The Vampire Economy (1939 NAZI Germany)

[The Village Idiot]

Don't agree wit them on some social and foreign policy issues but when it comes to free markets they are usually very good.

NAZI Economic Policy
http://mises.org/daily/3274

National Socialism
http://mises.org/daily/47

Mises's account is confirmed by a remarkable book that appeared in 1939, published by Vanguard Press in New York City (and unfortunately out of print today). It is The Vampire Economy: Doing Business Under Fascism by Guenter Reimann, then a 35-year old German writer. Through contacts with German business owners, Reimann documented how the "monster machine" of the Nazis crushed the autonomy of the private sector through onerous regulations, harsh inspections, and the threat of confiscatory fines for petty offenses.

"Industrialists were visited by state auditors who had strict orders to examine the balance sheets and all bookkeeping entries of the company or individual businessman for the preceding two, three or more years until some error or false entry was found," explains Reimann. "The slightest formal mistake was punished with tremendous penalties. A fine of millions of marks was imposed for a single bookkeeping error."

Reimann quotes from a businessman's letter: "You have no idea how far state control goes and how much power the Nazi representatives have over our work. The worst of it is that they are so ignorant. These Nazi radicals think of nothing except ‘distributing the wealth.' Some businessmen have even started studying Marxist theories, so that they will have a better understanding of the present economic system.

"While state representatives are busily engaged in investigating and interfering, our agents and salesmen are handicapped because they never know whether or not a sale at a higher price will mean denunciation as a ‘profiteer' or ‘saboteur,' followed by a prison sentence. You cannot imagine how taxation has increased. Yet everyone is afraid to complain. Everywhere there is a growing undercurrent of bitterness. Everyone has his doubts about the system, unless he is very young, very stupid, or is bound to it by the privileges he enjoys.

"There are terrible times coming. If only I had succeeded in smuggling out $10,000 or even $5,000, I would leave Germany with my family. Business friends of mine are convinced that it will be the turn of the ‘white Jews' (which means us, Aryan businessmen) after the Jews have been expropriated. The difference between this and the Russian system is much less than you think, despite the fact that we are still independent businessmen."

As Mises says, "independent" only in a decorous sense. Under fascism, explains this businessman, the capitalist "must be servile to the representatives of the state" and "must not insist on rights, and must not behave as if his private property rights were still sacred." It's the businessman, characteristically independent, who is "most likely to get into trouble with the Gestapo for having grumbled incautiously."

"Of all businessmen, the small shopkeeper is the one most under control and most at the mercy of the party," recounts Reimann. "The party man, whose good will he must have, does not live in faraway Berlin; he lives right next door or right around the corner. This local Hitler gets a report every day on what is discussed in Herr Schultz's bakery and Herr Schmidt's butcher shop. He would regard these men as ‘enemies of the state' if they complained too much. That would mean, at the very least, the cutting of their quota of scarce and hence highly desirable goods, and it might mean the loss of their business licenses. Small shopkeepers and artisans are not to grumble."

"Officials, trained only to obey orders, have neither the desire, the equipment, nor the vision to modify rules to suit individual situations," Reimann explains. "The state bureaucrats, therefore, apply these laws rigidly and mechanically, without regard for the vital interests of essential parts of the national economy. Their only incentive to modify the letter of the law is in bribes from businessmen, who for their part use bribery as their only means of obtaining relief from a rigidity which they find crippling."

[The Village Idiot]

The Vampire Economy sounds like an interesting read.

Doesn't sound like the NAZI's were very free market oriented at all.

They were socialists, imagine that.

[Chris]

The Vampire Economy sounds like an interesting read.

Doesn't sound like the NAZI's were very free market oriented at all.

They were socialists, imagine that.

Free market?  Not really.  You had to be in a "critical" industry if you wanted to do business in Germany.  Many businesses were closed down because the Reischtag did not approve of them.

But I bet gas was cheap, huh?

[The Village Idiot]

Free market?  Not really.  You had to be in a "critical" industry if you wanted to do business in Germany.  Many businesses were closed down because the Reischtag did not approve of them.

But I bet gas was cheap, huh?

Except you had to have connections to be able to get any gas.

[The Village Idiot]

I don't know if its public domain but here is a PDF file of it.

WARNING: 12.56MB in size

http://www.freeinfosociety.com/media/pdf/2782.pdf

Here is a legnthy quote from a Mises article ...


http://mises.org/daily/47

Mises's account is confirmed by a remarkable book that appeared in 1939, published by Vanguard Press in New York City (and unfortunately out of print today). It is The Vampire Economy: Doing Business Under Fascism by Guenter Reimann, then a 35-year old German writer. Through contacts with German business owners, Reimann documented how the "monster machine" of the Nazis crushed the autonomy of the private sector through onerous regulations, harsh inspections, and the threat of confiscatory fines for petty offenses.

"Industrialists were visited by state auditors who had strict orders to examine the balance sheets and all bookkeeping entries of the company or individual businessman for the preceding two, three or more years until some error or false entry was found," explains Reimann. "The slightest formal mistake was punished with tremendous penalties. A fine of millions of marks was imposed for a single bookkeeping error."

Reimann quotes from a businessman's letter: "You have no idea how far state control goes and how much power the Nazi representatives have over our work. The worst of it is that they are so ignorant. These Nazi radicals think of nothing except ‘distributing the wealth.' Some businessmen have even started studying Marxist theories, so that they will have a better understanding of the present economic system.

"While state representatives are busily engaged in investigating and interfering, our agents and salesmen are handicapped because they never know whether or not a sale at a higher price will mean denunciation as a ‘profiteer' or ‘saboteur,' followed by a prison sentence. You cannot imagine how taxation has increased. Yet everyone is afraid to complain. Everywhere there is a growing undercurrent of bitterness. Everyone has his doubts about the system, unless he is very young, very stupid, or is bound to it by the privileges he enjoys.

"There are terrible times coming. If only I had succeeded in smuggling out $10,000 or even $5,000, I would leave Germany with my family. Business friends of mine are convinced that it will be the turn of the ‘white Jews' (which means us, Aryan businessmen) after the Jews have been expropriated. The difference between this and the Russian system is much less than you think, despite the fact that we are still independent businessmen."

As Mises says, "independent" only in a decorous sense. Under fascism, explains this businessman, the capitalist "must be servile to the representatives of the state" and "must not insist on rights, and must not behave as if his private property rights were still sacred." It's the businessman, characteristically independent, who is "most likely to get into trouble with the Gestapo for having grumbled incautiously."

"Of all businessmen, the small shopkeeper is the one most under control and most at the mercy of the party," recounts Reimann. "The party man, whose good will he must have, does not live in faraway Berlin; he lives right next door or right around the corner. This local Hitler gets a report every day on what is discussed in Herr Schultz's bakery and Herr Schmidt's butcher shop. He would regard these men as ‘enemies of the state' if they complained too much. That would mean, at the very least, the cutting of their quota of scarce and hence highly desirable goods, and it might mean the loss of their business licenses. Small shopkeepers and artisans are not to grumble."

"Officials, trained only to obey orders, have neither the desire, the equipment, nor the vision to modify rules to suit individual situations," Reimann explains. "The state bureaucrats, therefore, apply these laws rigidly and mechanically, without regard for the vital interests of essential parts of the national economy. Their only incentive to modify the letter of the law is in bribes from businessmen, who for their part use bribery as their only means of obtaining relief from a rigidity which they find crippling."

Says another businessman: "Each business move has become very complicated and is full of legal traps which the average businessman cannot determine because there are so many new decrees. All of us in business are constantly in fear of being penalized for the violation of some decree or law."

Business owners, explains another entrepreneur, cannot exist without a "collaborator," i.e., a "lawyer" with good contacts in the Nazi bureaucracy, one who "knows exactly how far you can circumvent the law." Nazi officials, explains Reimann, "obtain money for themselves by merely taking it from capitalists who have funds available with which to purchase influence and protection," paying for their protection "as did the helpless peasants of feudal days."

"It has gotten to the point where I cannot talk even in my own factory," laments a factory owner. "Accidentally, one of the workers overheard me grumbling about some new bureaucratic regulation and he immediately denounced me to the party and the Labor Front office."

[Chris]

Cool.  I'm on it like white on rice.

[The Village Idiot]

Sounds like a DUmmie idea of heaven. They'd all be the local informers sending daily reports back to the central government on the local shops.

[The Village Idiot]

Believe it or not the author was a Marxist. weird huh?

He died in 2005

Guenter Reimann, a Marxist economist early in his career who eventually published one of the most expensive and influential newsletters on international capitalism and monetary exchange, died on Feb. 5 in Valley Stream, N.Y. He was 100 and lived in Manhasset, N.Y.

His death was announced by his family.

 
In his youth, Mr. Reimann was associated with the Communist opposition to Hitler's rise to power in Germany. After fleeing into exile, first to Britain and then to the United States, he published his first books here analyzing the market systems of Nazi Germany and Fascist Italy.

After World War II, having settled in New York, he started International Reports on Finance and Currency, a weekly advisory compiled for an elite group of subscribers who paid handsomely for it. It made him well-to-do but never changed his own his dim view of capitalism, especially in its unfettered variety.

His newsletter billed itself as the "oldest advisory service in all fields of international finance." He started it in the wake of the Bretton Woods conference, which created the International Monetary Fund and the World Bank. The institutions were established in 1946, but in the postwar chaos official exchange rates were largely on paper only and international commerce often was at the mercy of bartering and black market vagaries. Mr. Reimann helped dispel the confusion with his advisories.

His newsletter counted leading economists among a worldwide network of correspondents who provided independent analyses of current conditions and trends. It had bureaus in Europe, the Middle East, South America and Asia as well as an editorial board of international bankers and academics.