foreign coal. For this reason the 
 Rhine-Elbe-Union has been straining every 
 effort to secure an adequate supply of coal 
 for its factories. The same thing holds 
 good for ores. Where the company has 
 not got enough coal mines in the immediate 
 vicinity, further mines have to be acquired. 
 Since the German-Luxemburg Mining & 
 Smelting Company acquired the Union 
 Company of Dortmund, it has opened sev- 
 eral mines in the Dortmund district. As 
 already pointed out, it sought to compen- 
 sate for its own insufficient coal supply 
 since the war, by combining with the 
 
 6 71 
 
HUGO STINNES 
 
 Gelsenkirchen Mining Company, Inc., and 
 this company in turn found it profitable 
 to enter the combination because this would 
 lead to the extension of the mining business, 
 on account of the blast furnaces of the 
 German-Luxemburg Mining & Smelting 
 Company. 
 
 Each individual production stage is built 
 up in relation to the stage above and below 
 it in the cycle of the whole production proc- 
 ess. The finished-products factories are 
 assured of the necessary material, while the 
 factories that manufacture the intermedi- 
 ate products are assured of a sufficient coal 
 and ore supply from the stage below, and 
 at the same time can easily dispose of their 
 products to the next stage of manufacture. 
 The geographical concentration also sim- 
 plifies cooperation and at the same time 
 renders the work less expensive, while the 
 alignment of the various stages of manu- 
 facture allows the individual factory to 
 avoid the expensive storage of materials 
 
 and supplies. This method also avoids the 
 
 72 
 
HUGO STINNES 
 
 time-robbing selection of materials, the in- 
 creased cost due to the middle-man, and the 
 uncertainty of getting the right materials. 
 
 It is clear that an enterprise of this sort 
 can produce better goods in greater volume, 
 than an isolated factory. The use of its 
 own products, the decrease in its mainte- 
 nance cost, and its strategic industrial posi- 
 tion allow it to grow faster than other en- 
 terprises. We are therefore witnessing a 
 concentration race in the German industry 
 of to-day, especially in the mining industry. 
 Only a few large enterprises remain un- 
 consolidated. The old firms of Klöckner, 
 Stumm, Haniel, Funke, Thyssen, Stinnes, 
 and others, are growing into gigantic com- 
 binations which are constantly drawing 
 more closely together. 
 
 A few months after it was formed, the 
 Rhine-Elbe-Union was enlarged through 
 the acquisition of the Bochum Company, 
 engaged in mining and cast steel manu- 
 facturing. This plant, which represents an 
 extensive combination in the Rhine- West- 
 
 n 
 
HUGO STINNES 
 
 phalian district, has been in existence for 
 sixty years. It includes blast furnaces, 
 steel smelters, foundries, hammer and mill 
 works, and factories for manufacturing 
 railroad material, as well as a large number 
 of subsidiary plants. As many as 18,000 
 hands are employed. The Company pro- 
 cures the greater part of its raw materials 
 through the operation of its own mines, 
 coke plants, quartz mines, and limestone 
 fields. It also owns a network of iron-ore 
 mines in the ore district bordering on the 
 Sieg River. 
 
 Before the Bochum Company joined "the 
 Rhine-Elbe-Union it went through a curious 
 experience on the stock exchange. A Ber- 
 lin banker attempted to buy up the shares 
 of the Bochum Company on the stock ex- 
 change, causing a series of fantastic price 
 fluctuations. When this speculator had 
 accumulated a majority control of the Com- 
 pany, he began to look about for a pur- 
 chaser. The rumor had been spread that 
 foreign interests, taking advantage of the 
 
 74 
 
HUGO STINNES 
 
 exchange situation, were seeking to acquire 
 the Company. The Bochum Company 
 might easily have shared the fate of the 
 Phönix Company, and other German enter- 
 prises. At this point, the Stinnes group 
 decided to acquire the Company despite 
 the artificially high price. A purchase 
 price was agreed upon and the speculation 
 came to an end. The whole episode was 
 an exception rather than the rule, for Ger- 
 man industry is rarely subjected to such 
 purely financial operations. 
 
 The acquisition of the Bochum Company 
 was of crucial importance to the Rhine- 
 Elbe-Union for perfecting its plan for manu- 
 facturing intermediary and finished prod- 
 ucts. Its negotiations with the refined-steel 
 factory of Böhler Brothers & Company was 
 a step in the same direction. 
 
 Mining enterprises lead not only to the 
 metal industries, but to the electrical in- 
 dustry as well. Both of these industries 
 had attracted the attention of Stinnes. He 
 
 75 
 
HUGO STINNES 
 
 Intended the Rhine- Westphalian Electrical 
 Company to supply the two industrial 
 provinces of Rhineland and Westphalia. 
 These two provinces are, of course, thickly 
 studded with innumerable factories, elec- 
 trical distributing stations, power houses, 
 gas and electrical plants, railroad stations, 
 and trade centres, not to mention hundreds 
 of municipalities, with their network of 
 railroads and street car systems, all of which 
 consume light and power. By 1920 the 
 Company had undergone considerable ex- 
 pansion through the acquisition of power 
 houses and new districts requiring elec- 
 trical service. Its supply of raw materials 
 was covered by an agreement with the 
 Rhine Lignite Works at the Rodder mine. 
 A further supply of lignite comes from the 
 mines of A. Riebeck in Middle Germany, 
 as well as from the lignite mines in 
 Brunswick. 
 
 The Stinnes Trust thus rounded off its 
 mining interests at both ends through its 
 
 consolidation with the German-Luxemburg 
 
 76 
 
HUGO STINNES 
 
 Mining and Smelting Company, and the 
 Gelsenkirchen and Bochum Companies. 
 The next step followed in the same year. 
 In 1920 Hugo Stinnes consolidated his 
 mining business with the Siemens Company 
 in order to form a gigantic electro-mining 
 industry. 
 
 The Siemens Company began its career 
 in a small workshop which Werner Siemens 
 started in 1847, in an obscure location in 
 Berlin. From these humble beginnings 
 Siemens and his partner Halske developed 
 a great telegraph and cable construction 
 company. This company built and in- 
 stalled the entire Russian telegraph system. 
 One of the outstanding characteristics of 
 the Siemens family is its love of independ- 
 ence. Thus for example, Werner Siemens 
 for many years opposed the transformation 
 of the firm into a corporation, so that this 
 step was not taken until 1897. 
 
 This year marks the beginning of a great 
 development. The company assumed gi- 
 gantic proportions. The severe panic of 
 
 77 
 
HUGO STINNES 
 
 1900, which played havoc with the elec- 
 trical industry, threatened a number of 
 the larger electrical companies, which had 
 become involved in some very risky ven- 
 tures. The great electrical company of 
 Siemens and the A. E. G. (Allgemeine 
 Elektrizitäts-Gesellschaft) were the only 
 ones that remained unshaken. The others, 
 in so far as they continued to function at 
 all, had to seek support from these two. 
 At that time the consolidation of the 
 Siemens Company with the Nürnberg Elec- 
 trical Company (formerly Schuckert & 
 Company) took place. These two com- 
 panies formed the subsidiary Siemens- 
 Schuckert Company for the purpose of 
 developing methods of high power trans- 
 mission. A number of other companies 
 were likewise formed in connection with the 
 Siemens enterprise. 
 
 The Company supplies a remarkable 
 number of consumers, including electric 
 and gas companies, electric mining plants, 
 and subsidiary railroads of all kinds. Among 
 
 78 
 
HUGO STINNES 
 
 these are the Franckonian transmission 
 station, the high power houses, Franken 
 and Thüringen; the estabhshment of Kupf- 
 erdreh; the distributing station, Südharz; 
 the A. G. Wiener Lokalbahn Co. ; the Rhine 
 Electrical Company of Mannheim; the local 
 Berg Railroad; the Hamburg and Stettin 
 Electrical Companies, the electrical street 
 railway systems of Elberfeld, Barmen, 
 Würzburg, and so forth. The Company is 
 also interested in machine and automobile 
 factories, as well as in other factories at 
 home and abroad. 
 
 The products of the Siemens Company 
 comprise electrical manufactures and equip- 
 ments of all sorts, from incandescent lamps 
 to subways. It also manufactures general 
 machinery, fine mechanical and optical in- 
 struments, and other instruments of all 
 sorts, as well as automobiles and automobile 
 trucks. 
 
 It is noteworthy that the Stinnes Trust, 
 as in the case of the Gelsenkirchen Mining 
 Company, Inc., did not effect the consolida- 
 
 79 
 
HUGO STINNES 
 
 tlon with the Siemens Company through 
 any financial operation, but through direct 
 negotiations. Mutual necessity and the 
 prospect of joint benefits probably played 
 quite as large a role as the personality of 
 Stinnes and his gift for organizing. 
 
 This electro-mining company is called the 
 " Siemens-Rhine-Elbe-S c h u c k e r t-Union." 
 This pivotal organization regulates the 
 financial affairs of all the related companies, 
 and works out the plans for a joint adminis- 
 tration. But the intention is to keep the 
 management and the administration of each 
 member independent. The object of the 
 consolidation was described as follows, by 
 the chairman of the board of directors of 
 the Siemens-Halske Company: "In these 
 days, where nothing is left to us except 
 intelligent and highly trained workers, we 
 must see to it that everything that we can 
 extract from our soil does not reach the 
 markets of the world until it has been 
 partly or entirely manufactured by our own 
 labor." 
 
 80 
 
HUGO STINNES 
 
 This huge company, with its 200,000 em- 
 ployees, is in a position to experiment with 
 power-saving devices, radical innovations, 
 and opportune expansions as well as to 
 introduce methods of specialization and 
 standardization. This is one of the great 
 advantages of concentrated effort. 
 
 The consolidation of the Siemens Com- 
 pany with the great mining interests having 
 been effected, it remains for us to follow 
 the further development of its great com- 
 petitor, the Allgemeine Elektrizitäts-Gesell- 
 schaft. Here also we already see the be- 
 ginning of vertical combination. By virtue 
 of its connections, especially with the 
 Rhine-Westphalian industrial district, 
 which is a large consumer, the Siemens 
 Company will enjoy extraordinary advan- 
 tages in regard to its supplies as well as the 
 disposal of its products. It is equally cer- 
 tain that the future plans of the Stinnes 
 Trust, which are already looking beyond the 
 boundaries of Germany, will be of the great- 
 est importance for the electrical industry. 
 
 81 
 
HUGO STINNES 
 
 In order to round out the company, 
 Stinnes has also begun affiliations with 
 certain metal works such as copper and 
 brass factories, which are of great im- 
 portance for the electrical industry, and 
 has also become interested in aluminum 
 plants. In addition, he has brought the 
 automobile industry within his sphere, 
 through the purchase of the Loeb auto- 
 mobile factory in Berlin. 
 
 According to the agreement, the members 
 of the Siemens-Rhine-Elbe-Schuckert-Union 
 are merged together into a homogeneous or- 
 ganization, to last until the year 2000. The 
 time seems to have arrived when individu- 
 als can plan industrial combinations for 
 centuries ahead. 
 
CHAPTER VII 
 
 STINNES' AFFILIATIONS IN GERMANY AND 
 
 ABROAD 
 
 The Stinnes Trust has grown from the 
 Rhine-Westphalian industrial district until 
 it extends over the whole of Germany. 
 Through the Siemens-Schuckert Company, 
 it has gained a foothold in the most im- 
 portant industrial cities of Bavaria. At 
 the time of the consolidation, the combined 
 directorates made a statement in which 
 they pointed out the economic and political 
 importance of this event. They declared 
 that Bavaria and Berlin are combining 
 with Rhineland and Westphalia to form a 
 firmly knit economic unity which is des- 
 tined to counteract every attempt at separ- 
 ation. The sentiment of these German 
 industrial leaders was echoed on another 
 
 83 
 
HUGO STINNES 
 
 occasion by the forces of labor. In the 
 summer of 1920, at a conference of labor 
 union delegates from all the mines, a resolu- 
 tion was passed pledging the men to joint 
 action with the labor organizations of the 
 railroads and water highways, to cut off the 
 supply of coal, coke and briquettes from 
 any part of the country which should at- 
 tempt to secede from Germany. 
 
 In view of the weakness of the present 
 Germ„an state authority, these economic 
 arguments are of great importance when 
 facing the danger of isolation and secession. 
 
 Aside from its success in South Germany, 
 the Stinnes Trust has recently obtained a 
 strong foothold in the most important 
 industrial sections of Prussia. It controls 
 the importation of coal and the coal market, 
 and shares in the distribution of machines 
 and manures for the agricultural operations 
 of East Prussia. It has acquired an almost 
 monopolistic position in the manufacture 
 of cellulose, one of the chief products of 
 this region. All the cellulose factories of 
 
 84 
 
HUGO STINNES 
 
 East Prussia, which is rich in forests, arc 
 under the Stinnes control. 
 
 Hugo Stinnes also turned his attention 
 to German Austria. This country cannot 
 continue to exist for any length of time 
 without a close economic affiliation with an 
 economically strong foreign country. It 
 will soon have to decide in what direction 
 this is to take place. After a long period 
 of paralysis and impotence, German Aus- 
 tria is making frantic efforts to take care 
 of its economic future. The industries are 
 being transformed and are adapting them- 
 selves to altered conditions of production. 
 The attempt is being made to replace the 
 antiquated and only partly active factories 
 with modern plants, and to use the coun- 
 try's untapped sources of energy. Austrian 
 territory is being examined for deposits of 
 coal, oil, natural gas, and chemicals. 
 
 The severance of the Danube states from 
 Austria, in accordance with the treaty, has 
 caused a number of vital industries to come 
 under foreign jurisdiction. German Aus- 
 
 85 
 
HUGO STINNES 
 
 tria can no longer count on these nor on 
 any other foreign industries. Her mori- 
 bund exchange does not permit her to im- 
 port as formerly, and is allowing foreign 
 countries to buy up Austrian industries to 
 an alarming extent. 
 
 Yet, despite her present weakness, Aus- 
 tria is rich in economic possibilities. In 
 Upper Austria, in Salzburg and in the Tyrol, 
 there are coal deposits; oil seems to be pres- 
 ent in various localities, and valuable de- 
 posits of kaolin, or porcelain-earth, which 
 may form the basis for a highly developed 
 porcelain industry. There are sufficient 
 forests to support a flourishing paper- 
 making industry. The use of water power 
 would put the electrical industry on its 
 feet, and the power thus developed could 
 furnish the entire mechanical energy for 
 industrial and transportation purposes. In 
 the spring of 1921, the Stinnes Trust ac- 
 quired the Austrian Alpine Mining Com- 
 pany, by buying up the stock. This com- 
 pany owns the Styrian mining deposits, the 
 
 86 
 
HUGO STINNES 
 
 greatest mine of Europe, and used to play 
 an important part before the war in sup- 
 plying Italy and the Balkans with iron and 
 steel. In 1916, the best year of the mine, 
 2,360,000 tons of ore were mined, yielding 
 637,000 tons of pig iron, and 300,000 tons 
 of rolled steel. After the war, the produc- 
 tion was greatly diminished. In 1919 the 
 production had dwindled to 244,000 tons 
 of ore, yielding 59,000 tons of pig iron and 
 70,000 tons of rolled steel, which represents 
 about one-tenth of the former production. 
 
 When things were at their lowest ebb, 
 a Viennese banker bought the majority 
 stock control, and sold the greater part of 
 it, with enormous profit, to an Italian syndi- 
 cate. This acquisition was of great im- 
 portance for Italy. The Italian industry, 
 with little iron to fall back upon in its own 
 country, was now in a position to secure its 
 iron supply from Styria. The idea was an 
 excellent one, but conditions made it im- 
 possible to carry it out. For Italy, with 
 
 hardly any coal of its own, could not furnish 
 
 7 87 
 
HUGO STINNES 
 
 the necessary coke to refine the ore. The 
 Italians controlled the mine for almost two 
 years without extracting a single ounce of 
 iron. 
 
 Besides the lack of coke, the Italian syndi- 
 cate also faced a lack of labor. Formerly, 
 any amount of Italian laborers were to be 
 had to run the industry, but they now en- 
 tirely abstained from coming, which is 
 quite natural, since no Italian could be in- 
 duced to work to-day for wages paid in 
 Austrian crowns. On the other hand, the 
 syndicate was in no position to pay wages 
 in Italian lire. 
 
 The Austrian company formerly had ob- 
 tained the greater part of its coke from its 
 own coke plants in Orlau near Ostrau in 
 Moravia, as well as from other Moravian 
 coke plants, and from the Ruhr coal dis- 
 trict. The States that came into existence 
 through the fall of Austria erected trade 
 barriers against each other, so that the 
 deliveries of coke from Czecho-Slovakia 
 
 also ceased. The deliveries from the Ger- 
 
 88 
 
HUGO STINNES 
 
 man district likewise became small and 
 intermittent. As a result of this situation, 
 the company was compelled to make an 
 extremely unfavorable reciprocal agreement 
 with Czecho-Slovakia, according to which 
 the original Austrian company had to de- 
 liver pig iron in exchange for coke. But the 
 coke delivery became so inadequate that 
 six of the seven blast furnaces soon had to 
 be banked. 
 
 The acquisition of the enterprise by the 
 Stinnes Trust foreshadows a great change, 
 and is of the greatest importance for the 
 Styrian deposits as well as for the entire 
 problem of the economic reconstruction of 
 German Austria. The Stinnes Trust, which 
 controls iS-8% of the entire coal produc- 
 tion of Rhine- Westphalia, and 13% of its 
 entire coke output, is in a position to supply 
 all the coke necessary to run the blast fur- 
 naces at full capacity, the annual coke 
 requirement being 600,000 tons. The in- 
 creased production of pig iron is of vital 
 importance in reviving the industries which 
 
 89 
 
HUGO STINNES 
 
 depend upon iron. Under this arrange- 
 ment the iron produced at the Styrian mines 
 no longer has to be taken to Czecho- 
 slovakia, but is manufactured right in the 
 country. This means a resumption of the 
 Austrian iron industry, so that it can satisfy 
 the home demand, and at the same time 
 resume the export of iron. The excep- 
 tional quality of Styrian iron has played an 
 important part in handicapping Austrian 
 iron manufactures. The iron imported 
 after the closing down of the mine was not 
 always of the quality which the Austrian 
 industries required for their high grade 
 steel products. With the Styrian iron 
 once more at their command, they are now 
 again in a position to supply the market 
 with goods of standard quality. 
 
 Hugo Stinnes has been criticized in some 
 quarters for acquiring the Alpine Mining 
 Company. The transaction occurred in the 
 critical days of the London conference. 
 The purchase required large financial re- 
 sources and was looked upon as a measure 
 
 90 
 
HUGO STINNES 
 
 calculated to increase the difficulty of an 
 understanding. It may very well be that 
 the impression made in London was not 
 very favorable, but the loss of the ore de- 
 posits would certainly have been a much 
 greater calamity. This loss was actually 
 threatened because negotiations with foreign 
 purchasers had already begun, as in the case 
 of the Bochum Company where the stock 
 was almost bought up by foreign investors. 
 
 Austria would not have been in a position 
 to put this gigantic mining enterprise into 
 operation again without outside help. The 
 Kölnische Zeitung, (the leading paper of 
 Cologne), discussed the importance of the 
 case, in relation to the economic strangu- 
 lation of Germany and Austria, as follows : 
 
 ''The post-war policy of the Entente is 
 severely handicapping German industry, 
 and is excluding it from the world market 
 wherever possible. It is transforming Aus- 
 tria-Hungary into a heap of wreckage, and 
 is paralyzing Upper Silesia to the point of 
 
 industrial impotence. The Entente has 
 
 91 
 
HUGO STINNES 
 
 abandoned the utterly helpless Balkans, 
 and has nothing to contribute to the recon- 
 struction of Central Europe except insen- 
 sate reparation demands, penalties, and 
 reprisals. It has converted the 'urge to the 
 southeast ' which it formerly falsely ascribed 
 to us, into an irresistible pressure. An 
 enterprising man like Stinnes, whose fore- 
 sight and largeness of conception even his 
 enemies will not deny, is taking a leap into 
 the dark with the hope of transforming one 
 of the greatest enterprises of the continent 
 into an active member of European industry. 
 The capital involved is no trifle even for 
 Stinnes, and the risk is proportionately large. 
 Yet this step has brought down the wrath of 
 the Entente upon Stinnes, though none 
 moved a finger as long as exploiters from 
 every country in the world tried to share in 
 the auctioning off of Austria. When we 
 consider that Italy, a former ally, had the 
 first chance, but was not able to accom- 
 plish anything, and that Schneider-Creusot, 
 made wiser by unfortunate experiences in 
 
 92 
 
HUGO STINNES 
 
 the case of the Skoda works, left the field 
 open to German industry, it is really hard 
 to see how Stinnes deserves any reproach. 
 The Entente's policy of economic encircle- 
 ment of Germany cannot ignore the fact 
 that there are limits to these destructive 
 tendencies." 
 
 The acquisition of the Alpine Mining 
 Company by the Stinnes Trust has thus 
 far been the only practical step towards 
 the union of Austria and Germany, and has 
 caused a great stir in German Austria. 
 This is brought out in an open letter which 
 a Viennese journalist at that time addressed 
 to Stinnes. He wrote as follows: 
 
 *'You have attempted to revive the 
 stricken economic condition of German 
 Austria with your financial resources, and 
 have found the point at which the greatest 
 returns may be expected. Why was this 
 step so long in coming ? We on the German 
 Austrian side have been indefatigable for 
 over two years in invoking the aid of Ger- 
 man capital. There must have been polit- 
 
 93 
 
HUGO STINNES 
 
 ical difficulties, for the economic advantages 
 to both sides were obvious to everybody. 
 But the ItaHan purchasers could not meet 
 the costs. They probably hoped that their 
 participation in the Alpine Mining Company 
 would induce the Czecho-Slovaks to deliver 
 the coke necessary for the smelting of the 
 Styrian ore in larger quantities, after they 
 had revengefully denied it to the German 
 Austrians. But the Czecho-Slovaks were 
 not to be disturbed in the further enjoy- 
 ment of their revenge, so that six of seven 
 blast furnaces of the company remained 
 cold. And at that time French, English 
 and American allied interests would not 
 furnish coke, except at exorbitant prices. 
 The result was that the Italians soon lost 
 their enthusiasm for a piece of property 
 which they had so triumphantly acquired. 
 
 "You, Mr. Stinnes, are the right substi- 
 tute for them. For you have what they 
 lacked, namely, coal and coke. It is prob- 
 able that the thirst for vengeance will now 
 also rapidly disappear among the Czecho- 
 
 94 
 
HUGO STINNES 
 
 Slovaks, as was the case in the sugar busi- 
 ness, when Austria began to receive sugar 
 from far off Java, at a cheaper price than 
 that which their Czecho-Slovak neighbors 
 were asking for it. Subsequently, the price 
 of sugar in the world markets declined to 
 such an extent that the Czecho-Slovak 
 sugar could not be sold anywhere at their 
 asking price. Let us hope that the same 
 thing will happen with their coke. They will 
 undoubtedly offer it to the Alpine Mining 
 Company, so that the Westphalian coke 
 will not have to be taken away from Ger- 
 man industry. Next, the unemployment 
 will decrease. More hands will be required 
 in order to mine larger quantities of iron- 
 ore, which will also have to be smelted, 
 after which the iron will be used in the fac- 
 tories to manufacture machines, girders, 
 rails, tools, and other articles. The in- 
 creased supply will cause the price of iron 
 manufactures to come down. This will be 
 followed by a general reduction of prices 
 and wages. Then there will be a gradual 
 
 95 
 
HUGO STINNES 
 
 resumption of building activity, which will 
 stimulate industry all along the line. In 
 short, the industrial paralysis will cease, and 
 our economic life will again have a healthy 
 circulation. 
 
 ''For this reason, Mr. Stinnes, the Aus- 
 trian press is again suddenly favorable to 
 you. This is true even of the Social-Demo- 
 cratic papers which have recently swung 
 back to capitalism. The Social-Democratic 
 party, as you know, has been in a repentant 
 mood ever since the complete collapse of 
 their ambitious socialization plans at the 
 recent congress of the metal workers' unions 
 in Vienna. The Social-Democratic faction 
 in our national parliament is keeping close 
 watch, and has made an interpellation in 
 parliament, drawing the government's at- 
 tention to the possibility of your shipping 
 the Styrian ore to Germany, and thus 
 paralyzing the Austrian iron industry. But 
 this probably merely caused you to smile, 
 since you are after profits which will be 
 
 greatest if you have the raw material manu- 
 
 96 
 
HUGO STINNES 
 
 factured as much as possible on the spot, 
 instead of first shipping it to some distant 
 point. 
 
 "You must also have been highly amused 
 when one of our reactionary yellow journals 
 expressed the opinion that you had ac- 
 quired the stocks of the Alpine Mining 
 Company for the sole purpose of shutting 
 down the works for the benefit of the Ger- 
 man iron industry. This was undoubtedly 
 a case of deliberately sowing suspicion for 
 some ulterior motive. For you would have 
 much preferred the Italians to keep the 
 stocks of the Company, instead of selling 
 them to you, just as you are shedding no 
 tears over the increasing amount of foreign 
 holdings in Austrian banks and industries, 
 on the part of Frenchmen, Englishmen, and 
 Americans. Let them all continue to ac- 
 quire such holdings. Those of us who de- 
 sire the reconstruction of Austria, and her 
 close cooperation with Germany, welcome 
 this foreign participation." 
 The step which Hugo Stinnes had thus 
 
 97 
 
HUGO STINNES 
 
 taken is fraught with great risk, for he has 
 invested a gigantic sum and will have to 
 put still more money into this mining enter- 
 prise in order to put it into complete run- 
 ning order. The speculation that preceded 
 this step will make it extremely difficult to 
 derive any profit from this huge investment, 
 but it is characteristic of Hugo Stinnes to 
 build his business without always having in 
 mind the question of immediate or early 
 profit. 
 
 While taking these steps in the south and 
 the east, Stinnes was thinking of still 
 further ways of keeping open the economic 
 gates of Germany. Some time before the 
 war, he had already entered into compli- 
 cated negotiations for the purpose of con- 
 necting his enterprises with foreign sources 
 of raw materials and foreign fields of con- 
 sumption. His purpose was to have a cen- 
 tralized enterprise, producing its own raw 
 materials for its own transportation lines, 
 
 and marketing its wares through its own 
 
 98 
 
HUGO STINNES 
 
 merchandising system. In 1920 he added 
 an extensive exporting department to the 
 Hugo Stinnes Transportation and Overseas 
 Trading Company, organized in 1917, to 
 which reference has already been made. 
 
 The charter of this company in the 
 commercial register of Hamburg is very 
 interesting. It shows how the varied enter- 
 prises of Hugo Stinnes are to be developed. 
 The business is licensed to engage in the 
 following activities: To engage in trans- 
 portation of every description, as well as to 
 build and manufacture all shipping acces- 
 sories, whether at home or abroad; to deal 
 in the products of the mining, smelting, 
 and metal industries, the chemical and 
 electrical industry, and agriculture; to 
 market articles of every stage of manu- 
 facture, as well as raw materials of all kinds, 
 especially provisions and cattle products, 
 mineral, animal and vegetable oils, cotton, 
 and other textiles in the unfinished state, 
 hides, jute, wood, cellulose, paper, and all 
 products of the intermediate industries; to 
 
 99 
 
HUGO STINNES 
 
 engage in the re-shipping and storage of 
 all these products, especially during their 
 transmission from or to foreign countries. 
 The company is also licensed to undertake 
 the extraction, manufacture, and construc- 
 tion of every form of raw material and 
 manufactured article in its own estab- 
 lishments. 
 
 It is difficult to imagine a more compre- 
 hensive industrial organization. Stinnes 
 now proceeds from the mining and electrical 
 business, to become active in the most 
 varied forms of German business enterprise. 
 The Hamburg Travelers Company, which 
 Stinnes founded, together with the Ham- 
 burg American Line, enters the field of 
 travel and hotel and health resort manage- 
 ment. Steamer cabins, railroad compart- 
 ments, hotels, and health resorts are uni- 
 fied into one system. The company owns 
 the Esplanade Hotel in Berlin, and the 
 hotels in Oberhof, Thuringia, which are 
 run through the Hotel Management Com- 
 pany, Limited, of Thuringia. These enter- 
 
 100 
 
HUGO STINNES 
 
 prises correlate the varied possibilities of 
 the traveling and tourist business, and open 
 up the prospect of world travel as an or- 
 ganized enterprise. The route from the 
 North Sea to Central Germany, into Switz- 
 erland and down to the Mediterranean, is 
 likely to be developed first. 
 
CHAPTER VIII 
 
 STINNES AND THE NEWSPAPERS 
 
 There was much astonishment in Germany 
 when it became known that Hugo Stinnes, 
 the industrial leader, had gone into the 
 newspaper business. His first step was to 
 acquire the well-known Deutsche Allgemeine 
 Zeitung, Stinnes is by no means the first 
 German industrial leader to own a news- 
 paper. It is pretty well established that 
 a number of German newspaper properties, 
 advertising concerns, and news bureaus, 
 are under the control of the major indus- 
 tries. The exact connections are not always 
 clear. This state of affairs reflects upon 
 the whole German newspaper system. In 
 many organs of public opinion, it is true, 
 
 I02 
 
HUGO STINNES 
 
 the reader can easily form his opinion of 
 the influence at work behind a newspaper. 
 But in many cases even an experienced per- 
 son would find difficulty in doing this. The 
 policy of a newspaper may furnish no clew 
 whatsoever, so that it is only by accident 
 that the identity of those in control is dis- 
 covered. This tendency has gone so far 
 that there are now newspaper proprietors 
 who possess a whole string of different pub- 
 lications, with widely different policies to- 
 wards political and economic questions. 
 These papers have become pure business 
 enterprises, where it is quite immaterial 
 to those in control whether the paper 
 represents this or that shade of public 
 opinion. These proprietors look upon 
 newspapers solely from the point of view 
 of profit. 
 
 Nowadays, another development can oc- 
 casionally be observed. Men formerly en- 
 gaged exclusively in the newspaper and 
 advertising business suddenly become in- 
 terested in branches of industry that are 
 8 103 
 
HUGO STINNES 
 
 entirely removed from the newspaper 
 business. 
 
 Nevertheless, Hugo Stinnes seems to 
 present a special case. The policies of 
 those papers that are demonstrably under 
 his control in no way suggest that Hugo 
 Stinnes is anxious to launch any propa- 
 ganda in favor of his political or eco- 
 nomic point of view. Deeds and not 
 words reveal his influence. It is just 
 possible that he bought these newspapers 
 with the idea of influencing the press in 
 his favor, and winning some of his pro- 
 spective opponents over to his side. But 
 this is very unlikely. 
 
 Up to the present, the operations of 
 Stinnes in this field greatly resemble his 
 coal and electric enterprises. In both cases 
 he proceeds from an economic and practical 
 point of view. The connecting link be- 
 tween his newspapers and his coal business 
 is wood. We have already pointed out that 
 he had acquired extensive forest reserves 
 
 in order to assure a supply of mining tim- 
 
 104 
 
HUGO STINNES 
 
 ber. The possession of so much wood 
 seems to have suggested the production 
 cycle from wood pulp to newspapers, ac- 
 cording to the vertical system. This as- 
 sumption is strengthened when one sees 
 how he has fitted the various stages of pro- 
 duction between wood and newspapers into 
 his enterprises. He owns factories for the 
 manufacture of cellulose and paper, and 
 has acquired various cellulose factories at 
 the headquarters for the raw material in 
 East Prussia. It is interesting to observe 
 that he has, at the same time, made use of 
 his coal companies in order to make sure 
 of having an uninterrupted supply of coal 
 from the Ruhr basin for these factories in 
 East Prussia. In the next stage of paper 
 manufacturing, Stinnes is likewise in a 
 position to fit his own plants into the 
 cycle. It is rumored that the Hugo Stinnes 
 Book and Cellulose Company is seeking to 
 acquire control in a number of paper fac- 
 tories. His acquisition of the large Büx- 
 enstein Printing Company of Berlin and 
 
 105 
 
HUGO STINNES 
 
 the North German Book Binding and Pub- 
 lishing Company, paves the way to the 
 next step in the paper industry. The whole 
 enterprise culminates in the newspapers 
 which Stinnes has already bought. Here 
 we may again observe the same economic 
 cycle from the raw product through the 
 intermediate product to the finished ar- 
 ticle, all under the same uniform adminis- 
 tration, as in the case of the other enter- 
 prises of the Stinnes Trust. 
 
 The business efficiency of Stinnes makes 
 it seem probable that he will also attempt 
 to bring his newspapers to the highest 
 possible stage of technical and administra- 
 tive perfection. Nevertheless the Deutsche 
 Allgemeine Zeitung is still far from being a 
 journal of distinction, comparable let us 
 say, to the French Matin, It also lacks 
 the millions of readers who support news- 
 papers of such world-wide circulation. 
 Judged from appearances only, it is true, the 
 
 Deutsche Allgemeine Zeitung is the greatest 
 
 io6 
 
HUGO STINNES 
 
 German newspaper. But the modest cir- 
 culation among small officials which this 
 fussy little paper formerly enjoyed, as well 
 as under the excellent management of the 
 deceased Mr. Hobbing, has remained the 
 same. Editorial offices and experts value it 
 as before for its information service, but 
 the paper has no influence on any larger 
 sections of the public. With all his news- 
 paper purchases, Stinnes is still far from 
 being a Lord Northcliffe, and probably has 
 no intention of becoming one. 
 
 The report that Stinnes has already pur- 
 chased sixty German papers seems to be 
 largely exaggerated. The number probably 
 does not exceed a dozen or so. 
 
 The danger of a trustification of the press 
 certainly has possibilities which must not 
 be underestimated. Powerful personalities 
 might easily use their economic control of 
 the press in order to sway public opinion in 
 certain definite directions, and to misuse 
 their influence. It is a matter for legisla- 
 
 107 
 
HUGO STINNES 
 
 tion to be beforehand in checking the 
 dangers that might result from such a 
 trustification, with its attendant conceal- 
 ment of the nature of the control behind 
 newspapers. 
 
CHAPTER IX 
 
 STINNES IN THE PUBLIC EYE 
 
 Since the war, Germany has had to fight 
 for its very existence. This struggle is 
 taking place primarily in the field of eco- 
 nomics. Formerly, losing a war entailed the 
 loss of territory or the complete loss of po- 
 litical independence, whereas to-day the 
 consequences of such a war are a confisca- 
 tion of goods ; these goods are either taken 
 out of the defeated country in the form of 
 raw materials or finished products, or else 
 the same result is accomplished by curtail- 
 ing the conquered country's share in the 
 world's trade and commerce, in favor of the 
 victors. 
 
 For a long time the coal question re- 
 mained in the foreground of the peace ne- 
 gotiations. France had lost enormous quan- 
 
 109 
 
HUGO STINNES 
 
 titles of this important raw material through 
 the war. It will take years before the 
 French coal mines can be brought back to 
 their former output. This explains why 
 France was so interested in putting the de- 
 mand for German coal deliveries into the 
 forefront of the discussion. But even a 
 half-way informed opponent must have 
 recognized the absolute impossibility of 
 meeting the demand for the enormous 
 amount of almost 40,000,000 tons of coal, 
 as stipulated in the treaty of peace. At the 
 time not even a quarter of this amount 
 could be delivered. It is true that the out- 
 put of coal from the Ruhr basin increased 
 considerably in 1919 and 1920. But it was 
 still insufficient to supply German industry 
 with the necessary fuel. 
 
 The hostile powers saw that Germany 
 could not be compelled to deliver the 
 amount of coal demanded, by means of any 
 peremptory command. Since the days of 
 San Remo, they seemed to realize that the 
 only possible way of arriving at a real repar- 
 
 IIO 
 
HUGO STINNES 
 
 at ion programme was by resorting to nego- 
 tiations. There followed the conference at 
 Spa, which began with a fair prospect of 
 arriving at a European understanding, 
 though this promise ultimately failed to 
 be realized. 
 
 The negotiations took place in the Villa 
 Fraineuse, the former seat of the imperial 
 headquarters. The French delegates seemed 
 unable to dispense with the florid rhetoric 
 which characterizes so many French po- 
 litical utterances. The German delegates 
 were in an extraordinarily difficult position. 
 The amount of coal demanded of them was 
 so large that they did not wish to take the 
 responsibility of accepting it without fur- 
 ther authorization. They therefore sum- 
 moned the German experts to Spa in order 
 to hear their opinions. Hugo Stinnes was 
 accordingly summoned to Spa to testify as 
 an expert. 
 
 Opinion among the German delegates 
 
 was divided. On the one hand they were 
 
 threatened with the occupation of the 
 
 III 
 
HUGO STINNES 
 
 Ruhr basin, but on the other hand, they 
 were frightened by the prospect for Ger- 
 man industry which such an exhaustion of 
 Germany's raw materials seemed to open 
 up before them. Hugo Stinnes anticipated 
 such catastrophic results from accepting 
 the demand of the Entente, that he used 
 the entire force of his personaHty and his 
 prestige as an expert to insist upon a re- 
 fusal. The delegates decided to let Stinnes 
 present his arguments personally, at a 
 plenary sitting of the conference. Mr. 
 Hue, representing the German miners, was 
 also present as an expert, and was equally 
 convinced of the serious consequences of the 
 loss of coal to Germany, and appeared before 
 the conference at this same sitting as the 
 representative of the German coal miners 
 in order to state the grounds for his adverse 
 opinion. 
 
 Stinnes insisted that it would be abso- 
 lutely impossible to make an annual de- 
 livery of 40,000,000 tons. He recognized 
 
 the pressing need of France for reparation 
 
 112 
 
HUGO STINNES 
 
 coal, but considered that even the prelim- 
 inary dehvery of 2,000,000 tons per month 
 could not be carried out for the present. A 
 few days before, he had already made a 
 similar declaration to a representative of 
 the French press. In this interview, he 
 stated that he considered the Spa confer- 
 ence to be premature, and likely to turn 
 out a failure for both parties concerned. 
 He was in favor of allowing these economic 
 and social questions to mature for several 
 months, believing that many of them would 
 ultimately solve themselves. He further 
 believed that Germany would, in the course 
 of time, be able to increase its labor effi- 
 ciency, and that it was ready at any time 
 for international cooperation. 
 
 Stinnes referred particularly to the possi- 
 bility of cooperation between France and 
 Germany. The fact that the two countries 
 were adjacent was a direct invitation to 
 carry out the necessary reconstruction to- 
 gether, and to satisfy their economic needs 
 on the basis of mutual understanding. But 
 
 113 
 
HUGO STINNES 
 
 he looked upon Spa as still enveloped in 
 an atmosphere of mutual suspicion. 
 
 The arguments of Stinnes before the con- 
 ference were heard with the greatest at- 
 tention. The delegates saw before them the 
 representative of German industry, who re- 
 jected the gestures of diplomacy and dealt 
 with sharp-edged realities. The speech of 
 Mr. Hue strengthened this impression. 
 These speeches marked a departure in the 
 proceedings of these political negotiations. 
 The momentary effect, it is true, was not 
 very great. The guiding stars of the French 
 and English statesmen were not economic 
 but political. It was made evident that a 
 memorandum or an expert opinion, no mat- 
 ter how carefully and thoroughly composed, 
 makes little impression upon men of the 
 stamp of Briand and Lloyd George, who 
 are even likely to dismiss it without fur- 
 ther consideration. This method of pre- 
 senting the German arguments was out of 
 place, at least as far as any immediate 
 
 results are to be expected. 
 
 114 
 
HUGO STINNES 
 
 Mr. John Maynard Keynes, the EngHsh 
 expert, was entirely right in his pessimism 
 about Spa. He expected no insight from 
 Spa that would do justice to the reahties of 
 the situation. At the time of the confer- 
 ence at Spa, the coal question was no 
 longer an economic issue, as far a^ the 
 French delegate was concerned, but a polit- 
 ical one. If Millerand had failed to satisfy 
 the French public, his political career would 
 have ended. England on the other hand, 
 having in mind certain political steps in 
 Asia Minor, for which it was necessary to 
 gain French approval, was compelled to 
 hold back from any practical discussion. 
 The demands of France were put through 
 to the accompaniment of the military 
 threats of Marshal Foch. 
 
 The utterly impractical nature of the 
 reparation negotiations is revealed by the 
 fact that France already has an over- 
 supply of coal, despite the fact that the 
 German coal deliveries are far from reach- 
 ing the amount demanded at Spa. At the 
 
 IIS 
 
HUGO STINNES 
 
 same time, the reconstruction work is being 
 held up. A distribution of German effort, 
 so as to meet the actual varied require- 
 ments of France, would not have hampered 
 Germany as much as these coal deliveries, 
 and would have been of much greater 
 benefit to France. The French economic 
 body just now resembles an organism which 
 has been stuffed to the bursting point with 
 undigestible nourishment. 
 
 The attitude of Hugo Stinnes at Spa 
 was afterwards sharply criticized in Ger- 
 many. He was accused of having made 
 such a curt refusal with the deliberate in- 
 tention of bringing about the occupation 
 of the Ruhr basin. It was alleged that 
 this would have meant no diminution of 
 his profits. It was also hinted that he 
 wanted the Ruhr basin to be in French 
 hands, in order to escape the German 
 socialization schemes. The answer to this 
 is that Stinnes certainly could have found 
 other and less dangerous alternatives if his 
 
 actions had really been determined by mere 
 
 ii6 
 
HUGO STINNES 
 
 considerations of profit or the fear of social- 
 ization. At the same time it must be said 
 that Stinnes seemed to be of the opinion 
 that the French would in the course of 
 time undoubtedly find some excuse for oc- 
 cupying the Ruhr basin. As he explained 
 later in justifying his conduct at Spa, he 
 considered that the results would have 
 been less harmful for the future of Germany 
 if the occupation had taken place immedi- 
 ately at the time of the Spa conference, 
 rather than now or later. 
 
 The conference at Spa was preceded by 
 an interview between Stinnes and Miller- 
 and. The foreign press reported that 
 Stinnes had outlined a plan of close co- 
 operation between the French and German 
 coal and iron industries, which was to be 
 of the greatest importance in the upbuilding 
 of German economic life. His plan was 
 supposed to have been worked out to the 
 most minute detail. It was said to have 
 made a strong impression in France, but 
 
 that the French industrial leaders had op- 
 
 117 
 
HUGO STINNES 
 
 posed Stinnes' proposal. It was probably 
 feared that such a cooperation would work 
 out to the detriment of French industry 
 on account of the superior organization of 
 German industries. 
 
 The pessimistic calculations of Stinnes 
 in regard to the coal deliveries have turned 
 out to be untrue. The figures were prob- 
 ably correct, but evolution has shown that 
 a vital organism is elastic enough to form 
 new growths where the old growth has 
 been cut off. Nevertheless it is true that 
 the experiment was never carried out ac- 
 cording to the figures which Stinnes had 
 in mind. The insufficient output, despite 
 extra shifts, subsidies, and an increased 
 number of laborers, on Germany's part, 
 and the transportation difficulties of France, 
 have made it impossible to carry out com- 
 pletely the agreement at Spa. 
 
 The common sense harmony between 
 
 employers and employees revealed at Spa, 
 
 made a deep impression upon the public 
 
 both in Germany and abroad. But the 
 
 ii8 
 
HUGO STINNES 
 
 effect of this soon disappeared in Ger- 
 many, when political and labor dissensions 
 broke out with unprecedented severity im- 
 mediately after the occurrences at Spa. 
 The attacks upon Stinnes came thick and 
 fast. Among other things, he was accused 
 of seeking to acquire influence in France 
 in order to limit German prerogatives in 
 the Ruhr basin, and to split labor by means 
 of his newspapers. A letter which Hugo 
 Stinnes wrote to one of the men who at- 
 tacked him, is of considerable interest. In 
 July, 1920, he wrote as follows: 
 
 "I find that you have made certain 
 prominent statements in the Arbeiterzeitung^ 
 of Essen to which I am replying because 
 they have been made by a man who is a 
 member of our own mining industry, and 
 because these statements, unless they are 
 contradicted, are likely to cause mischief 
 in our mining community. The experts 
 of the coal industry, present at Spa, had 
 
 1 A newspaper devoted to the interests of labor published in 
 Essen. 
 
 9 119 
 
HUGO STINNES 
 
 two objects in mind when they made their 
 fight to keep the compulsory deHveries of 
 coal to the hostile Entente within certain 
 limits. They wanted first to save the Ger- 
 man mining unions from having to do a 
 great amount of overtime work at a period 
 when their food supply was inadequate. 
 In the second place they did not want the 
 unions to assume the responsibility for an 
 even greater increase of unemployment and 
 want in all other industries. 
 
 In the discussions of the socialization 
 commission, and in the committee of the 
 State Economic Council, I called particu- 
 lar attention to the fact that, contrary to 
 many of my associates, I did not take the 
 stand that the abolition of the eight-hour 
 day could be looked upon as a cure-all to 
 remedy the present depression within what 
 might be called a reasonable time. It is 
 therefore outrageous of you to accuse me 
 of having taken the opposite position. The 
 only correct statement you make is that I 
 
 declared that overtime work was essential 
 
 1 20 
 
HUGO STINNES 
 
 to change the present conditions in the 
 departments of mining, agriculture, and 
 transportation. What you say about a 
 French-German Purchasing Company, in 
 Paris, in which I am supposed to be heavily 
 interested, is either a careless or a dehberate 
 misrepresentation on your part. For it 
 has been constantly emphasized that only 
 the German unions and the Coal Syndicate 
 were to benefit from this French-German 
 Purchasing Company. This was again 
 brought out at the recent congress of 
 mining unions. If it is your intention to 
 create a dissension and suspicion between 
 employers and employees in the coal mining 
 industry, whether through ignorance of the 
 facts, or deliberately, you are merely fur- 
 thering the interests of our common op- 
 pressors, with the result that the Rhine- 
 Westphalian miners will have to drudge 
 like slaves for foreign masters for years to 
 come, to the great detriment of Germany. 
 You will thus do the same harm as a num- 
 ber of our representatives at Spa, who 
 
 121 
 
HUGO STINNES 
 
 through racial bias, broke down German 
 resistance against degrading demands. I 
 hope that you will see to it that my reply 
 to your statements is conspicuously printed 
 in the Arbeiterzeitung. Good luck to you!" 
 
 Hugo Stinnes had every right to repudi- 
 ate such suspicions. An expert called in 
 to give his opinion must be allowed to state 
 his case frankly, without being suspected of 
 bad motives. On this occasion, it is true, 
 Stinnes exposed himself by ascribing mo- 
 tives inspired by racial bias to other ex- 
 perts who did not share his point of view. 
 Perhaps he wanted to defend himself against 
 the impression which a French newspaper 
 had created, by describing Stinnes as hav- 
 ing a Semitic appearance. On this occasion 
 Stinnes had been characterized as "half a 
 professor, half a rabbi." In any case, 
 Stinnes' attack upon his associates at Spa 
 was most unfortunate. 
 
 Since Spa, Stinnes has been especially 
 down on politicians. After the negotia- 
 tions at the London Conference, he made a 
 
 122 
 
HUGO STINNES 
 
 sharp attack upon the German conduct of 
 the negotiations, in the Committee on 
 Foreign Affairs of the German parhament. 
 He reproached the Cabinet for having a 
 foreign poHcy that was without any guid- 
 ing idea or fixed plan. Lately, an interview 
 of Stinnes has been republished, which he 
 is supposed to have given to a foreign 
 correspondent. 
 
 "We are merely losing time through the 
 chatter of politicians who are wound up 
 like automatons by parliament and the 
 newspapers. What we need is a conference 
 of business men who can talk to each other 
 without hate. There must be no more con- 
 ferences at which everybody lays down his 
 revolver at his side. This sick world can 
 only be saved by a consultation of a few 
 physicians behind closed doors. It would 
 be insane on the part of Germany to de- 
 clare its willingness to pay even the in- 
 terest on a loan of 50,000,000,000 marks. 
 If the Allies are figuring on any such sums, 
 
 they are going to have another disappoint- 
 
 123 
 
HUGO STINNES 
 
 ment. France could have had material 
 and labor for construction two years ago, 
 and no German would have refused to de- 
 liver them. France, however, was not 
 really interested in reparation, but was 
 seeking to humiliate Germany. At the 
 present moment there are only two kinds of 
 countries in the world — those which can 
 buy raw materials because of the state of 
 exchange, and those which can not do this. 
 Both are bound to perish unless some form 
 of cooperation can be agreed upon. Money 
 is to be found, but only by giving the world 
 an example of perfect cooperation. Every 
 business man knows that money is to be 
 had, only the politicians do not seem to 
 know it. I am trying to save my country 
 from destruction, and at the same time save 
 the other countries." 
 
 This interview is without doubt essen- 
 tially correct. For this is the way Stinnes 
 thinks and speaks. He is always terse and 
 sure of himself, and sees things in a large 
 
 way, though he is sometimes a little reck- 
 
 124 
 
HUGO STINNES 
 
 less. It Is certain that Stinnes will make 
 use of his whole organizing power to solve 
 European problems when the time comes. 
 It is not like him to stand aside and sulk. 
 
 As a party man, Stinnes belongs to the 
 German People's Party (Volkspartei). The 
 party seems to have entertained the hope 
 that this powerful trust magnate would 
 make a strong foundation for a political 
 platform. These expectations have not 
 been realized. Hugo Stinnes seems to have 
 no desire to substitute a form of narrowly 
 conceived and unprofitable party politics 
 for his industrial activity. 
 
 Stinnes has lately been severely taken 
 to task for launching three ships which 
 were christened with somewhat opprobri- 
 ous names. To call these three ships 
 '^Hindenburg/' "Tirpitz," and "Luden- 
 dorff," was looked upon as a provocation, 
 though it is not likely that this idea ever 
 entered his mind. For the construction of 
 these ships had been begun at a period 
 
 when these three names still sounded differ- 
 
 125 
 
HUGO STINNES 
 
 ently to Germans, than they now do. The 
 three men in question had probably agreed 
 to act as godfathers for the ships some time 
 ago. It would have been very surprising 
 if a man like Stinnes had allowed any psy- 
 chological or tactical considerations to in- 
 fluence him to change the names of the 
 ships at the last moment. 
 
CHAPTER X 
 
 STINNES AND THE SOCIALIZATION OF INDUS- 
 TRIES 
 
 Coal and iron are the foundations of Ger- 
 man industry. He who controls them con- 
 trols the smallest business. By producing, 
 manufacturing, and exporting them, Ger- 
 many can exchange goods with the indus- 
 tries of the world; she can satisfy her own 
 needs and make enough profit to increase 
 and improve the supply; she can put her 
 factories into more and more perfect con- 
 dition. Mr. Vogler, one of the directors of 
 the Stinnes Trust, is quite right when he 
 says: "With us the potato has long ago be- 
 come a product of coal." 
 
 For this reason the question of creating 
 new economic systems always involves the 
 
 control of coal and iron. Newspapers, pub- 
 
 127 
 
HUGO STINNES 
 
 lie meetings, and commissions have long 
 been engrossed in plans for the develop- 
 ment of these new systems. Germany was 
 the first country to create a State Economic 
 Council, a parliamentary institution cre- 
 ated for the purpose of taking economic 
 questions out of the hands of politically 
 divided parties, and giving them to com- 
 petent representatives of the various trades 
 and professions to evolve some suitable 
 working basis. 
 
 In the State Economic Council, repre- 
 sentatives of every occupation come to- 
 gether for practical work on these economic 
 questions. After the events at Spa in 1920, 
 the question of socializing the mines was 
 exhaustively discussed. The records of the 
 proceedings read like an exciting drama 
 which shows the conflict of opinions and 
 interests on a broad stage, not without an 
 occasional bit of satire. 
 
 In the debate over the socialization of 
 
 the mines, there was found to be a sharp 
 
 conflict of opinion. Hugo Stinnes, who 
 
 128 
 
HUGO STINNES 
 
 belongs to the State Economic Council, 
 took an active part in the discussions. 
 When the first negotiations failed to estab- 
 lish a common basis, the so-called ** Com- 
 mittee of Understanding'' was formed, 
 which proceeded from Berlin to Essen, into 
 the heart of the coal district, in order to 
 arrive at some practical results. Besides 
 Stinnes and Vogler, this committee in- 
 cluded a number of other employers and 
 employees from the various branches of 
 the coal industry, and the series of fac- 
 tories belonging to the next stage of manu- 
 facturing. This meeting at Essen resulted 
 in an expert's memorandum which was 
 essentially the work of Stinnes. The other 
 large industrial leaders of German indus- 
 tries subscribe to the collectivist point of 
 view contained in this memorandum. As 
 we cannot digress too far into the details of 
 these proposals, we shall limit ourselves to 
 elaborating upon the two most important 
 ones. 
 
 The memorandum declares itself in favor 
 
 129 
 
HUGO STINNES 
 
 of creating vertical consolidations of the 
 industry. The object is to utilize the raw 
 materials to the greatest possible extent, 
 and to manufacture them into finished 
 products as efficiently as possible. When 
 these various vertical combinations within 
 the industry have brought about the great- 
 est possible economic concentration, they 
 are to be organized in relation to each 
 other on the horizontal system. The whole 
 industry will then be trustified both ver- 
 tically and horizontally into a collective 
 unit. This will ensure the maximum serv- 
 ice, and will thus fulfill one of the main 
 demands of socialistic organization. Ac- 
 cording to Stinnes, trustification and social- 
 ization run parallel, and do not have to 
 intersect each other. The second proposal 
 is to create industrial provinces. The eco- 
 nomic field is to be divided, not according 
 to geographical and political relations, but 
 strictly according to a practical economic 
 point of view. Within every uniform dis- 
 trict there will be a combination of all 
 
 130 
 
HUGO STINNES 
 
 the branches of industry, and a joint regu- 
 lation of power production, raw material 
 output, and manufacturing, together with 
 the necessary transportation facilities. In 
 forming these industrial provinces, Stinnes 
 is developing a plan which he had already 
 tried to put into practice before the war. 
 Both his mining establishments in the Ruhr 
 district, and his development of the elec- 
 trical business, had been planned with the 
 idea of creating a uniform industrial dis- 
 trict. To carry out this form of collec- 
 tivism, Stinnes also proposes to have the 
 employees hold shares in the industry. 
 
 These lines of development have been 
 evolved from practical experience, and fol- 
 low out the purpose which Stinnes had in 
 mind in establishing his enterprises and 
 consolidating the various branches into his 
 Trust. The importance of these consoli- 
 dations for the economic development of 
 Germany is indisputable. The proposal 
 of minor stock participation is not essen- 
 tial to the development of collectivism, 
 
 131 
 
HUGO STINNES 
 
 and may even become an impediment. The 
 participation of the individual employee 
 in the enterprises would merely strengthen 
 economic individualism. Other business 
 men demanded the participation of the 
 employees as a form of collectivism. 
 Socialization itself has thus far made little 
 progress. The great unknown quantities, 
 which the unsolved reparations problem 
 has called forth, must first be eliminated 
 from world economics. No amount of 
 negotiation so far has even succeeded in 
 reducing these quantities to practical di- 
 mensions. 
 
 Until this is done it is not very likely 
 that a transformation of the present-day 
 economic system can be accomplished 
 through legislation. In this connection, it 
 is interesting to hear the opinion of French 
 Socialists about the economic system which 
 Stinnes has created. A short time ago 
 Le Peuple pointed out how this concentra- 
 tion had cheapened production and avoided 
 the waste of raw material, and referred to 
 
 132 
 
HUGO STINNES 
 
 this form of organization as "a step which 
 France might well imitate." French in- 
 dustry, this newspaper continued, had found 
 nothing better to do than to raise the 
 tariff. This merely stunted business initi- 
 ative and diminished competition in world 
 economics, whereas these German concen- 
 trations had not only proved that produc- 
 tion methods could be improved but had 
 shown how such improvements could be 
 made. 
 
CHAPTER XI 
 
 THE SIGNIFICANCE OF STINNES IN GERMAN 
 ECONOMIC DEVELOPMENT 
 
 There is no doubt about the strength of 
 Stinnes' personality. But it is equally cer- 
 tain that from an economic point of view 
 he is rapidly growing beyond a mere per- 
 sonality: he is becoming his own work. 
 
 The Stinnes Trust serves as a model il- 
 lustration ot German trustification. This 
 differs in many ways from the well-known 
 American trust, in respect to its ori- 
 gins, its development, and its results. The 
 untapped natural resources of America of- 
 fered unprecedented opportunities for profit 
 to the trusts. In Germany, on the other 
 hand, there were already large numbers of 
 independent business men who had sprung 
 
 134 
 
HUGO STINNES 
 
 up as a result of the division and utilization 
 of the country's deposits of raw materials, 
 and the advanced technical development; 
 so that a trust could not be formed except 
 through a combination of individual daring 
 and an extraordinary gift for organization. 
 American trust builders also have frequently 
 made clever use of the stock exchange opera- 
 tions, in order to gain control of various 
 enterprises. Large scale speculations of 
 this sort have been rare occurrences in Ger- 
 many. It is only quite recently that the 
 stock exchanges of Berlin and Vienna have 
 witnessed such sensational operations. They 
 will cease as soon as the exchange has been 
 stabilized. 
 
 The German concentration movement 
 did not take place primarily through finan- 
 cial operations, but through logical con- 
 solidations of enterprises that were at the 
 same stage of manufacture, or were engaged 
 in similar manufacturing processes. Such 
 consolidations offered great advantages in 
 the running of the business, which did not 
 10 135 
 
HUGO STINNES 
 
 exist in the case of isolated enterprises. 
 They led to economy and skill in the pur- 
 chase of raw materials, and where they 
 were built up on the basis of their own raw 
 materials, this feature frequently put them 
 in the favorable position of being able to 
 procure their material without expensive 
 middle-men's costs, and without time-rob- 
 bing and costly transportation. They could 
 also regulate the production of raw ma- 
 terials according to whatever standard of 
 quality they required. 
 
 The special forms of industrial organiza- 
 tions peculiar to mining were to the advan- 
 tage of factories that handled several proc- 
 esses at different stages. The protracted 
 dissensions in the Rhine- Westphalian Coal 
 Syndicate had resulted from the fact that 
 a large number of mining industries, as 
 well as factories involving several processes, 
 were members of the same syndicates and 
 cartels. The cartel form of business or- 
 ganization will probably disappear entirely. 
 
 An essential difference between German 
 
 136 
 
HUGO STINNES 
 
 and American trusts also lies in the fact, 
 that in America the domination of the trust 
 in most cases led to the complete control of 
 an entire industrial field. Thus the all- 
 powerful Standard Oil Company, whose 
 history is associated with the name of 
 Rockefeller, completely dominated the 
 American oil industry within the short 
 space of ten years after it had absorbed 
 39 competing companies. At one time it 
 transported and distributed 95% of the 
 entire American production. Germany had 
 no such example of monopoly because a 
 number of equally powerful trusts grew up 
 within the same branch of industry. When 
 the period of consolidation approached, 
 German industry had numerous large enter- 
 prises with a highly developed individu- 
 ality. At present, the mining industry 
 alone includes a number of large firms. So 
 far no single trust dominates. As a result 
 the head of every trust is stimulated to 
 make a maximum effort. No mining trust 
 can afford to rely upon its powerful posi- 
 
 137 
 
HUGO STINNES 
 
 tion, and to let up in its effort to perfect 
 its equipment and to increase its produc- 
 tion. This continually forces German trusts 
 to do everything in their power to try to 
 cheapen production costs and to extract 
 the maximum effort from their workmen. 
 
 Another trait of the German trusts is 
 the principle of federation basis on which 
 they are organized, corresponding to the 
 characteristics of the German people. As 
 the Stinnes Trust shows, decentralization 
 is the very thing aimed at, so as to preserve 
 and increase the independence of the in- 
 dividual enterprises and the pride of each 
 director in his responsibility, as well as to 
 avoid stagnation in the office management 
 and in the shop. 
 
 Germany to-day shows the most diversi- 
 fied forms of consolidations in every field. 
 But they all have the same object in com- 
 mon, namely, to organize industry on a 
 more rational basis. This is essential in 
 order to keep Germany alive. The fact 
 that this process is taking place from within 
 
 138 
 
HUGO STINNES 
 
 is a sign of inner vitality. To what this 
 development will lead later on, cannot yet 
 be foreseen. Theories differ in regard to 
 the efficiency of these concentrations. The 
 dispute between the partisans of these 
 theories frequently takes violent forms. 
 But in the meantime the development goes 
 steadily on. Germany must of course pre- 
 vent unhealthy excrescences of this de- 
 velopment. But the development itself is 
 bound to take place. 
 
 The importance of German trusts for 
 the future of Germany is certainly very 
 great. So-called normal economic condi- 
 tions, in the period before the war, now 
 seem almost mediaeval and provincial. The 
 development is taking place with enormous 
 rapidity. The pressure of conditions from 
 without, the actual or threatened loss of 
 vital industrial sections, and the prohibi- 
 tion of export and import, would necessarily 
 have destroyed Germany if unsuspected 
 forces had not been liberated and been 
 made to unfold from within. Germany 
 
 139 
 
HUGO STINNES 
 
 will become a sparsely settled agricultural 
 state unless the formation of new kinds of 
 economic organization can bring about 
 greater, better, and cheaper production. 
 Trusts induce and facilitate the growth of 
 these new economic organizations. It is 
 worth while to observe the effects of trusti- 
 fication in the case of the Stinnes Trust. 
 
 The consolidation of the Gelsenkirchen 
 Mining Company Inc. with the German- 
 Luxemburg Mining & Smelting Company 
 and the Bochum Company, combines a 
 large number of similar plants engaged in 
 the production of coal, iron-ore, limestone, 
 and dolomite. These raw materials are ex- 
 tracted not only for the factories belonging 
 to the trust, but to a considerable extent 
 for outside factories as well. This com- 
 bination makes it possible to employ cheaper 
 and better methods of extraction because 
 the joint management eliminates competi- 
 tion, and facilitates a better organized plan 
 of distribution. The expenses of the Trust 
 
 are also reduced through the manufacture 
 
 140 
 
HUGO STINNES 
 
 of its own raw materials. The factories are 
 thereby put in a position to invest much 
 more money in new enterprises where the 
 resuhs may be doubtful, than isolated 
 establishments which operate much closer 
 to the profit and loss margin. Innovations 
 of a technical nature can also be introduced 
 with much less risk. 
 
 The by-products and intermediary prod- 
 ucts of the mining industry can be utilized 
 to the greatest advantage. Here also the 
 history of the Stinnes Trust shows that a 
 number of technical innovations were made 
 possible only by distributing the risk of the 
 experiment over the individual factories. 
 By-products such as coke and lime can be 
 manufactured in the company's own fac- 
 tories in any grade or quality desired. The 
 Trust can obtain all the necessary materials 
 for the production of pig iron from its own 
 plants, and the smelting takes place in its 
 own establishments. Steel of every grade, 
 cast-iron, blast furnace cement, and slag 
 
 stones, are all produced according to the 
 
 141 
 
HUGO STINNES 
 
 needs of the factories at the next stages of 
 manufacture. 
 
 Semi-manufactured products of every 
 form and quahty are successively produced 
 by a chain of related factories. The estab- 
 lishments at Gelsenkirchen produce rail- 
 road material, bar iron, tin, and tubing; 
 the Bochum Company manufactures rail- 
 road material, forged iron, bar iron, and 
 cast iron. The Brüninghaus factories pro- 
 duce crude forged iron and bar iron; the 
 former works at Thomee produce bar iron 
 and rolled steel wire. The former inde- 
 pendent works at Berg manufacture bar 
 iron, various forms of tin, wire, and tubing; 
 the German-Luxemburg Mining & Smelting 
 Company manufactures railroad material, 
 forged iron, cast-iron, tins and wires. The 
 affiliated factories of the Siemens Company 
 also produce bar iron and wire. 
 
 The finished products of the German- 
 Luxemburg Company include all kinds of 
 tools, screws and rivets, springs, forged 
 
 parts, switches, railroad and bridge con- 
 
 142 
 
HUGO STINNES 
 
 struction material, cranes, cables, railroad 
 and street cars, freight cars, machines and 
 ships. The Company obtains all its neces- 
 sary materials for these manufacturing 
 processes from the series of factories en- 
 gaged in the production of intermediary 
 products. The Bochum Company depends 
 upon previous production stages of the in- 
 dustry for its manufacture of forgings and 
 railroad material. 
 
 This foundation of raw material, semi- 
 and finished product, serves the Siemens 
 Company for the manufacture of the most 
 varied articles. These include: generators, 
 motors, transformers, switchboards, ma- 
 terial for installations, cables and conduits, 
 telegraph and telephone apparatus, signal 
 apparatus, measuring instruments, electro- 
 medial apparatus, hydrometers, railroad 
 safety devices, trucks and automobiles, 
 artificial coal, porcelain and paper for tech- 
 nical purposes, incandescent lamps, elec- 
 trical distributing stations, electrical equip- 
 ment for industrial power plants, for elec- 
 ts 
 
HUGO STINNES 
 
 trical transportation, and for chemical in- 
 dustries; long distance telephone apparatus 
 and transmission equipment, signal and 
 switchboard equipment, and underground 
 and hydraulic building material. 
 
 Beginning at the bottom of the scale, 
 every stage of manufacture is undertaken 
 in relation to the stage next above, so that 
 the raw material is gradually transformed 
 into a finished product of the best possible 
 quality. Whenever changes in the finished 
 product are called for, suitably equipped 
 factories can be installed at any of the pre- 
 liminary stages of manufacture. 
 
 The divisions in this system are not 
 rigid. Horizontal and vertical combina- 
 tions parallel and intersect each other. 
 Many industries are divided vertically or 
 horizontally within themselves, and some 
 are connected with others both horizon- 
 tally and vertically. Every stage of manu- 
 facture, besides having its place in the pro- 
 duction scale as a whole, is itself minutely 
 
 organized. This rational systematizing of 
 
 144 
 
HUGO STINNES 
 
 factories will undoubtedly be developed 
 still further. This combination is of especial 
 importance in the case of factories that 
 are connected in a series. The horizontal 
 division, which economic experts have been 
 insisting upon, is therefore already fore- 
 shadowed in the Stinnes Trust, and will 
 probably be further developed. 
 
 Stinnes is generally regarded as the 
 strongest exponent of the vertical trust. 
 The most recent developments show that 
 even those industrial leaders who formerly 
 were the strongest opponents of vertical 
 trusts can no longer get along without the 
 expansion of their enterprises both upward 
 and downward in the scale of production. 
 A combination of the vertical and the 
 horizontal systems will probably take place 
 to a very great extent in the near future. 
 
 The Stinnes Trust has been ver;^ much 
 attacked. In most cases the attack is not 
 against Stinnes himself but against the form 
 of trustification, so that it also applies to 
 other large trusts which are being formed 
 
 HS 
 
HUGO STINNES 
 
 in Germany. The point is being made that 
 the development of these trusts is not 
 organic but is due to the tremendous pres- 
 sure of external circumstances. In case of 
 a return to a period of normal economic 
 activity in the future, it is considered very 
 dangerous to have these trusts absorb a 
 large number of major and minor indus- 
 tries which they will no longer be able to 
 utilize when conditions are stablized again. 
 But after the factories are either aban- 
 doned or closed down, it will still be nec- 
 essary to pay off both interest and prin- 
 cipal on the large amounts of capital in- 
 vested. This necessity will form an un- 
 desirable liability which must be charged 
 against prices. The same reasoning ap- 
 plies to the overpayments which are often 
 being made to-day in acquiring new prop- 
 erties. These liabilities will prevent price 
 reduction, and will finally be passed on to 
 the consumer, so that the people as a whole 
 will suffer economic harm. 
 
 It is also claimed that there is great 
 
 146 
 
HUGO STINNES 
 
 danger of the owners of these powerful 
 trusts misusing their influence over society 
 and the state. It may become especially 
 difficult to regulate the production of in- 
 dividual countries in the interest of inter- 
 national economic understanding, if these 
 countries contain powerful, independent 
 pyramids which stand outside of the 
 commonwealth. 
 
 Finally it is argued that these trusts 
 make it impossible for important smaller 
 ' industries to remain independent, and that 
 they check the initiative of the masses. 
 
 These misgivings are not entirely un- 
 justified. In addition, the trustification 
 movement has thus far failed to give one 
 other necessary guarantee. Trusts will, it 
 is true, lead to the greatest possible ration- 
 alization of economics, but it has not yet 
 been shown that these factory systems, 
 however technically perfect they may be, 
 are working towards a true collectivism. 
 Of what use is it to the general public, for 
 instance, to have the best telephone system, 
 
 147 
 
HUGO STINNES 
 
 if such necessities as houses, clothes, and food 
 cannot be procured in sufficient quantities, 
 or only at exorbitant prices ? And it is also 
 true that, up to now, every advance towards 
 a better supply of these necessities is made 
 retroactive through the fact that increased 
 satisfaction constantly creates new wants. 
 Thus, the economic pressure persists even 
 when it is possible to satisfy all wants. 
 
 As regards the relative merits of vertical 
 or horizontal concentration, this at least 
 seems to be certain: Under the desperate 
 conditions of present day German indus- 
 try, the vertical trust is the most important 
 for the near future. The merit of the hori- 
 zontal system lies in its internal results. 
 This system may be compared to a com- 
 munity with an economic system which 
 allows the most suitable distribution of 
 labor and avoids every form of industrial 
 friction and waste of material, while at the 
 same time enjoying unrestricted relations 
 with the outer world. But Germany to- 
 day cannot revive her industry by satisfy- 
 
 148 
 
HUGO STINNES 
 
 ing, however perfectly and smoothly, only 
 her own wants. She must have free inter- 
 course with the world. The German eco- 
 nomic organism is crippled and will not be 
 able to maintain itself through the coming 
 periods of economic crises and struggles 
 for supremacy, unless it can secure points 
 of support and sources of food supply out- 
 side of its own borders. Only a vertical 
 trust like that of Stinnes can create points 
 of support for itself in the endangered 
 districts and in foreign countries. If ten 
 similar establishments, operating at the 
 same stage of manufacture, join with an 
 eleventh similar establishment in a foreign 
 country, they cannot accomplish their eco- 
 nomic function through the agency of this 
 one establishment, in times of political and 
 economic uncertainty. But a trust that is 
 linked with the production of raw materi- 
 als and is sure of disposing of its goods will 
 be able to retain its strength in a crisis, 
 and will even be able to engage in new forms 
 
 of activity in the face of powerful obstacles. 
 
 149 
 
HUGO STINNES 
 
 If we direct our attention to the anchor- 
 ages of the Stinnes trust, such as Rhine- 
 land-Westphaha, Hamburg, Berlin, Bava- 
 ria, East Prussia, and German Austria, 
 and follow out all their foreign connections, 
 we shall find that they offer valuable guar- 
 antees of their ability to function even in 
 periods of political and economic upheavals. 
 If the German commonwealth succeeds in 
 organically incorporating this powerful trust 
 into its own economic structure, Hugo 
 Stinnes will be one of the commonwealth's 
 strongest pillars. 
 
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