The German War Economy
THE
GERMAN WAR ECONOMY
Today the German economy
is the third strongest in the world and many German companies such as
Volkswagen, Siemens, BMW, Adidas, and Porsche are at the forefront of
technological design and innovation, vorsprung durch Technik (progress
through technology – a famous slogan used by Audi in the 1980s).
After WW1 the German economy was in crisis, a
result of the debt incurred by Germany in borrowing money to fight the war, and
because of reparations, a consequence of defeat and the Treaty of Versailles. The sum owed amounted to 132 billion gold
marks (US $33 billion dollars at the time).
The Germans regarded the Treaty as unfair and sought to re-negotiate the
reparations bill resulting in the Dawes Plan and then the Young Plan which was
a new schedule of payments which would allow Germany to re-pay a reduced debt
by 1988. The 1920s, known as ‘the
roaring Twenties’ because of prosperity and economic boom was also affecting
the German economy but consecutive economic crises such as the French
occupation of the Ruhr in 1923 and the hyperinflation of the following year
meant that the Weimar Republic was lurching from crisis to crisis. By the end of the decade, however, there was
clear evidence of recovery.
This all came to an end
after the Wall Street Crash in October 1929.
The crash has often been depicted as a crisis of over-production and
under-consumption. The consequences were
mass unemployment, poverty, and extreme economic instability which explains the
sudden surge in popularity of the Nazi Party (NSDAP) in the late 1920s and
early 1930s. In 1933 President
Hindenburg made Adolph Hitler, head of the NSDAP, Chancellor of Germany,
seizing power both legally and illegally after the Reichstag fire and the
Enabling Act which allowed Hitler to dissolve political opposition. Hitler addressed economic issues in a variety
of ways. Firstly, trade unions were
abolished, their assets seized, and they were then amalgamated into the German
Labour Front led by convicted Nazi, Robert Ley.
Secondly, Hitler addressed the critical issue of unemployment by
expanding the automobile industry. At
this time car ownership per head of the population was lower than the US, the
UK, France, and even Ireland. A savings
scheme was established to allow Germans to buy a Volkswagen or People’s
Car. Many unemployed Germans, desperate
for work, signed up for the Nazi roadbuilding scheme, a classic example of J.M.Keynes
economic theories. Keynes had argued
that orthodox supply and demand economics had failed, for historical reasons,
and that state intervention was required to stimulate the economy. In Germany roadbuilding was meant to
revitalise the economy, in Italy Mussolini reclaimed vast tracts of land around
cities like Venice and Rome to deal with the problem of malaria and other
severe epidemics that afflicted these places.
It was thought that roadbuilding would offer a kick start to the economy
which would become self-perpetuating.
However, ultimately only 20% of the motorways (Autobahn) were
ever completed and none of the Volkswagens were ever delivered. Rearmament and conscription, re-introduced in
1935, began to re-vitalise the German economy.
The Minister of Finance Hjalmar Schacht, a conservative nationalist and
orthodox yet brilliant economist warned Hitler that the economy was in danger
of over-heating or falling, once again, into hyperinflation. He was ignored and sidelined, living in
enforced retirement. Hitler had a much
greater and infinitely more ambitious plan which was to start a war, seize
living space (Lebensraum) in the east, exterminate or enslave subject
peoples, and challenge the monopoly of the powerful, the biggest players such
as the USA, Britain, and the USSR.
Hitler no longer cared about inflation and paid for armaments and
everything else by printing money and initiating a war of conquest and
subjugation.
Management of the war
economy was the responsibility of Hermann Goering (under the auspices of the
Four-Year Plan, a timetabled scheme intended to invigorate the German economy
in imitation of Stalin’s Five-Year Plans) and the Minister for Armaments, Fritz
Todt. Todt had been the organiser of the
Autobahn project in the 1930s and was an important bureaucrat and organiser who
had come to realise that Germany could never produce enough armaments to win
the war. He communicated these doubts in
a meeting with Hitler at the Wolf’s Lair, Hitler’s HQ in Rastenburg, East
Prussia in early 1942. (Wolf was
Hitler’s nickname from the early 1920s onwards.) However, the next day Todt was killed,
somewhat mysteriously, when his plane failed to take off in poor weather and
crashed. Hitler immediately offered
Todt’s post to his architect Albert Speer who accepted much to the
disgruntlement of Goering, a rival of Speers.
Speer began to rationalise and simplify war production for the needs of
a prolonged war on two fronts.
Speer’s appointment was
slightly surprising because he was an architect not an economist or an
administrator. However, such a decision
was entirely in keeping with Hitler’s dilettantish practises and
procedures. Hitler fundamentally
distrusted experts like Schacht in favour of true believers like Speer, for
Speer had complete confidence in Hitler’s genius. Unlike Todt, he was convinced that Germany
could win the war. Ultimately, however,
Speer merely extended the war by a few years.
Speer was tried as a war criminal at Nuremburg after the war and was the
only leading Nazi to escape the noose, instead serving a 20-year gaol
sentence. After he was released, he
published a book about his relationship with Hitler and the Third Reich, making
him a rich man. Speer was just as
culpable as the other leading Nazis but had the realism to understand that the
war was lost, and Nazi Germany crushed.
Other leading
industrialists such as Heinrich Koppenberg, General Manager of the Junkers
factory at Dessau, also realised, in the light of American bomber production
figures, that Germany could not win the war in the long run. The Americans projected that they could build
50,000 planes a year, more than the total production of all of Europe
combined. The generals also had profound
doubts. General Friedrich Fromm and
Chief of the Army General Staff Franz Halder realised that the arms economy was
declining and that a last chance might be the seizure of the oilfields of the
Caucasus. This led to Hitler’s switch of
objectives from Moscow, capital of the USSR, to southern Russia and the city of
Stalingrad. The generals favoured taking
Moscow but the offensive there had been stalled when Russian reserve divisions
consisting mainly of Siberians, equipped with winter clothing, skis, and
weapons resistant to the cold were released after Stalin discovered that the
Japanese had no intention of invading in the east. After initial triumphs Operation Barbarossa,
Hitler’s name for the invasion of the USSR, had ground to a halt because of
Autumn rains and then the effect of temperatures lower than -30 degrees. Hitler had expected a quick victory and had
not thought to bring winter dress and equipment. Hitler now directed Army Group South (the
German army in Russia was divided into three massive forces totalling 3 million
men) to attack Stalingrad and the Caucasus.
To achieve Hitler’s aims
Speer began to organise and rationalise the war economy by eliminating
excessive bureaucracy and simplifying methods of mass production. For instance, overall armaments production
rose from an average index figure of 98 in 1941 to a height of 322 in July
1944. Speer introduced experts from
other areas such as the car industry to simplify submarine construction into
eight stages with a different company assembling each section to a strict
timetable and then assembling the final product at a central plant. The time it took to produce a U-Boat was
reduced from 42 weeks to 16. Speer
insisted that companies exploit their workforce more effectively and double
shifts were introduced. At Nuremburg
Speer claimed to have been unaware of the Holocaust. In fact, Speer was directly responsible for
forced labour schemes, employing labour from beyond the Reich’s frontiers. Many of these labourers were worked to
death. Speer terminated contracts for
new plants costing 3,000 million Reichsmarks, insisting that already existing
industrial facilities might be better used.
Speer reduced the number of factories providing items like firefighting
equipment from 334 to 64, the number of companies producing machine tools from
900 to 369. Rationalisation also
effected the iron and coal industries, vital to the war economy. New systems of ordering and production were
introduced. Speer appointed savings
engineers to advise firms on how to better use steel and other raw materials. Coal was obtained by cutting allocations to
domestic consumers by 10%. Steel output
was boosted to 2.7 million tons a month in 1943. The Nazis believed that they had to provide
as many necessities as possible for the home front. They had learnt the lesson of WW1 when a half
a million people had died from malnutrition and widespread discontent stemming
from this fuelled anti-war sentiment.
But as the war went on domestic supplies were bound to be cut.
RESISTANCE
Hitler’s opponents had
been swept aside in bloody purges like the Night of the Long Knives or
sidelined and pushed to the margins, for instance conservative opponents who
had their doubts like Generals Blomberg and Fritsch. Hitler resisted the temptation to execute
unsuccessful generals as Stalin did.
Instead, they were replaced thus binding the general staff to Hitler
until 1944 and Operation Valkyrie. An
unsuccessful bomb plot in 1939 in Munich by a lone Communist at the Hofbrauhaus
was foiled when Hitler left earlier than planned. It seemed to many that Hitler had the luck of
the devil.
As the war progressed
Hitler became less and less concerned with domestic policy and increasingly
involved with military planning to the exclusion of all else. He shifted his HQ from Berlin to Rastenburg
and later to the Ukraine. A key ally of
Hitler, Reinhard Heydrich, was assassinated by Czech agents in Prague with the
assistance of the SOE (Special Operations Executive) in June 1942. Heydrich disregarded security and travelled
to work in an open topped car, without an armed guard. Hitler was furious at this lapse in security,
realising that the war was creeping inexorably towards his personal entourage
and himself.
There were other doubters
within the General Staff, one of these was Admiral Canaris, head of the Abwehr
(military intelligence). Canaris, and
others, had doubts about Germany’s preparedness for war, but these were
overcome after Hitler’s initial successes against Poland, France, and
Belgium. He also objected to Hitler’s
ideological objectives, meaning the Holocaust and the brutality it
entailed. Canaris was essentially
playing a double game, being in contact with opposition from within the
military which eventually decided that Hitler had to be assassinated.
Military intelligence was
not the only intelligence unit and it, in turn, was being observed by the
Gestapo. In January 1944 military
intelligence was taken over by SS security because Hitler had begun to suspect
Canaris of disloyalty. Canaris was
interned and then executed in 1945 after discovery of his diaries convinced
Hitler that he had betrayed military secrets to the allies.
Two main loci of
opposition were planning for a future after the Third Reich. The first was known as the Kreisau Circle, a
name given to it by the Gestapo. It
included intellectual opponents like Count Helmuth von Moltke, Count Peter
Yorck von Wartenburg and Count Fritz-Dietlof von der Schulenburg, all held
minor government posts. Christianity was
the basis of their objection to Nazism.
They also believed that a post-Nazi government would strongly emphasize
Christianity within a Federal structure.
However, they were opposed to an assassination attempt, preferring
instead for the regime to collapse. They
also attempted to incorporate elements of the former SPD which had been an
underground organisation since the collapse of the Weimar Republic.
The military-conservative
resistance also saw Christian values as vital to the new Germany which would
emerge after the demise of the Third Reich.
Unlike the Kreisau Circle they were totally prepared to assassinate
Hitler. This group included Ulrich von
Hassell, former Ambassador to Italy, Carl Goedeler, ex-Mayor of Leipzig,
Johannes Popitz, Prussian Minister of Finance, and former chief of the Army
General Staff Ludwig Beck. The group
consisted mainly of Prussian officers and conservative Prussian politicians who
believed that they could negotiate with the Allies once Hitler was gone. They also viewed the Holocaust with
shame. The group also included army
commanders like Karl-Heinrich von Stuelpnagel, Fritz-Dietlof von Schulenburg
and Wolf Heinrich, Count Heldorf, Police President of Berlin who were
responsible for massacres of Poles and Jews.
The group initiated a
series of failed assassination attempts culminating in the 20th,
July 1944 bomb plot. A member of the
circle, Claus Schenk, Graf von Stauffenberg, a lieutenant-colonel badly injured
in North Africa gained access to Hitler as the result of a promotion. He brought two bombs to Hitler’s HQ at
Rastenburg. Stauffenberg had lost his
right hand and the thumb and two fingers of his left and was only able to prime
one of the bombs. Stauffenberg left the
bomb in Hitler’s map room and left the building. He bluffed his way through the SS cordon,
flew back to Berlin and phoned Olbricht and the military conspirators at army
HQ to tell them that Hitler was dead, and that the military takeover should
begin.
However, Hitler wasn’t
dead. He had been protected by the heavy
wooden map table although four of those present, closer to the bomb, were
killed instantly or died later of their wounds.
In Berlin General Fromm had joined the conspiracy but upon phoning
Rastenburg learnt that Hitler was still alive and moved with Major Otto Ernst
Remer to stop the conspiracy. Because
Fromm was complicit, he immediately condemned and executed Olbricht,
Stauffenberg, Haeften, and Colonel Albrect Merz von Quirnheim. As he was about to be shot Stauffenberg
shouted, “long live sanctified Germany!”
Ludwig Beck committed suicide.
The conspiracy collapsed
and the Gestapo discovered through torture the names of all the
conspirators. There were trials in 1944
and in 1945 presided over by Nazi judge Roland Freisler. There were many further executions, in total
over a 1000. The plot had little real
chance of success in military terms, it was more of a protest than a real
attempt to topple the Nazis.
But why did the German
people fight onto the bitter end?
Firstly, the Allies had demanded unconditional surrender. Secondly, propaganda minister Goebbels
stirred up the German people by announcing on radio that the Soviets would
exile millions of Germans to Siberia if the USSR defeated Germany. Thirdly, Heinrich Himmler, head of the SS,
made speeches acknowledging the crimes of the Third Reich, implying that the
army had no alternative but to fight on.
Another source of
resistance, called the Red Orchestra by the Gestapo, based in Berlin, were
Germans within military intelligence who spied for the USSR. They informed Stalin of Operation Barbarossa,
for instance, even though he refused to believe them. Eventually the Gestapo uncovered the Red
Orchestra leading to dozens of executions.
In Munich a group calling
itself the White Rose began distributing leaflets calling for an end to the
war. The leaders, among whom was Sophie
Schoell whose boyfriend happened to be fighting on the eastern front, were
uncovered, and sent to the guillotine.
(A form of execution still used in Germany during WW2.)
It was obvious that only
highly coordinated resistance from within the military could stop Hitler and
this was not forthcoming. Most of the
General Staff were loyal to Hitler, who had come to personify the regime, to
the bitter end.
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