The Vampire Economy

Chapter XII

“SELF-SUFFICIENCY” THROUGH ERSATZ

“Much technical genius and hard work have gone into adapting the industrial machine to the use of ersatz. The results have been disappointing—huge investments to produce inferior articles at higher prices.”

SCIENCE, particularly modern chemistry, enables us to reproduce almost all “natural” products. Furthermore, chemistry gives us other completely new products, different from anything in nature. Today it may be economically unsound to manufacture them in quantity because of insufficient technical development; tomorrow they may well revolutionize production and consumption.

Criticism of ersatz production in Germany and other totalitarian states must not be regarded as denying the likelihood of further technical progress. It seems certain that progress will not be frozen at today’s level. Already trends are discernible which indicate that we are witnessing only the beginning of a new technical revolution. To grasp the implications fully is not yet possible. Today new technical methods are used to increase the production of armaments and to give them a more destructive power, far exceeding that of any previous implements of war. This “progress” means that technical possibilities exist which might be used for a better purpose.

Synthetic materials, or “ersatz,” are produced in the United States as well as in Germany. The American firm, E. I. du Pont de Nemours & Company, Inc., is in the forefront of this development. Dr. C. M. A. Stine, in an article published in the Du Pont Magazine, indicates the tremendous potentialities that are now unfolding as a result of present-day discoveries.

“We have entered the Chemical or Scientific Age. The Machine Age could not go beyond the limitations of natural materials, so that in the main it was limited to improving things known for centuries. The Scientific Age is taking us beyond into a realm of new materials not to be found in Nature, and from them we are creating things that did not and could not exist before.

“This new ability of man to create, and the new vision it has given us, in turn is creating a new economy—an economy that is putting wealth, in the true sense of greater enjoyment of life, within the reach of millions who never before knew it; that is, creating new opportunities for work, new leisure, new health. Above all it is creating new knowledge in the light of which almost nothing stands as impossible.” 1

But limited capacity to consume is an obstacle to further expansion on a mass-production basis. Construction of new and better plants and equipment would make existing means of production obsolete. The dead weight of the old investments hampers technical progress. The United States has the advantage of a wide internal market—wider than that of any other country—which has enabled it to participate in the development of synthetic products on a mass-production basis to a greater extent than other countries. The United States likewise has no difficulty in financing the huge investments necessitated by new chemical industries. In Germany, on the other hand, recently built plants for synthetic products would not have been created were it not for the strong pressure of the totalitarian State upon economic life. Government intervention can achieve results which would be impossible under the competitive system. But as a result of this development of new chemical industries, Germany’s internal economic equilibrium has been seriously thrown out of balance.

The mere evidence of new technical developments does not necessarily mean that at the present time their application is economically justified. At a later stage they may well turn out to be a success from the economic point of view as well. The fascist State must disregard economic considerations. Its main concern is: are the new plants essential for wartime economy or for the replacement of raw materials which cannot be imported because of lack of foreign currency? This makes the State especially interested in ersatz, or synthetic production.

It has happened before that a regime which, historically, represented the extreme decay of a society, sponsored new technical developments which became effective only after the downfall of the regime that gave them life.

The comparison with feudalism in its period of decay is striking. When absolute kings strengthened their political power by encouraging what industry and commerce existed, their actions foreshadowed the replacement of individual home production by modern industrial production.

History seems to repeat itself. Frederick William, absolute ruler of Prussia at the beginning of the eighteenth century, tried to introduce local production of silk, a costly attempt which was a complete failure. The National-Socialist State has repeated the experiment. Under the first Four-Year Plan several communities in Bavaria, Saxony and the Rhineland were forced to cultivate mulberry bushes, and special associations were organized to persuade the peasants to collect the cocoons. In 1934, the Weidenwerk Spinnhuette A.G. was founded in Zelle with government capital. In 1936, 472 kilograms of silk were produced on German soil. Since then, however, nothing more has been heard of the experiment.

The absolute monarch of the eighteenth century who wanted to strengthen his power felt it necessary to introduce certain industries into the economy of his country. But society was still fundamentally feudal; it relied on agriculture and manual labor and was not yet prepared for modern industrial production. Consequently, the State factories were very expensive and did not lead to progress in other spheres. Yet they were the first signs of a new technical era in a backward country. Gigantic chemical plants turning out new or “artificial” products may well play the same role under fascism as the State-sponsored factories did under feudalism in decay.

Before going into details as to the success of ersatz production, something should be said about the character of the economic “self-sufficiency” the fascist State is trying to create.

There is widespread misunderstanding about “autarchy.” Increased barriers against world trade, and particularly the development of productive forces to replace foreign raw materials, are tendencies which can be observed in all countries, but this process has reached its culmination in the fascist “have not” countries. Everywhere industries producing for the world market have declined; they relied on an international division of labor and looked forward to an indefinite expansion of markets and of productive forces.

A competitive economy can never be satisfied with what it has gained. The steady drive for world-wide expansion has been reflected in the industrial structure of those countries which supplied the world with goods. Industries producing “capital goods” or “means of production” grew at a much faster rate than those manufacturing consumption goods. However, in the end, the new “means of production” must serve to produce finished articles for consumption by human beings—except in the case of “means of destruction,” which belongs to a peculiar economic, or, rather, uneconomic, category.

In the industrial economy of our times the capacity to produce capital goods has by far exceeded the capacity to produce consumption goods. In order to find a market for capital goods, industrialists have had to make investments which heightened the disparity between the two divisions of industry. When world economy was expanding, that economic disparity was bridged by the opening of new markets and fields of investment. Now that such expansion is no longer possible, the disproportion has become a tremendous problem.

On the surface, fascist economy, particularly in Germany, seems to have found a solution for the economic crisis; it has been able to employ fully every able-bodied man and woman. Nazi leaders have proclaimed “autarchy—-economic self-sufficiency—as a program to keep the nation and the industrial machine busy creating new productive forces and ending dependence on the rest of the world. The reality, however, is quite different.

The economic policy of the fascist regime does not create economic self-sufficiency. Genuine self-sufficiency would mean complete independence of world economy. The new productive forces under fascism increase the disparity between capital goods and consumption goods industries. The decline of the consumption goods industries proceeds at a quickened pace, while the capital goods industries grow rapidly. But these capital goods are largely synonymous with war materials.

In the essence of things, such an industrial policy is not independence from world economy. On the contrary, it means preparations for the conquest by force of new markets and international monopolies. These war preparations influence decisively Germany’s industrial structure.

German prewar industrialization was characterized by two phenomena: the rise of German militarism, and the supplying of goods for the world market. The former entailed a disproportionate growth of those heavy industries necessary for the production of armaments. The latter meant the growth of industries producing machinery largely for export.

Prewar Germany developed a gigantic heavy industry, which produced iron and steel in greater quantities than any other European country. Iron and steel firms earned profits as a result both of the armaments race, which was started by German militarism at the end of the nineteenth century, and of German imperialist expansion (for example, the Berlin-Bagdad Railway).

While British industry developed first on the basis of textile exports, German industrial growth was based from the beginning upon huge exports of iron, steel and machinery. Hence, for German capitalism continuing industrial development of the world was a vital necessity on which her large export of capital goods depended. So long as world capitalism was expanding, Germany’s prosperous industrial machine could go on working at full speed, supplying the world with the means for further industrial development.

Postwar Germany had lost her prewar position as the leading producer of iron, steel and machinery, and the monopoly of certain chemical products she formerly held. There still remained certain types of machines with which German industrialists supplied the world market in competition with only one other country—the United States of America. But after the World War the dependence of world economy on German machines and other means of production decreased as a result of industrial progress in other parts of the world. Yet immense sums were invested in the renewal, modernization and extension of Germany’s industries, financed, to a large extent, by foreign loans.

From the military point of view, Germany’s prewar industrial structure was a happy combination of a powerful heavy industry with big manufacturing plants which did not need subsidies in peacetime. Germany’s prewar industries were privately financed and remained good businesses mainly as a result of the nation’s unique ability to supply the world with complicated machinery, electrical equipment, etc.

Now there is a still greater disproportion than in prewar times in the growth of heavy industry. The totalitarian State is attempting, on a gigantic scale, to use and extend its industrial capacity in such a way as to make German militarism the strongest in the world—so strong that it will be able to conquer by force what it cannot achieve by peaceful commercial competition. From being the workshop of the world, German industrialism has become the workshop for German militarism. Therefore Germany’s exports no longer expand at a rate corresponding to the growth of Germany’s industrial capacity.

Reduction of exports brings about reductions in imports and a resultant scarcity of foreign raw materials. This necessitates the production of ersatz without consideration of the high costs involved. The whole industrial machine may come to a standstill unless enough “ersatz” is available. New technical processes must therefore be put into operation even before they have reached the mass-production stage.

Among the raw materials which are of vital importance to German industry, textile fibers, ores, petroleum, timber and rubber occupy first place. It is in these fields that the greatest efforts have been made to replace imports by domestic production. Without these materials German industry cannot exist and Germany’s war machine cannot function. Their share in Germany’s imports in 1929 was 39 per cent; in 1932, 32 per cent; in 1935, 32 per cent; and in 1938, 35 per cent.2

Cell Wool

Cotton and wool, the major raw materials needed by European textile manufacturers, were and still are shipped largely from America and Australia. In return, Europe supplied and continues to supply the rest of the world with finished goods. But this world trade has declined. From 1932 to 1938 German imports of cotton fell almost 40 per cent in quantity and about 36 per cent in value; from 1929 to 1938 the decline amounted to 48 per cent in quantity and 77 per cent in value. Imports of wool dropped 23 per cent in quantity and 12 per cent in value from 1932 to 1938; from 1929 to 1938, the decline was 32.8 per cent in quantity and 71.9 per cent in value.

GERMAN IMPORTS OF COTTON 3

	1929	1932	1935	1937	1938
In million marks	814.7	291.3	329.7	275.1	186.9
In 1,000 tons	476.8	424.7	397.4	349.6	250.0

GERMAN IMPORTS OF WOOL

	1929	1932	1935	1937	1938
In million marks	739.4	236.4	248.1	285.2	207.3
In 1,000 tons	204.6	180.0	156.3	128.2	138.9

Foreign sources of supply have shifted too, especially cotton imports. Germany imported only 19 per cent of its cotton supply from the United States in 1938 compared to 75 per cent in 1932 and 76 per cent in 1929. Brazil and Egypt have superseded the United States as exporters to the Reich. Imports of raw cotton were increased from those countries with which barter deals were consummated. Germany exchanged industrial goods, munitions and so forth for raw materials. Conversely, imports of raw materials were curtailed from those countries with which such barter deals could not be arranged.

The growth of synthetic production has had a very great effect upon all cotton and wool exporting countries and is of increasing importance since it indicates that the old international division of labor has come to an end. Synthetic production of textile fibers started with artificial silk or rayon 4 which resembles silk more than it does wool or cotton. Another synthetic product, cell wool, a rayon staple fiber which is made from wood or skimmed milk as the basic raw material, is a strong competitor of cotton and wool. Cell wool has become the main source of supply for domestic textiles in countries where a scarcity of foreign currency and large scale armament construction have necessitated rigorous restrictions on the import of raw materials for textiles.5

A recent issue of a German periodical makes the following comment:

“This [the development of cell wool] is the astonishing fact, and, as will be shown, it threatens wool. It is not the production of the ‘have nots’ which counts, but the interest of the entire spinning and textile-consuming world in the new fiber. For as soon as the success of the new spinning materials was made known, even the countries which did not have raw material difficulties started producing it.… The old cotton and wool countries, the United States and England, took up staple-fiber production on a large scale and within the last three years have greatly increased it.” 6

Since 1932, production of cell wool has been rapidly expanded in Germany. Italy and Japan, in order to replace cotton and wool. In 1937, the Reich produced about ten times more cell wool than the United States, Italy 6.8 times more than the United States, and Japan 7.7 times more than the United States.

WORLD PRODUCTION OF CELL WOOL
(In million pounds)7

	US.A.	Germany	Japan	Italy	Great Britain	France	World Total
1929	.5	2.4	—	1.7	2.6	—	7.2
1932	1.1	5.5	.6	9.4	1.2	1.6	19.8
1937	20.2*	220.0	174.8	156.3	32.7	11.3	623.0

(*Preliminary figure of the Bureau of Census)

In pressing for the mass production of cell wool and other synthetic materials, the fascist countries have been motivated neither by a desire to increase productive forces with a view to satisfying previously nonexistent demand nor by the possibility of producing such raw materials more cheaply than the corresponding “natural” products. New factories have been built, or are under construction, as a result of decisions of a government which considers only military preparations important.

In discussing the sudden rise in the production of cell wool in Germany, Italy and Japan, the German Institute for Business Research emphasized the fact that the rise had been due largely to State subsidies and indicated that it was skeptical about the future of the new plants.

The Institute report states:

“General rearmament throughout the world has naturally led to a greater demand for wool.… Only when world rearmament has come to an end and military needs are the normal replacement needs, can staple fiber (cell wool)—when civil demands predominate—be a strong competitor of wool.… Natural wool will probably maintain its position as a ‘heavier’ textile raw material for heavy clothing in colder climates.” 8

In spite of the skepticism expressed by experts, the German government has gone ahead with its plans of rapid extension of cell wool production. In 1935, orders were issued for the immediate construction of four cell-wool factories. They were financed partly by the State and partly by compulsory contributions from the textile companies, the latter being forced to buy shares in the new companies.9 The cell wool industry is confined to seven companies: two of them—I.G. Farbenindustrie, the chemical trust, and Vereinigte Glanzstoffwerke, the largest rayon concern—control over 50 per cent of the total production.10

At the time this development was taking place, other branches of the textile industry increased their production of textile fibers, but this increase did not compare with the increase in the production of cell wool, either relatively or absolutely.

The following table gives some idea of the production of textile raw materials in Germany.

GERMAN PRODUCTION OF TEXTILE RAW MATERIALS

(Official figures—in tons)

 

	1933	1937	1938	1939
Flax	?	26,000	28,000
Hemp	200	6,800	10,000
Natural wool	5,200	7,100	7,500
Artificial silk	28,700	57,500	65,000
Cell wool	5,400	102,000	150,000	225,00011
Reworked wool	9,300	55,000	60,000
Reworked cotton	9,000	37,000	42,000

Only a small proportion of Germany’s consumption of “natural” textile raw materials can be satisfied from domestic production while the home production of artificial silk and cell wool already exceeds the domestic demand.

German production of textile raw materials in 1938 in per cent of consumption (1937)12

Flax	46.1	per cent
Hemp and jute	4.9	per cent
Natural and reworked wool	17.2	per cent
Artificial silk	118.2	per cent
cell wool	142.8	per cent
Reworked cotton	9.3	per cent

According to the German Institute for Business Research, Germany had to import 94 per cent of her supply of textile fibers in 1933. This percentage fell to 83 per cent during the first Four-Year Plan, but this growth in self-sufficiency becomes less impressive if one takes into consideration the fact that even in 1938 the total production of textile raw materials in Germany amounted to only 22.3 per cent of the consumption.

Official statements declare that the quality of certain kinds of cell wool approximates that of cotton and wool. For example, the Saechsische Wirtschaft,13 trade organ of Saxony’s manufacturers, described cell wool in the following manner:

“This new material … is no substitute, no passing fancy, but a well-liked fiber. Previously it was of poor quality, but now it has a tremendous advantage over all natural fibers; its texture can be varied according to specific requirements.”

Companies producing cell wool have reported the development of several types which are as permanently curly, elastic and heat-retaining as natural wool. The I. G. Farbenindustrie claims that its new fiber, “Vistralan,” will react in the dyeing process exactly like wool.

From the technical point of view it may be possible to produce artificial fibers which are superior in quality to cotton or wool, or fibers which have completely new properties. But the important question is not whether cell wool is really an effective substitute for cotton and wool but whether a good quality of cell wool can be produced to sell at a reasonable price. According to all technical experts, the production costs of these materials are so much greater than similar costs for cotton or wool that the mass production of these fibers is out of the question for many years to come. The exorbitant costs of production have been reduced at the expense of quality. But even fibers of inferior quality are more expensive than cotton or wool.

Consumers buying articles manufactured from cell wool are generally disappointed, for prices are higher and quality inferior. The government claims that the new material will soon supersede cotton and wool; that it will be cheaper in price and better in quality. But the consumers are not convinced; they stock up on cotton and wool articles, thereby increasing the scarcity of these materials.

Clothes made from cell wool are generally stiff and heavy and often retain moisture. In commenting on them, a private report declared: “A few years ago the big clothing shops were able to sell a suit made of pure wool for 35 marks. The worker could wear it for years. Today a suit, similar in appearance, costs 50 marks. The suit is no longer ‘pure wool.’ After a short time it looks like a sack. It soon shows wear and the threads look as if they were giving way. A few years ago one saw good overcoats in the shop windows for from 35 to 75 marks. Today the overcoats one sees cost 45 to 75 marks, but they are good in looks only. To get a coat of the former quality one must pay at least 120 to 200 marks.”

In an announcement over the radio, President Kehrl, head of the Office for German Raw and Work Materials, declared that in 1938 capacity of cell wool production had reached a total of 150 million kilograms, or one-third of the previous demand for cotton and wool. He hastened to add that the public must not think cell wool clothes would deteriorate when they were washed, although he admitted that manufacturers often made statements such as, “We cannot guarantee this article as washable.” In future, he declared, the police would forbid this.14

The quality of cell wool articles is undoubtedly higher than it was a few years ago but the price still is higher than former prices for similar wool articles. The tensile strength on which the quality of the yarn depends has been increased thirty and more per cent. In September, 1937, the Price Commissar forced a reduction of the cell wool price over the protests of the cell wool firms. German cell wool firms claimed that high costs of production plus heavy investment risks made it impossible to reduce prices. Nevertheless the price was reduced 9.3 per cent. Simultaneously the compulsory admixture of cell wool with cotton yarn in the finished product was increased from 16 to 20 per cent. Naturally the cheaper qualities disappeared from the market, while higher-priced articles were available in quantity. Unfortunately, the higher-priced articles of “better quality” were hardly as good as the previous cheaper quality had been.

Before the introduction of cell wool, Augsburg cotton yarn cost 1.33 marks a kilogram; today, mixed with cell-wool yarn, it costs 2.07 marks, a price increase of almost 60 per cent and a simultaneous decrease in quality.

Mass production of cell wool has increased the demand for wood. But “the raw materials wood and skimmed milk (likewise used in the manufacture of cell wool) are not available in unlimited quantities, and furthermore wood does not grow in a short time …” 15 In 1937, the Government decreed that 50 per cent more timber should be supplied from German forests than was supplied previously, in spite of the fact that such excessive lumbering is bound to have disastrous effects on German forestry.

The supply of wood from German cuttings has been increased from 25 million cubic meters annually (1925-1929) to 39.0 million in 1937, and about 45 million cubic meters in 1938.16

In the long run, this means the depletion of German forests, all the more so as the demand for wood as a substitute for other scarce materials increases. The Government has therefore decided that production of synthetic fibers shall not be expanded beyond the point where such fibers represent more than 20 to 25 per cent of the total textile consumption.

Yet the army needs wool for uniforms. Large subsidies, therefore, were paid to farmers in order to make sheep herding more attractive than the raising of cattle. Sheep-raisers were guaranteed a domestic price for their wool which was two and a half to four times as high as the world market price. In addition, they received long-term State credits on easy terms for the purchase of sheep. Fifty years ago the change from sheep breeding to the raising of cattle and grain was considered a sign of progress. Today the Government is paying a subsidy to those who are willing to use their land for sheep.

It would be futile to build a huge air fleet and construct thousands of tanks, armored cars, etc., unless sufficient gasoline were available to operate them. Consequently, the Nazis have expended great efforts in an endeavor to increase the domestic production of gasoline, and these efforts have shown remarkable results. German official reports claim that 100 per cent self-sufficiency in gasoline can be achieved through synthetic production, but this assertion is contradicted by the Reich’s violent drive for control of foreign petroleum resources.

According to the German Institute for Business Research, in 1937 Germany produced 36 per cent of the mineral oils (natural and synthetic products) she consumed, as against 20 per cent in 1935. In 1939, Germany will probably produce 50 per cent of her requirements. It is, however, very significant that domestic production of “gas oil” (Diesel oil), especially important for warfare, is relatively small and amounted to only 8.7 per cent of consumption in 1937.17

GERMANY’S SUPPLIES OF MINERAL OILS

	Total Consumption	Production from Domestic Raw Materials
	(1,000 tons)	(1,000 tons)	(In % of total consumption)
Gasoline	2,345	1,220	52.0
Diesel oil	1,385	120	8.7
Kerosene oil	89	40	44.9
Fuel oil	791	320	40.5
Lubricants	540	140	25.9
	5,150	1,840	35.9

Yet the rise in gasoline production is quite impressive in view of the fact that Germany possesses no important natural crude oil resources. It should be remembered, however, that the whole economy of the country has to pay a heavy toll to support domestic gasoline production.

The price of synthetic gasoline is four times that of the world market price for natural gasoline, despite the huge subsidies paid the producers of the synthetic product.

According to the calculations of Dr. Rudolf Regul,18 the cost of production of synthetic gasoline from coal amounts to about four times the cost of production of natural gasoline.

The German consumer has to pay for imported gasoline:

	In marks
World market price for 91.5 liters of imported gasoline (includes expenses for transportation)	6.70
Import duty	18.35
Turnover tax	.47
Compulsory admixture of German alcohol (8.5 per cent)	3.00
	28.52

Furthermore, the importer and salesman have to make a profit, so that the final price is more than four times the world market price.

In theory it is possible to extend synthetic gasoline production almost indefinitely. But the national economy cannot live merely on gasoline. German military experts are, however, inclined to make heavy inroads into the economy of the country in order to assure a greater supply of gasoline during wartime.

Self-sufficiency of mineral oils in peacetime would not assure self-sufficiency in wartime. According to German experts in war economy, the army air force and navy would absorb over seven million tons of gasoline or fuel per year in wartime, in addition to the present peacetime consumption of five million tons. Even this estimate has been criticized as too low. It is asserted that gasoline and fuel consumption of a “big power” waging totalitarian war would jump to three or four times its peacetime consumption.19

Buna

Rubber is another key product needed in vast quantities both in war and in peace, as a result of the growing motorization of transport. Natural rubber does not grow in Europe. During the last World War, the urgent need for rubber compelled Germany to produce synthetic rubber and to use it despite its high production costs and the many deficiencies in quality. But as soon as the World War ended, synthetic rubber production was discontinued.

Present conditions have again intensified the efforts of German experts to solve the problem of synthetic rubber production. A new German synthetic rubber—called Buna—is to play the role in its field which cell wool plays in the textile field. Buna is supposed to be as good as or better than natural rubber, and in certain cases this seems to be true. However, the “better quality” of synthetic rubber—especially its greater hardness—tends to complicate the manufacturing process. When Buna was first introduced, German manufacturers estimated that they required nearly four times as much machinery to work with it as with natural rubber. Since then, technical developments have decreased this proportion 20 but, according to German experts, costs of production are still at least three times higher than those of natural rubber. Huge investments in plants for the production of Buna have been made, although, from the point of view of economy, the process has not yet reached the mass-production stage. Production has been made possible only by huge subsidies and “conscription” of capital.21

As a matter of fact, consumption of rubber has grown more than the production of Buna. Although Germany can produce over 25 per cent of her needs, she is now importing more natural rubber than formerly, before production of Buna was started. Imports of natural rubber in 1938 were 66.6 per cent higher than in 1933, at the beginning of the first Four-Year Plan. It is expected that Buna production can be extended to about one-third of Germany’s rubber requirements in 1939-40.22

What a price has to be paid for this 25 or 33 per cent self-sufficiency! In 1937, a hundred per cent ad valorem duty was imposed on rubber imports. This yielded 160 to 170 million marks yearly. The price of natural rubber has increased more than 100 per cent, yet Buna still costs over 60 per cent more than natural rubber and nearly four times as much as rubber abroad.

Before foreign natural rubber passes the German customs it costs about one-third of the sales price in Germany. Yet three times the world market price for natural rubber is insufficient to cover the costs of production of synthetic rubber. The German producer therefore gets a subsidy of almost twice the world market price in cash from the Government—in spite of which, private producers complain that production is not profitable.

Germany spent 80 million marks for the import of rubber in 1938. Home production of this rubber would have cost about 400 million marks.

In addition, every industry using rubber has had to buy new machinery. The opinion of German capitalists on this matter was expressed by Die Braune Wirtschaftspost as follows: “Relative risks in the rubber industry are very high … because the shift [from natural rubber] to Buna means losses in many cases …23

Synthetic production of rubber might soon be resumed in all industrial countries, but it is improbable that buna will become of decisive importance. Its production is complicated and expensive and better processes might be discovered.

“Development of a process for making a synthetic rubber from butane was announced today by Dr. Gustav Egloff, director of the research laboratories of the Universal Oil Products Company, who said the process had been advanced to the stage of commercial utilization. Their synthetic rubber has wearing properties superior to those of natural rubber, and he added that .its costs will enable it to compete with natural rubber for many uses.

“The synthetic product developed in his laboratories is better and cheaper than the ‘buna’ rubber produced in Germany, Dr. Egloff said. The German material is made by a process which starts with acetylene, a synthetic hydrocarbon which must be manufactured from calcium carbide in an electric furnace process, while the American process starts with a gas so plentiful that it is almost a waste product in some oil fields and is also produced as a by-product in refinery processes.” 24

Other Substitutes

There are many other substitutes such as alloys and plastic materials to replace metal, fish skin as a substitute for leather. Much technical genius and hard work have gone into adapting the industrial machine to the use of ersatz. The results have been disappointing—huge investments to produce inferior articles at higher prices.

It is typical that the Nazis should expect the gigantic automobile plant financed by the German Labor Front to become the largest and most modern in Germany. The buyers of the new automobile are not so sure of the value of the product, however, especially when they are compelled to sign a declaration that they have no claim for compensation if the technical standards should not be up to minimum legal requirements. For the new “people’s automobile,” the special pride of the Fuehrer, will be built with ersatz materials.

The absolute power of the State has been used to advance the armament industries and ersatz with such ruthlessness that the decline in other branches of industry has been accelerated. Germany’s capacity for obtaining foreign currency and raw materials through the medium of exports has also declined. The situation has a momentum of its own. The greater the scarcity of raw materials, the stronger becomes the pressure of the State to extend production of ersatz, regardless of expense and in spite of insufficient technical experience.

For example, at a convention of German soap manufacturers on August 30, 1937, the official speaker, Arthur Imhausen, told those present that synthetic fats would be produced from coal tar, not only for making soap but also for fine quality butter. On another occasion, at an exhibition sponsored by a State-subsidized research institute in Duisburg, a group of peasants who had eaten butter made from coal testified that this synthetic product could not be distinguished from the best natural butter. Unfortunately, realities have a way of interfering with official plans. The trade organ of the German coal experts, Der Kohleninteressent, issued a warning that it would be a long time before synthetic butter could possibly compete with natural butter. Their warning said: “Artificial butter made from coal is a purer fat than natural butter … It is better not to say very much about the question of costs of production …” Earlier, Dr. Bergius, outstanding German expert on synthetic production and inventor of the best known process for the production of gasoline from coal, declared at a meeting at the Haus der Technik in Essen: “The pig is still the best fat producer. We have not been able to discover an industrial process for producing fat so effectively.”