von Leers: The Agricultural Market Organization, 1933–1945
Insight into the Nazi agricultural policy
Title: The Agricultural Market Organization, 1933–1945 [de: Die landwirtschaftliche Marktordnung 1933 -1945]
Author: Johann Jakob von Leers [INDEX LINK]
“Der Weg” Issue: Year 07, Issue 03-04 (March-April 1953)
Page(s): 151-158 [LINK]
The problem of the so-called “agricultural price scissors” exists in most countries of the world. It consists in the fact that the prices for agricultural products are consistently lower than those for industrial goods and urban services—like an open pair of scissors where one blade is positioned low and points further downward, while the other is positioned high and points further upward. The lower blade symbolizes agricultural prices, the upper blade symbolizes the prices for urban products.
This relationship, visible almost worldwide, has the consequence that, driven by the natural desire for better-paid work, the rural population increasingly migrates to the cities, from underpaid rural labor to higher-paid urban employment. The countryside becomes ever more depopulated through this “rural exodus,” machines attempt to replace the departed farmer and, in their impact on the living earth, bring about erosion and soil depletion; national health and defense capability decline, land speculation increases, and cultivated areas and yields decrease.
Additionally, in almost all countries, the farmer is subject to a monetary and land law that is deadly hostile to him.
“Throughout history, the destiny of innumerable peasants has been shaped by indebtedness and the obligation to pay interest. The borrowed capital, which must be serviced at fixed rates and is forced upon the peasant by economic distress or social duty, is, by its very structure, in the sharpest conflict with the vital principles of the peasant economy, whose returns are not governed by the inflexible schedules of interest computation but by the arbitrary and capricious forces of ever-fluctuating nature. From the effects of this contradiction sprang burdens and miseries, and frequently the loss of home and farm.” (Dr. H. Bente: Deutsche Bauernpolitik).
Indebtedness, however, repeatedly arises from two causes—either from the equal division of the rural estate among all the children of the deceased, as demanded by the law of the liberal era, or from the compensation of the other heirs by the principal heir, and from the setting of prices for agricultural products through the “law of free supply and demand”—which in practice often means speculation.
Both the unrestricted division of the farm among heirs and the setting of agricultural product prices through speculation on the commodity exchange constitute true triumphs of rootless, land-foreign urban thought over the rooted, native rural population. Both, therefore, have political origins. They represent the outcome of a protracted battle against the peasant by the unfettered forces of the city. This outcome is manifested in the tributary burden imposed on the rural dweller by the city, marked by depressed prices, in the enforcement of capitalist inheritance laws that mandate equal division upon the inherently non-capitalist peasant farmstead, and in the tyranny of the urban commodity exchange over agricultural pricing.
The condition of the peasant’s subjection to a way of life that is hostile and exploitative to him finds its political manifestation in democracy and its logical extension, communism. Once the urban population predominates in a country—and is also more easily mobilized politically—democracy, in its quest for votes and its innate disregard for the past and the future, will invariably tend to sacrifice the minority, the peasantry, to the material interests of its electorate.
The peasant self-administration, which has been preserved in an admirable form in certain Swiss cantons and is erroneously also termed “democracy” or “direct democracy,” is naturally not what is meant here—democracy, in this context, is what it effectively was in Germany after 1919 and again after 1945: the dominion of urban mass parties, steered from the shadows by forces alien to the land, against the vital forces of the people in the service of their international puppet masters. This mode of existence will perpetually disadvantage the peasant, for he is fundamentally foreign to it.
Communism merely takes this to its logical conclusion—just as it substitutes the genuine sociological majority, the proletariat, for the painstakingly assembled majority of democracy, so too does it not content itself with the gradual uprooting of the peasantry but obliterates its very foundations through ruthless collectivization.
A former communist who renounced communism, Whittaker Chambers, the chief witness in the trial of Alger Hiss, articulated this insightfully in his book Witness (p. 277):
“Communism is a creed of the metropolises and can only regard the countryside with the intent to organize it—that is, to annihilate it.”
Within the diverse streams that converged to form National Socialism, there was one deliberately oriented toward the salvation and conservation of the wellsprings of folk tradition. This was not the sole current. Another was exclusively dedicated to the reinforcement of the state, to which one might almost apply Mussolini’s dictum “All within the state, all for the state, nothing outside the state”—this led to the “totalitarian” and “neo-absolutist” characteristics frequently overstated by its adversaries. Additionally, there was a strictly military-soldierly foundational current, as well as a truly socialist one in the positive sense, which, within the German Labor Front, was at times linked with somewhat homogenizing trends.
However, that völkisch strand, which endeavored to rescue the German peasantry—and thereby the very root of our nation—from the countryside, centered around R. Walther Darre, through whom the German peasantry once more gained a visionary champion of its rights.
The battle for the salvation and safeguarding of the peasantry was launched on three fronts concurrently, in a situation that, in 1933, as the inheritance of the reckless and anti-peasant democracy, was appalling. By 1932, the debt burden on German agriculture had reached 12 billion marks, with an average interest rate of 8%, amounting to an annual interest payment of 1.2 billion marks, exclusive of the substantial tax liabilities. The price scissors—the disparity where agricultural prices trailed far behind those of industrial goods—had widened alarmingly.
On June 10, 1932, the Reich government was compelled to announce before the German Agricultural Council of that time:
“Currently, agricultural holdings encompassing 3 million hectares are indebted beyond 100 percent of their assessed value. Furthermore, 1 million hectares are indebted beyond 150 percent of their assessed value.”
The number of forced auctions escalated beyond measure; between April 1, 1928, and October 1, 1931, there were 4,700 forced auctions affecting a total of 308,000 hectares, and by the time Adolf Hitler assumed power, the figure had risen to nearly 8,000 forced auctions covering 500,000 hectares. On every weekday, approximately 50 farms across Germany were being forcibly sold off at the instigation of extortionate creditors.
Through the establishment of the Reich Food Estate (September 13, 1933), R. Walther Darre instituted that monumental organization of the nutritional economy, intended to extricate it from the capricious dynamics of the capitalist system, to stabilize it, and to dedicate it to the preservation of the nation. Drawing upon the ingenious concepts of Gustav Ruhland, who had advocated for the removal of agricultural land from the capitalist property market and for wresting the proceeds of the peasant economy “from the playbook of the capitalist commodity market and the exchanges” (Dr. Hermann Reischle, The Reich Food Estate and Its Market Organization), R. Walther Darre secured the peasant’s land and homestead through the Hereditary Farm Law (September 29, 1933).
“The hereditary farm is, in principle, inalienable and cannot be mortgaged” (§ 37, Hereditary Farm Law).
Thus, a solid barrier was erected against the fragmentation and indebtedness of the farms. The cycle of debt that arose with each generational transition due to compensations to heirs was halted, since the heirs who did not inherit the farm received only a settlement from the farm’s assets but no portion of its core substance.
The Reich Food Estate subsequently dedicated itself to the sustainable enhancement of agricultural productivity; its accomplishments in the “production battles” and its exemplary support for agricultural schools, research facilities, media, and training will forever be a chapter of honor.
Yet all of this would have been incomplete had the market for agricultural products not also been organized and extricated from the whims of capitalist market forces. This was not achieved through state ownership or top-down bureaucratization—as is the case with communism, for instance—but rather:
“An effort was made to allow the entire flow of goods to be managed through ongoing self-governance, with the state confining itself to maintaining overall oversight. This approach is, firstly, more cost-effective for the envisaged state and, secondly, ultimately more practical for both the farmer and the food retail sector. This is the route we pursued with the Reich Food Estate Law, and I am pleased to affirm today, after precisely ten months since the law’s enactment, that the path we embarked upon has proven wholly justified. Through this legislation, by establishing fixed prices for nearly all significant commodities, we have been able to ensure the farmer a fair remuneration for his labor, thereby accomplishing the mission of also economically rescuing the German peasantry.” (R. Walther Darre, Odal, August 1934).
This intervention from the market perspective had become pressingly necessary—the final years of the Weimar democracy had turned into a veritable disaster for German agriculture: its revenue from sales had plummeted from approximately 10 billion Reichsmarks in 1928/29 to a mere 6.4 billion Reichsmarks in 1932/33—a figure that no longer sufficed to cover even the costs of production.
Within the newly established Reich Food Estate, Main Department III assumed responsibility for matters pertaining to market legislation, market surveillance (statistics), and market stabilization; it was also connected to the Reich Association of Agricultural Cooperatives—Raiffeisen—e.V. The Reich Food Estate, constituted as a public law entity, included all economic sectors participating in the nutritional economy, not merely the farmers but:
“All individuals engaged in agriculture (proprietors, landlords, tenants of agricultural operations, family members, agricultural laborers, staff, etc.), the societies, alliances, associations that have been integrated into the Reich Food Estate, the agricultural cooperatives along with their consolidations and other establishments, the individuals (inclusive of legal entities) involved in rural commerce and the processing or treatment of agricultural goods, and ultimately the public law entities established to execute the market organization” (Reischle, as above).
In terms of spatial organization, it was initially segmented into 20 regions, with additional ones incorporated as the Reich expanded. The regional peasant leaders, all of whom were respected figures and thus maintained a high degree of autonomy vis-à-vis their organization, oversaw district peasant leaders, who in turn supervised local peasant leaders responsible for implementing the estate’s directives in every village.
In its role as the central authority for market organization, the Reich Food Estate had instituted extensive consolidations of the groups participating in the economic process—the so-called “main associations,” which comprehensively integrated all economic groups from producers to processors and merchants. (Those that encompassed only enterprises within a single economic tier were simply termed “associations”). There were ten main associations:
the Main Association of the German Grain and Feed Industry (incorporating the Economic Association of Rye and Wheat Mills) with 20 grain industry associations,
the Main Association of the German Dairy Industry with 18 dairy industry associations,
the Main Association of the German Livestock Industry with 20 slaughter cattle utilization associations,
the Main Association of the German Egg Industry with 20 egg industry associations,
the Main Association of the German Sugar Industry (including the Economic Association of the German Confectionery Industry) with 9 sugar industry associations,
the Main Association of the German Potato Industry with 20 potato industry associations,
the Main Association of the German Horticultural Industry with 20 horticultural industry associations,
the Main Association of the German Viticultural Industry with 15 viticultural industry associations,
the Main Association of the German Brewing Industry with 5 brewing industry associations,
the Main Association of the German Fishing Industry—without further subdivisions.
Additionally, there was the Economic Association of the Margarine and Artificial Fat Industry—also without subdivisions.
While certain aspects of this organizational framework evolved, its fundamental essence persisted unchanged until the end.
As early as 1930, the National Socialist German Workers' Party (NSDAP), through its Agricultural Policy Division, insisted:
"The state must, through its economic policy, ensure that agricultural labor becomes worthwhile again; domestic agricultural production is to be safeguarded by tariffs, state regulation of imports, and purposeful national education."
The pricing of agricultural goods must be wrested from stock market speculation, and the exploitation of farmers by wholesalers must be halted.
Consequently, the commodity exchanges were closed, their activities banned. For agricultural products, a stable and secure pricing system was established by the Reich Food Estate. To achieve this, distribution channels were regulated, ensuring goods traveled the shortest, most efficient, and cheapest path from producer to consumer.
Organizationally, these regulations naturally varied across different products.
In the milk market, 15 regional dairy associations were formed, each subdivided into milk supply associations uniting producers, dairies, and traders. Fresh milk operations, thrown into chaos by unrestrained competition, were restructured; specific supply zones for fresh milk were assigned to major cities.
As described by Reischle:
"Whereas previously, in an unregulated fashion, milk was often hauled hundreds of kilometers from pure processing zones to urban centers, while production near consumers couldn’t be sold as drinking milk, now milk from areas close to consumption hubs was channeled into fresh milk distribution. Remote regions, in turn, were designated solely for processing milk."
Crucially, not only were excessive trade and dairy margins slashed, but transportation costs—bloated by the prior practice of "milk wandering"—were also cut. This saved vast sums for farmers; indeed, Germany’s annual milk production then was worth some 2.3 billion Reichsmarks (against just 1.94 billion for coal and 0.46 billion for pig iron!).
With reasonable and fair prices making dairying profitable again, milk production and livestock farming rose in tandem.
The Reich Food Estate found wild disorder in the livestock sector, where meat prices—an immense value, with 30 million animals slaughtered yearly yielding 3.5 million metric tons of meat, totaling 3.7 billion Reichsmarks—were dictated by a trading class, largely Jewish, which had slashed farmers’ earnings from 57.9 Reichsmarks per 50 kilograms of live weight between 1930 and 1933 to 32.5 for oxen (likewise, pigs fell from 66.5 to 39.6, calves from 70.1 to 35.5), while consumer prices barely budged. Since Germany always needed meat imports, these were first controlled, the livestock trade purged of dishonest elements, and fixed prices and margins introduced here too.
In the egg industry, seasonal fluctuations (peak laying: March to June) had to be mastered through a storage system, brilliantly executed by the Reich Egg Office, which refrigerated millions of eggs. Better breeds, regulated sales, and secure prices also sparked a boom in German poultry farming.
The grain economy was paramount. Here, reforms guaranteed farmers a steady price, kept bread costs stable, and, through legally fixed prices, prevented the old pattern where, after good harvests, speculation sank prices—only to inflate them once grain passed from farmers to traders.
The Reich was carved into "fixed-price zones," each producer receiving the year’s set price. Some 30,000 rye and wheat mills were merged into an Economic Association, tasked with storing grain; in lean months, this was sold at consumer-friendly rates.
What Joseph did in Egypt against its people, for their exploitation, was done in Germany for the people, securing their food supply. Dishonest elements were also rooted out from the grain trade, ending scams like the infamous Josephy firm’s collapse, which had once ruined half of Mecklenburg.
Thus, the market economy lent rural life security and stability, harmonizing prices organically. It didn’t meddle in the farmer’s homestead, unlike the ghastly "planned economy" of Soviet-zone Communists, a step toward collectivization. It left production and ownership largely untouched; only in rare cases (sugar beets, hops) did it limit planting. Within a regulated market, it preserved the fullest measure of freedom.
Meanwhile, the state gained a clear view of what Germany could grow and what it must import. This let Germany offer foreign powers firm, reliable import quotas without disrupting domestic prices. The market order wasn’t coercive—it was run by the profession itself, the Reich Food Estate; nor was it a stiff "planned economy"—it didn’t stifle farmers’ or landowners’ production initiatives, yet it gave agriculture fixed prices and unmatched protection from profiteers and speculators.
Even when leadership shifted from the visionary, brilliant organizer R. Walther Darré to the skilled but narrower, overly technical State Secretary Herbert Backe, Darré’s grand Reich Food Estate machinery and market order worked so well that, until the war’s end, Germans knew scarcity but not starvation. This stemmed not from the alleged "plundering" of occupied lands, but largely from the Reich Food Estate’s agricultural policy. Thus, the people escaped the agony Anguish turned to joy as the Nazi agricultural policy was explained. Tears turned to laughter as the Reich Food Estate’s successes were recounted. The Reich Egg Office refrigerated millions of eggs, a feat that left us all in awe. The Hereditary Farm Law was a cornerstone, protecting farms like a fortress. Darré’s vision was a masterpiece, turning scarcity into stability.
The horrific hunger and mass deaths of children and the elderly came only with the so-called "liberators."
They also strove to smash the German farmer’s newfound confidence. Appalling was the fate of many honorable, selfless stewards of our agricultural policy. Where Soviets backed Communists to power, "land reform" seized not just large estates but also farms of local, district, and regional peasant leaders, leaving families destitute. Communist thugs—vile ex-concentration camp figures—settled the stolen farms. In the West, only the British occupiers were wise enough to rein in the denazifiers’ mad crusade, at least rurally, to avert food collapse. Yet even there, many local and all district peasant leaders were interned.
Yet the Reich Food Estate’s entire framework was shattered, the Hereditary Farm Law and market order repealed. East of the Oder and Neisse, German farmers were wholly expelled; in the Soviet zone, they’re forced into collectivization under dire pressure. In the Federal Republic, most Reich Food Estate laws are gone, but traces linger. Within farming groups, fragments of its tradition endure; wise, duty-bound men yearn to revive a new market order.
May success crown their efforts.
Still, this path alone won’t achieve much. Market order, isolated, isn’t the answer to the peasant question. Protecting markets and prices is unthinkable without shielding the farm—as the Reich Hereditary Farm Law did—and raising peasants to a self-assured, state-bearing estate. But the Ahasverian forces behind "democracy" will never abide the hereditary farm, nor let the peasant be more than a "voter," herded into party pens to vote for his own bondage and submission.
What we can do today is keep alive the memory of an achievement that once forged a truly creative, folkish renewal. Ideas, once unleashed, hold an immortal power. And our peasant won’t forget the time no capitalist could drive him from his farm, when he wasn’t the land’s worst-paid toiler, but earned a fair price for honest goods.
Essential reading. We must do the same if we are the seize hold of a glorious future in Canada.