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Military Industry and Economic Mobilization

Hitler unleashed the Second World War. It is equally clear that he had envisioned war at least since the twenties, when he wrote in Mein Kampf that National Socialists "turn their gaze toward the land in the East" and unambiguously affirmed that the only possible way for modem Germany to survive was to resume the eastward march of the medieval Teutonic knights "in order to provide with the German sword land for the German plow and thereby daily bread for the nation." Once he became dictator, moreover, he set about building up the German armed forces. As they became stronger, he conducted a more and more aggressive foreign policy until he finally forced Europe into the Second World War. While Hitler clearly planned for war, he did not prepare Germany for it.

Germany was not economically prepared for total war in 1939 and did not actually begin to convert her economy "to a wartime footing" until 1942. There can be no doubt [according to the October 1945 report on "The Effects of Strategic Bombing on the German War Economy"] that Germany started the conversion of her economy to a wartime footing far too late. Had Germany's leaders decided to make an all-out war effort in 1939 instead of 1942, they would have had time to arm in "depth"; that is, to lay the foundations of a war economy by expanding their basic industries and building up equipment for the mass production of munitions. Starting their armament program as late as 1942, they could only arm in "width"; that is, accept their equipment and material base as given and expand munitions production on the basis of available capacity.

Hitler's visions were of quick victories, prepared by setting potential enemies against each other. An adequate population and industrial base existed to support an expanded armed force. The Reich's population prior to the annexation of Austria and the Sudetenland was almost 70 million, and in creased by more than 10 million when these two areas became part of Germany. The Reich produced more than 22 million tons of steel yearly and over 200 million tons of coal. The country was highly developed industrially ,with large motor vehicle and tool plants, and had excellent transportation and communications systems. The merchant marine totalled more than 4 million tons, and port facilities were extensive.

The German management system, especially in terms of the technological industry, was a complex and convoluted bureaucratic nightmare. Their system of committees and rings, coupled with a lack of centralized control at the top, served to undermine an economy that was resource-poor, in terms of both monetary and natural resources. Further compounding the situation was the influence of Adolf Hitler. A man with a continental worldview and a penchant for doing things his way, Hitler was more of a hindrance to industry than a help. His constantly changing requirements led to costly and lengthy delays to the production of many aircraft. His inability to look beyond continental Europe from a practical standpoint ensured the German state never had a practical long-range bomber until it was too late. Indeed, the Germans ended the war with the same fighter and bomber with which they began the war, with only minor modifications and a dwindling ability to mass-produce them.

In 1936 Hitler informed the regime's top officials that Germany must be ready for war by 1940. In response, the Four-Year Plan was established. Developed under the direction of Hermann Goering, it set forth production quotas and market guidelines. Efforts to regiment the economy were not without conflict. Some of the economic elite desired that Germany be integrated into the world's economy. Others advocated autarchy, that is, firmly basing the German economy in Central Europe and securing its raw materials through barter agreements.

The highly respected economist, Dr. Hjalmar Schacht, a traditional conservative, Minister of Economics and President of the Reichsbank, was almost the only individual who regularly dared to speak up to Hitler. Schacht's alarm about Hitler's growing bellicosity first came to a head about 1936, the year in which he became what may be called a charter member of the anti-Hitler conspiracy. Colonel Georg Thomas was at the Reich Defense Ministry in 1934 with general authority over Wehrwirtschaftsuna Waffenwesen ( Defense Economy and Weapons Affairs). The army was constantly prodded by Thomas, its economic and armament specialist, as well as by Hjalmar Schacht. He and Thomas carried on a systematic agitation among Army and business leaders against arguments that a blitzkrieg might lead to a quick victory; in their view any next war was more likely to be another competition in exhaustion.

As the rate of the German rearmament program accelerated, Thomas became increasingly concerned that inadequate provisions were being made to sustain during a long war of attrition the precipitously expanding Wehrmacht. In July 1937 he prepared a report for Hitler, warning him that the pace of rearmament was outdistancing Germany's economic capacity, and that certain limits would have to be placed upon current military expansion.

One of the most striking and revealing of all the captured documents which have come to hand is one which has come to be known as the Hossbach notes [Red Series NT V-I, pg 376] of a conference in the Reichs Chancellery on 5 November 1937 from 1615 to 2830 hours (386-PS). In the course of that meeting Hitler outlined to those present the possi- bilities and necessities of expanding their foreign policy. : "Period 1943-45: After this we can only expect a change for the worse. The rearming of the Army, the Navy and the Air Force, as well as the formation of the Officers' Corps, are practically concluded. "Our material equipment and armaments are modern; with further delay the danger of their becoming out-of-date will increase. In particular the secrecy of 'special weapons' can- not always be safeguarded. Enlistment of reserves would be limited to the current recruiting age groups and an addition from older untrained groups would be no longer available. "In comparison with the rearmament, which will have been carried out at the time by other nations, we shall decrease in relative power."

In the end, no clear decision on the management of the German economy was made. Large weapons contracts with industrial firms soon had the economy running at top speed, and full employment was reached by 1937. Wages did not increase much for ordinary workers, but job security after years of economic depression was much appreciated. The rearmament program was not placed on a sound financial footing, however. Taxes were not increased to pay for it because the regime feared that this would dissatisfy workers. Instead, the regime tapped the country's foreign reserves, which were largely exhausted by 1939. The regime also shunned a rigorous organization of rearmament because it feared the social tensions this might engender. The production of consumer goods was not curtailed either, again based on the belief that the morale of the population had to remain high if Germany were to become strong. In addition, because Hitler expected that the wars waged in pursuit of his foreign policy goals would be short, he judged great supplies of weapons to be unnecessary. Thus, when war began in September 1939 with the invasion of Poland, Germany had a broad and impressive range of weapons, but not much in the way of replacements. As in World War I, the regime expected that the defeated would pay for Germany's expansion.

Germany had an excellent industrial base for war, with its heavy plants in the Ruhr, Saar, and Silesian areas. According to the German planners, however, by 1939 several more years were still needed to attain a production rate high enough to supply the materiel and ammunition for a major war. The military training program had already made inroads on the strength of the labor force, and mobilization would deprive it of additional thousands of technicians and workers who had completed their period of compulsory service and were assigned to reserve units. In short, Germany was prepared only for a limited war of short duration. Gasoline and ammunition reserves would not suffice for simultaneous large-scale operations in the east and west, and the disaster of 1918 still acted to dampen the enthusiasm of the general public for military adventures.

Hjalmar Schacht was sacked by Hitler as Reichsbank president in 1939 for opposing Germany's unbridled rearmament. By 1939 a pliable man had been found in Walter Funk, who succeeded Hjalmar Schacht as Minister of Economics when the latter warned Hitler against reckless military expenditures.

On the very eve of the war, Thomas attempted to avert what he fervently believed would be a catastrophe by insisting to the chief of the OKW, Marshal Keitel, that the impending conflict would inevitably become a long, drawn-out war of attrition which Germany could not possibly survive. As Thomas later recounted, Keitel cut him off with the assertion "that Hitler would never bring about a world war. There was no danger at all, for in Hitler's opinion, the French were a degenerate pacifist people, the English were much too decadent to provide real aid to, the Poles, and finally, America would never again send a single man to Europe in order to pull the chestnuts out of the fire for England, or even for Poland."

When the war began a few days later, Hitler not only refused to give the orders Thomas urged for full wartime mobilization of the economy but even hesitated to establish fixed priority schedules or stable production guidelines within the framework of existing directives. Only on 7 September 1939 did Hitler set up, on Thomas's urgent recommendation, a priority schedule, giving top classification to munitions and replacement of destroyed weapons and equipment. But then on 4 October he revised this to include, at equally urgent top priority on a competitive basis, a number of additional programs, including submarine construction. On 10 October, however, Hitler suddenly established super-priority (over the previous top-priority programs) for motorization; and in mid-November, just as German industry was being retooled for that latest shift, he gave super-super-priority to munitions production-a decision forced by the alarming shortages resulting from Germany's having entered the war, despite Thomas's repeated warnings, with only a four- to six-weeks' supply of ammunition.

On 22 June 1941, the first anniversary of the French capitulation, Hitler turned on his Soviet treaty partner with Operation Barbarossa. By the end of September, with victory in sight, "the greatest war lord of all times" actually went so far as to order a substantial reduction in armaments production. Only the bitter stalemate before Moscow itself and the entry of the United States into the war brought home to Hitler, at the end of 1941, that his astounding series of triumphs by armed diplomacy, coercion, subversion, and Blitzkrieg had finally come to an end and that he was now indeed engaged in a second world war, a long war of attrition, and a war for which he had deliberately and resolutely refused to prepare the Third Reich because he had neither wanted it nor thought it would be necessary.

In 1941 and 1942 the United States and Britain, working together, developed plans for a strategic bombing campaign against Nazi Germany. These plans were, in part, based on the belief that the German economy - like the British economy - was fully mobilized in support of the war effort. American and British planners assumed that Hitler would not have started the largest war in history without first fully mobilizing his economy to fight it. During the years 1933 until 1942 Hitler did not perceive a crisis in Germany sufficient enough to warrant mobilizing the entire German economy for war. It was not until 1942 that Hitler placed the German economy on a war footing.

Prior to the winter of 1941 Hitler hoped to realize Germany's ascendancy over Europe, and possibly the world, largely by skilled strategy. Time and timing were the secret weapons in the German war plan that took shape after 1933. Hitler hoped to build Germany's strength more quickly than that of any potential opponent. By rapid mobilization of a powerful striking force, by exploiting the political and ideological strains that he conceived to exist in the rest of the world, and by overwhelming separately in lightning campaigns such of his enemies as chose to resist, he hoped to secure for Germany an invulnerable position in Europe and in the world.

What Germany lacked in numbers of divisions, in raw materials and in basic industrial strength, it planned to compensate with highly trained ground units of great striking power. These were to be equipped and ready to march while Germany's enemies were merely preparing. Essential in this strategy was a technically well developed air force in being. Emphasis was not placed upon the development of an air force that would destroy the sustaining resources of the enemy's economy. In the German plan it was anticipated that an enemy's entire country would be so quickly over-run that little concern need be had for industrial and war production that was merely potential. The air force was, primarily, an arm of the blitzkrieg. The success of Hitler's strategy, until the battle of Britain, was complete; his more cautious advisers and generals confessed their astonishment. By September 1941 Hitler was so confident that he had succeeded in Russia that he ordered large scale cut-backs in war production.

Until the defeat at Moscow German industry was, incompletely mobilized and that in fact Germany did not forsee the need for full economic mobilization. German arms production during 1940 and 1941 was generally below that of Britain. When the full meaning of the reverses at Moscow became apparent the German leaders called for all-out production. The conquests of the previous years had greatly strengthened Germany's economy; with, the exception of oil and rubber, supplies of virtually all the previously scarce imported materials were or had become accessible. Great reserves of foreign labor only awaited voluntary or forced recruitment. The industrial plant of France, the Low Countries, Poland and Czechoslovakia had been added to that of Germany.

After the defeat at Moscow early in 1942, armament production increased rapidly. However, such increase was more the result of improvements in industrial efficiency than of general economic mobilization. Throughout the war a great deal of German industry was on a single shift basis, relatively few German women (less than in the first war) were drawn into industry and the average work week was below British standards.

Hitler appointed his architect, Albert Speer, as Reich Minister for Weapons and Munitions. Speer, an unusually able, hard-driving man who as a personal friend enjoyed the confidence of the Fhrer, immediately began to consolidate control over the war economy. At the time of his appointment in February 1942, there were no fewer than five supreme Reich authorities with conflicting and competing jurisdiction over German war production: Gring's Four-Year-Plan organization, Thomas's Wi R Amt/OKW, the Ministries of Labor and of Economics, and Speer's own ministry-not to mention the Air Force Ordnance Office which under Goring's patronage remained independent of the Wi R Amt, Himmler's ss Main Office of Economics and Administration, and several Nazi Party satrapies jealously guarded by Hitler's sinister Party Chancellery chief, Martin Bormann.

Germany's armament minister Albert Speer rationalized German war production and eliminated the worst inefficiencies in the previous controls. A threefold increase in armament production occurred under his direction but the increase cannot be considered a testament to the efficiency of dictatorship. Rather it suggests the degree of industrial undermobilization in the earlier years. An excellent case can be made that throughout the war top government management in Germany was not efficient.

Speer instituted those "changes in the institutional framework of the German war economy which made possible the brilliant success of German war production between spring, 1942, and summer, 1944, and so confounded Germany's opponents." In the words of the Strategic Bombing Survey: "Production of armament in 1943 was on the average 56 percent higher than in 1942, and more than twice as high as in 1941. . . . Despite the damage wrought by air attack and territorial loss, and despite the general drop in production in the second half of 1944, total industrial output for the year was the highest in the war."

Once it became clear that the war would not be a short one, Germany's industry was reorganized for a total mobilization. Between February 1942 and July 1944, armaments production increased threefold despite intense Allied bombing raids. Much of the labor for this increase came from the employment of some 7 million foreigners, taken from their homelands and forced to work under terrible conditions. Also contributing to the Nazi war effort was the systematic requisitioning of raw materials and food from occupied territories. As a result, Germans remained fairly well fed for most of the war, in contrast to the hunger endured during World War I. Despite their comparative physical well-being until late in the war, it gradually became clear to many Germans that the regime's series of military triumphs had come to an end.

What was possible under the adverse conditions of July 1944, when the index of munitions output peaked at 322 (the monthly level of January-February 1942 being taken as 100), suggests what might have been achieved had General Georg Thomas's program of comprehensive economic mobilization for total war been taken seriously during the thirties. The German economy was not fully mobilized until 1944, and by then the war was already lost. In August 1945, German prisoner of war General Lemelsen noted that Hitler "never clearly recognized that Germany alone would eventually . . . have to succumb to the superiority of its enemies and that he did not seek means when this became apparent to end the war, but rather delivered the people to complete destruction." The war was decided by the weight of armaments production.

Germany's early commitment to the doctrine of the short war was a continuing handicap; neither plans nor state of mind were adjusted to the idea of a long war. Nearly all German sources agree that the hope for a quick victory lasted long after the short war became a long one.

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