Hitler's Gift to the Hippies: The VW Beetle Story Part I – Rerun

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1:50Pushkit. Too quick? No, it was perfect. Pushkit, stop. You got it. Hey, it's Jacob. We are off for the next couple weeks Today, we're going to run a rerun. It's an episode I like a lot. It's the first of our two-part series about the Volkswagen Beetle. Really an extraordinary story. The car started out as Hitler's dream car, wound up the best-selling car in the world, and a hippie icon. Fun side note, this episode was recently nominated for a Signal Award for Best Episode of a History Podcast. So if you like the episode and you want to support the show and you have a minute, please vote for it.

2:30You don't have to, but it'll be nice. We'll put a link in the show notes that takes you to the page where you can do that. In any case, thanks for listening. Hope you like the show. And we'll be back in a few weeks with more new episodes.

2:53Where are we going to start this story, Jacob? The place is Hollywood. The time is the late 1960s. Yes. we are on the lot of a big Hollywood studio. They're making a racing picture, and they need to figure out what car the hero is going to drive. They know it's going to be something small, sporty, foreign. And so what they do is they get a bunch of candidates, a bunch of possible cars. So maybe an Aston Martin, like a little Fiat. Yeah, Volkswagen Beetle. And they park them on the studio lot right outside the commissary. and they just let like the ordinary people who work at the studio check out the cars as they're coming and going and they watch how the people react to the cars.

3:38And with most of the cars, people do what you expect. Maybe they kick the tires. Is that actually a thing? Is it just a metaphor? No, I think it's like back when rubber was bad. Really? Like your foot would go through? Is that what it was? I don't know. You want a little bounce on the tire. Okay. They like, you know, play with the steering wheel, whatever. But when the people get to the Volkswagen Beetle, they act in an entirely different way. They treat it not so much like a car, as like a cute little puppy. They're like petting it. Yeah, they're tapping the car. Yeah, yeah. And the producers see this and they think, oh, this car is different.

4:21This car has charisma. This car is a star. And they were originally going to call the movie Car Boy Girl. Why not? 60s, yeah. Sure. But they loved the Beatles so much that they ended up calling the movie The Love Bug. Herbie the Love Bug. I remember this from my childhood. I remember Herbie Goes Bananas, the sequel. Of course. It had the novelization, which I bought at the book fair and liked. The movie was a hit. I think the second biggest grossing movie of 1969, right behind Butch Cassidy and the Sundance Kid. Another classic. And, of course, so was the Beetle. Late 60s, peak Beetle. The car is, in fact, about to become, in a few years, the best-selling car of all time.

5:09A record that it still holds. And maybe my favorite thing about the Beetle, in a perverse way, this cute little puppy dog hippie car, was dreamed up by Adolf Hitler in part to conquer and subjugate his European neighbors. I'm Jacob Goldstein. And I'm Robert Smith, and this is Business History, otherwise known as Boy Boy Podcast. Otherwise known as a show about the history of business. These days we talk a lot about industrial policy, the role of government in commerce. When should a government intervene in the free market and decide what to manufacture, you know, pick winners and losers, determine the prices of things, even.

5:50Hitler tried to do all three, and it was a disaster, except for the car itself. It turned out to be pretty successful. The most successful car in the history of cars. In the 1930s, Germany was a wreck. It had lost World War I, had unsustainable reparations put on it, the Treaty of Versailles. It had the inflation of the 1920s. in the Weimar Republic. The inflation of all inflations. Wheelbarrows full of money. You've seen the pictures. And then coming in the 1930s, there is a global depression. And Germany is just hitting the skids. It's got 30 % unemployment, utter poverty, and Adolf Hitler comes in with his promises.

6:33Yeah, so 1933, Hitler comes to power, of course promising that he's going to, you know, make Germany the greatest nation on Earth. And one important part of his promise is material prosperity, right? Germany is, it's not just a country in the Depression, not just a country that has been burned with reparations. It is much poorer than France, the United Kingdom, and much, much poorer than the United States. And so part of Hitler's program, his promise, is to figure out how Germans can get the kind of mass-produced goods that ordinary people in the United States are now buying. And that's exactly what the Germans wanted to hear at this time.

7:14Sure. And in particular, you know, mass production and mass consumption is built on this idea of sort of the people, the mass of people. Right. And the mass of people is really important for Hitler and the Nazis. Right. There is this German word Volk, like folk. And it can mean people or it can mean nation. the Nazis have this term, and I will say now, I don't speak German, as you will hear in this show, but the Nazis have this term Volksgemeinschaft, which means people's community. And it is their dream of the Volk as a nation. And of course, crucially, right, for Hitler, the Volk doesn't mean all the people in Germany.

7:55It means the Aryans and not the Jews and not all the other undesirables. So Hitler comes to power with this promise of prosperity, and he starts promising all this Volks stuff. There's the... You can do it. You can do it. Volkschemfanger radio. People's radio. Volkskühlschrank. People's refrigerator, the cool. The cool. The Volkstrakter. Tractor. Tractor, yeah. And maybe the Fuhrer's favorite, in fact, the Volkswagen. And it's interesting because that Hitler really prioritizes this. You know, just a few weeks after he takes power in 1933. He goes to the Berlin Motor Show, which is amazing, right?

8:41But I mean, I guess at the time... He's got a lot to do. Yeah, and he's like, what do we need to do first? A car. And maybe because of the symbol of prosperity, or maybe because he's already thinking about what a car can do. And it's at that Motor Show, 1933, that he announces this dream of the Volkswagen. Yeah, and this dream for him, it like, it means a lot of things, right? There is also this idea that like, when the Volk have cars, it will help unite them as a people, right? If you think of traditional rural poverty, like you don't have a car, it's hard to go from town to town. But if everybody has a Wagen, then all the Volk, they can go and see the beautiful countryside.

9:20They can go and visit their neighbors. They are distinct regions. And in fact, were separate countries at one point, right? Not that long before this. Yes. So it brings them together as a country. And then there's another part of the plan, which is at this point, because there are not a lot of cars in Germany, Not a lot of Germans know how to drive. And Hitler has this desire to take new territory. And in order to do that, he is going to need young men with guns who can drive somewhere. And Germany really is far behind here, right? Like, in the U.S. at this point, there's something like one car or truck for every five people.

9:54And in Germany, it's more like one car or truck for every 150 people. Amazing. And it's interesting because Germany invented the car. Yeah. They invented the car and there were other small cars for sale, but they're really expensive. They're almost just bespoke hobby vehicles, right? Yeah, like even a cheap car in Germany at this point costs something like 2 ,000 Reichsmarks, which is around two years salary for a typical worker. And much more expensive, I should say, than basic cars in the U.S. were at this point, right? Germany had not mastered the mass production of the good, cheap car the way Ford and GM had in the United States.

10:33So Hitler's dream, car manufacturing, and that it be cheap enough that the German people can afford it. So Hitler says, no, it cannot be 2 ,000 Reichsmarks. It should be 990 Reichsmarks. I love this. Like he said, a 99-cent star. 990 Reichsmarks, which is less than half the price of the going car. And according to Hitler, like, he has all these ideas for it. It should seat four or five people so a German family can travel around, right? It should go at least 50 miles an hour, you know, that way you can get to Moscow in a timely way. Got to put the Blitz in the Blitzkrieg, right? Exactly right.

11:11And he says you should be able to mount machine guns on it. Sure. Not for the family vacation, but, you know, for other things. You never know. Other plans, right? And now there are German car makers in Germany, right? There's still a private industry at this point in the country. and they look at Hitler's specs and price and they say, no way. You know, they are, of course, aware that cheaper cars are made in the U.S., but the German market is way smaller than the U.S. There are fewer Germans. Germans are much poorer. So even if the automakers could get all of the knowledge, could build a factory like the ones in the United States, there just isn't a German market big enough to get the economy of scale to sell a car this good at a price this low.

12:00And the car makers, you know, they get together and they're like, so who's going to tell the Fuhrer, Adolf Hitler, that we can't do it? Mein Fuhrer, we have some notes on the Volkswagen. On your big plan, you've told everybody at the auto show. What? No, nobody's going to do that. So what does a company do when it doesn't want to deliver the bad news? They hire a consultant. Yes. That's what they're for. Yeah. They're going to have the consultant write a report to the Fuhrer that says, as an independent observer, it is not possible to make a car and sell it for 990 Reichsmarks. And pretty soon they find their man, automotive engineer by the name of Dr.

12:40Ferdinand Porsche. We'll talk about him after the break. We will.

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16:12Okay, that's the end of the ad. When we left, the German automakers had just decided to hire as their consultant one Dr. Ferdinand Porsche. I'm guessing he is not a medical doctor. He's not even an engineering doctor. He's an honorary engineering doctor. But the doctor's important. Maybe he gets the respect of the Fuhrer. He can lay the truth to him and just say it is not economically possible to build a cheap car. Well, yeah, and certainly Porsche is like legit at this point. He's been working in the auto industry for decades. He's in his mid-50s. He designed cars for Daimler. He worked on racing teams.

16:48And at this point, he is in fact a consultant. He's running a consultancy. And he gets this call from the automakers to be the, you know, bad news consultant. And he takes the job. He says, yeah, sure, I'll study this. I'll write a report. But he's like, no, I'm not going to tell the Fuhrer no. I'm going to tell him yes. Hell yes. Hell yes, and I'll be the man to make his Volkswagen dream come true. German hero. And so he gets to work designing the people's car of Hitler's dreams and pretty quickly comes up with this little scale model. And there are these amazing photos of Porsche and Hitler looking at a model that's like, I don't know, a foot long of what will become the Beetle.

17:32I would describe this car, except you have seen it. It looks exactly like every Volkswagen Beetle you have ever seen from the very beginning. It's that round little hedgehog looking car. And in this photo, you can see Porsche is on the left and Hitler, like full on Hitler, swastika, armband, mustache, slick down hair. He's like petting the bumper, just like the people at the movie studio that 30 years later. Yeah. And so we can talk about the design itself for a sec because it is so iconic is an overused word, but it really is. And they just nail it from the jump. Remember, at the time, American cars in the 1930s are long and sort of flat.

18:15I mean, if you picture it, right, there is a flat radiator grill on the front and then a long flat hood where the engine is. And then the top tends to be flat and long. It looks, those cars look like a coffin, if you can imagine the kind of boxiness of them, right? Yeah. Whereas the Beetle, it's incredibly round. And so there are a few things going on here, right? One is, at the time, this roundness, I mean, it is in fact aerodynamic. It conveyed modernity, right? And in design, the Germans loved modernity. There's also a fact about a circle, which is a circle has the most area inside it for the least amount of circumference.

18:55So if you're building a car and you're trying to make it cheap, you can use less metal to make it circular and make it feel inside like there's more space. There's one other photo here that's amazing, and it goes with what we're talking about. Same scene. In this instance, Porsche is like lifting up the back, what would be the trunk in a normal car. And Hitler is like gazing over to look and he's delighted. And I have to say, I find happy Hitler scarier than angry Hitler. He is kind of laughing his ass off because when you open the trunk of the car, what you see, in fact, is the engine. And I don't know if you've ever seen this in a Volkswagen Beetle, but the engine is in the back, which is an innovation at the time.

19:38And well, and also putting the engine in the back is part of what allows the front to be so round, right? In other cars at the time, the engine was in the front, the radiator was in the front, so you needed that big rectangle. And the air-cooled piece of this is key because there's not like modern antifreeze yet. The Germans don't have garages. And so it would basically freeze in the winter, particularly if you were like driving, say, to Moscow. Or just outside of Moscow. 15 miles outside of Moscow. Yes, exactly. Let's do one more picture. This one is from a few years later. Porsche has now built a full-size prototype of the Volkswagen Beetle.

20:18It is a convertible. and you can see in this photo, Hitler is sitting in the back and this is a detail I just love about this photo. There are bars behind the front seat, the sort of bars that you might see on a roller coaster, right? And these were made so that Hitler could ride in the back of a Volkswagen and stand up and hold onto the bar with one hand and with the other hand, well, you know what's going to happen with the other hand, yeah. Heil me, Sieg Heil. I don't know what Hitler says when he does the Heil Hitler. Yes. So it's the Heil Hitler mobile. And of course he loves it. Of course he loves it.

20:57But a prototype does not mean that you can actually build this car or build it cheaply. That's what Porsche is not telling him. Well, right. And this is like one of the great lessons of manufacturing, right? Like it's actually not that hard to build a prototype, right? To design a car. What they have to do now is build a factory, which really means kind of invent a factory, right? Like optimizing a factory to build quality products at scale cheaply is a profoundly hard problem. And this is the problem that the German auto industry knew all along was going to be there. They knew all along that, sure, you could design a prototype, but you can't build it profitably and sell it at the price Hitler insists on selling it at.

21:41Ah, mein Führer, we have some thoughts about the Volkswagen. Yeah, they basically drag their feet, right? Because they know, like, to try and build this factory and make this car and sell it at the right price would drive them out of business. So Hitler sees this happening and he's like, no, we're going to make this car. And so he goes back to his favorite place, the auto show in 1936, and gives another speech. I have to say, I just never knew this part of Hitler's obsession. I mean, he did give a lot of speeches. Yeah. We knew that part. I just didn't know the auto show part of it, right? And so here is what he says to the assembled auto manufacturers.

22:22I have given orders to pursue the preparations for the creation of the German people's car with relentless determination. and I will bring them to a conclusion and that, gentlemen, will be a successful conclusion. Mein Fuhrer? No, successful conclusion. That quote, by the way, comes from Bernhard Reiger's great book, The People's Car, A Global History of the Volkswagen Beetle. So we're at this stalemate, right? Hitler wants the car. None of the companies that build cars in Germany want to build it. And into this stalemate steps the Deutsche Arbeitsfront, which is the Nazis' national labor organization.

23:10And by this point, mid-30s, they are rich and powerful because when Hitler took power, what they did was they threw the heads of Germany's unions into concentration camps and took all the money from the unions. And instead of using that money for the benefit of their union workers, they decide they're going to use this money to get the Fuhrer's favor, right? To do what he wants and to put money into a factory. Yeah, they are going to build the factory to build the people's car and to run the project they pick. Some kiss ass they found off the street. Dr. Ferdinand Porsche. Yes. Yes. So where are we now?

23:48Porsche has his design. Yes. He has a source of capital. He has money, but he lacks human capital, right? This very important piece of industrialization, of progress, right? Nobody in Germany knows how to build a factory that's efficient enough to make cars at the scale that Hitler is dreaming of and as efficiently as Hitler is dreaming of. Like, nobody knows how to do it. This is one of those unappreciated facts about industrialization and the Industrial Revolution. You think it's just the machines. It is not the machines. It is people who can run the machines in a really productive, effective way.

24:23And the way you set up the machines and the way they all communicate with each other is something that is proprietary knowledge. It takes years to do. Yeah, I mean, the classic framework for economic growth was land, labor and capital. And then like 100 years in, somebody, Paul Rumer, actually, I think, was like, no, no, it's land, labor, capital and knowledge. So who knows how to build a big factory with an assembly line to make cars by the hundreds of thousands for the masses? Henry Ford, who literally invented mass production of cars, kind of invented modern mass production. He has perfected this in an amazing way.

25:04Yeah, of course, Henry Ford is really famous for two things, that assembly line you mentioned, and hating the Jews. Famous anti-Semite. Yeah. And like, not just like, oh, everybody used to hate the Jews. Like he really put his heart into it. Really did. He industrialized the Jew hating. He paid for this newspaper, the Dearborn Independent, that published this series called The International Jew. Was that pro or con, International Jew? Well, let me clarify. They consolidated the series into a book and the book was called The International Jew, The World's Foremost Problem. Hitler was a fan of the book.

25:43He actually had copies of it in his office in the 20s, translated into German. And he also had on his wall a portrait of Mein Heinrich, of Henry Ford. You know, it's bad if you have a picture of Adolf Hitler on your wall. But even worse is if Adolf Hitler has a picture of you on the wall. Like, that's as bad as it gets. That's peak. So, yes. So Dr. Portia and a few of his colleagues are able to travel to Michigan to see Henry Ford's incredible plant, incredible sort of temple of mass production and efficiency, learn from it and go back to Germany to build the factory. And what they saw really was a miracle at the time, the River Rouge plant, where raw materials like raw steel would go in one end.

26:32They had power plants, transformational, all of the industrial machinery. They had a foundry. And cars roll out the other end. Yeah. Like, it is a miracle at the time. And they think, oh, we got to build this for the Fuhrer. Yeah. And so they go out to basically the countryside where nothing exists. And they start building. They build, you know, the factory. But they also build a power plant and a foundry and houses where the workers are going to work. And the workers, by the way, are not just anybody. The workers themselves are going to be the Volk. It's going to be the car by the Volk for the Volk.