Attacks on Berlin Department Stores (Warenhaeuser) After 1933 (Part A)
Source: Simone Ladwig-Winters , International conference: German Society's Responses to Nazi Anti-Jewish Policy 1933-1941, Yad Vashem, 10-13 February 1995.
Georg Wertheim, the head of one of the four largest German department store chains in the 1920s and 1930s, noted in his diary: "1 January 1937 - the store is declared to be "German.ΓÇ¥ 1 This entry marks the forced end to his activities in the business that he and his family had worked hard to build up 2 .
Roots
In 1875, Georg's parents, Ida and Abraham Wertheim (who sometimes went by the name Adolf), had opened a modest shop selling clothes and manufactured goods in Stralsund, a provincial town on the Baltic Sea. An extensive network of family members ensured a low-priced supply of goods. In 1876, one year after the shop opened, the two eldest sons Hugo and Georg (aged 20 and 19 respectively), went to work in the shop following their apprenticeships in Berlin. Three younger sons later joined them. The business was called "A. Wertheim" after the father, who increasingly withdrew from active management of the business. Guidelines were introduced into the business that had been known outside of Germany for some time but were innovative in German retailing. These included: "low profit margins with high sales and quick inventory turnover; a broad and varied selection of merchandise; fixed prices (price tags on the goods); viewing of merchandise without a personal, psychological obligation to buy; exchanges - even a right to return goods - and above all, payment in cash." 3 Particularly the last was an important innovation, because trade in Germany until then had been based extensively on the principles of borrowing and haggling. With the new business methods, which other businessmen soon began to implement as well, the small shops experienced a rapid upturn and were soon able to expand their product assortment until they became small Warenhaeuser , or department stores.
Wertheim's growth was part of a broader development in German retailing. Following the Industrial Revolution it had become necessary to modernise trade. Mass products were being produced that also had to be sold on a mass scale. The Warenhaus - the site where mass products were sold - was the retail equivalent to the factory in the production area. Other forms of large-scale retail enterprises emerged as well, such as single-price variety stores, junk shops, mail-order businesses, consumers' co-operatives, and another sort of department store, the Kaufhaus . A careful distinction was drawn between the Kaufhaus and the Warenhaus . Both aimed at high sales, particularly in Berlin, the capital of the newly founded German Reich, which was growing by leaps and bounds. However, the Kaufhaus concentrated on one sector, usually clothing, while the Warenhaus stocked a wide variety of goods.
Beginnings
Wertheim was the first store of its type to open for business in Berlin. Previously, only Kaufhaeuser had flourished in the capital, such as N. Israel, Rudolph Hertzog, and Gebrueder Gersons. Wertheim met with grand success in Berlin as well. Business was so good that in 1893 and 1894 a building was constructed on the Oranienstrasse in Kreuzberg to accommodate a new Warenhaus . Three additional buildings were to follow, including one on the Leipzigerstrasse that caused a public sensation. Criticism - much of which was antisemitic in tone - soon accompanied this success. Nearly all the founders of Warenhaeuser happened to be Jews. Attempts were now made to defame the Warenhaus as a new type of business. The pejorative term "bazaar" was applied to it, although the practice of fixed prices contradicted the stereotype of "oriental" trading. Nor did the so-called socialist danger that allegedly emanated from the Warenhaeuser have any basis in reality 4 . The merchants of the commercial middle class and their various professional associations used these tactics in an effort to prevent further expansion of the Warenhaeuser .
This went so far that in 1900 Prussia (and other German states), introduced a tax that only Warenhaeuser had to pay. This tax applied to the sales of Warenhaeuser that had an annual income exceeding RM 400,000. Kaufhaeuser , some of which achieved significantly higher sales, were exempted from this measure. In addition, a variety of building and fire-code regulations were instituted that went far beyond the usual degree of safety precautions for public buildings 5 . The working conditions of employees were also attacked, for reasons of health and as a purported danger to morality. Ironically, A. Wertheim had made extraordinary efforts to set especially high social standards. The company was the first to introduce Sunday as a day of rest for all employees. In spite of these efforts, Wertheim was attacked in the press 6 . And in light of the company's prominence in Prussia, the Warenhaus tax was to be seen as a "lex Wertheim."
In fact, with its department stores, Wertheim had created a new concept of shopping that went along with changing consumer behaviour. There had developed "a body of consumers able and willing to buy above the line of necessity." 7 Bright, airy, and lavishly designed stores with correspondingly decorated wares, and friendly salespeople who went out of their way to help the customer transformed shopping into an experience. The "democratisation of consumption" 8 had been a necessary precondition for expanding the clientele of department stores. Wertheim's outstanding success was due to its presenting an astute mix of mass products and luxury articles. And every customer was warmly welcomed - as long as he or she was able to pay.
Indeed, the vehement agitation contributed in part to this success, since customers were curious as to what was really happening - and were exceedingly impressed, as Wertheim's growth in sales attests 9 . The business prospered, sales space underwent further expansion, and more personnel had to be added. Competition increased too, as other enterprises such as Hermann Tietz and Jandorf opened stores in Berlin.
The Warenhaeuser Flourish
Though Wertheim remained the top Warenhaus in Germany throughout the first decade of the century, the ranking within this sector changed during the 1920s. Now the enterprises with the highest sales were Karstadt and Hermann Tietz (which had been founded by Oscar Tietz with the financial backing of his uncle Hermann Tietz), followed by Leonhard Tietz, Wertheim, and Schocken.
Ranking of the German Warenhaeuser , Late 1920s and Early 1930s 10
Stores
Employees (1930),
Sales (1928), in RM
Karstadt
91
23,428
300 million
Hermann Tietz
18
16,458
300 million
Leonhard Tietz
40
15,000
190 million
Wertheim
7
10,450
128 million
Schocken
18
5,067
88 million
Concentration had advanced. The most dramatic break occurred in 1927 as the result of the takeover by Hermann Tietz of Adolf Jandorf's business, including the KaDeWe. The take-over effort and its defence significantly depleted capital. In addition, the tax burden placed tremendous pressure on these companies 11 . S erious problems ensued in all Warenhaeuser, that were further exacerbated by the world economic crisis, which led to the collapse of several banks and a major decline in purchasing power.
In addition to this, increased antisemitic tendencies marred public life again in the 1920s. The NSDAP agitated against the Warenhaeuser and called for a boycott. In the wake of the inauguration of the first Reichstag that included delegates from the NSDAP, Wertheim was physically attacked. Stones shattered the display windows 12 . The Warenhaeuser took legal steps to defend themselves 13 , but legal tactics could do nothing to hinder the discussion that was already underway on prohibiting the expansion of large retailers 14 . In December 1932, an emergency decree did in fact impose a general ban on the establishment, expansion, or relocation of variety stores 15 . The law took no heed of the fact that large retailers accounted for a very small proportion of retail sales.
Re-Sales 19 16
Germany
USA
In billion RM
% of total sales
in billion RM
% of total sales
Small and Specialty Shops
28.2
80.6
105.0
56.7
Hawkers, Junk Dealers, and Street Markets
2.2
6.3
4.2
2.3
Department Stores
1.5
4.3
29.4
16.0
CCo-ops
1.4
4.0
0.84
0.4
Mail-order Firms
0.35
1.0
6.72
3.6
Other
1.35
3.8
38.64
21.0
Total
35.0
100.0
184.8
100.0
In the above table, the variety stores are categorised as "other." With respect to the Warenhaeuser , however, it must be clearly emphasised that they never attained more than a 4.8% share of retail sales before 1933. Nevertheless, the abolition of the Warenhaeuser constituted Point 16 of the NSDAP program.
Attacks on the Warenhaeuser Intensify
After the National Socialist seizure of power in 1933, these businesses - together with Jewish shop owners, physicians, and lawyers - came under ever harsher attack from propaganda and calls for boycotts. During the nation-wide boycott of 1 April 1933, the Warenhaeuser remained closed for the entire day, although customers stood at their doors demanding entry 17 . The members of the executive board of the Association of German Department Stores E.V. had to resign their posts at the end of March due to enormous pressure 18 . Their successors took office with the aid of Emil Georg von Stauss, a representative of the Deutsche Bank 19 . They, in turn, had already been replaced in May by persons who had stronger ties to the National Socialist party. The public - including the international community - was led to believe that business was proceeding completely as usual, even after 1 April 1933.
The Betriebszellen (NSBO ), the local National Socialist representatives within each enterprise, ordered on 1 April that the Warenhaeuser deposit two months salary as security for each non-Jewish employee 20 . Had this demand been implemented, all Warenhaeuser would have immediately had to file for bankruptcy 21 . Since this was to be avoided at all costs, officials quietly dropped this demand, and substituted it by a declaration that did not require compliance under labour law 22 .
In the following months, an unofficial struggle broke out within the party over the " Warenhaus question." The creditor banks demanded a clear resolution. Hess (23) ordered a halt to the harassment of Warenhaeuser in order to preserve the thousands of jobs that they provided. Even then, attacks continued to occur, especially in the provinces, and in Breslau above all 24 .
In September 1933, the Ministry of Economics issued a definition for " Warenhaus " in contrast to " Kaufhaus ." According to this definition, a Warenhaus was 'a marketing outlet … in which goods of many types that do not belong together, including groceries, are offered for sale.' 25 The presence of a grocery department or cafeteria gradually became the decisive criterion as to whether an establishment was a Warenhaus , or only a significantly less attractive Kaufhaus . Despite this regulation, for many years official policy remained unclear as to whether Warenhaeuser as such, or only those belonging to Jews, were to be treated as an undesirable retail branch.
After the Gleichschaltung , not only Warenhaeuser but also Jewish businesses of all sorts were forbidden to place advertisements in the press. This had far-reaching consequences, as customers could no longer keep abreast of special sales. For despite all the political agitation, Warenhaeuser remained business enterprises, interested above all in selling their merchandise. And they managed to do this in the face of all opposition. By 1933 a shopping ban had not yet been enforced and even "persons in uniform" - that is, National Socialist party members - continued to patronise the Warenhaeuser 26 . When fanatical salespeople of other shops denounced uniformed party members for shopping at Warenhaeuser or refused to serve them, this was deliberately played down by management and by the Ministry of Economics. The propaganda apparently had not yet affected party members to the extent that they would refrain from shopping in Warenhaeuser .
In general, the April boycott cannot be said to have caused the collapse in sales that might have been anticipated. Beginning in 1930, monthly sales in the Warenhaeuser continually declined in comparison to the months of the preceding year. Only in April 1933 did they reach practically the same level as the year before 27 . While the Warenhaeuser attained between 94% and 97% of the previous annual figure during 1933 (the exact figures vary depending on their source, the Institute for Research on the Business Cycle or the Research Office for Trade) 28 , Wertheim's Berlin stores suffered an additional decline of about 10 percent 29 . Still, this development turned around, at least for Wertheim, by 1935 30 . When the Warenhaeuser are compared with the Kaufhaeuser, the Kaufhaeuser come out ahead, at least until the end of 1936 31 . This may appear to be evidence of the effectiveness of the propaganda against Warenhaeuser . Yet, there are other compelling reasons why the Warenhaeuser performed poorly. For example, in the summer of 1933 the Ministry of Finance issued guidelines for granting low interest loans to newlyweds (Ehestandsdarlehen ), authorised by the Law for the Promotion of Marriage 32 . These loans were awarded in the form of purchase coupons instead of cash; Jewish businesses and Warenhaeuser (irrespective of whether the owner was considered to be Jewish), however, were not permitted to redeem these coupons. In addition, special tax breaks were instituted for businesses that handed out Christmas bonuses in the form of purchase coupons. I.G. Farben, for one, took advantage of this arrangement; but these coupons, too, fell under the regulation that prohibited them from being redeemed in Jewish businesses or Warenhaeuser . It is nearly impossible to estimate how much income was lost in this way. One source, a letter from the Ministry of Economics to the Ministry of Finance, dated 29 January 1934, criticises this regulation and approximates a sales volume of RM 135 million for the year 1934 33 . The importance of the measure can be assessed on this basis alone. Sources further indicate that the total for 1933 clearly exceeded RM 135 million.
Moreover, the purchase coupons plainly directed consumption toward durable goods (e.g., furniture, ovens). Also, public authorities invested more heavily than before in merchandise from the photography, communication, and vehicle industries, which previously had been sold in part through the Warenhaeuser . Since such sales were illegal, these stores lost considerable income due to political manipulation.
"Aryanization" of the Hermann Tietz Group
The conflict surrounding the Warenhaeuser soon affected their ownership status as well. The Hermann Tietz Group was the first in which changes in management occurred in response to pressure from the creditor banks. At the beginning of 1933, the group needed an additional loan to the tune of RM 14 million. The business had experienced declines in sales of up to 41 percent (in Dresden), during that year, with particularly severe losses in its many provincial stores due to the fact that fixed costs remained relatively high 34 . After an initial agreement with the consortium of banks involved - which comprised the Akzept- und Garantiebank, Deutsche Bank und- Disconto-Gesellschaft, Dresdner Bank, Hardy & Co. und Commerz-und Privat-Bank 35 - approval of the loan was made contingent on Hertie, a newly founded company led by Georg Karg, becoming part of the management for procuring credit and the "establishment of Aryan predominance in management." 36 Karg, in turn, was dependent on the banks since he could offer security only in the amount of RM 50,000 37 . A family member in management, Hugo Zwillenberg, was forced to leave the business immediately. In the following months, auditing firms examined the various businesses of the group. During this time, the remaining brothers, Georg and Martin Tietz, were personally responsible for the property and obligations of the group. By mid-1934, after almoa year, the entire had been accounted for, and Geand Martin Tietz were forced to resign. The family members, who had built up the giant group, received a total of about RM1.2 million as compensation for the whole enterprise. During this entire time, their opponents had searched for ways to saddle the two brothers with continued liability without conceding them any decision-making power. In 1934, however, they came to the conclusion that this was not possible, and the two were pushed to resign 38 . The loan had been disbursed already in 1933.
References:
1. In addition to archival material of the Deutsche Bank, available in the Bundesarchiv Postdam for the first time in the wake of reunification, I was able to use the copy of Georg Wertheim's diary in the Archiv Stuerzebecher (cited in the following as: Wertheim, Diary ). I am grateful to Georg Wertheim's son for permission to use this material. The unpublished diary has three parts: a family history that must have been compiled around 1905; a chronological diary that notes important business events but focuses primarily on personal events such as travel, illness, and the like; and some comments by Georg Wertheim on his relationship to Kaiser Wilhelm II.
2. This article is based on my dissertation, which goes into greater depth on the complex of problems discussed here; see Simone Ladwig-Winters, Wertheim ΓÇö ein Warenhausunternehmen und seine Eigentuemer. Ein Beispiel der Entwicklung der Berliner Warenhaeuser bis zur ΓÇ¥Arisierung,ΓÇ¥ Muenster, 1997.
3. Peter Stuerzebecher, "Warenhaeuser,ΓÇ¥ in: Berlin und seine Bauten , Architekten- und Ingenieurverein zu Berlin, ed., Berlin, 1978, part VII, vol. A, p. 4.
4. Dr. F. Wollny, "Die Frage der Warenhaeuser,ΓÇ¥ in: Berliner Fragen ΓÇö Etwas auf dem Weg in das neue Jahrhundert , Berlin, 1901, pp. 110-111.
5. Stuerzebecher,
6. Wertheim, Diary, pp. 26, 27.
7. David Landes, The Unbound Prometheus , Cambridge, Mass., 1969, p. 243.
8. For a detailed account of this, see Klaus Strohmeyer, Warenhaeuser , Berlin, 1980, p. 80; see also Ladwig-Winters, Wertheim , p. 37.
9. According to Georg Wertheim's sales account book, which can be found in the Archiv Stuerzebecher, sales rose from RM1.3 million in 1890, the first year business was conducted in Berlin, to RM33.6 million in the year 1901!
10.The information in this table was drawn from a variety of sources; on Hermann Tietz, its sales, and its number of stores, see Hermann Tietz, Warenhaeuser ΓÇö ein Spiegelbild volkstuemlicher Verkaufsstaetten , vol. 31 of the Industrie-Bibliothek, Berlin, 1928, p. 83. The information was derived from other information, since this source is very reticent in providing particulars. For Wertheim, the information was taken from the sales book. Otherwise, see Heidrun Homburg, "Warenhausunternehmen und ihre Gruender in Frankreich und Deutschland oder: eine diskrete Elite und mancherlei Mythen,ΓÇ¥ Jahrbuch fuer Wirtschaftsgeschichte (1992), p. 208.
11.In 1932, the Wertheim company applied to defer its payments on its tax debt, but the application was rejected; Bundesarchiv, Abt. Potsdam (hereafter BAP), R 80 Ba 2 P 5200, Doc. 16, Georg Wertheim's statement to the banks from the year 1936.
12.Wertheim, Diary, p. 72.
13.The protective society of the larger businesses ( Schutzgemeinschaft der Grossbetriebe und verwandter Gruppen e.V .), made the various decisions jointly; see BAP Reichswirtschaftsmininsterium (RWM), P 13859, Doc. 3-18, entitled "Der Boykott in der Judikatur.ΓÇ¥
14.ADGB-Restakten, Archive of the former HistorischKommission zu Berlin, NB 430, Doc. 004 from 3 Ma1932, "Arbeitsbericht des Vorlaeufigen Reichswerberates.ΓÇ¥
15.Heinrich Uhlig, Die Warenhaeuser im Dritten Reich , Cologne, 1956, p. 207.
16.ADGB-Restakten, Historische Kommission zu Berlin, NB 429, Doc. 014, n.d.
17.Ladwig-Winters, Wertheim, pp. 111-126, 161.
18. Interview with Ulrich A. Tietz, son of the chief executive Leonhard Tietz, in November 1994, New York; see also Uhlig, Warenhaeuser im Dritten Reich , p. 76.
19.Uhlig, Warenhaeuser im Dritten Reich , p. 76; but also BAP R 80 Ba 2 P 24404, Aktennotiz Stauss/Frank from 13 March 1933.
20.Comité des Délégations Juives, ed., Das Schwarzbuch , Paris, 1934, p. 365.
21. Das Schwarzbuch , p. 366.
22.Supplement to the Hannoverschen Anzeiger, 4 February 1933.
23. Central Verein Zeitung, 23 November 1933.
24.See Chronologie, Ladwig-Winters, Wertheim , p. 457-458.
25.BAP, RWM 31.01 P 13862, Doc. 363, 11 September 1933. This ruling was reaffirmed on 16 December 1933 with a circular of the Ministry of Economics; see Uhlig, Warenhaeuser im Dritten Reich , pp. 100-101.
26.BAP RWM 31.01 P 13860, Doc. 59, 1 September 1933. In a circular, Schmitt, the Minister of Economics, came out against a shopping ban for National Socialist party members; see the documents of the Ministry of Economics.
27. Einzel-Handel - Amtliches Organ des Handelsschutzverbandes der Pfalz, vol. 34, pp. 52-54, in BAP RWM 31.01 P 9227, Doc. 15-17.
28. Einzel-Handel , vol. 34, pp. 52-54; however, scepticism is justified regarding these numbers.
29.Ladwig-Winters, Wertheim, p. 163.
30.Ibid, p. 206.
31. Wirtschaftsblatt der Industrie- und Handelskammer zu Berlin, 22 August 1936, vol. 23/24, p. 1122.
32.Enacted 1 June 1933 (RGBl. I, S.326).
33.BAP RWM 31.01 P 13862, Doc. 332, response on 27 April 1934 of the Ministry of Finance to the letter of the Ministry of Economics (30 January 1934)! Total sales for the branches of merchandise affected by this were estimated at RM 2.4 to 2.5 billion; see P 13861, Doc. 244-248, manuscript of a letter of the RWM, 30 January 1934.
34.BAP R 80 Ba 2 P 5218, Doc. 42, appendix to a report for Hertie advisory board members ( Beiratsmitglieder ), dated 3 January 1934.
35.Uhlig, Warenhaeuser im Dritten Reich , p. 116; and BAP R 80 Ba 2 P 11482, 25 January 1935.
36.Contract from 29 July 1933; Appendix 7 of the claim for reparations ( Klage auf Wiedergutmachung ), filed in 1948.
37.BAP R 80 Ba 2 P 11482, articles of incorporation ( Gesellschaftsvertrag ), 24 July 1933.
