The Third Reich at War

by Richard J. Evans

  Arms production required massive quantities of steel, which Hitler ordered to be directed above all towards the army, rather than the navy or the air force. Introducing greater efficiency into the organization of steel production was not least the achievement of the Reich Economics Ministry and its leading official Hans Kehrl. He set up a new system of ordering and production at a meeting on 15 May 1942 of the new central planning body he had established with Milch to co-ordinate arms production. At the same time, Speer appointed savings engineers to advise firms on how to use steel and other raw materials more efficiently. Better machines and more automation reduced wastage. By May 1943 Speer could claim that less than half the iron and steel was used to produce an average ton of armaments than had been used in 1941. By the end of the war, each ton of steel was being used to produce four times the quantity of munitions than had been the case in 1941. However, steel production needed large quantities of coking coal, and this proved impossible to obtain, given the difficulties facing the railway system and the low productivity of forced labour in the mines. Moreover, the mines were still short of more than 100,000 workers, while the railways needed another 9,000 men to load and operate the trains transporting the coal. Told of these problems on 11 August 1942, Hitler declared bluntly: ‘If, due to the shortage of coking coal, the output of the steel industry cannot be raised as planned, then the war is lost.’21

  More coal was obtained by cutting allocations to domestic consumers by 10 per cent. Steel output was boosted to 2.7 million tons a month in early 1943 in the Greater German Reich. With the increase in steel allocations to ammunition factories, and the introduction of fresh incentives to industrialists, Speer was able to boast that arms production as a whole doubled in his first year of office. At the same time, Erhard Milch and the Air Ministry were able to double the monthly output of aircraft, not least by concentrating production in a small number of mammoth factories. Bringing the main producers into line by forcing them to make changes in their senior management, Milch pushed through a rationalization programme in which the development of new, more advanced fighters and bombers was sacrificed to the mass-production of huge numbers of existing models, thus achieving significant economies of scale. An advanced fighter plane, the Messerschmitt Me210, was already being manufactured, but the Air Ministry had pushed on too fast, leaving crucial problems of design and development unsolved. The aircraft was unstable, and yet hundreds were being produced. Milch cancelled the project and focused resources on producing planes such as the twin-engined Heinkel 111. This medium bomber had first flown in 1934 and had proved ineffective in the Blitz, so it was redeployed as a night interceptor over Germany, where it met with some success. Similarly, Milch directed resources towards bringing more Me109 fighter planes off the production lines. The number of factories making the fighter was reduced from seven to three, and production boosted from 180 a month to 1,000. These changes meant that twice as many aircraft were being produced per month in the summer of 1943 than had been the case a year and a half before.22

  The air force had repeatedly demanded modifications and improvements to existing aircraft, thus slowing down production; by the end of 1942, indeed, the number of design changes recommended for the Junkers Ju88 bomber had reached 18,000, while the specifications for changes to the Heinkel He177 heavy bomber stored in Heinkel’s design offices filled no fewer than fifty-six stout files. Working together with Milch, Speer did his best to ward off new demands for design changes, but it was not until early 1944 that he managed to reduce the number of models of combat aircraft in production from forty-two to thirty, then to nine, and eventually to five. The number of different types of tanks and armoured vehicles was slashed in January 1944, with the reluctant and much-delayed agreement of the army, from eighteen to seven, and a single type of anti-tank weapon replaced the existing twelve. Speer found a total of 151 different types of lorry being manufactured for military use; in 1942 he cut this down to twenty-three. This simplification process extended to coal-mining and machine-tools too, where a total of 440 different types of mechanical and hydraulic presses was reduced to thirty-six. Components were a particular problem, complicating and slowing down the production process; the Ju88 for example used more than 4,000 different types of bolt and screw. Its eventual replacement, the Ju288, used only 200. Here, and where possible in other areas too, automatic riveting machines replaced manual labour, and the simplification process also meant that workers required shorter and more elementary training than they had previously needed. All of this boosted productivity, which in the arms industries was more than 50 per cent higher in 1944 than it had been two years previously.23

  Speer also rationalized the production of tanks. Early in the war the German army had relied on two medium tanks, the Mark III and the Mark IV, and a Czech-designed tank, the T-38, all of which proved their worth in the invasion of Poland and Western Europe in 1939-40. But in 1941 they encountered the superior Soviet T-34, which was fast, manoeuvrable and at the same time better armoured and equipped with more effective guns. This led to a major rethink, resulting in the production of two new tanks, the 56-ton Tiger and 45-ton Panther. These were formidable weapons, much more than a match for the T-34, and far more heavily gunned than their American counterparts. Speer managed to have them rolling off the production lines in considerable quantities by 1943. But almost as soon as they began to be built in any numbers, Allied bombing began to destroy the factories where they were made, so they could never be turned out in sufficient numbers. By contrast Soviet industry was turning out four tanks to every one manufactured by the Germans by the beginning of 1943. The relocation of Soviet industry to the Urals had finally paid off.24 The German economy might have been able in some areas at least to produce better weapons than the economies of its enemies, but it was quite unable to match them for quantity. The move to standardized mass production came later in Germany than elsewhere; in the end, indeed, it came too late.25

  The difference in other areas of armaments production was similarly striking, if not quite so dramatic. Even the United States was only producing half as many infantry weapons as the Soviet Union in 1942, and hardly any more combat aircraft and tanks. The American rationalization method was the same as the German, concentrating production in a limited variety of gigantic plants turning out a small number of standardized armaments. Yet German rationalization in some areas was achieved at the cost of quality. The Me109 fighter plane, for example, was too slow to cope with its more manoeuvrable Soviet counterparts. The Junkers bombers were also too slow, and too small to carry a really devastating payload. The new Tiger and Panther tanks were superior products, but, as so often, they were rushed into battle before all the design problems had been ironed out. They had a worrying tendency to break down. And all too often they ran out of fuel and could not be resupplied.26 At the same time, the Soviet people paid dearly for their Herculean production efforts: hundreds of thousands of workers, in a manner that had already become familiar in Stalin’s drive to industrialize during the 1930s, were drafted in from the farms, agricultural production suffered, and there was widespread malnutrition and even starvation. The fever-pitch of Soviet economic mobilization evident in 1942 could not be kept up for very long. But American lend-lease arrangements provided the Soviet armies with large quantities of food, raw materials and communications equipment, especially radios and field telephones, and were making a huge difference to British equipment and supplies as well. Soon the Americans would enter the war in Europe and North Africa directly. Speer’s efforts at rationalization, Todt’s efficiency drive, Milch’s organizational reforms, Kehrl’s administrative changes, all were insufficient in the end.27

  By the middle of the war, the American economy was producing quantities of weapons, aircraft, warships, ammunition and military equipment that the Third Reich could not hope to match. In 1942, US factories produced nearly 48,000 aircraft; the following year saw nearly 86,000 roll off the production lines and in 1944 more than 114,000. O
f course, a large proportion of these went to fight the Japanese in the Pacific. But this still left huge numbers to be deployed in the European theatre of war. Moreover, both the Soviet Union and the United Kingdom were out-producing Germany as well. Thus in 1940 the Soviet Union produced more than 21,000 aircraft, in 1943 nearly 37,000. The British Empire produced, in 1940, 15,000 aircraft, in 1941, just over 20,000, in 1942, more than 23,000, in 1943, around 35,000, and in 1944, roughly 47,000: the overwhelming majority of these were produced in the UK itself. This compared to 10,000 new aircraft built in Germany in 1940, 11,000 in 1941, and getting on for 15,000 in 1942. The rationalization measures taken by Speer and Milch and the increasing concentration of resources on aircraft production only had an effect from 1943, when more than 26,000 rolled off the production lines, and 1944, where the figure reached nearly 40,000. This was still fewer than Britain and the Dominions produced, and less than a fifth of the combined production of the three main Allied powers.28

  It was the same in other areas. According to the German Combined Armed Forces Supreme Command, for instance, Germany managed to manufacture between 5,000 and 6,000 tanks a year from 1942 to 1944, thus failing significantly to increase output. This compared to Britain and the Dominions, where some 6,000 to 8,000 tanks were produced a year. The Soviet Union, however, produced around 19,000 tanks a year during this period, and US tank production rose from 17,000 in 1942 to more than 29,000 in 1944. In 1943 the combined Allied production of machine-guns came to 1,110,000, compared to 165,527 in Germany. Not all of the Allied military hardware was deployed against the Germans, of course: in particular, the British and Americans were waging hard-fought wars in Asia and the Pacific. Nevertheless, large quantities of American arms and equipment did find their way to Britain and the Soviet Union, to bolster what was already a massive Soviet superiority in tanks and aircraft. The writing was already on the wall in 1942, as Todt had realized.29 By 1944, it was clear for all to read.

  III

  The strain on the German economy could be gauged from the fact that, by 1944, 75 per cent of GDP was being devoted to the war, in comparison to 60 per cent in the Soviet Union and 55 per cent in Britain.30 Yet Germany could also benefit from the annexation or occupation of a large part of Europe in the first half of the war. As we have already seen, the takeover of Poland offered opportunities for enrichment that few were able to withstand. More importantly perhaps, the conquest of affluent countries in Western Europe, with their advanced industrial and prosperous agricultural sectors, held out the promise of making a major difference from 1940 onwards. Altogether, it has been estimated, the German sphere of influence in Europe in 1940 had a population of 290 million, with a prewar GDP greater than that of the USA. Among the conquered countries, France, Belgium and the Netherlands also had extensive overseas empires that added further potential to the Third Reich’s economic power. The German authorities began to set about exploiting the resources of the conquered countries with an abandon that did not augur well for the future well-being of the subject economies. In the initial euphoria of victory, looting and plunder were the order of the day. After the defeat of France, the German armies sequestered for their own use over 300,000 French rifles, more than 5,000 pieces of French artillery, nearly 4 million French shells and 2,170 French tanks, many of which were still being used by the German army in the later phases of the war. All of this constituted no more than a third of the total booty seized from the French by the Germans. Another third was supplied by the seizure of thousands of railway engines and vast quantities of rolling stock. The German railway system had been starved of investment in the years before the war, leading to severe delays in moving bulk supplies such as coal around the country. Now, however, it was able to replenish its depleted stocks with 4,260 locomotives and 140,000 freight cars and wagons from the French, Dutch and Belgian railways. Finally, the German armed forces confiscated massive quantities of raw materials for the arms industry back home, including 81,000 tons of copper, a year’s supply of tin and nickel and considerable quantities of petrol and oil. Altogether, the French estimated that 7.7 billion Reichsmarks’ worth of goods was taken from them during the occupation.31

  It was not only the German government and German armed forces that took advantage of the conquest of other countries: ordinary German soldiers, as we have already seen, did so as well. The scale of their depredations in Poland, the Soviet Union and Western and Southern Europe was considerable. The letters written by German soldiers are full of reports and promises of goods, looted or purchased with their German Reichsmarks, being sent to their families in Germany. Heinrich B̈ll, later to become famous as a Nobel prize-winning novelist, sent packets of butter, writing-paper, eggs, ladies’ shoes, onions and much more besides. ‘I’ve got half a suckling pig for you,’ he announced triumphantly to his family just before coming home on leave in 1940. Mothers and wives sent money in the post to their sons in France and Belgium, Latvia and Greece, intended for them to buy supplies to take or send home. Soldiers seldom returned to Germany without carrying bags and suitcases of presents, purchased or purloined. After the regime lifted restrictions on how much could be taken or sent home in this way, the number of packages sent from France to Germany by military post soon ran at more than three million a month. Soldiers’ pay was increased towards the end of 1940 explicitly in order to help them pay for foreign goods for their families. Still more important were the massive quantities of goods, equipment and above all foodstuffs officially requisitioned and sequestered by the German army and civilian authorities in occupied Eastern Europe.32

  The Third Reich also began to exploit the economies in subtler, less obvious ways. The exchange rate with the French and Belgian franc, the Dutch guilder and other currencies in occupied Western Europe was set at a level extremely favourable to the German Reichsmark. It has been estimated, for example, that the purchasing power of the Reichsmark in France was more than 60 per cent above what it would have been had the exchange rate been allowed to find its own level on the markets instead of being artificially fixed by decree.33 Germany imported huge quantities of goods legitimately from the conquered countries as well as simply looting them, but it did not pay for them by increasing its own exports commensurately. Instead, French, Dutch and Belgian firms exporting goods to Germany were paid by their own central banks in francs or guilders, and the sums paid marked up as debts to the Reichsbank in Berlin. The debts, of course, were never paid, so that by the end of 1944, the Reichsbank owed 8.5 billion Reichsmarks to the French, nearly 6 billion to the Dutch, and 5 billion to the Belgians and Luxembourgers.34 Altogether French payments to Germany amounted to nearly half of all French public expenditure in 1940, 1941 and 1942, and as much as 60 per cent in 1943.35 Germany, it has been estimated, was using 40 per cent of French resources by this time.36 Altogether, well over 30 per cent of the wartime net production of the occupied countries in the west was extracted by the Germans.37 The effects of these exactions on the domestic economies of the occupied countries were significant. German control over central banks in the occupied countries led to the end of restrictions on the issuing of banknotes, so that ‘occupation costs’ were paid not least by simply printing money, leading to serious inflation, made worse by the shortages of goods to purchase because they were being taken to Germany.38

  German companies were able to use the overvalued Reichsmark to gain control of rival firms in France, Belgium and other parts of Western Europe. They could be helped by German government regulation of trade and raw materials distribution, which generally worked to their advantage. Yet the enormous deficit Germany ran up through the non-repayment of debts to the central banks of the occupied countries obviously made it more difficult to export the capital needed to buy up companies in the conquered countries. I. G. Farben, the German Dye Trust, did manage to seize control of much of the French chemical industry, and German firms, above all the state-sponsored Hermann G̈ring Reich Works, snapped up much of the mining and iron and steel industr
ies in Alsace-Lorraine. German state sponsorship of the Hermann G̈ring Reich Works gave it an obvious advantage over private enterprise in the acquisition of foreign firms. Many of the enterprises taken over were state-controlled or foreign-owned; the Aryanization of Jewish firms also played a role here, though in overall terms they did not amount to very much. Many of the biggest private enterprises, however, escaped takeovers, including major Dutch multinationals like Philips, Shell and Unilever, or the huge steel combine that went under the name of Arbed. Of course, the German occupiers supervised the activities of these firms in many ways, but in most cases they were unable to exert direct control or reap direct financial benefits.39