It is in a section where he is referring to the collapse of the German economy during and after hyperinflation…

p.10 The Gathering Storm – The Follies of the Victors 1919–1929

Here is the passage that I'm referring to:

… savings of the middle classes were wiped out, and a natural following was thus provided for the banners of National Socialism. The whole structure of German industry was distorted by the growth of mushroom trusts. The entire working capital of the country had disappeared.

I can't find any reference to the phrase on Google. From context, I guess that he's referring to industrial assets being squirrelled into opaque, family run conglomerate type holding trusts, but that is just a guess.

Can anyone help?

  • Are there footnotes for that section that might help?
    – T.E.D.
    Aug 2, 2021 at 13:24
  • This is likely to be referring to the leveraged investment trusts that promoted stock speculation shortly before the 1929 Great Crash, not just restricted to Germany and six years after the period of hyperinflation. For the American equivalent, it is worth reading J.K.Galbraith
    – Henry
    Aug 3, 2021 at 17:22

1 Answer 1


Mushroom is used here as a metaphor/analogy for appearing suddenly, growing fast to immense sizes, seemingly out of nowhere — but also not being a producer — of new/primary biomass, rather a destruent, decomposer or consumer —, not from a solid base, not stable in itself, prone to disappearing as fast they came into view.

This of course only understands the mushroom as the fruiting body isolated from the 'real' fungus, while at the same time mirrors the 'popular with Nazis' distinction in vocabulary between 'productive and greedy capital' ('schaffendes und raffendes').

Therefore this is not really about "industrial assets" but about financial products, which most of the time were no longer connected in a meaningful way to the industrial base of the economy.

A contemporary usage example would be:

In discussing the bank and the investment trust as they exist in this country today, we are dealing with two entirely distinct types of financial organization: one possessing ancient and honorable traditions based upon centuries of experience and practice; the other new, a mushroom growth, which has, however, attained such proportions in the brief period of its existence that it cannot be ignored as an important factor in current financial history. Its story, though brief, has been dramatic. In the name of the investment trust, huge sums, variously estimated, but running well into the billions, were conjured up as if by magic and placed under the control of small groups of men—some of them experienced and cautious, others less so.

All sorts of financial structures, some simple, some complex, some sound and some unsound, received this great flow of dollars. It is no wonder, then, that not all of the investment trusts were equally well prepared for the sudden change of scene that came with the unprecedentedly rapid de- cline in stock prices between September and the early days of November, 1929.

— Edgar Lawrence Smith: "The Bank and the Investment Trust", Proceedings of the Academy of Political Science, Vol. 13, No. 4, Business, Speculation and Money, 1930, pp. 35–41. jstor


Before I900, however, British investors had taken the first step toward clear thinking in these matters, and were distin- guishing between investment trust companies in the stricter sense, and finance, holding, and development companies having far more ambitious objectives. This clarification of terms was in part a result of the sobering experiences of 1890-95, following the mushroom growth of such a variety of financial enterprises during the preceding five years. It fixed firmly in the public mind that investment trusts should aim merely at the safety which arises from careful selection, wide distribution, and continuous supervision; and the returns to be,had from overseas securities bought partly with low-cost capital.


A comparable period existed in Great Britain from 1890 to 1896, when British investment trust companies were subjected to their "acid test." In the last years of the eighties, a period of mushroom growth, many abuses had arisen, such as careless buying, speculative trading transactions, the pyramiding of paper values through interrelated companies, unsound dividend policies, and excessive organizers' profits. The Baring Crisis called a halt to these tactics, and the following years ended in "separating the sheep from the goats." Upon so sound a basis has the investment trust business of Great Britain been conducted since I900 that neither the late war nor the present disturbed condition of the world commodity and security markets has been able to check the constant growth of public confidence.

— Leland Rex Robinson: "Investment Trusts", The Journal of Business of the University of Chicago , Jul., 1930, Vol. 3, No. 3 (Jul., 1930), pp. 279–316. jstor

And still in later analysis:

The key element in the American reparations plan was flexibility. Germany's creditors might receive reparations in several ways or allow them to remain within Germany. The plan did not, as Young conceived it, require continued American intervention or loans. What Young and his associates failed to perceive, however, was that their country's limited, initial commitment to inaugurate the reparations plan would quickly and uncontrollably mushroom into a massive and ongoing obligation to keep the system working.


To encourage Americans to buy high-interest foreign bonds and to combat the growing domestic recession, Governor Strong lowered the New York Reserve Bank's discount rate from 4.5 per cent to 3 per cent — the lowest rate in the world. Reparations expert Roland Boyden still feared that "the American investor is not eager for German loans." Unless the Germans embraced the Plan "whole- heartedly," warned Bankers Trust vice-president Fred I. Kent, "it will tremendously difficult, if not impossible, to place a large German loan in the United States."

The Government's "booming" of the Plan was echoed by the campaign of businessmen such as Bankers Trust vice-president Fred I. Kent, who helped rally the support of the International Chamber of Commerce as well as the National Foreign Trade Convent

— Frank Costigliola: "The United States and the Reconstruction of Germany in the 1920s", The Business History Review , Winter, 1976, Vol. 50, No. 4 (Winter, 1976), pp. 477–502. jstor

The German translation of Churchill's memoirs translates the critical passage as:

Die Ersparnisse des Mittelstandes wurden vernichtet, und dadurch bildete sich eine natürliche Gefolgschaft für das Banner des Nationalsozialismus. Der ganze Aufbau der deutschen Industrie geriet durch das pilzartige Wuchern von Trusts in Unordnung. Das Betriebskapital des Landes ging verloren.

— Winston Churchill: "Der Zweite Weltkrieg. Mit einem Epilog über die Nachkriegsjahre", Scherz Verlag: Bern, München, Wien, 1985 (1948).

Which seemingly 'clarifies':

The whole structure of German industry was thrown into disarray by the mushroom-like proliferation of trusts.

Alternatively, a seemingly 'left-wing' interpretation sees the building of cartels, combines, conglomerates and indeed industrial trusts as form of monopolizing the economy — and thus shaking the foundations of competition, innovation and progress. A German slogan of the time widely used to describe this process was Vertrustung (~'en-trustification') (Example from the official Files of the Reich-chancellory, example of Hitler criticizing this tendency during his Beerhall Putsch court speeches.).

While this view seemingly ignores the purely financial aspects in the problematic crisis years, it does highlight the economic power struggles that sclerotized the Weimar political system into walled up camps.

Mit Recht klagt die Denkschrift über die hypertrophische politische Machtstellung, die sich die Wirtschaft in ihrer Kartellierung und Vertrustung erobert habe. Wenn es aber die Aufgabe ist, die Macht der wirtschaftlichen Organisationen zu brechen, die heute dem Reiche ihren Willen aufzwingen, so dürfte der Vorschlag, „an die Stelle des einen politischen Zentrums, nach dem sich die Wirtschaft jetzt orientiert und das von ihr beherrscht wird, wieder eine Mehrheit von Zentren treten zu lassen", ein Rezept von fragwürdiger Heilwirkung enthalten.

(The memorandum rightly complains about the hypertrophic political position of power which the economy has conquered in its cartelisation and entanglement. But if the task is to break the power of the economic organisations which today impose their will on the Reich, the proposal to "let a majority of centres again take the place of the one political centre towards which the economy is now oriented and which is dominated by it" might contain a recipe of questionable curative effect.)

— Heinrich Triepel: "Der Föderalismus und die Revision der Weimarer Reichsverfassung", Zeitschrift für Politik , 1925, Vol. 14 (1925), pp. 193–230 jstor

This analysis of crisis in the year 1925 is of course counter caricatured by the real world founding of the perhaps best known trust: the infamous IG Farben. Also known not only for monopoly power but 'creative financing'.

It is noteworthy that the government under Stresemann decreed itself in 1923 to concentrate a range of businesses into such trusts:

On 2 November 1923, the Stresemann government issued the first Cartel Decree, which was intended to counteract excesses of the cartel system, but was not generally directed against cartelisation. A state cartel court was created which was responsible for all arbitration proceedings and disputes concerning external and internal cartel coercion. The private arbitration boards, which continued to be possible, were only permitted as a conciliation body for out-of-court settlements. Before and partly also after the Cartel Decree, the government compulsorily cartelised or compulsorily quotaed not only potash production but also coal and nitrogen production, the spirits, flint and cigarette industries as well as some less important branches, peat exports and the yeast and dried vegetable industry, and between 1919 and 1929 also brewery sales.


Between the decade before the First World War and the 1930s, the degree of cartelisation, i.e. the share of cartelised goods in total production, increased from about 25% to about 50%.


At the beginning of the 1930s, even the propagandists of the cartel movement doubted that the "macro-economic balance" of cartelisation was positive.

— H. G. Schröter: "Kartellierung und Dekartellierung 1890–1990", VSWG: Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte, 81. Bd., H. 4, 1994, pp. 457–493. jstor

These trusts were mainly found in Germany, where they were developed further under National-Socialism, but they were a popular idea throughout Europe. Only American and a few likewise minded countries refused the idea almost entirely at that time.

While not only the crimes committed during the following war led American policy and Churchill then to condemn these 'trusts' in general:

  1. At the earliest practicable date, the German economy shall be decentralized for the purpose of eliminating the present excessive concentration of economic power as exemplified in particular by cartels, syndicates, trusts and other monopolistic arrangements.

— "The 'Big Three' declaration", The Berlin (Potsdam) Conference, July 17-August 2, 1945 (a) Protocol of the Proceedings, August 2, 1945

  • 2
    That's really helpful, thanks. Just so I've got this straight in my head, is Churchill implying that these trusts were great fuel for Nazis to use as bait to gain voters? Much in the same way that financiers and fast moving private/venture capital are used as a flag to whip up anger whenever any financial crisis/job losses come along?
    – Tthis
    Aug 2, 2021 at 9:47
  • 2
    @Tthis Indeed. It's a blame game. With a base in reality of concrete problems, what Churchill describes is real, but the Nazi analysis overlooks systemic structures of cause & effect (great numbers—but imaginary value mainly on paper & in minds; a dependent, susceptible & vulnerable construct) in favour of naming names and insinuating (or blatantly stating) that it would have been 'a big plan by… (you know who)'. And that interpretation is then great for getting votes ('swamp is fine, we 'just' need to get rid of the gnats'). Aug 2, 2021 at 10:05
  • 1
    Would be interesting to know what term was used in the German translation of Churchill's work.
    – Jan
    Aug 2, 2021 at 10:28
  • 2
    @jan Yup. Seems a bit freely translated over all? But for the passage in Q, if authorized translation, seems helpful? Aug 2, 2021 at 10:38
  • 1
    To me it looks more like the translator was not aware of any obvious translation either. Another possible translation might be something about umbrellas or Dachverbände, with examples like IG Farben and Auto-Union (the latter only founded in 1932, though). But yours also makes a lot of sense.
    – Jan
    Aug 2, 2021 at 10:54

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