Economic stability of cooperatives during the Great Depression
The reasons given today for the amendment of the Act in 1934, with the introduction of enforced membership, are, in fact, historically entirely incorrect. MĂŒller accurately recognised this in his commentary. Let us first take a look at a few figures. The most devastating crisis years were actually the four years from the start of 1929 until the end of 1932 (see e.g. Schulze 1993: 151 and Wehler 2003: 257 et seq). Let us see how the number of cooperatives changed in Germany over this period. All figures are taken from the statistical yearbooks of the German Reich from that time. Every year they included an overview with the heading âTotal number of Cooperatives (without central cooperatives)â as registered on 1 January of that year. The following figures were recorded:
1929 | 52,153 cooperatives (see statistical yearbook 1929: 349), |
1930 | 52,559 (see statistical yearbook 1933: 377), |
1931 | 52,505 (see statistical yearbook 1933: 377), |
1932 | 52,030 (see statistical yearbook 1933: 377) and |
1933 | 51,499 cooperatives (see statistical yearbook 1933: 377). |
So their number decreased by 654 over these four years of economic crisis (although they even increased in the first year). This represents believe it or not just 1.25%.
This is a net figure. It therefore also includes the founding of new cooperatives as well as normal exits (e.g. due to fusions). Let us compare this figure with the corresponding development of companies with other legal forms now. These are once again net figures. According to the current logic of federations and the majority of legal commentators, the drop in companies with other legal forms should therefore have been even smaller. The information on joint stock companies (Aktiengesellschaften) and private limited companies (Gesellschaften mit beschrÀnkter Haftung) is the most significant and the statistical yearbooks are able to help us once again.
Let us look at joint stock companies first: the year shifts here as the respective reference date in the statistical yearbook is 31 December, unlike for cooperatives. The currency reform of 1923 in the wake of hyperinflation resulted in an era-related particularity for joint stock companies of that time. Until the start of the 1930s, there were still joint stock companies (admittedly only a few) who still declared their shares in Mark (the name valid until the end of 1923) and not yet in Reichsmark (RM). The figures refer to the sum of both groups.
On 31 December 1928 and therefore on 1 January 1929, there were 11,842 joint stock companies (see statistical yearbook 1929: 339). Four years later, on 31 December 1932, this figure was 9,638 (see statistical yearbook 1933: 367). There was therefore a decrease of 2,204 joint stock companies. This corresponds with a drop of 18.6% compared to 1928/29. There were 680 insolvencies in this period, which represents 5.7% (see statistical yearbook 1929: 339; statistical yearbook 1930: 383; statistical yearbook 1931: 363; statistical yearbook 1932: 359; statistical yearbook 1933: 367).
It is a bit more complicated to determine figures for private limited companies. The statistical yearbooks do list the change in numbers of other legal forms, including private limited companies but the overall number of private limited companies is missing in those years. Legal literature can, however, help here, particularly large, extensive commentaries on the laws governing private limited companies whose introductory chapters also feature information on the history of private limited companies. We can therefore learn that there were 57,338 private limited companies in Germany in 1926 (Michalski 2010: 62). I assume that the reference date for this figure was the 31 December 1926. In 1927 and 1928 the number of private limited companies reduced by an overall 11,248 (see statistical yearbook 1930: 368). There were therefore still 46,090 at the turn of the year 1928/1929. This figure then dropped by 2,490 (see statistical yearbook 1930: 368) in 1929 and by a further overall 1,440 companies (see statistical yearbook 1933: 368) in the three years that followed â in other words by 3,930 over the four years of economic crisis that are of interest to us here. This represents 8.5%.
Let us now look at these figures again:
Drop in cooperatives | 1.25%, |
Drop in joint stock companies (AG) | 18.6%, |
Drop in private limited companies (GmbH) | 8.5%. |
The fall in the number of companies with share capital was therefore respectively 15 and 7 times greater than that of cooperatives.
Now there may be several other reasons behind this fall in joint stock companies and private limited companies other than the direct consequences of the Great Depression â an increase in fusions, for example, or relocation abroad. The legal commentary on private limited companies also names tax discriminations as a cause (see Michalski 2010: 62). However such reasons could only explain a small proportion of the drop in numbers. In conclusion, it can therefore be said that cooperatives resisted the Great Depression much better, indeed surprisingly better, than joint stock companies and pri...