The forgotten end of the Hoffmann factory 1954 (A report by Mika Hahn)
In the 50s, the small, previously unknown factory of war profiteer James Oswald Hoffmann stormed the peak of the German economic miracle. In Lintorf, near Düsseldorf, the ‘Hoffmann-Werke’ built more than 100,000 motorcycles, small cars and above all the German Vespa. In addition to that they built 150.000 bicycles, which made them the largest German bicycle exporter of the time. But in 1954 the "most modern German motorcycle factory" (according to the press) surprised the public with going bankrupt. In a Spiegel article (January 1955), the Director of the Rheinisch Westfälische Bank Walter Karklinat called the event “the biggest and ugliest collapse of the last 20 years." Hoffman was mainly accused of a wrong financial policy. Only a few months earlier he had been internationally celebrated, now the only thing that remained was nationwide ridicule. The public of Germany's economic miracle didn’t show an interest in a more detailed analysis. Rumor had it that the bankruptcy was directed from above, agreed by major German corporations and banks in order to protect established companies that had not yet recovered from the aftermath of war.
Solinger Fahrrad Fabrik Until his rapid rise, Hoffmann was a white sheet of the German car industry. Nobody really knew where he came from or who he actually was. In 1938, the Düsseldorf confectioner's son first participated as a general partner of the Solinger Fahrrad Fabrik, founded in 1934 by Franz Schaaf, in 1943 Hoffmann took over the 400-person business. The war tripled Hoffmann workforce, with "free" laborers. Then followed the rise of a Nazi model factory: 1942 involvement in the development of armory, 1943 Hoffman officially received a decoration from Hitler. 1944, the Hoffmann headquarters were bombed out, but Hoffmann had already started to draw the main capital from rented additional workshops 20 km distant in Gräfrath. The forced laborers’ living conditions there had repeatedly been criticized by the Police Authority of Solingen. Hoffmann procured an access ban for his "war-related operations," and the production of armor for the "final victory" continued until 8 May 1945. This needs to be mentioned at this point because after the war, Hoffmann showed a decidedly Christian approach and he was even said to be related to Cardinal Frings.
The birth of the Vespa in Germany On the 9th of August 1949 the real rise of the company began when James Oswald Hoffman and Enrico Piaggio were signing the Vespa manufacturing license. Hoffmann was the first licensee of the Vespa that by now has been produced about 15million times. On the 9th of September 1949, the company was renamed "Hoffman-Werke". Until then only a few people had known the Vespa in Germany. While it was initially smiled upon as a ladies’ vehicle, the scooter quickly developed to a masculine status symbol. A gold mine for Hoffmann: Even before the workshop was completed, the annual production of 1950 was completely sold-out! The medium-sized bicycle manufacturer Hoffmann now gained nationwide popularity. Celebrities suddenly found themselves in the middle of idyllic Lintorf: Stars and starlets, ministers, journalists and racers streamed there. Even a film with John Heesters and Co. was shot.
Recovery made by Vespa A nationwide Vespa dealer network was created in a very short time, of which the entire Hoffmann-2wheeler segment gained profit: While in 1949 only 4815 motorbikes were produced, the production numbers increased to 9024 in 1950. In the 125cc motorcycles class, the Hoffman-Werke were Germany's third largest provider.
Buoyed by the success of the Vespa, Hoffmann started the costly development of engine and chassis designs. The success seemed assured, the excitement knew no boundaries ... We cannot tell the entire Hoffmann-story here for reasons of space. Only this: The Vespa did write an economic success story, an almost unimaginable cult grew around this motorized piece of tin. Also in 1951 the whole production of 8343 Vespas was sold out, 1952 the Lintorf factory built 11.801 scooters. In addition, also the sales figures of motorbikes saw a rise. And the peak was not reached: In 1953 Hoffmann produced 15.295 Vespa scooters. But unfortunately "produce" does not mean "sell". Although in 1953, sales increased by 11 million to 36 million DM in comparison to the previous year, more and more problems came up: A new generation of scooters with more power and bigger wheels, such as the Zündapp Bella or Glass Goggo, started to drive the Vespa out of the market.
Autumn 1953 Vespa Königin and Hoffmann Gouverneur In the fall of 1953 Hoffmann tried to react and launched the Vespa Special Model "Königin" with plenty of chrome and other colors. Also the "Hoffmann Gouverneur" the world's first motorcycle with a 250cc boxer engine and shaft drive. After many years of expensive development Hoffman hoped for black numbers again. Yet these two constructions were the very beginning of the end... but by then nobody could tell that in Lintorf. In May 1954 the American LIFE-magazine even published a special issue of the magazine titled: "Germany - A Giant Awakened." In this issue, Hoffman was found in a row with Jost Henkel and Alfred Krupp. Hoffmann is characterized as a "new capitalist". The initial staff of 63 in 1945 had seen a rise to 950 by 1954. This also made the land of infinite opportunity marvel. Hoffmann’s designs were internationally acclaimed, France ordered 300 Gouverneur motorcycles for the police. Everybody squinted hopefully towards French follow-up orders. Also Indonesia and Taiwan provided a market for the Gouverneur.
"Piaggio suddenly considered the license agreements violated by the special model “Königin”. Piaggio's main argument was Hoffmann's modified engine that delivered 5 instead of 4.5hp.”
Tristesse in Lintorf: But amid the general optimism came the first bad news: Piaggio announced the end of the Hoffmann’s Vespa manufacturing license, running until 1960. Ten months after the “Königin”'s presentation at the 1953 IFMA, Piaggio considered the license agreements violated by the special model. Piaggio's main argument was Hoffmann's engine modification, the "increase" of 4.5 hp to 5 hp. Hoffmann confronted Piaggio with the fact that they quoted 5hp in the description of the Italian "model 53". In a written reply, the Italians declared that the "rounding up" of power was their own right and of no concern to Hoffmann. "If the Vespa no longer corresponds to the license, then I will pay no more fees ..." said Hoffmann to his house lawyer Hassel and handed over the Piaggio letter to Düsseldorf’s Regional Court.
"1954 was the fateful year for the Hoffmann factory. The efforts concerning the governor didn’t lead to the desired success." It turned out that the bike was expensive, relatively inefficient and prone to technical defects.
Messerschmitt and BMW - the ailing giants It is surprising that the termination of the Vespa license happened at the same time as Hoffman announced the production of the cabin car, because ironically, the Vespa license was taken over by the Messerschmitt company, a former airplane manufacturer like Piaggio. The Augsburg-based company was not allowed to produce airplanes after the war, and produced the "bubble car" instead, which occupied the same segment of the market as Hoffmann's small cars. Messerschmitt himself had to cope with a five million DM debt. The production of the small car devoured 150000-200000DM every month, sales stagnated in 1954. This endangered the whole enterprise.
Accused: Hoffmann against BMW The events in Lintorf were racing in November 1954. Hoffmann had been accused by BMW and the Milanese Iso-works that the cabin car was a slavish imitation of the Isetta 250. At this point, the Isetta was not yet built by BMW and Hoffman enjoyed a head start. Hoffman reacted to the accusation of plagiarism with a negative declaratory relief and felt confident of victory. That, however, was too optimistic, because the car cabin was in fact very similar to the Isetta. Hoffmann himself went on the offensive and called the Isetta "the cabin car’s bambino" in the press. Which meant that the Isetta was the actual plagiarism. "The Vespa also has been copied," Hoffmann said to his chief developer Röger, who had warned him of possible consequences. It's worth noting that other small car manufacturers were not sued. The Heinkel Cabin also showed visual similarities with the Isetta. The economic situation was very tense for BMW and Messerschmitt alike. BMW also had to contend with the difficult consequences of the Second World War. The automotive manufacturing in Eisenach was lost, so were the aircraft engine works Brandenburg and Eisenach. 95% of the production in 1943 consisted of engines for the German airforce, the revenue (1943: 653 million RM) was gigantic. After the war, BMW produced one-and two-cylinder motorcycles based on pre-war designs and luxury limousines which had enormously high production costs. The Isetta lured by high profits and a turnaround for BMW.
Working class thriller Before anything could be clarified, there came the final blow for Hoffmann: The Rheinisch-Westfälische Bank, Hoffmann's main bank, refused a (previously granted) loan of 500.000 DM. On the25th of November 1954 the Lintorf factory announced its bankruptcy to save the company by means of a collecting society. Instead of their weekly wage, workers found only 20 DM, fathers of children 25 DM in their pay packet. Which is why on the 12th of Dezember 1954, 358 workers occupied the factory: "We are hungry" and "We will not leave the factory until our wages are paid" was written on the posters that the workers had placed on the walls of the. The now 82-year-old Franz Kunert, then grinder, remembers that day: "In the winter of 1954 only so-called "butter donations" coming from the surrounding communities were able to secure the survival of some families. The old Hoffman had always been like a rich uncle from America with plenty of money. And there came this proud man, stood before us, said nothing and just arched his empty pants pockets inside out. That was a clear sign. On this day to protest turned into resignation. The workers occupied the factory for two weeks, trying to save it. The workers offered pay cuts, but even that could not help. To alleviate the first emergency Jacob Oswald Hoffmann, was said to have traded in rugs and pictures from his villa for a song to a pawnbroker. The situation outside of the work was also bad for many merchants and craftsmen, who had, in good faith, believed the positive messages until it was too late. Some had been in debt with bills. A merchant in Hamburg who had speculated with the cabin and already paid for 120 vehicles, as well as a wholesaler in Karlsruhe, committed suicide. These news did not appeared in any paper.
Rheinisch-Westfälische Bank: Connections to BMW and Messerschmitt What role did the bank play? "Hoffmann is the pawn sacrifice to save BMW and Messerschmitt," many people said back then. Hoffmann’s money donor, the Rheinisch-Westfälische Bank AG, was a successor to the Deutsche Bank. Decentralized by the Allies and neutralized again in 1957. It was a bit of a tricky situation because not only did the competitors BMW and Messerschmitt share the same house bank, but the companies had also been closely linked in the period before 1945. In the Nazi era Hans Rummel was at the same time manager of the Deutsche Bank and chairman of BMW. Victor von Rintelen (head of the Munich branch DB) and Max H. Schmidt were part of the 10-member supervisory board together with other members of the Deutsche Bank’s staff. There were also connections in the opposite direction: Franz Popp, a former board member of BMW, was part of the Deutsche Bank of Bavaria’s advisory board. Due to their customers’ powers of attorney, the German bank had about 50% of the voting shares of BMW. The German bank had granted Messerschmitt and its many subsidiaries million loans, which brought in good returns in the course of the war production. In 1945 Messerschmitt employed over 45.000 workers, the Regensburg factory alone achieved a turnover of 87 million RM. There were numerous connections between the Bavarian company BMW and Messerschmitt. The ME 262 for instance was equipped with two BMW 003 turbine engines for testing purposes in 1941. People knew each other in Augsburg and Munich.
"Hoffmann is a pawn sacrifice to save BMW and Messerschmitt," many people said back then.
...really surprised? The Rheinisch-Westfälische Bank (RWB) made known via the press, that they were totally surprised by the termination of the Vespa license. "If we had known that," Bank Director Karklinat complained in an interview with Spiegel magazine, "Hoffman would not have gotten a penny from us..." James Oswald Hoffmann refused to admit that he had kept facts from the bank. Quite on the contrary: The RWB had kept it a secret to the public that the current production had been transferred to it in March 1953! The bank by then had all the power and made use of it. The production was confiscated, its delivery was prohibited. Particularly controversial: All vehicles had already been sold by means of prolongation bills! The whole of Germany now complained about Hoffmann. The bank knew that Hoffman would return the Vespa license as soon as the development of a scooter of his own was completed. In November 1953, Hoffmann engineer Kirchdörfer had reported to Düsseldorf RWB’s director Dr. Hoffmann Dicke about Vespa sales problems and presented him a potential successor. The fullbody motorcycle "comet" with a Vespa legshield was shown on exhibitions in 1953 and leaflets of a slimmed down version ("Meteor") were distributed to dealers in 1954. The Hoffmann-cabin could have been the big prize. The RWB let the famous French designer IA Gregoire write a report, and he prophesied the Hoffmann small car a good sale. Over 16 million dollars would have obtained from the delivery of the 800 small car sales orders.
DDR press The East German press reported in much greater detail about the possible reasons behind the Hoffmann-collapse. There, the focus was primarily on the Messerschmitt involvement: Ernst Wilhelm Schmidt (1892-1958), board member and former head of economic department of the Deutsche Bank in Berlin, was a defense industry leader. He gave lectures on the German War leadership and advocated large exposures for the heavy industry. After the war he served in the same position at the Rheinisch-Westfälische Bank in Düsseldorf and, as a friend of Messerschmitt, was said to have made use of his influence.
"The press spoke of ten million DM in debt. A total of 570 creditors however presented a total of 12.869.604 DM receivables"
"Maybe the Hoffmann cabin would have hit the jackpot. Over 16 million dollars would have obtained from the delivery of the 800 small car sales orders."
Secret help from East German When the capitalists in the West let Hoffman down, unexpected help came from the East. A delegation from Chemnitz (Karl-Marx-Stadt) appeared unannounced, delivered DM 200 and promised more: Accountant Scherfenkemp traveled to East Germany, and was received by the "Committee for Workers Solidarity' in Berlin. There he received a suitcase full of money and an escort of state security brought him back to Lintorf. The money was not enough to completely pay the workers, but their campaign was supported. The east had hoped for an incredible workers' strike and wanted to be present, when the "liberation of the workers" was to take place. In return for the donations, the Stasi thus moved in with Hoffmann employees. In the Western press, the Eastern aids remained unmentioned.
The end and the new beginning Eventually, not the monthly salaries of the workers were the major problem, but Hoffmann's total debt. While the press spoke of a ten million DM debt, a total of 570 creditors presented a total of 12.869.604 DM receivables. These comprised the development and production costs for the Gouverneur-bike, the new Königin Vespa, the comet scooter and the cabin car. On the 4th of May in 1956 the Hoffmann works had managed to lower the debt ratio by about five million to a total of 7,835,675 DM through the sale of already produced motorcycles and scooters, as well as bicycle exports to America and Turkey. Without the lucrative sale of the cabin and only 778 produced Vespas in 1955. Also without the comet-scooter, that made everyone expect big sales. A totally unprofitable company would not have been able to lower the debt so quickly.
Agreement with BMW The bankruptcy proceedings took more than 2 1/2 years. The actually ruined Hoffmann was able to save his factory. BMW and Hoffmann signed an agreement on the cabin car’s future production: Proudly, Hoffmann let BMW chauffeur him around in their latest luxury cars, while the creditors were compensated with only 35%. Hoffmann had already transferred his villa to the Catholic Church ("Pope Pius personally"), with a life-long residency for the factory owner. The State of NRW took over 3.5 million DM of Hoffmann’s debts, because it had been calculated that an even larger damage would occur, if the Hoffmann-works were closed down or sold. The Hoffmann factory was thus allowed to return. Although no longer producing vehicles, but all kinds of metal items.
"1973 James Oswald Hoffmann died childless. Without much media attention the gates of the Lintorf factory were closed for good by the end of the year 1991."
Armor - Hoffmann's crisis-proof business The men from the Nazi era, who had returned to their positions within the Federal Armed Forces had not completely forgotten their old friend Hoffmann. Hoffman was among the first to be allowed to produce armor material. In 1973 Jakob Oswald Hoffmann died childless. Without much media attention the factory gates in Lintorf closed for good by the end of the year 1991. Today the 150 year-old ruins house an entire commercial park.
What if? What would have happened to Hoffman, if the factory had been allowed to actually bring the developed vehicles on the market? The BMW Isetta sold 160.000 times. Some say the Isetta has saved BMW. Maybe Hoffman would still build cars today? It is hard to tell, because even larger vehicle companies auch as Bogward have gone down. But this is a "completely different" story...
If you'd like to see the original PDF with pictures etc, you can can download the German document here.
Biography Mika Hahn, Mika Hahn was born in 1976 and studied history, media sciences and philosophy in Düsseldorf. He mainly deals with "forgotten" layers of mobility history. He is the editor of the Rheinische Motorjournal and author of the books Carrera Panamericana 1953, Kölsche Zweiradgeschichten, Outstanding Woman – Frauen ihrer Zeit voraus. In 2004 Mika Hahn published a book on the works of Hoffmann.