The Third Reich

by Thomas Childers

  Building on that theme and working without the knowledge of the Foreign Office, Ribbentrop engineered a treaty with Japan aimed at the looming Bolshevist menace. Although the agreement, signed on November 26, did not explicitly mention the Soviet Union, focusing instead on the Moscow-directed Communist International (Comintern), the real target was the Soviet Union. Both Japan and Germany recognized “that the aim of the Communist International . . . is to disintegrate and subdue existing states by all the means at its command.” They further agreed that “the toleration of interference by the Communist International in the internal affairs of the nations not only endangers their internal peace and social well-being, but is also a menace to the peace of the world desirous of co-operating in the defense against Communist subversive activities.” The parties pledged to assume a position of benevolent neutrality should one become involved in a war with another power, but beyond that, the Anti-Comintern Pact offered little that was concrete. Its value was in propaganda, a sign of Germany’s growing global influence.

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  By year’s end Hitler could point to an impressive string of accomplishments—the stunning foreign policy successes, the Olympic Games, and a striking economic recovery, albeit an uneven, shallow one. By 1936 Germany was enjoying full employment, and predictions circulated that Germany would face a labor shortage in the near future. But beneath the surface of these triumphs lurked a serious and escalating problem, one that threatened to undermine the regime’s successes. Since 1934 rearmament was proceeding at an ever-accelerating pace, and military demands on the economy were growing by the month. By winter 1936 rationing had been put in place on many consumer items. The rising price of food, especially meat, led to considerable grumbling. William Shirer, an American journalist stationed in Berlin, reported in his diary that he had seen “long lines of sullen people before the food shops, that there is a shortage of meat and butter and fruit and fats, that whipped cream is verboten, that men’s suits and women’s dresses are increasingly being made out of wood pulp, gasoline out of coal, rubber out of coal and lime; that there is no coverage for the Reichsmark or for anything else, not even for vital imports.” Already in the summer of 1935, state police officials in the Münster district were reporting that “the dissatisfaction mentioned over the past months has not abated but escalated. The cause is the tough economic situation that shows no sign of a quick turnaround, and can be traced back to higher prices and shortages of food.” The manifestations of that rising discontent could really “only be seen in the palpable passivity of a great portion of the population toward the movement and its events.” The reasons for this disenchantment could be found “in the great poverty of a large portion of the population which stands in stark contrast to the grand style of certain offices of the party and state.”

  It was growing increasingly clear to policymakers that the Third Reich faced an intractable dilemma: to build the military machine Hitler desired, Germany needed to import vast quantities of raw materials. To pay for these imports the Reich needed hard currency. Exports, primarily of consumer goods, had previously provided the bulk of that hard currency, but with an ever-increasing share of the economy being devoured by the military, production of consumer goods began a steep decline in 1935 and steadily gathered momentum. The man Hitler called on to manage his ambitious rearmament program was Reichsbank president Hjalmar Schacht. Appointed minister of economics in June 1934, Schacht was an internationally recognized financial wizard, and the task before him was to find the funds necessary for Hitler’s ambitious rearmament plans. Schacht fully supported Hitler’s desire to rearm and devised a system of off-budget financing to increase military spending that would avoid detection from Germany’s neighbors. Using a variety of financial and foreign trade strategies to fund (and disguise) Germany’s rearmament in 1933 and 1934, Schacht had managed to lay the economic foundation for the military’s expansion. His “New Plan” called for rearmament that would unfold in two phases, each phase taking roughly four years. The initial phase called for the creation of a defensive army, capable of protecting the Reich from all possible enemies. The second phase would be devoted to developing offensive capabilities, tanks, and other armored vehicles.

  But the Wehrmacht, with Hitler’s wholehearted approval, was impatient. Its demands for raw materials escalated steadily in 1934 and 1935, and astronomically thereafter. In November 1935 Minister of War Blomberg informed all the service chiefs that they were no longer to concern themselves with costs and to order anything they needed. The response was swift. In the following month the army added forty-eight tank battalions to its projected thirty-six divisions, adding an offensive capability that Schacht’s plan had not foreseen until 1938. The air force also scheduled a vast expansion of its strength from forty-eight squadrons in 1935 to over two hundred by October 1938, and the navy was quick to follow suit. By 1936 military spending dominated the German economy and continued to climb; by 1938 the military accounted for 80 percent of the goods and services purchased by the Reich.

  For Schacht this was altogether too much too soon. In a series of increasingly frank memoranda and meetings with Hitler, Schacht tried to impress upon the Führer that the German economy simply could not cope with such demands. The Wehrmacht desperately needed ever-greater supplies of raw materials, especially iron, rubber, and oil, and needed them as soon as possible. Other states, jolted into action by Germany’s feverish rearmament, had begun to increase their military spending. There was no time to waste. The problem, as Schacht tried to explain, was that Germany lacked the necessary hard currency to procure the needed goods. Autarky had possibilities but was not the answer. Germany needed to rejoin the world economy and export. If the regime persisted in its massive rearmament and at this accelerated pace, the economy would simply implode.

  To prevent an economic catastrophe, Germany must either slow the pace of rearmament or temporarily halt it. Schacht was not reticent in presenting this gloomy prognostication to Hitler, which he pressed with ever greater bluntness. Unaccustomed to hearing such direct criticism and uninterested in either of Schacht’s unpalatable options, Hitler turned a deaf ear to such worries. He did not want to hear about the laws of economics as Schacht saw them and was not at all concerned about how the raw materials were acquired, just that they were. His overarching goal was preparation for war, and he was not about to let troublesome economic realities stand in his way. He would brook no criticism, even from his experts. The economy was there to serve the regime, to provide the state with what it required to realize its goal, and that goal was war. By 1936 he had grown weary of the economics minister’s pessimism and bleak forebodings. “He must go,” Goebbels noted in his diary. “He is a cancerous shadow on our politics.”

  In July, Hitler removed Schacht from his post as economics minister and forced him to take a leave of absence as director of the Reichsbank. Schacht would remain a member of the cabinet and continued to express his objections to the course of German economic planning, but Hitler wasn’t listening. He needed someone to lead the economy who would not be deterred by economic “inconveniences” but would make his preparations for war with ruthlessness and energy. That man was Hermann Göring. At the Nuremberg party rally in September 1936, Hitler announced a new Four Year Plan that would make Germany militarily and economically prepared for war within four years. He also revealed the creation of a new ad hoc organization that would assume command of the economy. Göring would lead this Office of the Four Year Plan, and his mission was abundantly clear: he was not to worry about the balance of payments, currency issues, foreign trade, or civilian needs; his job was to ensure the Reich’s preparedness for war within four years, whatever the costs. Hitler was aware of the privations being forced on the German people, but could only state that the people should be prepared to sacrifice for the good of the nation.

  In December, Göring spelled out the dire situation to a gathering of industrialists. Germany was engaged in a life-or-death struggle, and
“no end of rearmament is in sight. The struggle which we are approaching demands a colossal measure of productive ability.” It mattered not if every investment could be amortized. “The whole deciding point to this case is victory or destruction. If we win, then business will be sufficiently compensated. . . . We are now playing for the highest stakes . . . All selfish interests must be put aside. Our whole nation is at stake. We live in a time when the final battles are in sight. We are already on the threshold of mobilization and are at war, only the guns are not yet firing.”

  Under Göring’s management of the economy, a dramatic surge in military spending, astronomical in scope, began. To raise and equip an army of roughly three and a half million troops in only four years, large parts of German industry would have to be retooled; other manufacturing plants brought on line; workers retrained. The economy would be stretched to the limit—and beyond. By 1940 the army was to be a fully equipped fighting force of 102 divisions and more than 3.6 million men. At least five thousand tanks were to be produced in the same time frame. The Luftwaffe also issued an order that its forces should be at full strength by 1937, a full year ahead of schedule, adding more complications for economic planning. Wehrmacht thinking was no longer focused on defensive considerations but on a force trained and equipped for offensive operations.

  This massive military buildup imposed serious strains on the economy. Aside from the currency and balance of payments problems, for which there was no obvious financial solution, there was the looming question of what was to happen when this massive flood of spending subsided, when the factories had filled all their orders and the production targets had been met. Would the armaments factories then function at half time, lay off millions of workers, or close their doors? If this rapacious military machine was not to be used in the near future, would armaments production at the same pace be necessary? Although the Nazis did not trouble themselves very much about such long-range questions, they had, in fact, created an economy that was based on war and expansion. As economic historian Adam Tooze has aptly put it, “War now had to be contemplated not as an option, but as the logical consequence of the preparations being made.”

  The year 1937 was bereft of any major foreign policy crisis, and yet amid all the frenzied military and economic activity, an air of nervousness prevailed. The Socialist underground reported that “more than ever all strata of the population are filled with the worry that war is imminent.” That fear was heightened in September when the regime conducted air raid drills in Berlin, blacking out the city for three consecutive nights. Other cities were encouraged to do the same. The Socialist underground reported that “the Four-Year-Plan, the rationing of food supplies, the deployment orders for the event of a general mobilization, the heightened activity of air defense, the involvement of Germany in Spain, and the boundless agitation against the Soviet Union—all this provides constant nourishment for the war psychosis.” Women in the National Socialist Women’s Organization were “being trained to take over men’s jobs,” and “in recent months the Hitler Youth has introduced special training afternoons, during which the youths practiced throwing hand grenades and firing machine guns.”

  Hitler needed some sort of foreign policy success, some new surprise or dramatic exhibition of Nazi dynamism to reignite the people’s enthusiasm. He decided to host a lavish state visit by Mussolini to demonstrate the newfound solidarity between Germany and Italy. Preparations on the usual Nazi scale were undertaken. For three days in late October, the Duce was saluted, celebrated, and cheered by excited crowds that greeted him wherever he appeared. Mussolini was impressed. The visit culminated on a rainy night in Berlin, when the Führer and Duce gave speeches effusively touting Fascist solidarity to a rain-soaked crowd of 62,000 on the Maifeld. It was, a rapturous Goebbels believed, the largest crowd Mussolini had ever addressed. The stadium was bathed “in a magical light . . . Unfortunately much rain. But what does that matter on this night! I am completely happy.”

  Nothing concrete was achieved during the visit and potential problems still remained between the two regimes, especially over the status of Austria, but both powers considered the visit a spectacular success. Mussolini returned to Rome impressed with German power, organization, and Hitler himself. For his part, Hitler could feel that Germany was no longer isolated in Europe. Shortly after the visit, on November 6, Ribbentrop announced that Italy had joined the Anti-Comintern Pact, making for a Rome-Berlin-Tokyo axis of power, an apparent sign of Germany’s global reach.

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  It was under these circumstances that on November 5, 1937, Hitler convened a meeting of his top military commanders in the Reich Chancellery. The purpose of the meeting was ostensibly to settle mounting disagreements between the different branches of the armed forces over the allocation of increasingly scarce raw materials. Present in this small circle were Göring, in his dual capacity as head of the Four Year Plan and as commander of the Luftwaffe; Blomberg, minister of war; Fritsch, Commander; and chief-of-staff of the army, and Admiral Erich Raeder, supreme commander of the navy. Foreign Minister Constantin von Neurath was also in attendance, as was Hitler’s military attaché, Friedrich Hossbach. Raeder, whose complaints about steel allocations had prompted the meeting, was particularly galled by what he considered the preferential treatment given to Göring’s Luftwaffe—a grievance shared by Blomberg and other service chiefs. Raeder hoped that Hitler would resolve the dispute. Instead, and typically for Hitler, the Führer did not address the issue at hand until late in his presentation and then only fleetingly. To the surprise of his listeners, he launched into a lengthy monologue on foreign and economic policy, providing a sweeping overview of his strategic thinking. His demeanor was grim. This would be no blustery propaganda speech.

  “The aim of German policy,” Hitler began, was “to make secure and preserve the racial community and to enlarge it.” Preservation of “the German racial core” was, above all, a question of space. Lack of Lebensraum represented “the greatest danger to the German race,” and securing Germany’s future was “wholly conditional on solving the issue of space.” Over the next three hours, he assessed Germany’s economic options, particularly with regard to raw materials. Tin, steel, rubber, and oil were of course essential, but the food supply drew his greatest attention. Although some gains had been made, especially in the area of synthetics, the policy of pure autarky could not solve Germany’s food problems. Nor could a return to world trade, an oblique swipe at Schacht’s position. Expansion was the only realistic solution, as it had been for the great empires from the Romans to Frederick the Great to Bismarck. “Germany’s problem could only be solved by force and this was never without attendant risk. The only real question was ‘when and how.’ ”

  Germany’s first objective was to secure its southern and eastern flanks, and that meant seizing Czechoslovakia and Austria. Austria should be absorbed, if possible without military conflict, but the Czechs deserved no such consideration. “Die Tschechi,” as Hitler and the Nazis referred to Czechoslovakia, was an illegitimate state, created by the victors at Versailles. It was rich in raw materials and would simply disappear into the German Reich. Hitler then reviewed the strengths and weaknesses of the major powers and their likely responses to an act of German aggression. Britain and its empire were weaker than widely assumed and did not represent a serious threat; France would not act without Britain. Poland would not intervene alone, and if the German offensive was “lightning fast,” Russia would stay on the sidelines. Bolshevik Russia posed a long-term threat but, confronted by a fait accompli, would not take action. Italy, despite some difficulties regarding Austria, would be a reliable ally.

  With the other powers increasing their own military spending in response to Germany’s massive rearmament, the Reich could not afford a lengthy delay. Germany must act soon or lose its momentary advantage. It was his unalterable resolve that at the very latest the German economy and armed forces must be ready to act by 1943–45 or earlier if circu
mstances were favorable. At the conclusion of his presentation, the issue of resource allocation among the services was briefly addressed and resolved to Raeder’s satisfaction. But after the Führer’s remarkable talk, that question slipped distinctly into the background.

  The small circle of listeners was shocked by what they heard. Although the generals were certainly familiar with the basic thrust of Hitler’s ideas, never before had he laid them out so directly and so exhaustively. If they were taken aback by Hitler’s presentation, they were just as surprised when he solicited their comments. He listened attentively, sometimes jotting down notes, as Generals Fritsch and Blomberg raised serious objections. They were not opposed to the idea of Lebensraum, but they were stunned that Hitler was considering a course of action that would certainly lead to war not only with Czechoslovakia but with Britain and France—a war for which the Wehrmacht was ill prepared. Hitler did not interrupt or try to dissuade them—Göring was left to respond to their criticisms—but he must have been disappointed. He was not accustomed to dissent and certainly not the sharpness of their objections.

  No formal minutes were taken, and the only record of the proceedings are the notes written several days later by Colonel Hossbach. In the Hossbach Memorandum, many historians have seen a clear blueprint for action, an actual plan for German aggression. Others have claimed that Hitler’s speech was merely a tour d’horizon, a typical diversionary tactic to avoid having to address the armaments issue. But Hitler carried notes with him for the meeting, although he did not refer to them, and he displayed his famous memory for details. Hitler’s performance that day may have been an effort to avoid taking a side in the interservice dispute, but it seems more likely that his talk was a genuine effort to convince the generals of his vision. He clearly expected them to be carried along with him. Instead, the meeting ended with disagreement and harsh language.