Krupp

views updated May 18 2018

Krupp

The Krupp family was a German dynasty of industrialists. The Krupps started the first major steel-works in Germany in 1811, and their enterprise expanded rapidly to become one of the world's largest companies and Germany's leading supplier of armaments.

The astounding rise of the Krupp family is very much part of the rapid industrial growth of Germany with its highly concentrated, efficient cartels. As a major weapons manufacturer since the 1860s, the firm was a symbol of the deadly collaboration between the giant industrial complex and the military in Germany and elsewhere, so characteristic of modern warfare.

Early Krupps

The recorded history of the Krupps starts in 1587 with the entry of one Arndt Krupp (Krupe) in the guild archives of Essen. A prominent burgher, he ran a flourishing business in the wine and grocery trade, real estate, and moneylending and married his children into Essen's wealthiest families. The marriage of the eldest son, Anton, to the daughter of a well-established gunsmith first involved a Krupp in the manufacture of guns—in this case, during the Thirty Years War. After the conclusion of that war, however, and during the century that followed, the scions of the family retreated to public office as town clerks of Essen, while other members of the family continued as small traders and shopkeepers.

Not until the mid-18th century did the Krupp's business fortunes rise again. In 1751 Friedrich Jodokus Krupp (1706-1757), a great-great-grandson of Arndt who had become a wealthy merchant by a first marriage, married Helene Amalie, who similarly claimed direct descent from the first Essen Krupp. Following Jodokus's death, Helene Amalie promptly renamed the family business "Widow Krupp" and expanded energetically and imaginatively into new areas of enterprise. In 1800 she acquired a foundry near Essen named "Good Hope" and thereby started the family firm on its way to iron making.

Although the shrewd widow sold "Good Hope" at a considerable profit 8 years later, her grandson and successor, Friedrich (1787-1826), continued her interest in metal-working. He built his steel-casting factory at a time when the exclusion of British steel by Napoleon's continental system made the production of steel an unusually promising prospect. He founded in 1811 the firm of Fried. Krupp—the name the firm still bears today. Although initially hampered by outmoded equipment, Friedrich was able to make a success of his business until his ill health caused the company to enter a period of rapid decline. Friedrich died on Oct. 8, 1826.

Alfred Krupp

Friedrich's death left the near-bankrupt factory and the secret of steelmaking to his 14-year-old son, Alfred (April 26, 1812-July 14, 1887), who was to become the real founder of the Krupp industrial empire. Dubbed "Alfred the Great," he became one of the great industrial tycoons in the rapidly expanding German industrial economy of the 19th century. Initially with the help of his valiant mother, Therese (1790-1850), he quickly tightened his grip on the firm and explored ways of improving and expanding its production. In 1830 he added the manufacture of steel rolls, just in time to take advantage of the expanding market created by the German Customs Union (1834) and the first German railroads (1835). In the 1840s he began introducing newly developed machinery, often designed by himself—such as the famous giant hammer "Fritz," which made his works competitive with English steel.

The major breakthrough came in 1851, when Alfred gained world fame with the display of a perfect 4-ton steel ingot and the first steel cannon at the London World Exhibition. His production of the seamless railroad tire a year later (preserved in the firm's symbol of three interlocking rings) quickly made him one of the world's major suppliers of railroad equipment. In 1862 Krupp pioneered the Bessemer process on the Continent and introduced the open-hearth method of steel casting in 1869.

Krupp's entry into the manufacture of arms was slower. Acceptance of the steel cannon was initially hesitant, and only after the astounding performance of his guns in the Franco-Prussian War (1870-1871) did the rapid boost in gun sales begin.

As an industrial empire builder, Krupp pioneered the vertical "mixed company" in Germany by adding a variety of mining, power, and transportation concerns to his firm. As a paternalistic employer, he introduced several significant welfare services (health insurance, pension fund, housing), which later served as models for Bismarck's social legislation.

Friedrich Alfred Krupp

Alfred's son and successor, Friedrich Alfred (Feb. 17, 1854-Nov. 22, 1902), unlike his robust, vigorous, and dominating father, was a quiet, delicate man who enjoyed the theoretical scientific aspects of steelmaking more than the routine of production. Nonetheless, he proved to be an able administrator, acquired new subsidiaries for the firm, began the production of steel armor plate, and expanded into shipbuilding and steam shipping. Under his direction, the firm doubled its work force to 43,000, entered into extensive scientific research, and became a model of progressive paternalistic labor services.

An Interregnum

The death of Friedrich in 1902 extinguished the direct male line of the house and left the firm in the hands of two determined women, Friedrich's wife, Margarethe (1854-1931) and his 16-year-old daughter and sole heiress, Bertha (1886-1957). In 1903 the firm was transformed into a joint stock company owned exclusively by the Krupp family. Bertha married the Prussian diplomat Gustav von Bohlen und Halbach (Aug. 7, 1870-Jan. 16, 1950) in 1906, and he was permitted by the emperor William II to add the name Krupp, thereby ensuring the formal continuation of the dynasty.

Gustav Krupp von Bohlen und Halbach

The rising demand for weaponry created by World War I soon overshadowed all other production and caused the firm to grow rapidly. The field gun "Big Bertha," introduced in 1909, played a vital role in the German advance in 1914 and at Verdun in 1916. In 1918 a new cannon, the "Paris Gun," shelled Paris from a 75 mile distance.

At the end of the war, under severe strains of revolution and Allied pressures, Gustav reconverted the firm to the production of railroad equipment and heavy machinery. The major expansion was in the exploration of new types of metals and machinery, which led in 1926 to the invention of sintered tungsten carbide.

With the rise of Hitler, armaments production once more became an important branch of the firm, although it remained less than 10 percent of the total production until 1939. During World War II the Krupps were again Germany's major arms suppliers—the best-known were the Krupp U-boats, the "Tiger Tanks," and the huge railway gun "Dora," used to bombard Sevastopol with 80-centimeter shells in 1941. The firm expanded rapidly and became intimately tied to Nazi policies through the use of some 100,000 slave laborers from occupied eastern Europe. Meanwhile, with Gustav's health failing, the firm passed to the eldest son, Alfried (Aug. 13, 1907-July 30, 1967), who became director in 1942 and sole proprietor of the reconverted family firm in 1943.

Alfried Krupp von Bohlen und Halbach

At the end of the war, both father and son were arrested, but because of Gustav's ill health, only Alfried was brought to trial; he was sentenced to 12 years of imprisonment and forced to surrender the firm (Nuremberg, 1948). The company—70 percent destroyed and dismantled—was put under Allied control. In 1951, however, the U.S. high commissioner, J. J. McCloy, released Alfried, and an Allied decree in 1953 permitted his return to the helm of the company, an arrangement that was later changed by the establishment of a holding company, which left ownership, but not control, in the hands of Alfried.

With the economic recovery of West Germany and the establishment of the Common Market, the Krupp firm— reconverted to railroad and heavy machinery production— again expanded rapidly. Through its work as designer and builder of whole factories, Krupp was active both in under-developed countries and in trade with Communist Eastern Europe. In June 1967 it completed Germany's first nuclear plant.

Alfried's death in 1967 and financial crisis finally led to the dissolution of the family enterprise by Alfried's eldest son and heir, Arndt. The firm was converted into a true corporation on Jan. 31, 1968, thereby ending one of history's longest industrial dynasties.

Krupp

views updated May 21 2018

KRUPP

expansion under alfred krupp (1812–1887)
industrial management under alfred krupp
the steelworks from alfred krupp's death to world war i
bibliography

Steel, the key material of the Industrial Revolution on which the Krupp family founded its industrial empire in Germany, offers higher strength, hardness, and elasticity than other ferrous metals. In 1811, Friedrich Krupp (1787–1826), an offspring of a prosperous trading family from Essen, founded a workshop for the production of cast steel on a plot of land bought from his grandmother. He hoped to profit from the high demand for steel in a Napoleonic Europe that was deprived of English steel exports as Great Britain sought to weaken France's supremacy through restrictive trade policies. Technical difficulties, as well as, after Napoleon's defeat in 1815, the renewed influx of English steel, whose manufacturers dominated European markets until well into the second half of the nineteenth century, led to persistent, severe losses in Krupp's workshop. On the verge of personal bankruptcy, Friedrich Krupp died an exhausted, frustrated man at the early age of thirty-nine.

expansion under alfred krupp (1812–1887)

When Alfred Krupp, Friedrich's fourteen-year-old son, assumed managerial responsibility for the heavily indebted workshop with four employees in 1826, he devoted himself to the business with the monomaniacal energy that was to characterize his career. At the heart of the company's long-term success lay a reputation for high quality that allowed it to emerge as a competitor of English manufacturers. Alfred Krupp immersed himself in the technical details of steel production, personally supervising production processes on the shop floor throughout his entire professional life. Once the workshop had overcome initial technical problems, it widened its product range to enter new markets during the 1830s. In addition to craft tools and minting stamps for coin production, Krupp began to produce springs, axles, railway wheels, crankshafts, gun barrels and—starting in the 1850s—cannons. Product diversification combined with a rapidly growing workforce. Having gradually expanded to employ 240 people by 1850, in the next two decades the company benefited from dynamic industrialization processes that transformed the Ruhr area around Essen into the core region of the German industrial landscape.

The company took advantage of expanding steel markets in the manufacturing and railway sectors. During the 1860s, it also developed into a leading military supplier, the Prussian army being its most important customer. Armaments accounted for 56 percent of the company's turnover in 1876, which led to Alfred Krupp being nicknamed the "cannon king." By 1873, the steelworks in Essen employed nearly 12,000 people and a further 4,100 workers in subsidiary enterprises.

industrial management under alfred krupp

Much of this expansion was predicated on high-risk investment strategies. Until the 1870s, Krupp invariably reinvested profits in new production facilities, subsidiary companies, and large stockpiles. This dynamic expansion, however, came at the price of low reserves, and the policy of immediate re-investment repeatedly subjected the company to major perils during recessions. The steelworks that had impressed domestic and foreign observers as evidence of the industrial power fuelling the German Empire only narrowly averted bankruptcy by laying off more than two thousand laborers in the mid-1870s. Thereafter, Alfred Krupp focused more strongly on the financial consolidation of his company.

An acute sense for self-promotion complemented Alfred Krupp's business acumen and technical skill. He personally lobbied crowned heads and enjoyed a particularly good relationship with the Prussian monarch and subsequent German emperor William I (1797–1888). This connection led to armaments contracts and lucrative orders for railway equipment. Krupp also wooed potential customers, including heads of state, during spectacular tours of his gigantic production facilities. In 1861, the Prussian king left Essen profoundly impressed after a demonstration of steam hammer "Fritz," a legendary "monster" weighing fifty tons. Moreover, Alfred Krupp devoted considerable attention to public relations efforts to secure and maintain an international reputation. The company was a regular participant at world fairs on both sides of the Atlantic; its displays usually included superlative exhibits such as the largest steel block or the biggest gun on show.

By his own account a man with an impatient and brash disposition, Alfred Krupp practiced a direct leadership style to assert his authority over all areas within his works. Personal control, however, was increasingly difficult to achieve as the enterprise grew, a process that required the development of formal management routines within growing hierarchical administrative structures. Although Alfred Krupp was forced to tolerate frictions with his managers, he demanded unqualified loyalty from his manual workers. He was the prototypical example of an entrepreneur who conceived of himself as a stern yet benevolent patriarch. In keeping with this authoritarian understanding of business leadership, the company strictly monitored its employees' private sphere. Workers with socialist sympathies were fired, as were those pursuing "immoral" lifestyles. This high-handed approach to industrial relations went hand-in-hand with Krupp's sense of responsibility for the well-being of "his" workers that led him to offer social provisions that were exceptionally generous by contemporary standards. The company sponsored consumer associations offering foodstuffs at subsidized prices, health insurance, and pension schemes, as well as housing programs. As a result of these welfare programs, Krupp's factory succeeded in attracting and retaining a skilled labor force with low fluctuation rates.

the steelworks from alfred krupp's death to world war i

By the time Alfred Krupp died of a heart attack in 1887, his steelworks had become a European industrial giant with excellent connections to the political establishment of the German Empire, and beyond. Krupp was succeeded by his son Friedrich Alfred Krupp (1854–1902), who, while continuing the firm's social policies, further expanded the business, not least through mergers with competitors. Friedrich Alfred Krupp died under mysterious circumstances amid rumors of suicide on the Italian island of Capri after press allegations of a sexual scandal involving young men. After the turn of the century, Gustav Krupp von Bohlen und Halbach (1870–1950), who had married into the family, took over the directorship of the company, which profited from the booming international economy as well as the arms race before World War I. By 1914, the company had become Germany's largest private employer, with a workforce of eighty-one thousand employees.

See alsoGermany; Industrial Revolution, First; Industrial Revolution, Second.

bibliography

Berdrow, Wilhelm. The Krupps. Translated by Fritz Homann. Berlin, 1937.

Epkenhans, Michael. "Krupp and the Imperial German Navy 1898–1914: A Reassessment." Journal of Military History 64 (2000): 355–370.

Köhne-Lindenlaub, Renate. "Friedrich Krupp GmbH." In International Directory of Company Histories, vol. 5, 85–89. Chicago, 1992.

Bernhard Rieger

Encyclopedia of Modern Europe: Europe 1789-1914: Encyclopedia of the Age of Industry and Empire

Krupp

views updated May 21 2018

KRUPP.

BIBLIOGRAPHY

In May 1912 the large, tradition-rich, and powerful Fried. Krupp AG firm celebrated its one hundredth anniversary with a three-day long festival; in attendance were members of Germany's political, economic, and social elite, including Emperor William II and all of the princes of the German Empire. Years of remarkable prosperity and economic growth gave company officials and members of the Krupp family an additional reason to celebrate; sales increased more than fourfold in the period 1903 to 1913 and the size of the workforce approximately doubled in the same period. On the eve of World War I the Fried. Krupp AG consisted of a diverse array of enterprises, including iron and steelworks, rolling mills, shipyards, coal and ore mines, limestone quarries, and manufacturing plants that produced goods such as cast steel products and armaments.

World War I accelerated these growth patterns. The number of workers at Krupp increased from more than 80,000 in 1914 to 170,000 in 1918. Similarly the physical plant of the Fried. Krupp AG doubled in size in this period in order to meet the extraordinary demands of the war. Although armaments manufacturing accounted for no more than one-third of Fried. Krupp AG's total pre-1914 output, Krupp was devoting by 1916 ever more industrial resources to the production of armaments, including artillery pieces and shells, submarines, armor plate, explosives, and battleships. In the last years of the war more than 80 percent of Krupp's production capacity was used for the manufacturing of war-related goods.

Krupp weathered Germany's defeat in World War I remarkably well. The revolutionary disturbances that swept across Germany in 1918 and 1919 spared for the most part the various branches of the Krupp industrial empire. Although terms of the Treaty of Versailles, notably the prohibition of the manufacturing of many kinds of armaments and the compulsory dismantlement of certain industries, and the loss of traditional international market shares during the war directly impacted Krupp, the firm was not too adversely affected in the immediate postwar period. Krupp benefited from the postwar inflation, allowing it to pay off debts at very advantageous rates, and modernized its production techniques and equipment, thereby offsetting some of the damage resulting from the postwar compulsory dismantling and destruction of much of its industrial plant. The firm also diversified its industrial and manufacturing activities. In place of large-scale armaments production, Krupp, for example, now built various kinds of locomotives and rail cars and machines for business and agriculture, as well as continuing its traditional activities in mining and steel production. Krupp, however, did not get out of the armaments business entirely, continuing to be involved in the designing and production of armaments despite its official prohibition from doing so; agreements with Swedish, Dutch, and Japanese firms ensured that Krupp cannons, submarines, and other arms continued to be manufactured during the Weimar Republic.

Following Adolf Hitler's ascension to power in 1933, the production of arms again became a central Krupp activity. As early as 1935, for instance, Krupp shipyards began to build submarines and destroyers; the Germania shipyard in Kiel alone built ninety Type VII submarines in the period from 1936 to 1944. Similarly Krupp factories soon began to produce great numbers of artillery pieces and cannons, massive quantities of armor plating, and "Tiger" tanks. A not insignificant cost of rearmament for Krupp was its rapidly diminishing loss of institutional independence vis-à-vis the Nazi state and party. The booming economy of the late 1930s also created labor shortages for the firm; Krupp eventually sought to overcome this problem during World War II by employing tens of thousands of forced laborers drawn from all over Europe, including inmates from concentration camps such as Buchenwald.

Germany's defeat in World War II again meant the substantial destruction and dismantling of the Krupp works. Compounding the damage inflicted by bombing raids on Krupp factories during the war was the postwar loss of machines and plants at the hands of the Allied forces' dismantling crews. Unlike after World War I, however, the victorious Allies held the head of Krupp, Alfried Krupp von Bohlen und Halbach, responsible for the firm's activities during the war. Tried at Nuremberg in 1947 for various war crimes, Alfried and ten Krupp directors were convicted of "spoliation of occupied territory and the employment of slave labor" and were sentenced to lengthy prison sentences as well as, in the case of Alfried, the complete loss of his Krupp family fortune. Also new were moves to break up the Krupp empire in accordance with the Allied policy of Germany's de-cartelization, intended to divide the Krupp group along horizontal and vertical lines.

The early release of Alfried Krupp from the notorious Landsberg prison in 1951, as well as the return of his confiscated property, signaled a new phase for the Krupp empire. Alfried and firm executives such as Berthold Beitz implemented a series of reforms that allowed the Krupp holdings to profit from the West German "economic miracle" taking place at the time. Sharp fluctuations in the price of steel beginning in the mid-1960s, combined with downturns in the German and global economies, the firm's overly aggressive expansion plans, its precarious credit-borrowing schemes, and its risky and not particularly profitable trade agreements with Eastern bloc countries created a series of crises for Krupp in the 1960s and 1970s. As a result, the structure of the Krupp empire underwent significant reorganization, including the creation of the "Alfried Krupp von Bohlen und Halbach Foundation" that, in addition to its financial support of educational, cultural, artistic, and public health ventures, had a controlling interest in the main Krupp holding, the Fried. Krupp GmbH. Another consequence of the crises was the selling on two occasions of large amounts of Krupp capital stock to the shah of Iran in exchange for much-needed cash infusions; by the late 1970s the Iranian government controlled a 25.01 percent interest in the Fried. Krupp GmbH.

Since 1990 Krupp has strengthened its global position through a series of mergers. In the early 1990s Krupp merged with the German firm Hoesch AG, forming Fried. Krupp AG Hoesch-Krupp. Shortly thereafter, merger negotiations began between Fried. Krupp AG Hoesch-Krupp and Thyssen Steel; the merger was finalized in 1999. In 2005 Thyssen-Krupp focused on steel and capital goods and services, employing more than 184,000 people worldwide.

See alsoForced Labor; Germany; Industrial Capitalism; War Crimes .