The Founding of I.G. Farbenindustrie AG
The merger contract that created the Interessensgemeinschaft Farbenindustrie Aktiengesellschaft was signed by representatives of BASF, Bayer, Hoechst, Agfa, Weiler-ter-Meer and Griesheim-Elektron on December 2, 1925. While the appellation of a “community of interest” was kept, the partners henceforth constituted a single stock corporation (Aktiengesellschaft) known commonly as I.G. Farben. Among them the signatories already owned controlling interests in Cassella and Kalle AG, with no need for these to appear as direct partners. Under the agreement, BASF would raise capital to equal that of the merged companies. The combined headquarters would be set up in Frankfurt am Main. The leading position within the trust clearly belonged to the “Upper Rhine Group,” meaning the BASF enterprises. The combine officially assumed the name of I.G. Farbenindustrie AG on December 9, 1925. The equity capital of the merged firms consisted of 641.6 million reichsmark (RM) in common shares and 4.4 million RM in preferred shares. The merger placed I.G. Farben among the largest corporations in Europe and also among the largest chemicals producers in the world.
A restructuring of the dyestuffs industry followed in the wake of the I.G. merger. The number of production sites was reduced so as to achieve greater concentration and lower costs in production. Important products would be developed and produced at two locations within the combine’s operations. This was espoused by Duisberg as a principle for maintaining an ideal level of competition within the combine. Such plans did not go through without conflicts among the partners, and arguments followed over which enterprise should remain within a given sector of production. The process of rationalization also led to cuts in personnel. Structural change and reorganization soon brought their first tangible fruits, however, and with the decline in costs a successful reentry to the international markets seemed within reach.
The consolidation into I.G. Farben was also meant to restore greater control over international markets. Branches and subsidiaries were founded all over the world, and I.G. Farben also held shares in about 500 independent foreign firms. The German dyestuffs industry had made a first run at securing new positions on the international market already in the wake of World War I. Negotiations in the early 1920s with chemicals firms in France and Britain had aimed at cartel arrangements with regard to dyestuff markets. A three-way cartel arose among companies in Germany, France and Switzerland and came to control 61 percent of world dyestuff production by 1929. That share rose to 65.61 percent through the subsequent inclusion of the British ICI. While this showed the economic power of I.G. Farben, the German dyestuffs industry proved unable to recapture the near-monopoly it had enjoyed on the world market before the war.
I.G. Farben grew increasingly powerful in the years after its founding and by 1928 appeared to be the most important group within all German industry. Its total shares achieved a market value of 3 billion RM in 1928, amounting to 2 percent of the German national product of 150 billion RM. By June 1929, on the eve of the global economic crisis, I.G. Farben employed 19,801 managerial personnel and 65,592 industrial workers.
(DOP; transl. NL; based on: Karl Heinz Roth: Die Geschichte der I.G. Farbenindustrie AG von der Gründung bis zum Ende der Weimarer Republik)