10 P
THURSDAY. SEPTEMBER 19. 1963
MEDFORD MAIL TRIBUNE. MEDFORD. OREGON
oroetr Arms Empire icomis Hemmoved T
By ZANDER HOLLANDER nd
AKlnvK niUDtc
United Presi International
Two decades ago, military
ivearjons and machines manu
factured by dynastic industrial
complexes of Germany and Ja-'-
pan were raining death and de
struction on Allied soldiers on
the continent of Europe and the
islands of the Pacific.
But hardly had the last shots
of World War II been fired be
fore occupation forces began
dismembering t h e ordnance
making industries of the defeat
ed nations. The intent was
clear: to prevent the giants of
industry like Krupp in Ger
many and Mitsubishi in Japan
from again forging the hard
ware that makes modern war
fare possible.
The course of history, how
ever, is often a strange and
winding path. In 20 years, both
West Germany and Japan again
are mighty industrial nations
and both are politically allied
with former enemies the Unit
ed States and the Free World
in the global economic struggle
between the Democratic West
and the Communist East.
Where it was sound politics
and economics to sever the sin
ews of the'Kfupp and Mitsu
bishi empires m 1945, such a
course is questionable in the
light of today's world condi
tions. Restrictions Off
Today, most of the immediate
post-war restrictions placed on
Krupp and Mitsubishi have been
lifted or held in suspension. The
two old and formidable indus
tries are reuniting their dis
membered parts and expanding
into new products and new mar
kets throughout the trade-conscious
world.
Here is an up-to-the-minute
look into the new faces of
Krupp and Mitsubishi by Unit
ed Press International corres
pondents based in'Germany and
japan:
Krupp Story , .
Hitler's thousand-year Reich
was dying that morning in 1945
when Amerloan GIs jeeped up
to a plush villa outside the Ger
man industrial capital of Essen,
brushed pasb a butler in knee
britches and arrested Alfried
Krupp Von Bohlen und Halbach,
sole owner' of the vast Krupp
industrial empire.
The Krupp combine had forg
ed the steel sinews of' three
Croat German war machines
but in the spring of 1945 it was
an empire in ruins. On the nlaht
of March 11. 1.000 Royal Air
Force bombers pounded the ma
jor Krupp factories into gar
ishly twisted rubble. What was
left was dismantled and shipped
to Russia and Yugoslavia as
war reparations.
And Krupp and a score of di
rectors were sent to prison for
12 years by an American War
Crimes tribunal for using slave
labor and other crimes. The
Krupp empire seemed, destined
never to rise again.
Seven men an American, a
Briton, a . Frenchman, three
West Germans and a Swiss
were empowered to dismember
the magnificent industrial em
pire for good. On Allied order,
Krupp agreed to sell his coal
and steel holdings jnost nota.
bly the vast Rheinhausen steel
works near Essen.
Sale Postponed -
The Allied order to divest
K r u p p of Rheinhausen the
heart and soul of his $1.26 bil
lion a year industrial complex
remains in effect. But as the
years pass and the seven-member
commission again and again
postpones the deadline for the
sale it becomes increasingly
doubtful if it ever will be sold.
The original deadline was Jan.
31. 1959. The most recent ex
tension brings it to July 31,
1984.
Alfried Kfiipp" Is now free
from prison and Is full or part
owner of at least 160 factory
enterprises, 27 of them outside
Germany. His firm, Fricdrich
Krupp of Essen, and its subsid
iarics produce at least 3,500
products among mem locomo
tives, nylon fiber, construction
machinery, hospital and dental
equipment, tankers and river
boats, diesel motors, myriad
iron and steel products, heavy
duty trucks, industrial magnets
coal, cranes, bridges, copper
plumbing, ovens, screws, weld
ing torch electrodes and syn
thetics. In addition Krupp owns
an ocean freight company and
a river shipping firm and has a
controlling interest in two air
craft manufacturing companies
Weser Flugzeugbau of Brem
en and flugzeugbau Word ol
Hamburg.
Krupp's holdings are divided
into 21 divisions employing 110,-
000 persons, 45,000 of them at
the parent plant in Lssen. in
1962, Krupp sales totalled 5.12
billion deutschmarks ($1.28 bil
lion). No Outside Holdings
There are no outside stock
holdings. When Krupp wishes to
expand in a new direction he
goes to a bank and obtains a
few million marks as a personal
loan. Krupp is secretive about
the firm's annual profit.
Fortune Magazine rates the
Krupp combine the eighth larg
est in Europe, behind Unilever,
Siemens, Philips, Royal Dutch
Shell, Hawker Siddcley, AEG
(West German General Elec
tric) and Fiat. Krupp itself con
tends it is twclltn largest in
terms of gross turnover.
Krupp's wheeling and dealing
goes on apparently unrestrained
by the Allied sell order hanging
over his head.
The Kruno enterprise was
founded in 1811 by Essen Grocer
Fricdrich Krupp when Napo
leon's blockade kept Europe
from buying British steel.
The firm nearly went bank
rupt before Krupp's son Alfred
took over at the age of 14. He
stumped Germany as his own
traveling salesman and revived
the tottering fortunes by invent
ing a seamless railroad wheel
and graduated to industrial gi
ant by turning out cannon for
the German armies in the Franco-Prussian
war of 1870-1871.
Enters Shipbuilding
Alfred s son Fricdrich Alfred
Krupp expanded into shipbuild
ing, helped develop the diesel
engine and built the Rhein
hausen Steel Works whose ovens
spewed out the steel for Kaiser
Wilhclm's World War I armies.
When Fricdrich died, his old
est daughter Bertha, namesake
of the "Big Bertha" cannon that
shelled Paris in 1914, assumed
control of the firm. Fricdrich
had no sons. But Bertha mar
ried a young nobleman-diplomat,
Gustav Von Bohlen Und
Halbach, who took charge of
the empire. The Kaiser decreed
he should insert Krupp in his
name.
Gustav ruled Krupp during
World War 1 and supported
right wing politicians during the
Weimar Republic. He was not
regarded as a Hitler supporter
at first, but the Krupp factories
became the arsenal of the Wchr
macht, turning out "Big Gus
tav" cannon, Tiger tanks and
other land and naval arma
ments.
Alfried Von Bohlen Und Hal
bach, eldest son of Gustav and
Bertha, acquired the Krupp
name and scepter in 1943 when
his father suffered a stroke.
It has been whispered that a
gentlemen s agreement
among world industrialists pre
vents an empire-wrecking offer
to buy out Krupp. While break
ing up Krupp appealed to be
good politics and passable eco
nomics in immediate post-war
Europe, some observers say, it
is bad politics and even worse
economics in the light of the
Atlantic economic community in
which Krupp is just one of many
giants.
Yet the allies are unwilling
to lift the sale order entirely
and some believe the threat of
its enforcement helps confirm
Krupp's post-war pledge never
again to produce aims.
Alfried Krupp, 55, a shy, aus
tere, chain-smoker, rules the
Krupp empire from on high. Its
day-to-day management is cn
trusted to Berthold Beitz, 49,
Krupp general manager, whose
authority is virtually total.
Beitz, suave, handsome, gre
garious and rather un-Gcrman-ic,
rules Krupp with such drive
and efficiency some colleagues
call him "Dor Amcrikancr."
Largely as a result of Beitz'
negotiations, West Germany is
opening a trade mission with
embassy status in Warsaw, Po
land, and talks are underway
with Hungary and Romania.
Will the sell order hanging
over the Krupp empire ever be
enforced?
Perhaps Ludwig Erhard, West
German economics minister and
designated to succeed Konrad
Adenauer as chancellor, gave
the answer when he spoke at
Krupp's 150th anniversary ob
servance in 1961.
The post-war order, Erhard
said, "is an anachronism which
must be eliminated. There
no room today for a spirit of
reprisal, revenge or humilia
tion."
FLAGS PRESENTED Flags of the Latin American republics and
Spain were prosonted to Elbert Covell College, first Spanish
speaking liberal arts college in North America, which opened
this month at the University of the Pacilic, Slockton, Calif. G.
Domago-Hoath, right, president of the Pan American Society,
makes a symbolic presentation of the flags to Dr. Robert Burns,
left, UOP president. The actual Haas were ton lareo to snrend out
for the photo. (UP1)
Mitsubishi Report
for the past 10 years, one
of the staples of the Japanese
business press has been feature
articles entitled Are the Za
balsu Coming Back?" The Zai-
batsu arc the big business com
bines which dominated Japa
ncse industry before World War
II. The word literally means
"money clique" or "the big
money.
As to whether they are com
ing back, the answer is yes.
It is doubtful if the big com
bines ever will return to their
commanding position of pre
war days when they controlled
70 per cent of Japan s industry
Both Japan and the world have
changed too much for that.
But big business swings plen
ty of weight in Japan today and
it is concentrating that weight
in order to compete better in
the richer and rougher world
market.
The latest manifestation is
the recently announced merger
plan for the three Mitsubishi
companies which build ships
and manufacture machine tools
The three firms, which retained
(he name of the industrial com
plex broken up by allied occu
pation authorities after the war,
together do 30 per cent of the
shipbuilding in Japan the
world's leading shipbuilding na
tion. They own 50 per cent of
Japan's shipyard capacity.
The Mitsubishi firms also
make 30 per cent of the turbine
boilers in Japan, 10 per cent of
the automobiles and 10 per cent
of the machine tools.
The companies today are call
ed Mitsubishi Heavy Industries,
reorganized (that is, broken up
by occupation authorities), Mit
subishi Shipbuilding and Engi
neering Co. and Mitsubishi Nip
pon Heavy Industries.
I're-War Name
The name of the merged com
pany will be Mitsubishi Heavy
Industries precisely the name
of the pre-war firm which made
much of Japan's military hard
ware. It will be the third largest
company in Japan after Hi
tachi Electric and Machine
Products and Toshiba Electric.
Mitsubishi's three constituent
firms had 76.505 employees in
1962 and made $46 million in
profits on .$750 million sales.
If Mitsubishi Electric also
joins the proposed combine, as
expected, it will be the biggest
single manufacturer in Japan.
The merger plan is highly com
plicated but is expected to be
accomplished by the spring of
1965 at the latest.
The three machinery compa
nies and the electric firm are,
in turn, only part of a larger
group of two dozen companies,
slill most bearing the name
Mitsubishi and descendant of
the pre-war Mitsubishi Zaibatsu.
The three Mitsubishi compa
nies which plan to merge arc
headed by three salaried man
agers who are relatively un
known far less prominent
than a number of big Japanese
bankers, (or instance. Banks
play a dominant role in indus
try because the capital struc-
m9mmmmmmr K"''iS
'4.
i
mas ms&i
FLOODED BY HURRICANE Port Acres, a suburb of Port following Hurricane Cindy. Some : families nl the area were
Arthur, Texas, ihows the extent of flooding from heavy rains evacuated by mnbiliied units of the Texas National Guard. (LTD
ture of Japanese companies con
sists mainly of bank loans.
Live Simply
Japan's big executives do not
go in for conspicuous living.
No yachts, big parties or show
place dwellings. The ideals of
the Japanese family life are
simplicity and austerity, quiet
and privacy, although it can be
said it takes a substantial in
come to achieve much of the
latter two.
The Zaibatsu, like Mitsubishi,
still overshadow individuals like
Matsushita and Honda and ag
gressive new companies like
Sony Electronics and Canon
Camera.
Of the Zaibatsus, Mitsubishi
still has the most cohesivencss,
the most esprit de corps, the
greatest "organization man"
philosophy.
The 24 companies make ma
chine tools, ships, electric prod
ucts, chemicals, steel, rayon,
cement, glass and paper. They
refine and sell petroleum prod
ucts, mine coal, carry ocean
freight, do warehousing, issue
insurance policies, sell real es
tate and do importing and ex
porting. Last year, they had more than
242,000 employees and earned
profits in excess of $172 mil
lion sales of $4.8 billion.
This would put the entire
Mitsubishi combine, if it were
completely reunited, at about
fifth place in the money rank
ings of American firms, al
though far behind General Mo
tors which had 600,000 em
ployees, profits of $1.5 billion
on sales of nearly $15 billion
last year.
II
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