Abstract: Economic Rationality and State-Owned Companies in Nazi Germany: The Formation of the Reichswerke "Hermann Göring"

Alexander Donges

Abstract

In this paper I analyze the formation of the Reichswerke "Hermann Göring," the most important state holding company in Nazi Germany. The Reichswerke were founded in 1937 as a result of the preceding conflict between private steel producers and the economic authorities. Hermann Göring, Commissioner for the Four-Year Plan, demanded the expansion of domestic iron and steel production. Since this plan was associated with excessive risks, the private companies refused to invest. As a result, Göring ordered the construction of state-controlled iron and steel works. In the literature, the formation of the Reichswerke is often used as an example for economic irrationality in the Third Reich. By comparing the economic interests of private steel producers with the strategic goals of the regime, I show that it was rational. Furthermore, scholars interpret this event as a turning point that indicated the beginning of an increasing suppression of private business in favor of state-controlled companies. I argue in this paper that the formation of the Reichswerke was an exception. In general, the regime cooperated with private business in implementing the economic program. But in this case a cooperative solution had to fail because of widely diverging interests.