Plan Z

by David Wragg

  The second group was ordered by the flotilla leader to patrol in the latitude of Finisterre, and shortly after dawn on 13 May, U-37 established contact and attacked. Once again, in poor visibility and worsening sea conditions, the convoy managed to escape. The flotilla leader then deployed the third group across the course of the convoy in the Bay of Biscay, while the seven boats of the two southern groups made the best speed possible on the surface chasing the convoy in heavy seas. The Erwin Wassner sighted the convoy at 15.00, and two of the third group’s boats, U-32 and U-34, joined the ‘surface raider’, but the Saar drove the convoy off to the west and contact was lost again. Nevertheless, the third boat of the group, U-35 made contact with the convoy at 19.00 and maintained contact until darkness, before attacking, and then maintaining contact until the Erwin Wassner caught up and attacked the convoy at 03.00 on the final day of the exercise. The Saar then followed with the remaining southerly submarines, before the Erwin Wassner changed sides to become a convoy escort. She was repeatedly attacked, although she did force the U-boats to dive.

  By dawn, seven U-boats were in the vicinity of the convoy. At 07.45, U-47 attacked from 500 yards, and then attacked from 300 yards ten minutes later. There were further attacks during the day, some from a range of up to 3,300 yards, and at the close of the exercise, at 20.00, the convoy was surrounded by thirteen U-boats.

  Not surprisingly, Dönitz concluded that for effectiveness, a ‘great number’ of U-boats was essential, and that this depended on the U-boat in contact with the convoy calling up others. This would overwhelm the convoy and stretch its escorts. He accepted that in the vast reaches of the Atlantic with the course of the convoy open to doubt, even larger numbers of U-boats would have to be deployed, and believed that this justified his proposal for larger and faster reconnaissance U-boats. Command would be divided between BdU in Germany which would deploy the U-boats along the expected course of the convoy and a flotilla leader or Fuhrer aboard a U-boat who would exercise tactical control. This, of course, indicated a heavy wireless traffic, and the risk of direction finding discovering the location of the U-boat groups, but Dönitz believed that accuracy would be difficult and that there would not be time for reinforcements to get into position to save the convoy.

  While he ignored developments such as radar, although he was to become involved with a trial scheme to fit basic radar aboard two U-boats, Dönitz anticipated correctly that a convoy would send its escorts on a dusk sweep astern of the convoy to detect tracking U-boats, although these ships would be vulnerable to torpedo attack, and he believed that the convoy would change course after dark.

  He also argued that there should be a small number of repair U-boats taking into account the more distant operations conducted away from U-boat bases.

  Nevertheless, Dönitz had his ideas challenged even by senior officers with U-boat experience. Konteradmiral (Rear Admiral) Furbringer argued that the Royal Navy was stronger so that surprise was essential for success, and that until U-boats could be made immune to Asdic, attacking against this defensive aid would be suicidal. Furbringer saw attacks on the escorts as essential, but dangerous, and that U-boat operations would have to be closely linked with those of a naval air arm.

  Dönitz was dogmatic about the importance of the U-boat, however, and even questioned the value of naval aviation in mid-Atlantic. There was no question that he was pleased with himself, completely confident that the May exercise had been a great success.

  CASE WHITE

  Meanwhile, events had been hurtling towards war. On 11 April, the directive for ‘Case White’, the long-planned attack on Poland after 1 September, had been issued by Hitler. He saw internal difficulties in France as pre-occupying her, and that this would mean that Great Britain would have to consider attacking on her own, an unlikely prospect. He argued convincingly, certainly as far as Raeder was concerned, that despite British and French guarantees to Poland, the conflict could be contained. Raeder was later to concede that many naval officers did not share this view, including Dönitz. Even so, Raeder followed an inspection of the U-boat flotillas on 22 July with a speech to the officers in which he told them that he had Hitler’s personal assurance that war with Great Britain would not occur in the near future.

  ‘Do not believe that the Fuhrer would bring us into such a desperate position,’ he assured his audience. ‘For war with England would mean Finis Germania!’

  In some of his official reports and other papers, Dönitz wrote as if he accepted the official line. Meanwhile, the U-boat specialists at the Marineleitung started to accept Dönitz’s arguments. This was despite one paper by the first staff officer in the U-boat department, worrying over the impact that carrier-borne aircraft would have on the U-boats, forcing them to keep submerged and therefore unable to track a convoy on the surface. On the other hand, the same paper also anticipated the Kriegsmarine being able to field adequate battleships and surface raiders to force the Royal Navy to deploy its own battleships as convoy escorts, and because of the limited numbers of such ships, having to concentrate all convoys onto one route, from the United States. This could only mean that he expected Plan Z to be implemented, at least for the most part if not in its entirety, which meant that war was not expected in autumn 1939.

  One interesting fact that emerges from this paper, is that he fully expected the United States to remain neutral, but nevertheless to continue to provide substantial support for the United Kingdom. Supplies from throughout the world would be concentrated in the US and convoys sent from East Coast ports across the Atlantic.

  In fact, the paper, written by a humble Kapitanleutnant (lieutenant-commander) glossed over a number of problems. It was remarkably prescient in seeing the threat posed by carrier-borne aircraft, but for some reason failed to consider the implications for the large, fast reconnaissance U-boats. It accepted Dönitz’s proposal for 300 U-boats, but then increased the numbers of other U-boats, with a figure of twenty for Fuhrer U-boats, so that sixty would be needed, and for reconnaissance suggested fifteen, making a total of forty-five. In addition, the author also proposed smaller boats for operations in the Baltic and the North Sea, as well as tanker U-boats to extend the patrol times, so that, in total, he was proposing a force of around 500 U-boats! This was a massive increase on even the final version of Plan Z – already extended at Dönitz’s request, and could only be realised by cutting the surface fleet element.

  Case White required all U-boats not required in the Baltic for the campaign against Poland to be deployed around the British Isles to attack merchant shipping should the United Kingdom honour its pledges to Poland. Senior officers in the Kriegsmarine were well aware of the secret treaty signed between Germany and the Soviet Union. In August 1939, just thirty-five boats were actually available for extended operations, and these left Wilhelmshaven in late August. Additional U-boats, the small Type IIs, were deployed to the North Sea while fourteen were left in the Baltic. Despite the relatively small number of submarines at this stage, and the frantic planning of the years from 1933, and even before, one problem encountered was a shortage of torpedoes. Of course, with virtually all of the 56 U-boats at sea, there would be nothing to replace them when they returned to base. Dönitz took the Erwin Wassner to Swindemunde, indicating that he was expecting action in the east, but it had been decided earlier that should war with the United Kingdom and France break out, he would take his command ship to Wilhelmshaven. Then came the news that both the UK and Poland were mobilising.

  The Kriegsmarine was now feeling the lack of ships of all kinds, not just U-boats. The two Panzerschiffe Graf Spee and Deutschland (not to be renamed Lutzow until November), with their supply ships, were being sent to their Atlantic patrol areas.

  As the Kriegsmarine prepared for war, Dönitz was disappointed when he was ordered to send his U-boats to their Atlantic stations taking a northerly course around the Faeroe Islands, using extra fuel and reducing their time on station to mid-September at the latest.

  H
itler was also suffering a major disappointment at this time. As war loomed, like the Kaiser before him, he attempted diplomacy. He even promised the British ambassador to Germany that he would guarantee the continued existence of the British Empire, even placing German forces at the disposal of the British government. One major setback to his plans was that he had learned, virtually at the last moment that he could not count on his ally, Mussolini. Italy would not declare war.

  The news that Germany was at war with the United Kingdom reached both Dönitz and Raeder within minutes of the uncoded signal being sent to all units of the Royal Navy, ‘Total Germany’, on 3 September 1939. Those around Dönitz saw his shock, and he left the room briefly to prepare a message of encouragement to his staff. Raeder was also surrounded by his staff when the news reached him, at his daily conference, and he too left the room. He detailed the fleet he would have had available under Plan Z had the war been postponed until 1944 or 1945, when with the cooperation of Japan and Italy, they could even have had a chance of defeating the Royal Navy.

  ‘Today the war breaks out against England-France,’ he noted in a memorandum, ‘which, according to the Fuhrer, we need not have reckoned with before about 1944 and which until the last moment the Fuhrer believed he should prevent … (the Kriegsmarine) could only show that it understood how to die with honour in order to create the foundations for later reconstruction.’

  * A number of vessel types were intended to increase in numbers after 1947, with the Type P battlecruisers eventually rising to 12 ships, aircraft carriers to 8, light cruisers to 24, and scout cruisers to 36.

  CHAPTER SIX

  The German War Economy

  With the absorption of Austria and, thanks to the Munich Agreement of 1938, the Czech Sudetenland into the Third Reich, Hitler had created a Grossdeutschland, making Germany the preeminent continental power in a way that the Kaiser had never achieved. Pre-First World War Germany had been a continental power without doubt, but pre-Second World War Germany was something else. Of course, Hitler wasn’t finished. There were those areas of Poland that had originally been part of Prussia, and these were still outside Grossdeutschland. The former Austrian territory of South Tyrol, German-speaking and as a result of Versailles, part of Italy was safe, at least for as long as the alliance between Germany and Italy lasted, which was effectively the same as saying as long as Hitler and Mussolini survived. There do not seem to have been plans to absorb the German-speaking part of Switzerland, but although the country was officially neutral, German aircraft did intrude into Swiss airspace during the war, and were intercepted by Swiss fighters.

  Nevertheless, in this moment of triumph, having faced down the British and the French and gained the territory he so desired, Hitler was faced with some practical and increasingly pressing problems. The massive demands of rearmament, which not only placed a great strain on the economy but also precluded industry having sufficient capacity for exports to earn much needed foreign currency, were increasingly being met by the Reichsbank printing money. In the wake of Munich it was forced to admit that there was no longer ‘complete stability of the German currency’, and indeed that although it was ‘not yet fully apparent’, ‘an inflation of the Reichsmark had begun.’ Inflation, the debilitating evil that had swung so many Germans behind Hitler and helped him to gain power, was on the march once again.

  PRESSURE FOR A PEACETIME ECONOMY

  The bankers and economists wanted to see a transition from a war economy to a peacetime economy so that printing of money to meet the demands on the exchequer could end. There had been no alternative to this policy throughout 1938, with the Reich unable to raise long-term loans on the international markets, the gold and foreign currency reserves wiped out, and the arms effort demanding the import of fuel, rubber, ore and non-ferrous metals. The Reichsbank noted that the nation’s leadership had managed to ‘avoid a war that would have jeopardised its earlier successes’ and warned that it had now to face the challenge of ‘avoiding … inflation whose consequences could be almost as dangerous.’

  The problem was that the financial world had taken Hitler at his word when he pronounced himself satisfied with the Munich Agreement, yet Hitler wanted the rest of Czechoslovakia and he wanted the territory lost to Poland as a result of Versailles. Hitler and most of the senior members of the armed forces now realised that they would have to fight the Western powers before they could make any significant advances in the East. Yet, Germany had to advance eastwards if it was to gain not just the much desired Lebensraum, but also the food, raw materials and most of all the oil reserves that Germany needed.

  Even before Munich, the military-economic office of the Oberkommando Wehrmacht was advised that it was to prepare for war against England in 1942. Already, the Fuhrer’s promise of no war with England until after 1943 was broken. It took just another two weeks for Goering to make his famous speech to senior Luftwaffe officers and prominent industrialists about needing a ‘gigantic programme compared to which previous achievements are insignificant.’ The Kriegsmarine’s role in this was to start a six year build up, Plan Z, which, of course, took it to 1944, two years after the date just given to the Oberkommando Wehrmacht for the outbreak of war.

  The problem was quite simple. Germany could not afford the level of armaments production experienced in 1938, let alone the further increases outlined by Goering in October, which effectively meant tripling production. As the year drew to a close, the Reich faced a massive cash flow crisis and an equally difficult foreign exchange situation. In the aftermath of Munich, with not just the ordinary German but also financial institutions buoyed up by optimism and the seeming assurance that peace lay ahead, the Reichsbank had been able to raise loans internally, issuing government bonds to the tune of 1.5 billion Reichsmarks, and then even managing to add another 350 million on top at short notice. Nevertheless, the Reich’s appetite for money was endless, and in late November, another attempt to raise 1.5 billion Reichsmarks in this way failed, with a third of the bonds left unsold.

  Hitler was left with the stark choice of imposing massive cuts in public spending or ordering the Reichsbank to print money, meaning accelerating inflation. Goering had already extended price controls beyond armaments contracts, but price controls were, and remain, an ineffectual and crude weapon favoured only by the economically illiterate.

  In short, the planned armaments programme meant that 30 per cent of Germany’s gross domestic product would have to be spent on the Wehrmacht alone. This ignored the demands of the other projects also needed to make the country ready for war, including development of communications and manufacturing industry, and, of course, the synthetic fuel and rubber production processes in which so much hope was being placed.

  It is clear that during the winter of 1938–1939, the Reichsbank used economic arguments in an attempt to dissuade Hitler from following his rearmament plans. It was not that the president of the Reichsbank, Horace Schacht was opposed to German rearmament. He was a Nazi and a follower of Hitler, but he believed that rearmament should be within limits. In other words, that it should only proceed at a pace that the country could afford. It mattered not at all with Hitler that this was well-intentioned advice from a supporter with a sound grasp of economics. Within two weeks of receiving the advice, Schacht was dismissed, along with his deputy, Friedrich Dreyse and the Director, Ernst Huelse. Two other signatories to the report resigned to show solidarity with the dismissed men, and to emphasise the importance of the advice. Perhaps appropriately enough, Schacht was replaced by a man called Funk! Walther Funk has been described as compliant. He was helped by a change to the Reichsbank’s constitution in June 1939, which abolished any formal limits to expansion of the money supply. Although the Reichsbank’s value remained at parity with the gold standard, in reality the country had abandoned the gold standard. This had been a long term Nazi aim, to free the Reich from the constraints that adherence to the gold standard implied.

  The truth was that, increasingly, Ge
rmany was becoming an artificial and closed economy, with growing restrictions on who could do what. In some ways, this was not unlike the hated Communist system which the National Socialists despised so much. There were differences, however. It is not for nothing that some say that Communists nationalise property, while Fascists nationalise people. Hitler had become an absolute dictator, and could determine the money supply as he wished. So often, the Fuhrer’s refusal to take advice is associated with his disagreements with his generals later in the war as the tide swung decisively against Germany, but this is wrong. In 1938 and 1939, he was already over ruling the advice of those with the training and experience that made them well qualified to pronounce on issues, whether they be of economics or of strategy.

  Inevitably, contradictory messages were being issued by the regime. In early 1938, the foreign exchange situation was dire, but temporary relief was given by the Anschluss, which brought Germany not only the territory and people of Austria, but that country’s foreign reserves. By August, exports were down 20 per cent compared with the same month in 1937. In mid-October, Goering was calling for a renewed export drive, and in November, the Wehrmacht was informed that exports would have priority over everything else! That was the same month that the Wehrmacht received the shocking news that its steel allocation for 1939 was to be cut from 530,000 tons to just 300,000 tons.

  Nevertheless, even Hitler could not conjure up everything that the Wehrmacht wanted. The country was at peace but the economy and industry were both on a war footing. Hitler could play with the Reichsmark and print as many as he liked, but he could not generate additional industrial capacity at whim, and nor could he magic additional foreign reserves with which to increase the supply of essential materials for the war effort. The overall level of military spending experienced in 1938 continued, which was far less than the Wehrmacht wanted, but it was already at a ruinous level. A sign of the state of the country was that the national budget was a state secret. For 1939, the Wehrmacht budget was set at 20.86 million Reichsmarks, of which 11.6 billion was for recurring expenditure and the remainder for expansion. There was considerable disparity between the armed forces. The Kriegsmarine thought it was doing well with a budget of 2.744 billion Reichsmarks, as did the Luftwaffe with 7.018 billion Reichsmarks, but the Army had to manage on 10.449 billion Reichsmarks, less than in 1938. The reduced steel allocation for 1939 also impacted heavily on the Army as the Navy was given priority.