THE ECONOMIC CONSTITUTION AND SOCIALIZATION
The Constitution imposes on each German the duty of work. It is not
sufficient in modern states, especially in one defeated in war, that
every one therein merely work, unless this work is directed in a
certain spirit, following a given plan and toward a determined end. The
fundamental idea that inspired the Constituent Assembly in the last
provisions of its work is as follows: The whole German system of economy,
public and private, is destroyed or demolished by the war. Germany cannot
dream of rising from its ruins unless it realizes immediate and radical
reforms. It must completely reconstruct its former economic system. The
whole country must become an immense enterprise directed by a conscious
will aimed at a definite goal. All the forces of the country solidly
organized and scientifically utilized must be so managed that a maximum
of production will be assured.
To this end, two series of reforms are contemplated. They are summed
up in these words, “councils” and “collective economy.” On the one
hand, there is projected an Economic Constitution, whose organs are
progressively destined to be parallel to those of the political
Constitution. On the other hand, the effort is made to realize in the
organization of production and distribution an economic system that is
intermediate between that of private economy on the one hand, and a
purely socialist régime on the other.
Nothing systematic, however, has as yet been achieved. The ground is
new. Surprised by the Revolution, the theoreticians of new systems have
not yet fixed their schemes nor elaborated complete and coherent plans.
On the other hand, the majority of the National Assembly is formed by a
coalition of parties whose economic conceptions differ still more than
do their political conceptions. This lack of definiteness and these
differences endanger all effective realization of a solution. But the
necessity of reforms has made itself imperatively felt and economic
difficulties are so grave and menacing that they cannot wait indefinitely
for solution. Further, there are very many people who are restive and
who do not hesitate to resort to general strikes and even to revolts,
when governments hesitate too long in effecting a reform from which they
hope an amelioration of their lot. That is why one will look in vain for
a plan as a whole or a logical order in the provisions we are about to
study. Most of them were adopted by an assembly uncertain of the work it
should do, one which went about its tasks most hurriedly and obeyed the
pressure of external forces more powerful than itself.
SECTION I
THE ECONOMIC CONSTITUTION
The Economic Constitution rests wholly on the idea of the Councils. It
is recalled[57] that the system of the Councils, even under the parity
principle which the supporters of the Vocational Parliament wished to
give it, was left out of the political Constitution but is included in
the Economic Constitution, for which it forms the framework.
1.--THE “ANCHORAGE” OF THE COUNCILS IN THE CONSTITUTION.
Before the Revolution, said the Socialists and Trade Unionists, there
was in Germany neither political autonomy nor economic autonomy. Just
as in their political life the people were governed by a coterie of
junkers and bureaucrats, so in their economic life the people were
under the absolute domination of the entrepreneur. This autocracy of the
capitalists expressed itself legally in the fact that the conditions of
work were fixed solely by the employers. The omnipotence of the latter
was, however, modified by the collective bargains concluded between them
and the trade unions. While it is true that these agreements or bargains
did not have legal guarantees, nevertheless thanks to the existence
of workingmen’s organizations there was instituted by means of these
agreements a contractual and coequal workingmen’s right.
The Revolution of 1918 introduced in Germany political democracy. The
republican government in its establishment has even taken several steps
along the road of economic democracy. Reforms, such as the granting of
complete liberty of organization, the abolition of ordinances on wages
and exceptional laws against agricultural labourers, and the protection
of workers and salaried employés against arbitrary discharge, certainly
mark interesting progress.
But the Socialists, followed on this point by the National Assembly,
held that these reforms were only preparatory in character. True
economic democracy can not content itself with the mere recognition of
workers’ organizations and collective bargaining. Economic democracy
cannot be established and therefore economic and social transformation
cannot be effected, unless the working class can exercise on production
the influence that is its due. There must be provided an organization
that accords the workers the right to participate actively in the
determination of the ends and of the duties of the vocation and the
enterprise; which makes of the workers co-operators with the capitalist.
There must be in every district, in the states and in the Reich an
economic representation created, in which workers and employés will be
represented by the side of their employers, and in which, on a footing of
equality, they will be called upon to co-operate in the regulation of all
economic questions. Such is the thesis; and all efforts and struggles
which we shall observe, centred about the problem of according to the
working class the right of codecision (Mitbestimmungsrecht); and about
the problem of organizing this right. But so far nothing has been done
beyond the statement of some indefinite principles and the roughing out
of the first measures of their realization.
* * * * *
These problems were not new. Already before the war the law of 1891
provided for “Committees of Workers” in the factories, who could be
consulted on the provisions of factory regulations; but as the formation
of these committees depended entirely on the good-will of the employers,
the workers looked with little sympathy on this institution. In fact,
such committees existed in several thousand factories, but their activity
was limited to the administration of the income from fines and the
institution of welfare work.
During the war the rôle of the workers increased considerably in
importance. The laws for compulsory patriotic service which took away
from them the liberty of work owed them compensation. There were
established therefore in all enterprises where there were more than fifty
employed, “committees of workers,” which were elected by all the workers
and had definite functions. There were in addition “joint arbitration
committees,” where conflicts between employers and employés were settled.
“Committees on decisions” also existed, charged with ruling on other
questions raised by the law for patriotic service. These different
organisms at once assumed an important place in the economic life.
On the advent of the Revolution the unions easily obtained some reforms
for which they had fought for a long time, and which constituted their
immediate claims.
On November 15, the unions concluded an agreement with the employers’
associations, which has served as the basis of an important development,
begun on that date and known as the “labour board” (Arbeitsgemeinschaft).
The _Arbeitsgemeinschaft_ appeared several months before the end of the
war, but assumed a rôle of prime importance in the new organization of
economic Germany.
The _Arbeitsgemeinschaft_ has been defined as “the combination of big
associations of employers and of workers for the regulation of reciprocal
relations between employers and workers and for the solution in common of
all economic and social questions touching industry and labour.”[58]
The essential principle of the _Arbeitsgemeinschaft_ is that of _parity_.
In the agreement of November 15, the labour unions are recognized as the
vocational representatives of the workers. The most complete liberty of
organization is accorded them. The agreement specifies as its practical
tasks the feeding of veterans, the distribution of raw material, and the
regulation in common of labour disputes. For the settlement of pending
questions there was organized a special committee composed one-half of
employers and one-half of workers.
Several days later, December 4, 1918, there was drawn up the “statutes
of the _Arbeitsgemeinschaft_ of the employers and employés of Germany.”
All German industries were divided into a certain number of groups,
which had common organs composed half of employers and half of workers,
each elected by their respective organizations. There was in addition a
central council, which was the _Arbeitsgemeinschaft_ of all the employers
and organized workers of all German industries. Its members were elected
by the groups from their membership; and these in turn elected a Central
Committee, which executed the decisions of the Central Council.
All these organs--and this point must be emphasized--were composed
half of employers and half of workers. The parity principle is at the
basis of the whole organization of the _Arbeitsgemeinschaften_. Thus
all economic and social questions concerning industry and labour were
regulated by committees in which the employers’ associations and the
labour unions were each represented by one-half in each committee. The
_Arbeitsgemeinschaft_ is a treaty of peace.
In addition on December 23, 1918, the Commissars of the People signed
a decree “on collective agreements, workers and employers committees,
and the arbitration of labour disputes.” This decree[59] maintained
the committees which were developed during the war by virtue of the
law for patriotic service, and increased their powers. Here, too, the
whole mechanism rested on the parity principle. According to this
decree, committees of workers and employers had to be organized in all
industries, in all the administrative bodies and in all offices where
there were at least twenty labourers or employés. These had as their
mission the protection of the economic interests of labourers and
employés against employers in the factories, administrative bodies and
offices. The committees had to supervise in co-operation with the bosses
the carrying out of the various provisions in the collective contracts.
In factories where there was no collective contract the committees were
supposed to co-operate in the regulation of wages and other conditions
of labour in agreement with the economic representatives of the workers
and employés. It was their task, in addition, to maintain good relations
among the workers, as well as between the workers and employers.
It would seem that an evolution thus commenced could have continued
normally and without difficulty, and that economic and social problems
raised by the reorganization of Germany could thereafter be regulated by
the _Arbeitsgemeinschaften_; that is to say, by direct agreement between
employers associations and labour unions. But the problem was peculiarly
complicated by the introduction and rapid diffusion in Germany of Russian
revolutionary ideas. The Soviet differs essentially from the committee
above described. Whereas in the latter employers and employés are placed
on terms of equality and the committee itself becomes a purely economic
institution, the Soviet, according to the Russian conception, is a
political organization, whose purpose is to eliminate the employers and
to establish the dictatorship of the proletariat. The Soviet must have in
its hands all the political and economic power of the State.
As to this conception of the political omnipotence of the Council, we
have seen that powerful opposition ensued on the morrow of the Revolution
and that in January, 1919, the Social Democrats remained in full control
of power after having eliminated the Independents. We know that this
struggle continued, however, and it will be recalled what organizations
the Independents provided for and wished to institute in order to assure
to the Workers Councils the political sovereignty they claim. Parallel to
the political struggle between the Social Democrats and the Independents,
there developed another, on the economic field, between the Trade Unions
and the Councils, which found themselves in conflict as much over
what reforms should be demanded by the working class as over the rôle
these two groupings should respectively retain in the struggle for the
recognition of their claims.
The Trade Unions declared themselves satisfied with the agreement they
had concluded with the employers, as well as with the decree of December
23, 1918, which Legien, President of the General Confederation of
Labour, called “The Great Charter of Labour.” They were convinced that
thereafter there was nothing more to do but to wait for time to develop
logically and peacefully the rôle of the _Arbeitsgemeinschaften_ and of
the Committees provided for by the decree of 1918. _They did not believe
that in this evolution there was any room for Councils._ It was they,
the Trades Unions, that had theretofore been the only ones to occupy
themselves with economic questions, and they did not propose to permit
special groups, operating in isolated factories, to deprive them of
their traditional mission. Legien in particular did not want to hear any
talk of the Councils. They did not seem to him to be able to “incorporate
themselves in the actual hierarchy of the organizations and agencies
of the workers.” He protested against any concession to the system of
Councils, and declared that the only organisms in position to defend the
economic interests of the working class, were the Trades Unions.
But an increasingly important part of the working class, attracted by
the ardent propaganda of the theoreticians of the Councils system,
physically and mentally depressed by misery and unemployment, irritated
by the mistakes of the Cabinet and disillusioned by the impotence of the
Assembly of Weimar, rallied to the doctrines of the Councils. The Trades
Unions were no longer believed by them able to lead the battle which
would assure to the workers the preponderant rôle which should be theirs
in economic matters. They showed during the war, co-operating with the
militarists and the bureaucrats of the Empire, that they were always
ready to compromise. They were directed by veritable functionaries, whose
whole careers developed within the Trades Union administration and who
had no qualification for representing the working class. In order to
secure what the working class wants these claims must be taken in hand
by organs issuing directly from the workers--militant organizations in
position to lead a swift energetic fight--these organs being the Workers
Councils. _The Councils must be placed above the unions_, and it is to
them that belongs the right to decide on the campaigns that should be
waged.
Between these two opposite conceptions there arose an intermediate
theory. The trades unionists of the later school and the Christian Trades
Unionists, energetically as they rejected all economic dictatorship by
the Councils, held, however, that there is something just and legitimate
in such theories. Giesbert, who holds an important situation in the
Christian Trades Unions and who was to be Minister of Posts, wrote in
April: “We have not sufficiently appreciated and above all we have
realized too late the degree of sound truth in the idea of the Councils.
The reason for this is that this idea has come to us from Russia as a
political conception, and also because it arrived accompanied by all
the tragic manifestations of the Russian Revolution. If the system of
Councils assures to the workers the right to participate more completely
in the organization and development of economic life, then it cannot
help but contribute, if this is done in a reasonable manner, to the
reawakening of the love of work and the establishment of a close
community of interests between employers and employés.”[60]
As for the Cabinet, it declared itself from the first against the
Councils, and in an official communication on February 26, 1919,
Scheidemann, President of the Council of Ministers, declared that the
Cabinet never considered the introduction of the Councils System in
Germany, and that above all, if any part should be accorded the Councils,
it could only be that of an intermediary between the employers and the
trade unions.
But it soon became impossible for either the Cabinet or the Trades
Unions to remain in this almost completely negative position; for the
struggle for the _Mitbestimmungsrecht_ ceased to be merely a debate among
theoreticians. At the beginning of March the workers in the metallurgical
industry declared a general strike in Berlin; and in April the miners of
Central Germany did the same.
The Cabinet found itself forced to modify its point of view. Receiving
at Weimar a delegation of strikers come to present an ultimatum to him,
Scheidemann recanted the communication of February 26, and engaged
himself by a written promise to effect the recognition of the principle
of Councils in the Constitution.[61] One month later he fulfilled his
promise. On April 5, a new note made known under what conditions and
to what extent the Cabinet envisaged the possibility of organizing and
utilizing the Councils. He proposed to inscribe in the Constitution an
article proclaiming in general terms the right of workers to participate
in common and on equal terms with employers in the regulation of
questions of wages and work, as well as in the development of the forces
of production in the common economic interest. By the side of special
Workers Councils there were to be mixed Councils which would have general
economic authority.
On their side the Trades Unions also found themselves obliged to seek
a working basis, and they concluded by agreeing to the introduction
of Councils in German economic life, on the condition that a very
sharp separation be marked between the powers of the Factory Workers
Councils and the Economic Councils on the one hand, and those of the
Trades Unions themselves on the other. Another condition was that
assurance must be given the Trades Unions that the _Workers Councils
would fulfil their mission in accord with the Trades Unions_. At the
Congress of Nuremberg, July, 1919, the Trades Unions engaged themselves
to use their whole influence to secure for the workers and employés the
_Mitbestimmungsrecht_ in the various industries and to help the Factory
Workers Councils to play an effective part.
2.--CONSTITUTIONAL PROVISIONS RELATIVE TO THE COUNCILS.
It was agreed, then, to recognize for wage-earners and salaried employés
the right of co-operation in the conduct of industries and that all
parties to the productive organization of the nation must co-operate in
the regulation of economic questions. This idea is developed and in part
realized in the provisions of Article 165, which form the foundation of
the future Economic Constitution.
The Constitution sets forth the idea that the economic organization of
the country must pursue two different courses and should therefore have
two different series of organs--the “Workers Councils” and the “Economic
Councils.” This double organization is based on considerations that were
expressed by Member of the Assembly Sinzheimer at the session of the
National Assembly on July 21, as follows: “In economic life there is
both a conflict and a community of interests. The conflict that exists
in our economic life and which it is impossible not to perceive is the
conflict between capital and labour. It is therefore necessary, since the
employers are already represented publicly in Chambers of Commerce, etc.,
that the side of labour should also receive special public representation
which should include all wage-earners and salaried employés. The mission
of this representation should be to express all the interests of the
working class, as such, in an organized manner, through a public organ
of representation. This public organ of representation is the Workers
Council. This Council is a unilateral representation of interests. It has
as its purpose the increase and realization of the economic influence of
the working class. But in economic life there is not only a conflict,
there is also a community of interest. The latter is based on the common
interest in production on the part of both employer and employé. The
Economic Councils have as their mission, in contrast to the Workers
Councils, to realize these common ‘duties of production,’ that are
equally incumbent upon employers and employés. They must satisfy all the
interests of production and bring into co-operation for production all
the elements that participate in it, to increase production, diminish its
costs and to regulate it as far as possible according to considerations
of social good.”
Workers Councils are: Factory Workers Councils, for each establishment;
District Workers Councils, organized for each economic district; and the
National Workers Council, whose authority extends over the whole German
territory. These Councils have as their mission the safeguarding of the
social and economic interests of the workers.
The Economic Councils are organized according to a geographical
division. They consist of District Economic Councils and the National
Economic Council. The former consist of the union of District Workers
Councils with the corresponding representatives of the employers and
other interested classes of the population. The National Economic
Council consists of the union of the National Workers Council with the
corresponding representatives of the employers and other “interested
classes of the population.” The Constitution does not state precisely
what is to be understood by this last expression. In the Constitutional
Committee it was unanimously agreed that the consumers shall be
particularly represented in the Economic Councils. The creation of these
Councils is obligatory and legislators are bound by the Constitution to
enact the necessary laws to this effect.
In addition there may be created “autonomous bodies” (Article 156, par.
2) the administration of which is incumbent upon Economic Councils
organized not by regions but by industries. Unlike the regional Economic
Councils, the creation of these autonomous bodies is only optional; they
must be organized, says the Constitution, “in case of urgent necessity.”
The Constitution specifies with a little more detail than for the Workers
Councils, the powers of the future Economic Councils. These have for
their purpose, in addition to general economic duties, _to co-operate
in the execution of socialization laws_. In addition the Economic
Councils of the autonomous bodies are charged with the administration of
enterprises placed under the economic collectivity, such as coal, potash,
etc.[62]
Finally, the National Economic Council must have certain political
functions, and thereby the Constitution makes concession to the
supporters of the institution of an Economic Parliament. The solution
adopted constitutes a middle ground between the views held by the latter
and those of the partisans of a purely formal democracy. It gives to the
National Economic Council a certain political influence, but it does not
accord it absolutely any power of execution. It has the right to be heard
on all bills of social and economic character before they are presented
to the Reichstag by the Cabinet. It has, in addition, the right itself to
propose laws on social and economic matters, and the Cabinet is obliged,
even if it does not approve of these projects, to take them before the
Reichstag. It may only present its own point of view as opposed to that
of the Economic Council. Finally, the latter may send a representative
from among its members to present its proposal before the Reichstag. The
situation of the Economic Council is, on the whole, on the social and
economic field very analogous to that of the Reichsrat.
The existence and the activity of free vocational associations, that
is to say, the unions of workers and employers, are not affected by
the institution of Councils. Article 165, par. 1, expressly recognizes
vocational organizations of workers and employers. In theory the spheres
in which the Councils and these organizations respectively move are
distinct, and the differences between them naturally result from the
difference in the aims of the two organizations. After the Constitution,
as well as before, these unions of employés and workers had as their
function the regulation of the conditions of labour and of wages with
the aid of collective agreements; whereas the Workers Councils and the
Economic Councils are concerned with questions other than the contractual
determination of the conditions of labour and wages. But we shall soon
see that in practice this separation is extremely difficult to maintain
and that it gives rise to considerable difficulties between the Councils
and the unions.
3.--FACTORY WORKERS COUNCILS.
I.--Of the different organisms provided by the Constitution, which shall
be created first?
Some wanted to start from above. They wanted, said these, to organize
first the National Economic Council, and to charge it immediately with
the important functions attributed to it by the Constitution, as in the
conditions prevailing in Germany at present these powers should not
remain without titular direction. They desired also that the National
Economic Council prepare and propose the bills necessary for the
organization of inferior councils. In other words, the National Economic
Council was asked to be the Constituent Assembly for the future Economic
Constitution.
Others wanted to commence from below, so as to erect the edifice
progressively, and not to construct an upper story before the one below
it was sufficiently built to afford a solid foundation.
It was the latter opinion that prevailed. On August 9, 1919, the Cabinet
announced a bill creating the Factory Workers Councils. It was urgent,
said the Cabinet, that these Councils be created first, because there
already existed in many enterprises Workers Councils; some of them had
been created by the provisions of collective contracts, others by the
will of the workers which had made itself felt during the Revolution, but
both kinds of Workers Councils lacked altogether a legal standing.
The bill expressed the idea that the power, hitherto accorded to the
Committees of Salaried Employés and Wage-Earners should be transferred
to the Factory Workers Councils, but that these powers should be
considerably enlarged. This bill was such as could be expected from a
Cabinet in which there co-operated, in addition to the Social Democrats,
the Centre and Democrats. It corresponded to the economic and social
ideas of the trade unionists of all shades, ideas evolutionary and not
revolutionary.
From Right and Left the most strenuous criticisms were directed against
this bill.
The employers recognized that it was necessary to institute workers
representation in each industry and enterprise, and they accepted
the creation of the Councils, in which both employers and workers
would be represented, which would discuss questions of work and wage,
which would supervise the execution of collective bargains and which
would serve as an intermediary between the workers and the bosses.
But they energetically rejected all measures that, under more or less
roundabout devices, tended to recognize for the workers any right of
control whatever over production or the management of enterprises,
since merchants and manufacturers must above all have freedom of
operation. They protested energetically against all provisions that gave
the Councils the right to intervene in the direction of business, in
questions of hiring and discharging; just as they rejected the proposals
that the workers be allowed to participate in the consideration of new
technical methods, and that they, the employers, must submit their
balance sheets to the workers, reveal the amounts of their profits or
their losses and admit workers as members in the Administrative Council.
The supporters of the pure doctrine of the Councils, on the other hand,
criticized the Cabinet’s proposal for the opposite reason, because it
did not organize the real workers representation, but only Councils in
which the employers and the workers have the same right. It is impossible
to conciliate labour and capital, said they; for, the co-operation of
these two must inevitably end in the domination, by the employers, of the
workers. The Councils must be made up exclusively of workers who would
have an absolute right to control production. The powers given by the
bill to the Councils were illusory; they would be only petty unions. The
regulation of production would remain intact as before. These Councils
would be allowed to examine once a year the balance sheets of each
establishment, but they could not control the direction of its business,
its purchases, its selling or its profits. The only real advantage would
consist of being able to discuss the questions of hiring and discharging.
Thus attacked and criticized the bill, after the most impassioned
discussion,[63] after many important alterations, was finally adopted on
January 19, by a vote of 213 to 64. This is the law of February 4, 1920.
* * * * *
II.--The organization of the Factory Workers Councils must be supple
enough to permit them to fulfil their mission, whatever the importance
or the form of the factory may be. They must be neither too small nor
too cumbersome; they must comprise both employers and employés; each of
these groups must be in position to defend its particular interests; the
electoral right must be wholly democratic and minorities must be insured
representation, which imposes the obligation of establishing proportional
representation; those delegated must always be guided by their duties as
representatives. As a consequence of the last, it must be provided that
the assembly of electors be enabled to withdraw its support from its
representatives and to recall them. The greater part of these conditions
was realized by the law of February 4.
The forms that the Factory Workers Councils may assume are extremely
diversified.
There is first of all the “Factory Workers Council,” properly so-called,
which exists in every industrial or commercial unit and in all the
public and private administrations where there are at least twenty
workers.
The wage-worker members of the Factory Workers Council constitute a
“Workers Council” and the salaried employé members make up an “Employé
Council.” If the Factory Workers Council has more than nine members
it elects according to the principles of proportional representation
a “Factory Committee” of five members. If the Factory Workers Council
comprises both representatives of workers and of employés, each of these
two groups must be represented in the Factory Committee.
A “General Factory Workers Council” must be created for enterprises of
the same kind situated in the same locality or in adjoining localities
and belonging to the same owners, if the Factory Workers Council in each
plant so decide. This organization may either remain in juxtaposition
with the Factory Workers Councils of the different plants, or it may
replace them. In that case it functions as a common Factory Workers
Council.
A “shop chairman” must be elected in the place of a Factory Workers
Council in establishments employing less than twenty workers, of whom at
least five must be electors.
There is finally a “Factory Assembly” composed of all the regular
employés of the factory. It is convened by the president of the Factory
Council. He must convoke it if the employer or at least one-quarter of
the workers demand it.
* * * * *
III.--The powers of the Factory Workers Councils are two kinds;
social and economic. _With one or two exceptions they are both purely
deliberative in character._
* * * * *
SOCIAL POWERS:
(A) _Conditions of Work_.
(1) The Factory Workers Council supervises the execution of legal
decrees, of collective bargains and of arbitration decisions in favour
of the workers. The regulation of the conditions of work by collective
bargaining remains the essential purpose of the Vocational Unions.
The Factory Workers Councils cannot and must not replace this general
trade union agreement by a regulation which would intervene between the
workers of any single factory and the management of that factory, for
the conditions of labour, particularly wage scales, must be fixed not
simply according to the conditions prevailing in any single factory, but
according to the general situation of the industry. On the other hand,
the Factory Workers Councils must see to it that the conditions of work
agreed to between the manufacturer’s union and the labour organizations
are strictly carried out, and must adjust any difficulties that may arise
in their application. Each Council must perform the same function in
regard to the execution of arbitration decisions and the carrying out
of legislative regulatory provisions relative to the condition of the
workers.
(2) The Factory Workers Councils co-operate in the fixing of wages
and other conditions of work, when these questions are not settled by
collective agreement. But it is understood that, even in such a case,
the Factory Workers Councils must act in accord with the Trade Unions
concerned.
(3) They co-operate with the employer in the adoption of rules for the
factory within the framework of the collective bargains in operation.
(4) They examine the questions of pensions for wounded veterans and
compensation for those hurt in course of work.
(5) They establish in agreement with the employers rules concerning the
hiring of wage-earners and salaried employés and they have the right to
oppose their discharge. In the respect to the former, the law specifies
that the rules relative to hiring must contain no provision by virtue
of which the hiring of a worker would be affected by his political,
military, religious or union activities. When these rules permit it, the
right of the Factory Workers Council, in so far as it concerns the hiring
of a worker, is waived and it is the boss or his representative who
thereafter decides in each particular case of hiring. But if the boss or
his representative violates the rule of contract, the Council of Workers
or the Council of Employés may raise a protest. If an agreement is not
thereupon reached between the boss and the council, the difficulty is
taken before the competent Arbitration Committee which decides finally.
On the other hand, in regard to discharges, the law of February 9 gives
to the discharged worker the right to appeal it to the Workers Council,
and, if an agreement is not reached by this Council, to appeal to the
Arbitration Committee in any of the following circumstances: (a) If
the discharge is due to the fact that the worker is active in certain
political, military, denominational or trade union matters or that he
belongs or does not belong to this or that political, denominational, or
labour organization; (b) if the discharge is without cause; (c) if the
worker is discharged because he has refused to do any piece of work other
than that agreed upon when he was hired; (d) if the discharge appears
particularly severe, and justified neither by the attitude of the worker
nor by the situation in the industry.
(B) _Differences between Employers and Workers._
The Factory Workers Councils maintain harmony among the workers as well
as between them and the employer, and insure the liberty of organization
among the workers. They must help avoid all troubles or disorders that
may make difficulties between the employers and the workers, and if such
arise, they must abate the trouble as soon as possible.
It is not the part of the Factory Workers Councils to take sides in
economic disputes in favour of this or that tendency. It is the organ of
all the workers of any industry taken together, and it must permit any
labour organization, no matter to what tendency it belongs, to enjoy all
the rights and all the control to which it is entitled.
(C) _The Well-Being of the Workers._
(1) The Factory Workers Councils must combat the dangers of occupational
accidents and diseases.
(2) They must co-operate in the creation of pension funds, the building
of workers’ homes, and other institutions of well-being in the factory.
* * * * *
ECONOMIC POWERS.--(1) The Factory Workers Council aids by its technical
advice the employer in giving the factory as high an economic efficiency
as possible, and co-operates in introducing in the factory new methods
of work. This co-operation on the part of the Factory Workers Council
assumes that the employer keeps it in touch with the condition in the
industry and with the most important events in it. The Council may
therefore demand that the employer supply the Factory Committee, or the
Council with all the necessary information on the work and the condition
of workers, and that he show the pay-rolls--for the purpose of checking
up with the schedules agreed upon by collective contracts--and all other
documents necessary for the supervision of the execution of collective
agreements. This right of inspection is limited in two respects. On
the one hand, the Factory Workers Council can only examine records on
the economic aspects of the factory, thus excluding all political,
union, militarist, denominational, scientific or other investigations
on the part of the Councils. On the other hand, the law specifies that
this right of examination must not be exercised in such a way that it
jeopardizes secrets of the factory or commerce. The question remains as
to what must be understood as a secret of the factory or of commerce;
this must be settled by judicial decision. From the first moment
commentators on the law of February 4th, held that business contracts,
records of profits and loss, the schedules and pay-rolls, estimates of
net cost, and the purchase price of raw material are not questions that
the Factory Workers Councils are forbidden to investigate. In addition
the employer must at least once every quarter furnish the Factory Workers
Council with a report on the situation and the progress in general of
the factory, on its output and on its prospective needs in the way
of workers. Finally the Factory Council may demand that every year a
balance sheet for the factory and a statement of profit and loss for
the preceding year shall be submitted to the Factory Committee, or the
Council, if there is no Factory Committee.
(2) In the factories that have Administrative Councils,[64] the
wage-earners and salaried employés are represented on these councils by
one or two delegates. This representation of workers on Administrative
Councils has aroused among the employers the liveliest opposition.
The Cabinet’s project provided that the worker representatives have
the same rights and duties as the other members of the Administrative
Councils. But the National Assembly has not followed the Cabinet on this
point and has limited the power of the workers’ representatives in the
Administrative Council to the mere statement of the interests and claims
of the workers, and to the execution of their votes and wishes concerning
the organization of the factory. In addition this representation must
be regulated by a special law, and, until such a law is passed, that of
February 4 confines itself to prescribing that the representatives of the
workers have a seat and voice in all the meetings of the Administrative
Council, but that they receive no remuneration other than the pay for the
time of attendance at the meetings. They are obliged to keep confidential
what they learn at the meetings of the Council. The underlying spirit
intended for the workers’ representation in the Administrative Council
is indicated as follows: “The granting of so extensive a power, changing
the right of co-deliberation generally accorded to the working class
into a right of codecision, is proposed in the conviction that nothing
is better calculated to increase the love of work, the sentiment of
responsibility and the output of industries than the right accorded to
workers to co-operate under their own responsibility in the supreme
direction of the factories.”
One cannot conclude the study of the economic powers of the Factory
Workers Councils without saying a word on the question of the
co-operation of these Councils in the socialization process. The
supporters of the theory of Councils have always forcefully insisted on
this co-operation to justify the necessity of giving the maximum power
possible to the Factory Workers Council. But the law of February 4 does
not grant these councils in economic matters anything but powers of
deliberation, hardly even conceding them the right of decision; nor does
it give them any privilege other than that of supporting and helping
their employers in the achievement of the factory’s purposes. Thereby
is denied all action on the part of the Factory Workers Councils that
might directly influence the socialization of the factory itself. The
law of February 4 seems to take the point of view opposed to that of
socialization.
Socialization is a work relegated exclusively to the State and
legislation. It cannot be included in the mission of the workers’
representations in a factory. To socialize is to modify economic
organization and the right of property, and this change cannot be
made except by law. Further, no particular factory can be socialized
of itself, that is to say, be transformed by itself into the property
of a community. The work of socialization must be undertaken by whole
divisions of industry. To accomplish this work it is not the Factory
Workers Councils that are competent, but only the parliamentary
representation of the whole people.
However, among the partisans of the Factory Workers Councils, some
hope that these Councils will be able to give the workers a socialist
education by affording them the chance to participate in economic
affairs. They believe that, thanks to the Workers Councils, there will
finally be formed a working class ready, under responsibility, to fulfil
administrative duties in a socialist commonwealth. The Factory Workers
Councils according to them will be a school for socialism.[65]
4.--THE TRADE UNIONS AND THE COUNCILS.
Such, in outline, is the law of February 4, 1920. The first elections
of the Factory Workers Councils were held during the month of May that
followed. Immediately there broke out disputes and rivalries, more
violent than before, between the Trade Unions and the partisans of the
Councils systems over the rôle which the Factory Workers Councils should
play, and particularly over the relations that should subsist between
these Councils and the Trade Unions.
The union leaders wanted to maintain their traditional policy, “the wage
policy” of the joint committee and the _Arbeitsgemeinschaft_. They held
that economic and social reforms can only be accomplished progressively,
given the complexity of economic phenomena, and they were convinced that
the necessary evolution will take place naturally, thanks to co-operation
of employers’ and employés’ organizations in the _Arbeitsgemeinschaften_.
The development of these organisms since the revolution seems to support
their opinion. On the basis of agreements concluded in December, 1918,
the _Arbeitsgemeinschaften_ have taken on considerable extension.
Little by little the organisms provided by the statute of December
4, 1918, have been created and expanded. Not only have individual
_Arbeitsgemeinschaften_ been established between employers’ and
employés’ organizations, but these have also been formed into larger
groups. For example, the _Arbeitsgemeinschaft_ of the Ruhr mines, those
of the Sarre, of Saxony and of Upper Silesia have united into a central
_Arbeitsgemeinschaft_, that represents the interests of the whole coal
mining industry of Germany. It is administered by a Central Council
composed, of course, of equal numbers of employer and worker delegates.
A great number of other industries have organized on the same model
and they, too, have added above the local organs a Central Council
that represents the general vocational interests. Finally, the Central
Committees of the different industries have joined and thus created on
December 12, 1919, a central _Arbeitsgemeinschaft_, which constitutes
the supreme organization and which is charged with settling by direct
agreements between employers and employés and on a parity basis all the
problems that touch the life of the industries and trades in Germany.
This is sub-divided into fourteen vocational groups: iron, provisions,
construction, textile, clothing, paper, leather, transports, glass and
ceramics, chemistry, oils and fats, forest and land workers, mines and
lumber. The Central Executive Committee (Central Vorstand) is composed
of twenty-three members chosen by the employers and twenty-three by the
workers. Other Committees are created on which the Central Committee
places part of its work. Seven such have already been constituted, on the
study of wages, labour legislation, economic policy, raw material, coal
and transports, tariffs, the execution of the treaty of peace and the
internal regulations of the _Arbeitsgemeinschaft_.
All this movement, say the trade unions, represent undeniable progress.
For the hostile interests of employer and employé is substituted the
_interest of the vocation as a whole_, which creates in the employers
and workers of the same vocation a consciousness of the community of
their interests and engenders among the different industries a fruitful
rivalry. In uniting the _Arbeitsgemeinschaften_ of all the industries,
conflicting interests are placed in equilibrium and neutralized and there
remains only common consciousness of national interests.
What can the Factory Workers Councils do otherwise than enter into the
framework of already existing organisms and, directed by the Trades
Unions, aid in the development of these organisms? In other words,
the Factory Workers Councils--and this is also the formal will of the
legislator--should be the _delegates of the Trades Unions in each
factory_ to supervise there the application of the agreements adopted by
the Trades Unions and the employers associations. In addition what could
the Factory Workers Councils do if they had not behind them the power of
the strong organizations of the Trades Unions? A Factory Workers Council,
that could not count on the support of a strong union, could exercise
no useful activity whatever. It would be soft wax in the hands of the
employers. If they want to do efficacious work, the Factory Workers
Councils, even though they are the direct emanation from the workers of
the factory, must conduct themselves as organs of the Trade Union, and
can only play an important rôle if they march hand in hand with the Trade
Union.
This dependence of the Factory Workers Councils on the Trade Union gives
rise naturally to two considerations. _The Factory Workers Council is
without resources_, whereas the Trade Union is rich; the one cannot
undertake anything without the aid of the other. But naturally it will
not obtain this aid unless it submits to the guidance given it. On
the other hand, in order to discuss adequately with the employer the
difficult problems that come within the authority of the Factory Workers
Council, there is required a preliminary education which the worker does
not possess unless he has had long experience in Trade Union life. He
often lacks the knowledge and the experience which cannot be acquired
except slowly and in the school of the Trade Unions. For this reason
also, the Factory Workers Councils should follow Trade Union direction.
The champions of the system of Councils do not concede this subordination
of the Factory Workers Councils to the Trade Unions. There is an
essential difference between the two, they declare. The Trade Union has
as its exclusive mission the preparation and the direction of struggles
for wages and conditions of work _under the régime of capitalist
production_. The Factory Workers Council is _warring for a new system of
production_. And its mission is to prepare the working class to take into
its own hands the direction of production. That is why the _organization
of the Factory Workers Council must be independent of the Trades Unions,
and must develop outside of the framework of the Trades Unions_.
The task which the Factory Workers Councils must accomplish and which
must serve as the basis of all their future activity, is to achieve a
unity of front of the whole working class. The Trade Unions have not yet
brought themselves to take the initiative in this fundamental reform.
At the present time workers are still scattered among approximately
fifty Trades Unions, which are divided still further into a number of
sections and branches. There is an inextricable network of collective
contracts, “tariffs,” and wage agreements down to the smallest labour
group, representing a great amount of work; but this cannot in the least
ameliorate the economic condition of the working class.
One thing must immediately be abolished, the _Arbeitsgemeinschaft_,
because it is contrary to the doctrine of the class struggle, and
because, under the pretext of co-operation, it insures the domination of
the capitalist over the worker.
As for the Trades Unions, the champions of the Factory Workers Council
recognize that the latter, although working on a different plan,
must remain in intimate contact with the former. But there is an
indispensable reform to be realized. Organization by trades must be
replaced by organization by industries or factories. In other words,
all the vocations functioning at the same time in the same industry
must be grouped within the same organization. In still other words,
the separation of wage-earners associations from the associations of
salaried employés must be done away with. On the contrary, all manual
and intellectual workers of the same industry must join together and
consecrate all their efforts to a common end.
Finally, declared the partisans of the Councils, the Factory Workers
Councils cannot remain isolated in the various separate industries. They
can only fulfil their function if they unite in district assemblies and
organize in such a way as to create a “Central Organ of the Factory
Workers Councils,” which will direct the activity of all the Factory
Workers Councils of Germany.
These arguments were not without effect on the Trades Union leaders.
They still maintained, naturally, the principle that the Factory Workers
Councils must enter into the Trade Union organization and that they must
remain an organ of the latter. But they declared themselves ready to
accept a great part of the reforms demanded by their critics.
Moreover the General Federation of Labour and the General Federation
of Salaried Employés organized “A Central Union of the Factory Workers
Council,” whose purpose is to unite the Factory Workers Councils with
the unions of wage-earners and salaried employés, and to incorporate
them into the whole Trade Union organization. To this end they undertook
a complete local organization of the Factory Workers Councils. First
the District Committees of the Trades Unions were to proceed to a
redistribution of the Factory Workers Councils into fifteen industrial
groups. Each industrial group was to decide independently on the matters
that concern the vocations included in this group. The Group Council
had to include a member of the Trade Union or of the corresponding
union of salaried employés. This organization by groups was to insure
the co-operation of Factory Workers Councils on an industry basis, and
thus attempt to meet the criticisms of partisans of the Councils. Above
the different industrial groups three organs were provided which would
represent the Factory Workers Councils as a whole: the General Assembly
of all the Factory Workers Councils, the Central Council, and the Central
Committee.
The mission of the Trade Union organization of the Factory Workers
Councils would be to give the latter a Trade Union direction and
development, to unite in the factories all economic and social forces
available, and to utilize these forces for the defence of the common
interests of all workers. There is thus a division of labour between the
traditional mission of the Trade Union branches and that of their local
committees, on whom would be still incumbent the duties of specifically
Trade Union organization, whereas questions of general, social and
economic policy would be given over to the “Central Factory Workers
Council.” It follows that the two parallel organizations must work hand
in hand and must consult each other on all questions, thus doing away
with all possibility of conflict.
Such was the plan, duly elaborated by the Trade Unions, which at this
time is submitted for discussion in common by the Factory Workers
Councils and the Vocational Associations of Germany. Naturally, it is
impossible to foretell what will result from these deliberations. All
that can be said at present is that the members of the Factory Workers
Councils are almost exclusively elected from among the wage-earners and
salaried employés _already active in the Trade Unions_, and thus the
conception to which the Trade Unions seem to cling above everything else,
the incorporation of the Factory Workers Councils into the Trade Union
associations, seems destined to be realized of its own accord.
5.--THE PROVISIONAL ECONOMIC COUNCIL.
These discussions, these vacillations, these difficulties, have up to
now prevented the government from submitting the necessary projects of
laws for the creation and organization of Councils, other than Factory
Workers Councils, provided for by the Constitution. In May, 1920, there
was an attempt to propose a law on “Local Workers Councils.” But the
government declared that it had not yet arrived at a clear conception of
the relations between the Factory Workers Councils, the future Economic
Councils and the employers’ organizations, and that it was still pursuing
its studies.
In view of the impossibility of continuing the building of the structure
from below, it was decided to change the method and, returning to the
system rejected the year before, resignedly the attempt was made to
continue from above. There was thus created a “Provisional Economic
Council.”
The organization of this Council, provisional as it must be, has not
proceeded without presenting great difficulties, which it is interesting
to sum up.
I.--This Council must consist of the representatives of all economic,
agricultural, commercial, and industrial interests. The first question
that came up was to fix the number of representatives to be allowed
to each different interest. Naturally, violent conflicts arose, each
interest fighting for the largest representation possible. Instead
of establishing a proportion based on the respective importance of
the various vocations in German economic life, and of holding to this
proportion, the Cabinet increased the total number of members of the
Economic Council as fast as this or that interest claimed a stronger
representation, with the result that the number of representatives,
originally fixed at a hundred, increased to 280 and finally became 326.
It is clear that the resulting proportion that came from these successive
increases favours agriculture to the detriment of industry and the
middle classes.
A place was given to the representatives of consumers; unwisely,
according to some critics. For one can understand the adding of the
consumers to the assembly of the producers of some one single industrial
group, that of coal, for example, which grows always at the expense
of the consumers. But in the Economic Council, all industries and
vocations are by definition represented; the producers in one industry
are the consumers in all the others and it is unnecessary to add to
them, in order to represent the interests of consumers, additional
representatives, who by hypothesis are only consumers.
The 326 members of the Economic Council are allotted as follows:
68 representatives of agriculture and forestry.
6 representatives of market industries and fisheries.
68 representatives of general industry.
44 representatives of commerce, banks and insurance.
34 representatives of transport enterprises.
36 representatives of small business and small industries.
30 representatives of consumers (municipalities, consumers’
associations and organizations of women).
16 representatives of civil servants and the professions.
24 other persons named by the government.
II.--There then followed the question of how the delegates of each
group are to be appointed. The discussion reverted to the question
whether these delegates should be appointed by vocation or region.
Where employers and workers were grouped, the principle of parity was
naturally adhered to. Agriculture, for example, which is entitled to 44
delegates, was represented by 22 land owners and 22 agricultural workers.
On the other hand, the mode of nomination in all groups representing
workers offered but few problems, for--at least until the Factory Workers
Councils have united and become organized geographically over the whole
Reich--the only labour organizations are those of the Trade Unions;
that is to say, organizations almost exclusively vocational, and the
labour delegates to the Economic Council cannot be elected except by
means of these organizations. But the problem became much more complex
in the case of the election of representatives of employers and property
owners. These had, in addition to their industrial associations, organs
of regional representation, such as chambers of commerce, chambers of
agriculture, boards of trade, etc. Should their delegates throughout be
elected by regional organs or by associations? The Reichsrat replied, by
chambers of commerce; and the National Assembly declared for associations.
The partisans of representation by chambers of commerce pointed out
that these chambers are, according to existing legislation, the only
representatives of industry and of commerce in public law; that
they embrace all the industrial and commercial circles, considered
vocationally as well as regionally, and that they constitute an electoral
body more complete than the organizations on a purely professional basis;
and that, in contrast to the associations, the chambers of commerce are
elected by all the manufacturers and merchants inscribed on the register
of commerce.
The supporters of the associations replied that, great as was the service
rendered by the Chambers of Commerce as local and regional corporations,
they play almost no rôle whatever in the public economy of Germany. Their
influence on economic management is practically nil; and they are limited
in the matter of projects for new laws, to the voting of resolutions that
have no outcome whatever. The special business associations, however,
although without official standing in public law, are acquiring more and
more importance in the public economy of Germany. What is most important
is to make up the Economic Council of “heads”--of the most eminent men
from each industry, whether of the North or the South, the West or the
East.
The solution adopted does not seem to have been a particularly happy
one. Of the sixty-eight industrial delegates, forty-eight represent
vocational divisions and twenty represent regional groups. Of the first,
forty-two are designated by the _Arbeitsgemeinschaft_ of the employers
and industrial workers of Germany (twenty-one employers and twenty-one
workers); six others represent the Council of Coal and the Council of
Potash. Of the regional representatives, twenty employers are named by
the Chambers of Commerce and of Agriculture but twenty workers are named
by the labour element of the Central _Arbeitsgemeinschaft_.
III.--The authority of the Provisional Economic Council is not quite the
same as that of the final Economic Council, provided by the Constitution.
It must, and that was its essential mission, construct the framework on
which the future Economic Council is to be erected, and determine how it
shall be elected. This necessitates its organizing in advance Workers
Councils, aside from Factory Workers Councils, and Economic Councils for
each locality, which, according to the Constitution, must contribute to
the formation of the National Economic Council.
In addition, the Provisional Economic Council must examine the projects
of all important laws, economic and social in nature, that the Cabinet
is required to submit to it for advice before placing them before the
Parliament. It must be heard on proposals for decrees and important
regulations. It has itself the right to present proposals for laws.
These powers are the same as those projected for the final Economic
Council. But the two differ in an important respect. Whereas, according
to the Constitution, the Economic Council will have the right, when it
differs in opinion from the Cabinet, to present its point of view by
one of its members before the Reichstag, it has not been considered
feasible, for constitutional reasons, to recognize the same right for
the Provisional Economic Council.
* * * * *
Generally, however, the Provisional Economic Council is considered as
already constituting an Economic Parliament, and at the commencement of
its work[66] it was so regarded by the press.
It does not deserve this name, for it has no power of decision. It
is purely and simply a technical Council that advises the Cabinet on
principal economic questions. It differs from ordinary technical Councils
in that instead of being appointed most of its members are elected. One
cannot therefore criticize it from the point of view of formal democracy,
in the way that any parliament composed according to the parity principle
can be criticized, viz., that each employer-member represents much fewer
electors than the worker-members. As it is here a matter of a council
of experts, the most important thing was to gather the best qualified
authorities of the whole country. It is evident, therefore, that in the
present state of affairs such authorities are found much more easily
among employers than among workers. The relative proportion of these two
elements within the Provisional Economic Council matters little since
decision lies exclusively with the assembly elected by universal suffrage.
Meanwhile, however, the importance of the services that the Economic
Council can be called upon to render must not be underestimated. It
is undeniable that, as at present composed, it has gathered together
nearly all the men considered in Germany to-day as the most experienced
and trained authorities in economic matters. It must not be lost sight
of also that a great number of these men, aside from their individual
importance, have behind them the support of the whole force of the
extremely powerful vocational and economic associations by which they
were elected.
One immediate danger menaces the Economic Council. It is that the men
who compose it will let themselves be guided on the technical questions
they are to examine by party considerations. It may be divided--as
is natural--into groups of employers, groups of workers, groups of
agriculturalists, industrialists, and merchants. If it turns out to be
an assembly of conservatives, democrats, Catholics and socialists, it is
doomed to sterility.
If, however, the Economic Council avoids this danger it will render,
first of all, the service of clarifying the political atmosphere itself.
The members will defend very legitimately only the interests by which
they were charged with representation. In this way economic groups will
not need to act indirectly through the intermediate agency of political
representatives. They will be able to express their point of view clearly
and support their interests directly. The political parties, too, will
gain thereby; for they will be freed of all considerations of interest
and they will no longer have to complicate technical problems by imposing
on them their general political conceptions. As for the authority that
will accrue to the Economic Council, it depends entirely on itself
whether it will be nullified or preponderant, and its future lies in its
own hands.
Former Under-Secretary of State, von Delbrück said before the National
Assembly--speaking, it is true, of the Economic Council to be organized
by the Constitution, but the Provisional Economic Council is nevertheless
its precursor--that the Economic Council is without doubt, by the side of
the Reichstag and the Reichsrat, a third legislative assembly. For such
an assembly, “called upon to deliberate on the most important questions
in the national life, will necessarily have a natural tendency to enlarge
its powers. We are undoubtedly on the eve of a period in which the
Reichstag and the Reichsrat will be considered as one side of a balance,
and the Economic Council as the other. Behold in this a wholly new
political evolution. There will come a day when the Economic Council will
seek to become the heir of the Reichsrat and to take its place.”
Will this prediction be realized? It will if the Economic Council is able
to render the government and the people the services they expect of it.
It will not if it does not deserve to be heard by them and does not know
how to make itself heard.
SECTION II
SOCIALIZATION
In order to reconstruct in Germany the public and private economy
destroyed by the war and the revolution, it is not enough to give the
producers a special right to co-operate in the regulation of economic
questions; nor to recognize particularly for the working class the right
of co-deliberation in the determination of these matters. It is hoped
that such measures will increase production. But it is also necessary
that no part of production be lost and that all of it be utilized to the
utmost for the community. One is thus led to inquire whether the system
of production and the distribution of wealth, such as prevails under a
capitalist régime, is capable even if improved, of attaining such an
end; whether it were not better to substitute a new system, socialist or
not, giving the utmost guarantee that production will benefit the entire
community.
We must inquire what attitude the Constituent Assembly took on this
question and what solution it adopted.
1.--THE PROBLEM OF SOCIALIZATION.
On the morrow of the Revolution, power passed entirely into the hands
of socialists, that is to say, by definition, men whose programme may
be summed up in these words: the abolition of private property and the
taking over by the state of all the means of capitalist production.
The Independents undoubtedly would have set about at once the task of
realizing this programme. But we have seen that they had but a brief
period of power; and the Social Democrats seemed less in a hurry to keep
their promises.
For the moment the political revolution was enough to absorb all their
activity, and they postponed the economic revolution. They declared
that an industry cannot be socialized until it is “ripe” for such a
measure. But, they further declared, this maturity cannot be suddenly
effected by a vote of Parliament or even by the decision of the majority
of the people. It is the product of a slow social development, which
may find its expression in the vote of a majority, but which cannot be
thereby hastened. To tell the truth, the Social Democrats, whom events
had placed with their back to the wall, perceived how difficult it is
to put into practice the vague theories with which they had heretofore
contented themselves. Not only did they realize that the solution of
economic questions raised by socialization is extremely difficult, but
they became also convinced that it was necessary first to consolidate
some of the elements of German economic life that had survived the war
and its unhappy conclusion before proceeding to experiments which might
accomplish their ruin. They resolved therefore to study the problems of
socialization more deeply before passing to its realization. For this
purpose they created, November, 1918, a “Committee on Socialization”
which was not to be an official organ but a free scientific committee
charged with the drawing up of reports and proposals on the question of
socialization. It consisted of eleven members with Kautsky as chairman.
But the impatience of the masses did not give the Socialist Cabinet the
respite they required. The people, who for years had been promised the
abolition of private capitalist property, and who saw in the realization
of the Socialist programme the end of the miserable situation into
which the war and the revolution had plunged them, demanded immediate
measures. The general strike which broke out in Berlin in March,
1919, and which, as we have seen, prompted the Cabinet to promise the
“anchorage” of the Councils in the Constitution, also pushed it to
prepare in haste two projects of law--one on socialization, the other
on the regulation of the coal industry, the two projects being adopted
within a few days by the National Assembly. The two laws carried the date
of March 23, 1919. The first is what is called in Germany a “blanket
law” or a “skeleton law.” It indicates the different forms according to
which socialization of private enterprises may become operative, and the
conditions in which these enterprises, once socialized, may be exploited.
The second makes immediate application of these principles to the coal
industry. In addition another law voted several days later, April 29,
1919, regulated according to the same principles the potash industry.
Whereupon the members of the Committee on Socialization, who complained
of having their work constantly impeded by the Cabinet, and their
recommendations remaining unheeded, handed in their resignations on April
7, 1919.
On the other hand, the Minister of Public Economy, the Social Democrat,
Rudolph Wissel, finding the measures for socialization taken or proposed
by the Cabinet too timid and insufficient addressed a memorandum to the
Council of Ministers on May 7, which had great reverberation throughout
Germany as soon as it became known.[67]
The Cabinet, said Wissel, followed a policy inconsistent and without
unity. Within the Council of Ministers a decision on fundamental
questions was avoided in order not to put the coalition in danger; and
the few measures taken were compromises dictated by necessity.
Meanwhile the economic situation of Germany was in an almost desperate
state, and a menacing catastrophe could be avoided only by completely
transforming the system of production that prevailed in peace times.
Wissel declared that he was not speaking of expropriation, for that
would do no more than substitute the state for private capitalism, that
is to say, one exploiter for another. But what he referred to was the
restriction of illegitimate profits, the regulation of prices and the
control of the distribution of profits. _Production and consumption
must be organized according to a co-ordinated plan_ in such a way that
enterprises may be exploited in the interest of all and not to the
exclusive profit of some. It was imperative to proceed by some solution
as a whole and not by incoherent and isolated attempts.
The principal measures for which Wissel demanded immediate adoption were
the following:
(1) The organization of the system of Councils by a special law
without waiting for the adoption of the Constitution. They must
include organizations of workers and of employers, regional and
vocational. These last, which would rest on the parity principle of the
_Arbeitsgemeinschaft_, would have for their mission the direction of the
economy in the vocation they represented, this direction to follow the
principles decreed by the Cabinet. There must be in addition an Economic
Council, which will be the supreme organ of the whole German collective
economy.
(2) Other branches of production must be regulated on the model of the
regulation already in operation for coal and potash. The next to be thus
regulated must be electricity and the cereals.
(3) The State must take a more and more important part in the functioning
and in the profits of industrial enterprises. By an inheritance tax and
by a tax on capital there must be put into the hands of the State a great
part of the industrial fortunes. Instead of collecting these taxes in
money or in war loans, the state must become the proprietor of part of
the enterprises in the form of shares.
(4) The stocks and bonds of the industrial concerns of the State will be
administered not by a Minister, but by a national bank which will conduct
its business according to purely economic rules to the exclusion of all
political considerations.
By these last two measures will be realized what the supporters of this
system call a “progressive mediatization of capital.”
(5) There will be created funds of several billions of marks which will
be administered by an office acting in close relation with the vocational
economic organization and designed to procure employment for German
workers.
(6) The cost of necessities which Germany must import exceeds greatly
the cost of domestic commodities. This circumstance compels the increase
of wages, which in turn causes the cost of living to rise and lowers the
value of money. To counteract this part of all wages must be distributed
hereafter in provisions, clothes, etc. Credits will be opened by
financiers and by the State.
(7) Temporarily the right to strike in certain industries vital to the
German economy will be restricted. The right to stop work will have to be
voted by nine-tenths of those employed in that industry.
(8) To realize this programme the number of Ministers who will occupy
themselves with economic questions will be reduced to three. They will
constitute within the Cabinet an “Economic Committee,” whose directions
will have to be followed absolutely by the political Ministers.
On the whole this project aimed at the realization of a state
intermediate between capitalism and socialism.
Defended only among the socialists by a small group of doctrinaires, this
project had against it at the same time the Independents, the bourgeois
parties and the Social Democrats. The Independents opposed it because it
permitted capital to survive. The bourgeois parties opposed it because
the supervised economy prevented the free play of economic factors
and paralyzed initiative. The Social Democrats opposed it for fear of
dissatisfying the Centre and the Democrats, of whom they had need to
maintain themselves in power. Particularly opposed to Wissel’s project
were the Trade Union conceptions supported in the Cabinet by the Minister
of Food Supply, Robert Schmidt. He presented a counter-project which
embodied the argument which the Socialists of the government opposed to
the theoreticians of socialism. The work of socialization, said they,
must be undertaken but slowly and the socialization of an industry must
wait until that industry is sufficiently matured. This last conception
prevailed and in July, 1919, Wissel resigned. Thereupon the offices of
the Minister of Public Economy and that of Food Supply were merged and
Robert Schmidt given the unified post.
It was to be expected, therefore, that the process of socialization would
be considerably slowed up. In fact, the Constitution of the month of
August confined itself to specifying and enlarging in several respects
the principles of the law of socialization of March 23; and for several
months there was only one law enacted along these lines, that of December
31, 1919, on the socialization of electricity.
But once more the people intervened. It may be recalled that one of the
“Eight Points” of the agreement imposed on the Cabinet by the Trade
Unions after the _coup d’état_ by Kapp, provided that the Committee on
Socialization be at once reconvened, that representatives of vocational
associations be added to it, that new industries be socialized and that
the socialization of industries already decreed be enforced.
In conformity with these engagements, the Cabinet in the beginning of
May, 1920, submitted to the Reichstag a project of law that provided for
the municipalization of a certain number of industrial enterprises, and
reconvened the Committee on Socialization. The members of this committee,
who were authorized to add to their number new colleagues on the
condition that the total number of the members should not exceed thirty,
were given a double mission. First they were to study and clarify the
fundamental principles of socialism, for the purpose of determining the
general lines along which the capitalist system should be transformed.
Then they were to submit concrete and immediate proposals, which,
inspired by the laws of collective economy, would permit the commonwealth
to utilize directly the natural resources and the sources of power. The
committee had also to study how the industries already socialized were
functioning, what results had been attained and to propose, if necessary,
all needful changes.
2.--THE COLLECTIVE ECONOMY.
All these labours, all these investigations, all these discussions of the
problem of socialization had one result. They have shown how confused,
even among the socialists, is the concept of socialism; that behind the
same word may hide two economic systems extremely different, and that a
whole series of almost imperceptible gradations may exist between the
capitalist system and complete socialism.
The Constitution raises the following principle: Economic organization
must cease to be dominated by considerations of private interests in
order that hereafter it may be inspired exclusively by considerations of
public interests. Private interests must be subordinated to collective
interests. The present economic régime, based on private ownership,
must be substituted by a new régime based on collective ownership
(Gemeinwirtschaft). What is understood by this?
In its largest sense the expression “collective economy” may be defined
as an organization, following a certain predetermined plan, of the
economic system of a country for the purpose, on the one hand, of
obtaining as large an increase as possible in production by the union of
all forces affecting economy; and, on the other hand, for the purpose
of devoting a proper part of the product to the community or to its
productive members.[68] Thus a system of collective economy is any
system that increases public influence in private enterprise, on the
condition that it results in a more just administration and distribution,
particularly in the cases of monopolized industries already organized
into trusts or cartels.
In practice, the principle of collective economy may be applied under
three different forms:
(1) The State may take over immediately and entirely the ownership of the
industries it wishes to subject to the new régime, and direct by itself
and alone, with the aid of its civil servants, the industries which it
has seized. _This is complete socialization._
(2) The State may content itself with participating in the ownership
of certain private enterprises. It owns, for example, a certain number
of shares in a corporation. In such a case, it does not manage the
enterprise wholly, but it has the right of codecision in the general
direction of affairs. _This is partial socialization._
(3) Finally, the State may leave in the hands of individuals the
ownership of enterprises which it wishes to subject to the principles
of collective economy; but it unites, if necessary by constraint, all
those that belong in one industry or in the same category of industries,
such as chemistry, coal, metallurgy, etc. Thus united the enterprises
are administered by means of organs in which are represented all the
categories of the population interested in it, such as owners, workers,
trade unionists, consumers, etc. These organs must be guided, in the
direction they give to this management, above all by a concern for the
general interests of the commonwealth. This is _collective economy_
properly so-called or _nationalization_.
This last form of collective economy is particularly interesting, be it
said. For, on the one hand, it avoids the just criticisms of bureaucracy
and exaction generally directed against socialism properly so-called.
On the other hand, it takes into account the principal demands of the
working class at the present time in recognizing for the workers the
right to participate in the direction of business enterprises.[69]
The Constitution does not clearly choose between these three different
methods of applying the principles of collective economy in the large
sense of the word. It declares all three possible and leaves to the
ordinary legislature, whenever it is desirable to regulate an industry
in the general interest, the task of choosing the bearing it wishes to
give such regulations and the régime to which it wishes to subject the
industry in question.
(1) In effect, according to the terms of Article 156 of the Constitution,
the Reich may transfer private business enterprises to public ownership,
that is to say, take over the property for the Reich, the States, or for
the municipalities.
(2) The Reich may participate itself or have the States or the
municipalities participate in the administration of these enterprises, or
may secure for itself in some other manner a decisive influence in these
enterprises.
(3) Or, finally, without taking to itself all or part of these
enterprises the Reich may regulate, on the basis of autonomy and
according to the principles of collective economy, the production and the
distribution of wealth.
In this last case the Constitution specifies that the business
enterprises which are made subject to a nationalization measure, shall
form “an autonomous body” (Selbstverwaltungskörper). This is a new form
in public law. The “autonomous body” is somewhat analogous to ordinary
public corporations. It administers itself with the organs necessary
for it. It enjoys great independence, but it is nevertheless subject
to supervision by the State. Article 156, par. 2, of the Constitution
specifies that when legislation subjects a given industry to the system
of nationalization and organizes the autonomous body it must constitute
the administrative organs of this body in such a way that there shall be
insured the co-operation of all the producing elements of the people, and
that the salaried employés and wage-earners participate in administration
and that the production and distribution satisfy first of all the
interests of the commonwealth.
These organs form the Industrial Economic Councils which we have already
examined. An example will illustrate this hypothesis. Legislature
decides, for instance, to subject the chemical industry to the régime of
the collective economy. It combines, therefore, all the manufactories of
chemical products into a sort of obligatory _cartel_, the bond uniting
the different manufactories being more or less close according to
circumstances. The system of administration by “autonomous bodies” will
consist of the institution of one or more organisms, such as Economic
Councils of the Chemical Industry, in which will be represented all the
individuals, associations and Councils interested, and which will manage
together the German chemical industry. The chemical industry will thus
form an autonomous body, that is to say, a sort of public corporation
under the supervision of the State. Further than this, however, it is
not possible at the present time to specify the distinctive traits of
this new legal category. We must wait until legislation has organized a
number of autonomous bodies before we can state precisely their general
characteristics and give them a place in the collective institutions
of public law. Still less possible, naturally, is it to forecast the
economic consequences to which they may give rise.
* * * * *
However, the Constitution has not felt that it should give the ordinary
legislator absolute freedom to proceed according to his fancy to the
enactment of measures for socialization more or less complete. It has
therefore provided certain limits on the exercise of the rights it
confers on the legislature.
(1) Only the legislature of the Reich may enact socialization measures.
(2) No industry may be socialized except when it is “ripe for this
socialization.” This is the so-called _maturity clause_.
(3) Enterprises which the legislator wishes to organize as “autonomous
bodies” may not be so proceeded against except “in case of urgent
necessity.”
These last two restrictions may seem very important. In reality, however,
they constitute a purely fictitious restraint; for the legislature is the
sole judge, at any time that it wishes to socialize an industry, as to
whether that industry is “ripe” or not, and whether or not the case is
one of urgent necessity.
(4) There remains finally the question of indemnity. As may well be
imagined, during the discussion of the project of the socialization law
as well as during the deliberations on the project of the Constitution,
this question was very vigorously discussed. The Socialist parties wanted
no allusion made to this question in the text of the law or that of the
Constitution. The bourgeois parties demanded that at least in the case
of complete socialization the state should be absolutely obliged to
accord an indemnity. It was impossible to arrive at agreement. So that
although the principle of indemnity was incorporated, it was left to the
legislature, whenever it enacts a special law decreeing a socialization
measure, to decide whether or not indemnity shall be accorded and to what
extent.
* * * * *
In accordance with the above provisions a certain number of industries
have been placed under the régime of collective ownership, where they are
about to be transformed.
For the coal, potash and iron industries the laws of March 23, of April
29, 1919, and the regulation of April 1, 1920, have chosen the system of
collective ownership, properly so-called. That is to say, the industries
of coal, potash and metallurgy, although to a very limited extent, have
been organized into autonomous bodies, self-administering under the
supervision of the Reich.
As to electricity, the law of December 31, 1919, provides that electrical
plants that have acquired a certain importance will become the property
of the Reich, the latter, however, providing a suitable indemnity.
The project of the law relative to municipalization, finally, provides
that municipalities may, with the authorization of the Reich,
transfer to the régime of collective ownership private industries
that serve principally common local needs. Full authority is given
the municipalities over all that concerns transportation, water, gas,
cinematographs, theatres, burial, baths, etc. These enterprises may be
either taken over entirely as the property of the municipalities, or
be organized into autonomous bodies. In principle the municipality is
required to indemnify in all such cases.
It is impossible to examine here in full detail these or later laws. It
is interesting, however, to devote several pages in describing in a very
general way, in view of the great importance of the coal industry at the
present time, the system into which it has been transformed.
3.--THE REGULATION OF THE COAL INDUSTRY.
The crisis in coal which to-day exists in almost every country in the
world has led the different governments to take various measures either
to avert it or to diminish it. In general, coal mining has remained in
the domain of private economy. Distribution, however, has passed more or
less completely into the domain of collective economy. The systems of
distribution to which the different countries have resorted are various.
According to the given circumstances they adopt one or another of three
possible modes of public economy. In France, the distribution of mined or
imported coal is carried on by the state itself. In Germany it is done
by a group of organisms in which are represented the various interested
elements of the population, but in which provisionally the mine owners
predominate.
It is advisable to study first the existing system in the coal industry
in order to understand better the changes we are examining.
* * * * *
I.--As regulated by the law of March 23, 1919, and the decree of August
21, of the same year, the mechanism of the coal industry consists of
three organs: the Colliers Association, the National Association, and the
National Coal Council.
The German Reich is divided into a certain number of coal mining
districts. In each district all the mine owners associations must form
a Colliers Association. If this cannot be accomplished voluntarily the
Minister of Public Economy promulgates the organization by means of a
decree. Each Colliers Association must have a Council of Administration,
in which it is obligatory that the workers be allowed representation.
In addition, in the Councils of Administration of the five biggest
associations there must be admitted a representative of the salaried
employés. The Council of Administration has the authority commonly
accorded to the councils of administration of stock companies by the
Commercial Code; it appoints its own president. In the same way all the
owners of gasworks that produce coke are united for the whole territory
of the Reich into an Association of Coal-gas Manufacturers, formed on
the same model as the Colliers’ Associations.
The Colliers Associations, the association of Coal-gas Manufacturers and
the German states that belong, by virtue of ownership of mines, in the
Colliers Associations, are united into a _National Coal Association_.
This has a Council of Administration in which must be included three
wage-earners and salaried employés and one representative of the
consumers.
_The National Coal Council_ is composed of sixty members--representatives
of the states, of mine owners organizations, wage-earners, office
workers, consumers, etc.[70] It is convened as often as conditions demand
and at least once every six months. It must in addition be convened if
at least ten of its members or the Minister of Public Economy of the
Reich demand it. It decides by majority vote. It creates three technical
committees, The Economic Committee on Mining Construction, The Economic
Committee for the Utilization of Combustibles and The Social Committee
of the Mines. Each member of the National Coal Council must belong to a
committee. The cost of the administration of the National Coal Council
and of its committees is borne by the National Colliers Associations.
* * * * *
Each of these organs has its own special powers.
The National Coal Council directs the economy of combustibles, in which
is included importation and exportation, according to the principles
of collective economy under the supervision of the Reich. It must
approve the charters according to which the Colliers Associations and
the National Coal Association are organized. The National Coal Council
may decree general policies for the administration of combustibles, in
particular for the abolition of unproductive enterprises and for the
protection of consumers. It sees to it that the National Coal Association
and the technical committees of the Coal Council work according to the
same principles and in a coherent system. It may demand information
from any of the organs that participate in the fuel industry; and the
authorities and committees are obliged to give it any assistance it
demands. The technical committee collect all important data based on
practice and experience, study all matters that enter within their domain
and prepare decisions for the National Coal Council.
_The National Coal Association_ controls the application of the general
policies and decisions decreed by the National Coal Council and regulates
the details of the execution of these decrees. It must approve the
general conditions of the coal deliveries of the Colliers Association.
_It establishes and publishes the selling prices of fuel, taking into
account proposals made by unions and the interests of the consumers._ On
this point it must insure the same treatment for the consumers’ societies
as for the wholesalers, and see to it that each consumer, who takes at
least a full carload of coal at the mine or at the point of delivery,
shall obtain fuel under predetermined conditions for cash payment.
Finally, the National Coal Association has authority in questions of
import and export.
_The Colliers Associations_ supervise the application of the decrees
issued by the National Coal Council and by the National Coal Association,
and, within the framework of these decrees, regulate the production,
utilization and consumption on the part of their members. They,
themselves, sell the fuel which should be put at their disposal by their
members, on the account of the latter. The powers of the Association of
Coal-gas Manufacturers are similar.
The mining companies may raise claims and protests against the
regulations of the Associations of which they are members, appealing
to the National Coal Association and beyond that to the National Coal
Council.
If any measure on the part of the National Coal Council, the National
Coal Association, or of the Colliers Associations violates any vested
right, the individual or the association injured is entitled to suitable
indemnity. This indemnity may be sued for before ordinary tribunals.
The powers of the Reich, the States, and the municipalities are fixed by
the decree of August, 1919, as follows:
The Reich, through the intermediacy of the Minister of Public Economy,
exercises general control over the fuel economy. The Minister may
in particular lower the price of coal fixed by the National Coal
Association. He may also organize a representation of fuel consumers, a
representation with authority to fix the retail price of coal. The cost
incurred by the Reich in the execution of the law on the regulation of
coal, up to a minimum of 200,000 marks per year, must be borne by the
National Coal Association.
The States represented by the Committee on Commerce and Industry in the
Reichsrat are authorized to participate in the deliberations of the
National Coal Council and its committees, but only with consultative
powers. Fiscal authorities are authorized to demand information of the
National Coal Council of the Reich and of its committees as well as of
the National Coal Associations and of the Colliers Associations.
Municipalities of at least 10,000 inhabitants and groups and Unions of
Municipalities, after having heard the claims of dealers and consumers,
and guided by the wholesale price of coal fixed by the National Coal
Association, are themselves empowered to fix the retail price within
their territories.
* * * * *
II.--The regulation above described was far from giving complete
satisfaction. It has been attacked both by the consumers and the
socialists. The latter criticize it as not having gone far enough along
the road of nationalization. The former, on the other hand, complain that
prices are fixed by an Assembly in which coal owners form a very great
majority (The National Coal Association), and that the other interests
are not able to make themselves sufficiently heard. The result of this
system is that the coal producers always come to agreement to the
detriment of the consumers and constantly increase the price of coal.
It must be conceded to the socialists that in the system established
by the law of March 23, 1919, the principles of collective economy are
applied in the most parsimonious manner possible. The only Council in
which there is parity between employers and workers is the National
Coal Council, but the rôle of this Council is reduced to a minimum. The
real directors and administrators of the coal industry are the Colliers
Associations and the National Coal Association. The National Coal
Council has hardly any effective power. As for the Cabinet, the right
of the Minister of Public Economy to oppose his veto to measures taken
by the National Coal Association and in particular to lower by law the
prices fixed by the latter, is considered by the Socialists entirely
insufficient in view of the close co-operation of the coal mine owners
and the dealers in league against him.
In May, 1920, a bill was elaborated by the Cabinet. It provided for the
abolition of the National Coal Association and for the transfer of its
powers to the National Coal Councils; in addition the influence of the
consumers was to be considerably increased within the National Coal
Council. But the Constituent Assembly adjourned before this project could
be examined by them.
Meanwhile a change was effected. It was agreed at the end of May, 1920,
that decisions of the National Coal Association would thereafter not be
operative unless they were made in agreement with a “Great Commission”
of the National Coal Council. If agreement is not arrived at the matter
must be brought before the National Coal Council itself which thereupon
decides, its decision becoming binding upon the Association.
* * * * *
III.--But this reform did not suffice, and the question of a complete
transformation of the regulation of the coal industry was submitted to a
searching examination by the Committee on Socialization. One thing was
unanimously agreed upon--the existing régime could not continue. The
Provisional Economic Council, in its meeting on July 24, the Cabinet of
the Reich in the meeting of the Reichstag on August 5, and the Committee
on Socialization declared that the coal industry must thereafter be
completely subjected to the principles of collective economy; that the
wage-earners and salaried employés in this industry must be included
in the number of responsible directors of the industry; and that the
profits obtained from the exploitation of the mines by private capital
must be considerably decreased.
As for the practical means of realizing these recommendations the
Committee on Socialization was not able to come to an agreement and
submitted two different proposals.
The first, that of Lederer, signed by ten out of twenty-one members,
demanded _immediate expropriation and nationalization of all the mines_.
The owners of the mines would receive an indemnity in the form of bonds
bearing a fixed interest, and the ownership of these mines would be
transferred to an autonomous body, called “The German Coal Corporation.”
This corporation is to be governed by the National Coal Council, which
appoints a “directorate” to administer affairs. The right to appoint
industrial heads, as well as the responsibility for the technical
exploitation, passes to the National Coal Council and to the Directorate.
Bonuses for production are to be given to directors, salaried employés
and workers.
The authors of this proposition insist on the fact that they are not
instituting state socialism for mines with all its attendant fiscal and
bureaucratic dangers; and to emphasize what it is they are aiming at,
they propose that the mines now owned by the Reich and by the States be
taken away from them and transferred to the German Commonwealth of Coal.
Prices will be fixed by the Reich, to whose budgets will be accounted the
profits of the exploitation--and undoubtedly the losses.
The second proposition, that of Rathenau and signed by eleven members
out of twenty-one, does not go as far along the road of nationalization.
The present owners of mines, according to this plan, provisionally
retain their property, but their rights therein are strikingly reduced.
The distribution and the sale of products cease to be guaranteed by the
National Coal Association--which is, in fact, done away with--and are
given over to the National Coal Council and to a Directorate, four out
of five of whose members are elected by the Council; the fifth, the
President, is appointed by the Minister of Public Economy.
The principal innovation consists in this. Whereas formerly the sale of
coal was made on the basis of the individual exploitations, according
to this project every mine transfers to the National Coal Council its
whole output, and the net price is averaged according to the books. The
National Council, therefore, has a monopoly on the wholesale trade and it
fixes the selling prices. In addition to the net cost the Council credits
to the mine (1) the cost of delivery and the interest and amortization
of bonds of the enterprises; (2) the interest and amortization of new
investments; (3) the normal fixed interest on the operating capital
employed in the exploitations; (4) bonuses, fixed according to a
schedule, for the increase of output of each exploitation; or deductions
in case of decrease of output.
The National Council may demand the inauguration of new projects, or
exploitations may propose improvements with the approval of the Council,
provided that either the Council or the entrepreneur furnishes the
necessary funds. Finally, in order to retain the free play of private
initiative, an entrepreneur may, even in spite of the National Council,
make investment but at his own risk and peril.
By these provisions the entrepreneur loses all interest in the increase
of the price of coal, for commerce in it and commercial profits are
denied to him. Also the fixing of high net prices does not serve him
in any way, since his books are supervised by the properly empowered
auditors of the National Council. The only way left him to make big
profits is to improve his exploitation in its economic and social
aspects. The interest or the profit which has hitherto ruled economy
is retained in form, but it can no longer work except in the common
interest. The situation of the manager will depend as to-day on an
objective economic success.
The Cabinet of the Reich announced its intention of soon submitting a
project of law which will adopt in outline the Rathenau proposition.
Already the mine owners are discussing in the press the question of
the “maturity” of the mines and the mode of calculating the cost of
production. But above private interest there is a collective interest and
the question will come up whether the system proposed by the Committee on
Socialization and the Cabinet does not incur the risk of becoming more
troublesome than profitable to the community itself.
CONCLUSION
We have analyzed in the preceding pages the principal provisions of the
German Constitution. There are in it a great number of other provisions,
which had to be omitted from this analysis deliberately, either because
they also occur in all the other Constitutions of the world, such as the
principle stated by Article 102, that judges are independent--provisions
which do not at all serve in characterizing the work of Weimar; or, on
the other hand, because they were dictated exclusively by the necessity
of solving problems created by the particular circumstances in the midst
of which the Reich found itself; such as the provisions of Article 88
and those following, dealing with the post, railroads, and navigable
waterways. These provisions present only a slight interest from the
general constitutional point of view.
In its final draft the Constitution of 1919 bears throughout the stamp of
_compromises_, which had to be effected between the parties represented
in the Assembly, on practically every problem attacked. On nearly every
question which the Constituent Assembly had to solve, bargains were
negotiated between the conflicting interests and theories of the parties
opposed. If one takes these articles of the Constitution one after
another, one can draw up the balance sheet of every party, and note
the points on which it has won its cause and those on which it had to
compromise. The Social Democrats wanted to substitute for the federal
Empire a unitary State; whereas the Centre, whose co-operation was needed
for the Social Democrats to remain in power, defended the federalist
idea. The final result constitutes a marked victory for the Social
Democrats. But on the question of the relation of Church and State, the
Centre obtained a solution that is much nearer their desires than those
of the Social Democrats. Sometimes problems of a non-constitutional
nature were mixed into negotiations on the Constitution. It is known, for
example, that the Social Democrats secured the signature of the Centre to
the Treaty of Versailles only in exchange for Social Democratic consent
to the compromise clauses on education.
Nevertheless the product of these negotiations and these transactions
constitutes a work whose essential characteristics are clearly enough
indicated, and whose bold outline seems to respond to the demands which
all constitutions of this kind make.
From the point of view of legal technique the Constitution of Weimar is,
on the whole, well made. Conscientiously, scientifically, the men who
drew it up studied foreign Constitutions, subjected them to the most
stringent criticism, tested them by the particular exigencies of the
Reich and by the special character of its people. Here they imitated,
there they initiated. Naturally, they were not wholly able to detach
themselves from the judgments, preferences and prejudices that prevail
in their country. Perhaps from the strictly German point of view it is
better that it should be so. The work is strongly marked with their
traits. It is logical and fine-spun, audacious, complicated and sometimes
obscure, painstakingly conceived and solidly constructed.
But whatever technical merit a legal document may present, it is worth
little unless it accommodates itself to the realities for which it is
created, unless, too, it is strong enough to resist the thrusts directed
against it and to master them. Has the Constitution of Weimar resistance
enough to withstand all the inevitable assaults which will be aimed at
it, and can it guarantee to the German people a well-ordered public life
and a stable government?
We know the bases on which it is constructed; politically--unitarism,
parliamentary democracy, the republic; economically--the participation
of the working class in the management of industry, evolution toward the
nationalization of the industries most important in the national life.
The political institutions, under more or less different forms, have been
tested by other peoples, who have not complained of them. Will these
institutions, adapted as they have been, succeed equally for the German
people? The economic institutions are new. What will be their worth?
The question is serious; for in this edifice so logically constructed
all parts are mutually interdependent, and the whole will not endure
unless the parts are solid. The downfall of any of them will drag down
the others. Political institutions will not function unless economic
provisions assure industry and commerce sufficient prosperity. But
economic institutions will be swept away if the government is overwhelmed
and ceases to fulfil its mission.
* * * * *
The Constitution begins with making the Reich a state as unitary as
possible without completely suppressing every trace of the federal
régime. But there are strong centrifugal tendencies. In Prussia there
are several provinces that demand to be formed into distinct states.
Throughout the Reich there are several states that demand the return to
a purely federal régime, if not actually the complete separation from
the German Reich. Will these tendencies be strong enough to bring about
a relaxation of the unitary bond, if not actually the disintegration
of the Reich? We have already pointed out the difference, for example,
separating Catholic, peasant and conservative Bavaria from Protestant,
industrial and socialist Prussia. The States were able to endure without
much difficulty the hegemony of a victorious, powerful, prosperous
Prussia, a hegemony by which they profited. But the same States resent
the thought that a Prussia, which they hold responsible for the defeat
and which they now see much weakened, should want to keep them still
under its yoke and to attempt, under the pretext of unity, to absorb the
Reich. They feel this all the more strongly since the future is dark.
Prussia has been dangerously stricken and it may appear more advantageous
not to tie up too intimately their own interests with those of such a
state.
Once more Prussia holds the fate of Germany in its hands. If, renouncing
the attitude which it has maintained since the Revolution, Prussia
permits a transformation of some of its provinces into states, or
if it accords them an autonomy so great that they will be in effect
assimilated into states, then the federalist or separatist tendencies
will probably lose much of their strength, and the unitarism desired by
the Constitution will be able to maintain itself and even to develop.
But if Prussia, relying on its strength and prestige, diminished though
they be, insists on keeping the other German states, willing or not, in a
Reich dominated by it, then it may be that the federalist or separatist
tendencies will prevail.
The political institutions of Germany are as strongly impregnated with
the _democratic idea_ as possible. The majority is sovereign. But
there are minorities, to the right and to the left, that aspire to
dictatorship. It seems little likely that another attempt like that of
Kapp and Lüttwitz will succeed any better than the last attempt--at least
unless a sudden and complete change in the political orientation of the
people takes place. On the other side, the Independents, for whom even
in Berlin a _coup d’état_ may be perhaps easy enough, know that they
would have against them the great majority of the German people, and
their leaders openly declare that their hour has not yet come. If in
the domain of democratic doctrine a change seems likely to come, it is
probable that it will appear in the form of a right expressly accorded to
economic associations or, in a still more general manner, to producers,
to exercise a special and direct influence on the government. If the
Provisional Economic Council succeeds, it is possible that Germany will
broaden the experiment and attempt a true Economic Parliament.
_Parliamentary government_ has been accepted but it is mistrusted.
There have also been introduced a whole series of measures such as
the referendum, initiative, the nomination and the impeachment of the
President by the people, which are not only logical applications of the
democratic principle, but which are also assurances against any possible
misdeeds of parliamentarism. This is a splendid proof of trust in
democracy. It is for the future to say whether it is justified.
As a matter of fact the referendum and initiative await the law which is
to organize them. What will these institutions produce in a country as
vast as Germany? It is easy to see that they will strikingly increase
the burden of governmental machinery, and one asks oneself whether
they will not incur the risk of completely impeding its functioning.
For the success of these institutions, we must suppose a sufficiently
firm political education and intelligence, a public that knows its
wishes and how to make them prevail, a Parliament and a Cabinet skilled
in recognizing the wishes of the nation and ready to submit to them.
Because of the mistrust of parliamentarism, it has been decided that the
President shall be elected directly by the people. He is endowed with
power by the nation and placed near to the Reichstag in order to control
it. But may he not become too strong, and is there not a danger that
he will abuse his powers to the great injury of liberty and democracy
itself? The present President has been elected by the National Assembly.
Considerable as are the powers which the Constitution gives him, he is
actually one of the least powerful chiefs of state in the world. Will
matters be different when he is elected by the whole people? Will he be
strong enough, or too strong?
This democracy which does not fear the plebiscite, has expressly excluded
the _monarchical form_ for the Reich and for the States. There are,
nevertheless, here and there, particularly in Bavaria, monarchical plots.
Will the Constitution have here, too, enough force to command obedience?
It does not seem for the moment that a monarchical restoration, no
matter of what dynasty its pretender, would have any serious chance of
succeeding. For, until some new state of affairs, the working class,
which would permit a dictatorship exercised by itself, will probably
oppose every attempt at a return to the abolished personal régime.
* * * * *
The Economic Constitution departs much more from old customs than the
political Constitution.
_The idea of the Councils_ is probably the only really new idea that
has appeared in the public law of modern states since the war. German
law has given this idea solemn consecration and has embodied it in the
Constitution. But up to now it has given it only the most restricted
application. The Factory Workers Councils have hardly begun to function,
and the working class has not yet any clear notion of the manner in which
it will use the power given by the law to these new organisms.
The doctrine of the Councils leads naturally to _nationalization_.
For to confide the administration of the whole of an industry to
Economic Councils, in which the workers are represented by the side of
the employers and consumers, is to make a direct application of the
_Mitbestimmungsrecht_. But other considerations are also tending to
give this system a place of increasing importance. “The free play of
economic forces” is no longer being upheld. It is affirmed everywhere
that classic liberalism has had its day, and that in order to improve the
economic situation so extremely unfavourable in all the modern states,
it is not enough that things be allowed freely to take their course.
It is now thought that “let alone” leads to bankruptcy. One no longer
believes in the former principles that held as absolute the right to
private property, the right of work, liberty of commerce, and freedom of
contract. To-day these rights are held to be limited by the general good
and must be exercised by the individual in the interest of all.
As the question of principle seems to be settled the problem becomes
almost exclusively a practical one. A certain number of industries have
become more or less nationalized or even socialized and will become still
more so, their number also probably growing. The discussion now seems
to be only on the modes of application, on the degree of “maturity”
necessary; on whether this or that industry is or is not ripe; on the
mode of calculating the cost of exploitation; on bonuses for output,
etc., etc.
Like the idea of the Councils, this doctrine of nationalization seems to
gain more and more. What will come of it for Germany and for the States
that will follow this road? Are not these new formulas the ephemeral
result of the upheaval due to the war? Or will they, improved and tested
by practice, be definitely installed in the economic organization of all
modern peoples? To the countries that adopt them, will they bring ruin
or economic prosperity and social peace? On these matters, one can only
write interrogation marks. In any event, however, it is important to
follow the German experiment with the greatest possible interest.
GLOSSARY
German Translation
REICH Commonwealth
REICHS- of the Commonwealth, national
REICHSARBEITERRAT National Workers’ Council
REICHSGERICHT National Judicial Court
REICHSKANZLER National Chancellor
REICHSMINISTER National Minister
REICHSMINISTERIUM, pl., -IEN National Department
REICHSPRÄSIDENT President of the Commonwealth,
National President
REICHSRAT National Council
REICHSREGIERUNG National Cabinet
REICHSTAG National Assembly
REICHSVERWALTUNGSGERICHT National Administrative Court
REICHSWIRTSCHAFTSRAT National Economic Council
LAND State (an integral part of the
Commonwealth)
LANDES- of the State, State
LANDESREGIERUNG State Cabinet
LANDTAG State Assembly
WAHLPRÜFUNGSGERICHT Electoral Commission
STAAT country, state (one of the family
of nations); referring to Germany,
it designates the Commonwealth and
separate States as a single
political entity.
STAATSGERICHTSHOF Supreme Judicial Court
STAATLICH political
FREISTAATLICH republican
APPENDIX
THE CONSTITUTION OF THE GERMAN COMMONWEALTH
_PREAMBLE_
The German People, united in all their branches, and inspired by the
determination to renew and strengthen their Commonwealth in liberty and
justice, to preserve peace both at home and abroad, and to foster social
progress, have adopted the following Constitution.
PART ONE
Structure and Functions of the Commonwealth
_SECTION I_
COMMONWEALTH AND STATES
ARTICLE 1
The German Commonwealth is a republic.
Political authority is derived from the People.
ARTICLE 2
The territory of the Commonwealth consists of the territories of
the German States. Other territories may be incorporated into the
Commonwealth by national law, if their inhabitants, exercising the right
of self-determination, so desire.
ARTICLE 3
The national colours are black, red and gold. The merchant flag is black,
white and red, with the national colours in the upper inside corner.
ARTICLE 4
The generally recognized principles of the law of nations are accepted as
an integral part of the law of the German Commonwealth.
ARTICLE 5
Political authority is exercised in national affairs by the National
Government in accordance with the Constitution of the Commonwealth, and
in State affairs by the State Governments in accordance with the State
constitutions.
ARTICLE 6
The Commonwealth has exclusive jurisdiction over:
1. Foreign relations;
2. Colonial affairs;
3. Citizenship, freedom of travel and residence, immigration and
emigration, and extradition;
4. Organization for national defence;
5. Coinage;
6. Customs, including the consolidation of customs and trade districts
and the free interchange of goods;
7. Posts and telegraphs, including telephones.
ARTICLE 7
The Commonwealth has jurisdiction over:
1. Civil law;
2. Criminal law;
3. Judicial procedure, including penal administration, and official
co-operation between the administrative authorities;
4. Passports and the supervision of aliens;
5. Poor relief and vagrancy;
6. The press, associations and public meetings;
7. Problems of population; protection of maternity, infancy, childhood
and adolescence;
8. Public health, veterinary practice, protection of plants from disease
and pests;
9. The rights of labour, social insurance, the protection of wage-earners
and other employés, and employment bureaus;
10. The establishment of national organizations for vocational
representation;
11. Provision for war-veterans and their surviving dependents;
12. The law of expropriation;
13. The socialization of natural resources and business enterprises, as
well as the production, fabrication, distribution, and price-fixing of
economic goods for the use of the community;
14. Trade, weights and measures, the issue of paper money, banking, and
stock and produce exchanges;
15. Commerce in foodstuffs and in other necessaries of daily life, and in
luxuries;
16. Industry and mining;
17. Insurance;
18. Ocean navigation, and deep-sea and coast fisheries;
19. Railroads, internal navigation, communication by power-driven
vehicles on land, on sea, and in the air; the construction of highways,
in so far as pertains to general intercommunication and the national
defence;
20. Theatres and cinematographs.
ARTICLE 8
The Commonwealth also has jurisdiction over taxation and other sources
of income, in so far as they may be claimed in whole or in part for its
purposes. If the Commonwealth claims any source of revenue which formerly
belonged to the States, it must have consideration for the financial
requirements of the States.
ARTICLE 9
Whenever it is necessary to establish uniform rules, the Commonwealth has
jurisdiction over:
1. The promotion of social welfare;
2. The protection of public order and safety.
ARTICLE 10
The Commonwealth may prescribe by law fundamental principles concerning:
1. The rights and duties of religious associations;
2. Education, including higher education and libraries for scientific use;
3. The law of officers of all public bodies;
4. The land law, the distribution of land, settlements and homesteads,
restrictions on landed property, housing, and the distribution of
population;
5. Disposal of the dead.
ARTICLE 11
The Commonwealth may prescribe by law fundamental principles concerning
the validity and mode of collection of State taxes, in order to prevent:
1. Injury to the revenues or to the trade relations of the Commonwealth;
2. Double taxation;
3. The imposition of excessive burdens, or burdens in restraint of trade
on the use of the means and agencies of public communication;
4. Tax discriminations against the products of other States in favour of
domestic products in interstate and local commerce; or
5. Export bounties;
or in order to protect important social interests.
ARTICLE 12
So long and in so far as the Commonwealth does not exercise its
jurisdiction, such jurisdiction remains with the States. This does not
apply in cases where the Commonwealth possesses exclusive jurisdiction.
The National Cabinet may object to State laws relating to the subjects of
Article 7, Number 13, whenever the general welfare of the Commonwealth is
affected thereby.
ARTICLE 13
The laws of the Commonwealth are supreme over the laws of the States
which conflict with them.
If doubt arises, or difference of opinion, whether State legislation is
in harmony with the law of the Commonwealth, the proper authorities of
the Commonwealth or the central authorities of the States, in accordance
with more specific provisions of a national law, may have recourse to the
decision of a supreme judicial court of the Commonwealth.
ARTICLE 14
The laws of the Commonwealth will be executed by the State authorities,
unless otherwise provided by national law.
ARTICLE 15
The National Cabinet supervises the conduct of affairs over which the
Commonwealth has jurisdiction.
In so far as the laws of the Commonwealth are to be carried into effect
by the State authorities, the National Cabinet may issue general
instructions. It has the power to send commissioners to the central
authorities of the States, and, with their consent, to the subordinate
State authorities, in order to supervise the execution of national laws.
It is the duty of the State Cabinets, at the request of the National
Cabinet, to correct any defects in the execution of the national laws.
In case of dispute, either the National Cabinet or that of the State
may have recourse to the decision of the Supreme Judicial Court, unless
another court is prescribed by national law.
ARTICLE 16
The officers directly charged with the administration of national
affairs in any State shall, as a rule, be citizens of that State. The
officers, employés and workmen of the national administration shall, if
they so desire, be employed in the districts where they reside as far
as is possible and not inconsistent with their training and with the
requirements of the service.
ARTICLE 17
Every State must have a republican constitution. The representatives of
the People must be elected by the universal, equal, direct and secret
suffrage of all German citizens, both men and women, according to the
principles of proportional representation. The State Cabinet shall
require the confidence of the representatives of the People.
The principles in accordance with which the representatives of the
People are chosen apply also to municipal elections; but by State law
a residence qualification not exceeding one year of residence in the
municipality may be imposed in such elections.
ARTICLE 18
The division of the Commonwealth into States shall serve the highest
economic and cultural interests of the People after most thorough
consideration of the wishes of the population affected. State boundaries
may be altered and new States may be created within the Commonwealth by
the process of constitutional amendment.
With the consent of the States directly affected, it requires only an
ordinary law of the Commonwealth.
An ordinary law of the Commonwealth will also suffice, if one of the
States affected does not consent, provided that the change of boundaries
or the creation of a new State is desired by the population concerned and
is also required by a preponderant national interest.
The wishes of the population shall be ascertained by a referendum. The
National Cabinet orders a referendum on demand of one-third of the
inhabitants qualified to vote for the National Assembly in the territory
to be cut off.
Three-fifths of the votes cast, but at least a majority of the qualified
voters, are required for the alteration of a boundary or the creation
of a new State. Even if a separation of only a part of a Prussian
administrative district, a Bavarian circle, or, in other States, a
corresponding administrative district, is involved, the wishes of the
population of the whole district must be ascertained. If there is no
physical contact between the territory to be cut off and the rest of the
district, the wishes of the population of the district to be cut off may
be pronounced conclusive by a special law of the Commonwealth.
After the consent of the population has been ascertained the National
Cabinet shall introduce into the National Assembly a bill suitable for
enactment.
If any controversy arises over the division of property in connection
with such a union or separation, it will be determined upon complaint of
either party by the Supreme Judicial Court of the German Commonwealth.
ARTICLE 19
If controversies concerning the Constitution arise within a State in
which there is no court competent to dispose of them, or if controversies
of a public nature arise between different States or between a State and
the Commonwealth, they will be determined upon complaint of one of the
parties by the Supreme Judicial Court of the German Commonwealth, unless
another judicial court of the Commonwealth is competent.
The President of the Commonwealth executes judgments of the Supreme
Judicial Court.
_SECTION II_
THE NATIONAL ASSEMBLY
ARTICLE 20
The National Assembly is composed of the delegates of the German People.
ARTICLE 21
The delegates are representatives of the whole People. They are subject
only to their own consciences and are not bound by any instructions.
ARTICLE 22