Emil Lederer: Discussion Contribution on the Potash Industry (1921)

Emil Lederer’s recorded commission intervention, identified as “[Diskussionsbeitrag zur Kaliwirtschaft, S.304–307, Nr.7],” examines whether the potash industry should undergo full socialization after, or alongside, coal. Its scope is a single attributed speaking turn responding to earlier testimony and discussion. Lederer offers a conditional assessment rather than a settled recommendation: socialization must be judged by the productive economies it can achieve beyond private industrial concentration, weighed against the difficulties of managing export sales. His argument moves from plant closures and production quotas through foreign competition to possible combinations of public production, private marketing, taxation, and public shareholding.

The initial distinction is between an industry’s suitability for socialization in principle and its priority within a gradual programme. Lederer does not exclude potash from full socialization, but asks whether it is the appropriate next sector. Two questions organize his inquiry: how far production can be concentrated through closures, and how foreign trade affects the institutional choice. He initially associates comprehensive coordination with the strongest means of enforcing rationalization, then tests that expectation against conflicting expert testimony.

Witnesses have suggested that maximum output might be achieved by the twenty best plants or by eighty, against approximately two hundred existing works. Yet forecasts of closures under current arrangements reach only eight to twelve percent of total production. Lederer treats this discrepancy as an unresolved economic problem, not as proof of either private efficiency or socialization’s superiority:

Es ist also die Frage, ob die private Stillung bis zu dem ökonomischen Optimum führen würde?

English translation: The question, then, is whether private closure of plants would lead to the economic optimum?

The decisive comparison is not between uncoordinated private firms and coordinated public production. Private industrial groups already have incentives to concentrate output, subject to technical limits, factory capacity, and concessions governing residual brine. The question is whether these groups can also transfer production quotas across their organizational boundaries. Their separate interests may prevent the industry-wide redistribution required by the economic optimum. Lederer therefore distinguishes technically attainable concentration from closures feasible within existing private ownership. The conflicting estimates may describe these different limits rather than simply disagree about productive capacity.

His argument for socialization remains explicitly conditional. If private groups could close only ten percent of works while socialization could close forty or fifty percent, the additional economies would constitute a strong case for public reorganization. These figures are a hypothetical comparison, not established results. Institutional change is justified here by its capacity to overcome barriers between groups and reduce production costs, rather than by public ownership alone.

Foreign competition sharpens this reasoning. Competition from Spain and Alsace could require more extensive and rapid closures. Although competition is commonly invoked against socialization, Lederer reverses that inference:

So könnte gerade die ausländische Konkurrenz, die häufig als ein Argument gegen die Sozialisierung angeführt wird, ein Argument dafür sein, weil die Privatwirtschaft schwerlich zu umfangreichen und radikalen Quotenübertragungen, weiter zu einer Zusammenlegung von Konzernen oder Übertragung der Quoten außerhalb der Konzerne in die Konzerne kommen würde, da die einzelnen Gruppen eifersüchtig bemüht sind, ihre Selbständigkeit zu wahren.

English translation: Thus foreign competition itself, which is often cited as an argument against socialization, could be an argument for it, because private enterprise would scarcely undertake extensive and radical quota transfers, or a merger of industrial groups or the transfer into those groups of quotas held outside them, since the individual groups jealously strive to preserve their independence.

Competition nevertheless has a different significance for selling the product. Export trade involves changing circumstances, advertising, relationships with dealers, and knowledge of customers. Lederer also raises the possibility that successful sales require personal inducements, drawing analogies with machine tools and steel exports. He does not claim that the testimony establishes such practices in potash. His concern is that a fully socialized organization might struggle to reproduce commercial methods available to private businesses. The same international pressure can thus strengthen the case for centralized production while complicating the case for public control of marketing.

This tension leads him to consider separating production from trade. Publicly organized extraction and processing might deliver their entire output to a private marketing company, provided sales could reliably cover production costs. That company could pay a fixed addition to costs or remit a share of profits, possibly on a progressive scale. The difficulty is the allocation of losses: requiring public production to absorb a private marketing company’s losses would raise concerns. Lederer’s hesitation rests on an unresolved question of profitability:

Ich muß gestehen, daß ich hier auch nicht zu einer vollständig klaren Position kommen konnte, weil ich die Rentabilitätsverhältnisse tatsächlich noch für ungeklärt halte.

English translation: I must confess that here, too, I have been unable to arrive at a completely clear position, because I still consider the conditions of profitability to be unresolved.

If objections to full socialization carry sufficient weight, he identifies two further routes. The industry could become a tax-bearing unit with profit shares linked to the closure programme; alternatively, the public could acquire stakes in the existing joint-stock companies and participate automatically in their profits. These proposals explore public claims on industrial returns without resolving every organizational question. They remain subordinate to the central test: how much additional rationalization socialization would achieve.

Lederer ultimately assigns potentially decisive weight to the production-side advantage:

Denn dann wären die Vorteile in der Produktion, die Senkung der Kosten zu groß, als daß man dieses Risiko zu scheuen brauchte.

English translation: For then the advantages in production, the reduction in costs, would be too great for there to be any need to shrink from this risk.

“This risk” concerns marketing difficulties if socialization enables substantially greater closures. His concluding refusal to take a definitive position preserves that condition. The intervention’s relevance lies in its differentiated treatment of ownership, coordination, and commercial organization: production and sale need not receive the same institutional solution, and foreign competition supplies no automatic verdict. The choice depends on evidence about achievable concentration, quota transfers, profitability, and the distribution of risk.