“Foundation of an Empire”
“The needle bearing is not the beginning. The beginning is the carpet. With the manufacture of textiles of all kinds, the brothers Wilhelm and Georg Schaeffler lay the foundation of their success from September 1940 onward. "We were originally textile people," the elder one still says in 1966, when their needle bearing has long since made its career.1 At the time, that surprises no one. But who still knows today that the Schaefflers were also among the leading German carpet producers well into the eighties of the 20th century?”
“It was the time when “our artillery shells hurried westward” and “shook the house where he was born,” as Georg Jakob recalled on the occasion of his youngest son’s 30th birthday.13 For more than two years, the peoples of Europe had been engaged in one of the gravest conflicts in their history, not exactly poor in wars. The developments in the Balkans were the trigger for the drama, at the end of which 14 million dead would be counted. Here, the antagonisms between the great powers, some of which had arisen in the non-European world, crashed against one another and intensified—further charged by the ambitions and actions of the Balkan peoples—into severe storms. The storm broke when the Austrian-Hungarian heir to the throne Franz Ferdinand and his wife were murdered in Sarajevo on June 28, 1914.”
“With the beginning of the Allied counteroffensive on July 18 and especially with the lost Battle of Amiens three weeks later, it becomes apparent that the German Reich and its allies can no longer win the war. On November 11, 1918, not far from Paris, in the Forest of Compiègne, the armistice between Germany and the Allied opponents is signed. Among other things, it provides for the “immediate evacuation” of Alsace-Lorraine; with the Treaty of Versailles, the former imperial territory is finally ceded back to France on June 28, 1919.”
“As Georg Jakob Schaeffler recalled on the occasion of his son Georg’s 30th birthday, the family was “taken into custody for 14 days within an hour by 20 mounted Frenchmen” at Christmas 1918. On July 27, 1919, the Commissioner of the Republic signs the expulsion order for “Georges Schaeffler, gérant du domaine de Marimont.” Fortunately, the family succeeds in saving a considerable part of the “assets acquired through decades of work.” As long as possible, the parents exchange paper marks for gold coins at the municipal administration in Dieuze and then bring them to safety hidden in a piano.20”
“Georg Jakob Schaeffler evidently remains at Marimont for some time longer. For the time being, the French administration does not wish to do without the experience of the “excellent farmer,” as Georg Jakob Schaeffler is described in the bureaucrats’ papers. For the family, this means years of separation. While his wife continues to live with her parents in Metz with daughter Elisabeth and son Georg, the head of the family remains at Marimont with Wilhelm and Katharina and does not move to Avenue Maréchal Foch—what the former Kaiser-Wilhelm-Ring in Metz is now called—until mid-June 1920.21”
“Hardly has he received his school-leaving certificate than Wilhelm Schaeffler works for nine months at the iron and household goods business Ludwig Becker in Neunkirchen on the Saar, “in order to get to know the consumer’s attitude in retail.” Immediately afterward he completes an internship at Neunkirchener Eisenwerk AG. Since 1926, this traditional company has belonged to Kölner Eisen- und Hüttenwerke AG. Its owner, Otto Wolff, subjects the company in the following years to a modernization program costing millions. During this time, that is, before beginning his studies and then twice more during the semester breaks, Wilhelm Schaeffler gains insight here into the “most essential commercial departments.”43”
“For the time being, however, he leaves Schmalenbach’s business administration seminar and goes to the Sorbonne in Paris as a visiting student for the winter semester of 1928/29. In the French capital he pursues “language studies,” attends “in particular lectures in law and economics,” and also completes a three-month internship there at a “coal wholesale business.” At the end of April 1929, Wilhelm Schaeffler returns to Cologne and in the summer of 1931, after seven semesters, passes his diploma examination with the overall grade “very good.” His thesis on “German industrial bonds with additional rights” is graded the same way.45”
“More likely, however, it is the case that the ambitious and driven upwardly mobile Wilhelm Schaeffler regarded the work at the trust companies in Cologne and Dresden merely as steps on the career ladder. The next step was a real career leap: on September 1, 1935, Wilhelm Schaeffler moved to the industrial office of the Dresdner Bank headquarters in Berlin for “career advancement.” There, Gustav Overbeck became his mentor, having made him an “attractive offer.”47 In terms of its importance for Wilhelm’s professional development as well as for the future of the Schaeffler entrepreneurial family, this stage of his early career can hardly be rated highly enough. For it was here that he gave his professional profile its final polish; here that he apparently forged the connections that led him onto the path to becoming an independent entrepreneur; and here, too, that he came into close contact with some of his later business partners.”
“In the industrial office of Dresdner Bank responsible for the “practical credit assessment from a business management standpoint,” Wilhelm Schaeffler reviews a total of 65 companies from various sectors, nearly half of them from the textile industry. These include “Davistan Krimmer, Plush and Carpet Factories AG, Berlin – Katscher O.S. and Kaldenkirchen” and “Gebr. Fritsch, cloth factory, Cottbus.”48 The owners of this company, founded in 1882 and operating as a general partnership since September 30, 1921, are the merchant Hans Georg Fritsch and his brother, the textile manufacturer Heinrich Albert—known as “Heinz”—Fritsch. Heinz Fritsch is also responsible at Dresdner Bank for evaluating the technical equipment and production of the companies to be examined.”
“On February 3, 1939, Wilhelm Schaeffler receives procuration for the cloth factory of the Fritsch brothers, and on August 15 sole procuration. He is responsible for exports. From December 31, 1939 onward, “Mr. Georg Schaeffler” holds a stake of 200,000 Reichsmarks in “Gebr. Fritsch OHG, Cottbus.” It remains unclear whether this refers to Wilhelm’s brother Georg Schaeffler or, more plausibly, his father Georg Jakob Schaeffler. What is certain is that the Schaeffler family had a stake in the Fritsch brothers’ company no later than the end of 1939. Shortly afterward, the reverse is also true: when Wilhelm Schaeffler becomes self-employed, Heinz Fritsch is involved in one form or another in the Schaefflers’ companies. In late summer 1946, shortly before the arrest of Heinz Fritsch and Wilhelm Schaeffler, Fritsch’s cloth factory in Cottbus is removed from the commercial register.49”
“When Wilhelm Schaeffler’s doctoral thesis appears in print, the world is in the second year of war. Hitler wanted it. The Germans followed him. The so-called annexation of Austria into the German Reich in March 1938 and the gradual destruction of Czechoslovakia carried out step by step until March 1939 were the first stages on a path that, with the German invasion of Poland on September 1, 1939, deliberately led into the European war and, with the German Reich’s declaration of war on the USA on December 11, 1941, ultimately into the world war.”
“There is no question that Georg Schaeffler became acquainted with the brutal reality of war, even if the campaigns against France and Yugoslavia in May and June 1940 and April 1941 respectively were each concluded after only a few weeks. But the twenty-four-year-old also took part in the first phase of the so-called Russian campaign, with which Hitler, on June 22, 1941, simultaneously launched a racially ideological war of extermination of previously unknown dimensions. What Georg Schaeffler experienced and saw in the process, we do not know. In any case, his unit fought in the Battle of Moscow, which in the winter of 1941/42 brought about the turning point of the war on this front.”
“On October 24, 1944, Georg Schaeffler is able to complete his studies with good results. In his diploma thesis he deals with the “Business Management and Tax Consideration of Wartime Operating Partnerships in Trade and Industry with Special Consideration of Contract Design.” The reviewer attests to his “tight linguistic formulation” as well as a “clear structure and execution” and rates the work as “good.”54”
“By the time Georg Schaeffler completes his studies, he is already a partner in the two companies that his brother has taken over or founded in Upper Silesia. Wilhelm Schaeffler begins his entrepreneurial career when, on October 1, 1940, he acquires the majority of Davistan Krimmer-, Plüsch- und Teppichfabriken Aktiengesellschaft, based in Berlin and with several plants in Katscher in Upper Silesia. This story and what follows from it must be told in detail. On the one hand, this is the nucleus of the later global corporation, and on the other hand, this chapter plays a role in the existential crisis into which the company founded by Wilhelm and Georg Schaeffler will fall in 2008.”
“Economically, Katscher had already been shaped by the textile industry since the early 19th century and also made a name for itself as a weaving town, but this reputation faded over time because it could not keep pace with technical development. With the opening of the narrow-gauge railway line Katscher–Großpeterwitz, which made the direct transport of goods to Berlin possible and also made the town interesting for manufacturers from the capital, the production of plush, carpets, tapestries, Krimmer, table and divan covers in Katscher entered a new heyday after the turn of the 20th century. The largest and most modern textile factory in the town was the plush and carpet weaving mill David & Co.”
“The company was founded in 1850 as David & Co. in Berlin. The nature of the business is as unknown as its development in the first decades of its existence. It is documented that it operated under various additions to its name, and at the beginning of the 1930s as “Plush, Krimmer, upholstery fabric, blanket, and carpet factories. Founded 1850.” As early as the turn of the century, David & Co. had acquired properties in Katscher in Upper Silesia and in 1905 put its own production facility into operation there. In 1923 and 1933, the company bought eight more properties in the town, most of them including plants and apartments, and expanded its operations into a “giant enterprise,” as it is described in a contemporary report on the situation of craftsmen in Katscher.55”
“When Wilhelm Schaeffler took over the company in 1940, the total production area amounted to 40,000 square meters. With the striking chimneys of the four plants, up to 50 meters high, the rail connection with its own building for Plant I, and the seven-story reinforced-concrete high-rise of Plant II, the company left its mark on the city. A record that Wilhelm Schaeffler prepared in the autumn of 1951 reveals what the company contained: “Carpet weaving mill … with large dye works, weaving mill, and all dry and wet finishing facilities. Also the only mechanical knotted-carpet weaving mill in the German Reich, whose machinery alone cost more than 1 million marks after the First World War to acquire … Production of woven furs of all kinds, especially Persian lamb imitations. This production reached more than half of the total German production of this kind. Large special dye works, weaving mill, and complete finishing. Including the carpet weaving mill, there were more than 300 looms.” And so on and so forth. Since Wilhelm Schaeffler was initially occupied with repaying the loan, then with entering armaments production, this is essentially an inventory of what the former Jewish owner Ernst Frank had left behind.56”
“4 plants, 40,000 square meters, 1,400 employees: In Plant I (top), Wilhelm Schaeffler AG manufactures textiles until March 1945. In Plant IV, Wilhelm Schaeffler KG has been producing armaments since March 1943.”
“The bankruptcy administrators take over a business whose affairs had recently been going poorly, but which is overall in good condition. This is shown by the considerable assets the company possesses. Altogether, this is property worth almost 4 million, including those 224,000 Reichsmarks that come from the bankruptcy estate of the owner Ernst Frank. This “entire … body of assets including the ongoing manufacturing and trading business” is acquired by the successor company Davistan Krimmer, Plush and Carpet Factories Joint-Stock Company, which was established on May 29, 1934 and is cited below as “Davistan AG.” The takeover takes place “with retroactive effect from 9 December 1933,” the day of the bankruptcy, thereby at the same time striking the brief chapter of a holding company from the company’s annals. At the end of 1934, the “workforce numbers 590 persons.”59”
“The purpose of Davistan AG remains the “manufacture of krimmer, plush and carpets, indeed textiles of every kind, and the distribution of all products.” The share capital amounts to one million Reichsmarks. Dresdner Bank controls shares with a nominal value of 735,000, the bank Mendelssohn & Co. with a nominal value of 245,000, Director Franz Breitschädel with a nominal value of 20,000 Reichsmarks, that is 2 percent,60 which by 1940 he will initially increase to 10 percent.”
“The new company, too, has to fight for economic survival. While Davistan AG was still able to show a small surplus of a good 25,000 Reichsmarks in 1934, the following year the books show a loss of 225,000 Reichsmarks despite considerable savings.61 The company’s problems reflect the difficulties in which the town of Katscher finds itself. How dramatic the situation is is described by the mayor in a desperate letter to the district administrator in Leobschütz in mid-July 1934. According to it, the misery began in the summer of 1919 with the Treaty of Versailles, which awarded the so-called Hultschiner Ländchen to the newly founded Czechoslovakia. Since then, the border has run two kilometers south of the town, which now lacks its “hinterland.” “Of the once flourishing plush, Krimmer, and carpet industry, 7 factories have gone under … Almost every 2nd inhabitant depends on public assistance.” In 1934, the town has debts of almost 1.5 million Reichsmarks.”
“The import restrictions of spring 1934 had the consequence that the yarns necessary for Krimmer, plush, and carpet production could no longer be imported from England without further ado. As early as May 1934, the Davistan rescue company at that time had written to the foreign exchange office of the Berlin State Finance Office: “If we do not receive permission to import or pay for English yarns in sufficient quantity, our operation will shortly come to a standstill.” The alternative, namely the conversion of production through the “admixture of rayon staple fiber and artificial silk,” does not meet the standards that customers expect of the company and moreover takes time.63”
“At least the downward trend could be stopped, so that by 1939 the loss carryforward had been reduced to around 25,000 Reichsmarks. That was not enough for the banks, since in the bankruptcy proceedings of 1933/34 they had already had to write off about 3 million Reichsmarks.65 Therefore, since 1937 Dresdner Bank had been looking for a buyer for Davistan AG, but was skeptical about the success of the search. In June 1937 it was said laconically: under the prevailing “circumstances,” no buyer would be found for the shares. And then they do in fact find one after all: in September 1940 the “auditor Scheffler [sic]” expressed his interest in Davistan AG.66”
“At this point, 67.5 percent of the shares were held by Dresdner Bank, 10 percent by Franz Breitschädel, and 22.5 percent by the private bank Mendelssohn & Co. The bank, one of the oldest private banks in Germany, had in 1938 been partially taken over by Deutsche Bank as a result of the “Aryanization,” which above all secured the ongoing business operations. The rest was transferred into a shell company trading as “Mendelssohn in Liquidation.” It also included some assets that could not be liquidated, including the stake in Davistan AG.”
“On September 26, 1940, Schaeffler reached a commercial agreement with Dresdner Bank, and on October 1 with the private bank Mendelssohn. Wilhelm Schaeffler and his partners acquired the 67.5 percent of Davistan AG held by Dresdner Bank, with a nominal value of 675,000 Reichsmarks, for 472,500 Reichsmarks plus stock transfer tax. They obtained the 22.5 percent of the shares held by the private bank Mendelssohn & Co. more cheaply, namely for 62.5 percent of the nominal value of 225,000 Reichsmarks, that is, for 140,625 Reichsmarks plus tax.67
Seen in this way, Wilhelm Schaeffler and his partners derive an indirect benefit from the "Aryanization" of the banking house. Wilhelm Schaeffler was not involved in the process itself. Both also apply to the "Aryanization" of Davistan AG. Schaeffler benefits from the corresponding measures taken by others. But he is not an antisemite. He was involved neither directly nor indirectly in the denunciation, persecution, deportation, and murder of Jews. Antisemitic statements have been preserved neither in official nor private papers. This also applies to all members of his family.”
“When Wilhelm turns 70, Georg publicly recalls that at the time his brother had proposed to the family “to bring the assets of our parents, which stood outside industrial risk, into industrial risk with all its opportunities and dangers.”74 Specifically, this was done by encumbering the family real estate, by transferring savings, and by selling parts of the stock holdings. These presumably also included shares in Dynamit Nobel AG, which Anna Carolina Schaeffler had acquired in 1938.75”
“At the end of 1942, Wilhelm Schaeffler takes over the shares of Heinz Fritsch as well as Hermann Klingsöhr, thereby briefly increasing his stake to 80 percent, of which he immediately passes 25 percent on to his brother Georg. From then on, Wilhelm Schaeffler holds securities with a nominal value of 550,000 Reichsmarks, and Georg Schaeffler is now a co-owner of Wilhelm Schaeffler AG with 25 percent of the shares, having a nominal value of 250,000 Reichsmarks.81”
“With the founding of Wilhelm Schaeffler KG, Wilhelm Schaeffler draws the consequences from the reorganization of state industrial policy. Especially after Albert Speer, Hitler’s favored architect, rose to the head of the Ministry of Armaments and Munitions at the beginning of 1942, companies were pressured to convert their production to armaments goods or to enter armaments production. At the same time, industry was covered with a network that ultimately consisted of 178 special committees and special rings. In close agreement with Hitler, this was intended, according to Speer, to ensure "the most expedient execution of orders by the most efficient means."86”
“Since the middle of 1943, the intensification of the Allied bombing war against the German industrial centers in the west has led to a relocation of war-essential production to the periphery, not least to Upper Silesia. Since the necessary production facilities cannot be conjured up out of the ground at short notice, existing ones must be cleared out. This includes, among other things, factories in the textile industry. On a list of civilian enterprises to be closed by the Gau Economic Chamber of Kattowitz, the »Willi Scheffler [sic] AG« in Katscher also appears at the end of June 1943.87 Evidently, however, Wilhelm Schaeffler, thanks to his good knowledge of the local situation, had taken precautions in time, begun building up a parallel armaments-related production, and thus also ensured the continuation of his textile operations.”
“In fact, the Wilhelm Schaeffler KG, if you will, provides the legal framework for a development that had long since been set in motion. For as early as March 15, 1942, “in the course of shifting our textile production to ar[maments],” the textile company received an initial order to manufacture a “release device” for the Luftwaffe. And at the beginning of 1943, that is, half a year before the founding of Wilhelm Schaeffler KG, the namesake informed Dresdner Bank of his intention to begin, “on his premises” and “under his own direction,” with “50–60 women from his workforce,” a “war-important production, preferably precision mechanics,” as stated in an internal memorandum of Dresdner Bank.89”
“The founding of Wilhelm Schaeffler KG is therefore the consequence of the order situation during the war. The purpose of the new company is the manufacture of war matériel. In February 1944, the Reich business registry lists “tanks and assault guns, including parts for them,” “aircraft bombs and containers for them,” as well as machine parts and sheet-metal goods.90 In fact, Wilhelm Schaeffler KG does not manufacture the weapons, but rather the operationally important “parts” and “containers for them.” On the very day of its founding, the company is declared a “defense economy enterprise.””
“In doing so, Wilhelm Schaeffler, who pulls the strings, de facto supports National Socialist policy, warfare, and occupation policy. The tribunal also arrives at this judgment when, on June 9, 1950, in his absence, it speaks of the “willingness of the person concerned” to have assisted the “National Socialist state through the adoption of war production as well as through the provision of his professional knowledge.” Although the American military government had already determined that Wilhelm Schaeffler “had not been actively involved in the party or its affiliated organizations,” nor could the tribunal establish any “profiteering.” Yet Schaeffler had “demonstrated through his conduct that, as an experienced businessman, he was not willing ... to forgo the profits resulting from war production.”91”
“While Wilhelm Schaeffler KG employs 290 workers in armaments or metal production in mid-February 1944, in the textile sector, that is, at Wilhelm Schaeffler AG, there are now 65 fewer than almost a year earlier, but still 476, “who are transferred to metal production as needed.” This increasingly becomes the case, although in October 1944 there are still 377 employees working in the textile sector, including 65 salaried staff.93 The comparatively high number is surprising, but realistic, because by switching from mohair and wool to acetate rayon, which is supplied by a Freiburg company, production can be increased considerably, so that even a contract manufacturing operation in Brno has to be used.94”
“The fact that Schaeffler switched production to acetate silk is related to the increasing shortage of natural raw materials. These include not only animal wool but also human hair, which at this time is a common, though comparatively scarce, raw material of the textile industry. In order to ensure the supply of animal wool, Schaeffler holds, among other things, a stake in Wolle und Tierhaar Aktiengesellschaft (Wotirag).95 It is also likely that he processed human hair. That this included hair from the Auschwitz extermination camp cannot be fundamentally ruled out, but it is unlikely, as documented by the source situation explained in the appendix.96”
“In the course of 1944, the number of employees in Schaeffler’s two companies must have increased considerably. In any case, Wilhelm Schaeffler stated in the autumn of 1951 that at the end of the war, shortly before the evacuation still to be described, “approx. 1,400 employees” had been working in his four plants covering a total of around 40,000 square meters, including up to 700 in needle bearing production.97 Sometimes as many as 1,500 employees are also mentioned, but never more. This figure cannot be verified. However, the already cited list from mid-February 1944, in addition to the aforementioned 476 employees in the textile sector, lists a total target strength of 1,010 staff members for the production of drop devices for the Luftwaffe, track chain needles, and track chain needle bearings, which yields a total of around 1,400 to 1,500 employees.98”
“Compared with other German companies—such as Continental AG or “Kugelfischer Georg Schäfer & Co.,” as this company has been called since 1941—which produce armaments on a large scale with thousands of civilian foreign laborers and prisoners of war, Wilhelm Schaeffler KG is still a small enterprise. But here too, the incoming armaments contracts cannot be handled without foreign workers.”
“Among these objective constraints, especially in the case of smaller and medium-sized companies, usually family-run, was the pressure from state institutions to enter armaments production. Faced with the alternative of yielding to the pressure or losing control of the company—partly or entirely, temporarily or permanently—they chose, more or less without exception, to enter armaments production. But because the permanent workforce was drafted in waves, the companies were left with hardly any choice other than to request and employ foreign laborers.”
“This was even how the American judges saw it in the Nuremberg trial against Friedrich Flick and leading employees of his corporation. This first of three so-called industrial trials was regarded even by contemporaries as a model trial and precedent for comparable proceedings. In their judgment, the judges certified to the defendants on December 22, 1947, that they “did not very willingly employ foreign laborers or prisoners of war. It has also been shown that they probably knew that it was futile and dangerous to resist the assignment of such laborers. It was known that any action that could be interpreted as an attempt to prevent or delay the Reich’s war economy program would be interpreted as sabotage and punished with the most severe and strictest penalties and sometimes even resulted in the death penalty.”101”
“In the short term, by entering armaments production, they ensure that their business survives the war years and benefits from the wartime economy. The fact that the Schaefflers take up needle bearing production is due to chance. They know nothing about this business. But they are capable of learning. After the war, they rise to become one of the leading rolling bearing manufacturers.”
