5

HOLLYWOOD, MOSCOW, AND THE CRISIS OF GERMAN FILM

For the greater portion of the stable years, the governing coalition of the Weimar Republic, the Bürgerblock, consisted of the Deutsche Zentrumspartei (Catholic Center party), the Deutsche Volkspartei (German People’s party, DVP), the Deutschnationale Volkspartei (German National People’s party, DNVP), and a number of smaller splinter parties. The coalition members tolerated the republic, some more willingly than others, as long as their leading constituents, ranging from middle-class Catholic merchants to wealthy landowners and the industrial elite, could sustain their political influence and prosper as they had during the crisis. Such was the case until 1929.

The influx of loans and investments stimulated speculation and industrial concentration at a rate parallel to that prior to 1924. In the electronics, chemical, and steel industries, huge conglomerates such as Siemens, A.E.G., I. G. Farben, and the Vereinigte Stahlwerke acquired smaller companies and joined international cartels to guarantee higher and more stable prices for their products at home and abroad. For a minority of the most powerful and wealthy, the Weimar government once again nurtured conditions under which substantial wealth could be accumulated. To a much lesser extent, even the working masses prospered. The system seemed to be functioning smoothly.

In reality, the German economy grew dependent on continual support from foreign governments and banks. Approximately one half of the annual gross national product during the years of relative stability was expended to cover short-term loans (Rosenberg, 164). If the source of credit vanished, the economy would collapse and once again threaten the nation’s stability. Between 1924 and 1929 German political and economic leaders spent, invested, and allocated funds with little apparent regard for the inherent danger. At least until 1929, it worked to the great satisfaction of those at the top of the social hierarchy and with sufficient prosperity for the rest to avoid significant political conflict.

The potential for political conflict existed in part because, although the Dawes Plan stimulated employment and wage increases, less attractive working conditions became more and more prevalent. To maximize profit German industrialists accelerated efforts to streamline production. Smaller factories gave way to larger production plants where anonymity, mechanization, and alienation prevailed. The workers’ interest in their jobs and the workplace decreased. The same process now spread into the realms of business and government. Streamlining here was especially significant because the number of white-collar workers grew almost three times faster than the number of blue-collar workers during the period.¹ The armies of new clerical workers and bureaucrats joined the ranks of the lower-middle-class and working-class Germans who feared further descent in the social hierarchy and coped with poor working conditions by hoping for upward social mobility.

Improving material conditions and increasing political independence from the Western Allies strengthened the position of those who supported the republic and fostered the tolerance of the Bürgerblock. However, the struggle between republican and antirepublican; democratic and autocratic; communist, socialist, and capitalist ideologies persisted. As illustrated by Hindenburg’s election in 1925 and the plebiscite to disinherit the German aristocracy in 1926, public opinion more often than not marginally favored an ideological orientation associated with the relative prosperity and security of the Second Reich.² Nevertheless, the ideological war continued. During the years of relative stability, mass media—the printed media, radio, and cinema—played an increasingly significant role in the process. For various reasons mainstream cinema continued to exert a conservative to reactionary influence on public opinion.

The Dawes Plan contributed to a further concentration of power among a few very wealthy and very conservative men in the film industry. The stronger currency made it impossible for exporters to compete as successfully as they had between 1919 and 1923. Many young companies went out of business; others were acquired. Larger companies survived, but even the largest experienced difficulty as U.S. and European firms began showing more interest in the German market.

Hollywood film companies posed the greatest threat. By 1927 they owned German theaters, operated distribution offices, and purchased stock in German production companies. In 1923 National Film began distributing Paramount films, and David Selznick negotiated an agreement with Trianon. Even the largest German film conglomerate, Ufa, found it necessary to accept a partnership with Universal, Paramount, and MGM in 1926.³ Similar interest groups developed between Terra and Universal in 1925 and between Phöbus and MGM in 1927.

At the same time, Hollywood producers enticed German film talent to work in the United States. By 1926 Hollywood had engaged Ernst Lubitsch, Friedrich Murnau, E. A. Dupont, Conrad Veidt, Emil Jannings, Pola Negri, and others. Some returned, but the exodus of Germany’s best directors, actors, and technicians continued throughout the stable years and beyond.

In contrast to the less visible U.S. involvement with German companies in the new international chemical, electronics, and steel industry cartels, Hollywood’s very visible influence on the film industry stimulated a heated debate in the media. Most journalists emphasized Germany’s gratitude for U.S. assistance but bemoaned the consequences for the film industry. On 9 January 1926, for example, Germany’s leading film journal, the liberal Lichtbild-Bühne (L.B.B.), featured a headline editorial, “Amerikanisierung der Ufa?” (“Americanization of Ufa?”).

The journal’s editors attempted to dispel rumors that Ufa had fallen under Hollywood’s control. Far from quieting the fear of readers who perceived Ufa’s development as a barometer for the future of the entire industry, their comments indicated just how difficult it would be for Ufa to avoid requesting further credit, a move that would necessitate additional concessions. According to the article, U.S. newspapers, including the Sun and the Chicago Tribune, claimed that U.S. film companies had gained control of the German market. The newspapers used terms such as “rivals,” “victor’s prize,” “conquer,” and “domination” in their description of the initial competition among the U.S. companies and their ultimate joint agreement with Ufa. The L.B.B. discounted the reports of conquest, acknowledged fierce competition, and asserted that Ufa would remain sovereign. It argued that the Deutsche Bank, the principal Ufa stockholder, would provide enough credit so that Ufa could continue and expand its production without more foreign assistance. If that failed, the German government would intervene to protect Ufa’s integrity. Why? The article noted: “In the end, not only individuals have an interest in the German Ufa, rather the entire population and the government that represents and carries out its wishes.”

The L.B.B. editors, despite their liberal tendencies, certainly felt some obligation to support Ufa. Their income depended in part on payments from Ufa for advertising in the journal. There were other reasons for the journal’s point of view. The residual impact of prewar propaganda, the fresh memory of warring nations, the insecurity, hunger, and violence that conservative and reactionary interest groups associated with the constraints of the Versailles Treaty, and the reality of intense competition at the national and international levels contributed to the perception of Hollywood’s influence as a potential threat to Germany’s national well-being. For the same reasons many insecure Germans preferred to retreat to older concepts of security and accept explanations for crises that linked individual identity to industrial interests and the interest of the nation. In addition, mainstream cinema’s capacity to satisfy unfulfilled needs artificially by encouraging spectators to identify with popular heroes and heroines, including patriarchal and authoritarian figures such as Friedrich II, Königin Luise, Bismarck, and Wilhelm II, stimulated among large segments of the German population an interest in the fate of a particularly German film industry.

Within this context film quality became a secondary factor. Although some journalists continued to argue that the industry could survive and prosper only by producing high-quality films, many others argued that every effort should be made to assist German producers in their competition with Hollywood companies. In fact, the German government had attempted just that by introducing an import contingency law.⁴

The law very precisely stated the desired ratio of imported to domestic films but offered no clear guidelines for enforcement. Film companies traded and sold their contingency certificates, foreign companies induced their German partners to produce inexpensive, low-quality films, or they produced them in Germany themselves so that they could import blockbusters. Joint productions made it difficult to distinguish foreign from domestic films, and the government allowed two companies, Ufa and Phöbus, to transfer contingency certificates directly to their Hollywood associates. With the development of international cartels, national economic interests became less easy to identify and protect.

As the crisis continued, film companies began soliciting domestic investments to remain competitive. Terra Film, which had a close association with the liberal Ullstein Publishing House, received investment assistance from the far less liberal I. G. Farben group,⁵ and the chemical concern’s Dr. Friedländer joined Terra’s board of directors. Seen in this light, the Dawes Plan both accelerated the cartelization that enabled industrial giants to diversify their growing assets and created conditions that forced the film industry to solicit such investments. Terra Film was no exception. In the majority of cases new investments came from conservative to reactionary circles.⁶

Ufa also faced pressing financial difficulties in 1927. Following the negotiation of the Parufamet agreement in 1926, the Deutsche Bank and the German government were either unwilling or unable to undertake what the L.B.B. had prescribed for Ufa. By 1927 bankruptcy once again threatened Germany’s largest film conglomerate.⁷ Mismanagement and Hollywood competition forced Ufa to renew its search for investors late in 1926.⁸

The I. G. Farben group expressed interest and eventually invested, but Alfred Hugenberg’s group, the Wirtschaftsvereinigung zur Förderung der geistigen Wiederaufbaukräfte (Economic Association for the Promotion of the Intellectual Forces of Reconstruction), assumed control. When the Deutsche Bank abandoned its position as major Ufa stockholder in 1927, the Economic Association invested sufficiently to gain a 75 percent share of Ufa, and eleven men who either sympathized with or were members of the Hugenberg group joined Ufa’s board of directors.⁹ To take control of Ufa, Die Rote Fahne estimated that the Hugenberg group invested thirty-five million marks.¹⁰ That was an extremely large sum of money in 1927, but well within the means of an association whose members included some of Germany’s wealthiest men.¹¹

For more than a decade the association, composed to a large extent of western coaling magnates, had used money from their vast trust fund to invest in all forms of mass media. Under Hugenberg’s leadership the association strove to influence public opinion in opposition to Social Democracy. At the time of its investment in Ufa, its media concern ran the Telegrafen-Union, a news wire office that serviced over sixteen hundred German newspapers. It controlled one of the nation’s largest publishing houses, the August Scherl Verlag. It also operated fourteen regional newspapers, including Scherl’s Berliner Lokal-Anzeiger, and the Kinematograph, an influential conservative film journal that counterbalanced the mildly liberal L.B.B.

While building their media empire, Hugenberg and his followers sustained and even intensified their political conservatism.¹² The success of the October Revolution in 1917, the transfer of power from the Hohenzollern monarchy to the Social Democrats in 1918, and the birth of the German Communist party at the end of 1918 had increased their insecurity. The founding of the Weimar Republic made them even more determined to stop the shift to the left in Germany. Hugenberg detested the Weimar Republic and opposed all efforts to strengthen its democratic foundations. He and a small but powerful right wing of the DNVP even struggled against their own very conservative political party when they perceived it to be cooperating with republican forces.

Under Hugenberg’s leadership the right wing of the DNVP hoped to abolish the Weimar constitution and establish a national dictatorship or restore the Hohenzollern monarchy. They strove at all costs to eradicate German socialism, a fairly undifferentiated concept for them that described the activity of Social Democrats, Communists, trade unionists, Jews, and almost anyone who supported the republic. By October 1928 the right wing of the DNVP had grown sufficiently so that Hugenberg could assume leadership of the entire party.

With the acquisition of Ufa in 1927, Hugenberg greatly expanded the sphere in which he and his associates could foment public opposition to the Weimar Republic. The Ufa conglomerate consisted of 140 companies. It included film distribution offices all over Europe and in the United States.¹³ Ufa also controlled 116 theaters, including the largest and most attractive palaces in most major urban centers in Germany.

Weimar film historians have claimed that the Hugenberg Concern initially only sought commercial success.¹⁴ As long as the republic remained stable, they have asserted, Ufa remained neutral. That seems questionable considering Hugenberg’s adamant opposition to his own party’s tolerance of the republic. Upon closer scrutiny, it becomes clear that Hugenberg’s ideological orientation affected Ufa policy immediately. Shortly after the Economic Association took control of Ufa, one of Hugenberg’s associates, Dr. Ludwig Bernhard, published Der Hugenberg-Konzern. Psychologie und Technik einer Großorganisation der Presse (The Hugenberg-Concern: Psychology and Technique of a Mass Press Organization). In the brochure, Bernhard asserted that the Hugenberg group had very clear political motivations for its investment in Ufa. Bernhard noted that the group’s major concern was not that Hollywood would subsume Ufa and conquer the German film market. Much more threatening was the possibility that the “communist propaganda center” would take possession (92).

Almost immediately after Hugenberg’s old partner Ludwig Klitzsch became Ufa’s general director, and a host of Hugenberg associates assumed leading roles in its executive committee,¹⁵ Ufa quietly developed new policies. Just two days after the executive committee had been formed, it acted to remove intertitles from Metropolis that committee members judged to have communist connotations (R109, 1026a, 7 April 1927). From the outset the new executives refused to screen any Soviet film that in their estimation promoted “bolshevism.” In one particular case on 21 September 1927 the committee discussed the possibility of rejecting Südfilm distribution of the Soviet film Bett und Sofa (Bed and Sofa, R109, 1026a, 21 September 1927). Apparently, even a relatively innocuous love story represented too great a threat.

In 1928 Ufa increased efforts to restrict access to the German film market for distributors of Soviet films. When Soviet exporters experienced difficulty in procuring contingency certificates at the beginning of that year, the executive committee suggested that the Soviets be allowed to import only one film for every three German films they allowed to be imported into the Soviet Union (R109, 1027a, 3 January 1928:1). Later that year Ufa’s executive committee excluded all Soviet-German co-productions of the Derussa company from its theaters (R1o9a, 5 July 1928:1). Ufa initiated a similar proposal in the Spitzenorganisation der deutschen Filmindustrie (SPIO), an organization that developed policies for the entire industry and whose chairman was Ludwig Klitzsch.

Although the ideological orientation of the Hugenberg Concern significantly influenced Ufa’s production and distribution decisions, it is accurate to assume that Ufa strove for commercial success. Economic considerations, as well, moved Ufa and, to some extent, the entire film industry to pressure the Soviet film industry. When the Germans and Soviets signed the Berlin Treaty in April 1926, many German film journalists speculated about possible advantages for German companies.¹⁶ In 1925 the Soviet Union had purchased 35 percent of German raw film exports. Soviet law also allowed German distributors to export films to the Soviet Union in large quantities. However, Soviet officials refused and perhaps were unable to pay enough for screening rights to satisfy German distributors. In light of the ever-increasing financial difficulties that resulted from competition with Hollywood film companies, the German industry hoped to maintain its advantage in trade agreements with the Soviet Union and, if possible, dominate the Soviet market to compensate for Hollywood’s domination of the German market.

In 1926 the Germans intensified pressure on the Soviet film industry. Following the amazing commercial success of Battleship Potemkin, Soviet companies moved quickly to export films to Germany. The Film-Kurier predicted a threat to the German industry in February in “Russisches Monopol—Deutsches Kontingent” (“Russian Monopoly— German Contingency,” 16 February 1926). To avoid an “assault” and to increase profit in the Soviet market, the industry together with a cooperative German government used contingency restrictions as a lever. Soviet access to German theaters depended on Soviet willingness to allow German distributors greater access to the Soviet market. When Ufa suggested an exchange ratio of three German export films for every one Soviet film imported into Germany in 1928, its motivation was ideological and economic. The desired effect was the same: Soviet access to the German market was restricted while German access to the Soviet market was maximized.