As Germany's economic crisis intensified, a lack of orders meant that the civilian production division in Düsseldorf began showing losses, and, with the exception of the profitable steam-plow production, production lines gradually ground to a halt. However, Rheinmetall did not suffer as greatly as some other enterprises did. In September 1930, Rheinmetall signed a contract to establish a design bureau with 20 German engineers to work with the Soviets. The contract with Rheinmetall ended in the summer of 1933, when Hitler came to power. From the middle of the 1930s, Rheinmetall-Borsig, as with many other industrial enterprises at the time, developed and produced weapons and munitions in response to orders from the Reich War Ministry. Production included machine guns, tank guns, mortars and field artillery, anti-aircraft guns, and railroad guns.
Becoming involved in the production of artillery during the First World War, Rheinmetall allied with Solothurn AG. In 1933 the takeover of locomotive manufacturer August Borsig GmbH was made as a future arms production plant in Berlin. Continued expansion led to an amalgamation with Borsig AG in 1936, the resulting Rheinmetall-Borsig Aktiengesellschaft combine. The company's affiliation to Goering's complex was strengthened even further in June 1938, when Reichswerke Hermann Goering purchased the majority holding in Rheinmetall-Borsig from Vereinigte Industrieunternehmungen AG (VIAG).
The merger with Borsig-Werk in Berlin in 1936 nearly doubled the number of Rheinmetall employees compared to 1935. By 1938, with a workforce of 45,438 - the figure cited in that year's annual report - the much-enlarged company had clearly joined the ranks of Germany's corporate giants. Apart from plants in Berlin-Tegel, Düsseldorf, Sömmerda and Unterlüß, "Rheibo" (as it was unofficially known) had major subsidiaries and trade investments, especially in Berlin; but the company maintained large-scale production facilities in Switzerland and the Netherlands as well. To this extent, Rheinmetall-Borsig in 1938 was even bigger than Röchling, Rheinmetall's later majority shareholder.
With the outbreak of World War II in September of 1939, Rheinmetall-Borsig restructured itself into a Regular Works and an Affiliated Works. Regular Works comprised the facilities in Düsseldorf, Sömmerda, Unterlü, and the Borsig plant in Berlin-Tegel, along with separate divisions in Derendorf, Rath, Grafenberg, Halver, Gruiten, and Oberkassel. Affiliated Works consisted of eight facilities that since 1936 had been used as production plants for weapons and munitions. The factories were located in Berlin, Guben and Fürstenberg (Mark Bradenburg), Breslau, and Apolda in Thüringen. By the first year of the war, all ordinance factories came under the control of institutions of the German armed forces. In March of 1940 the newly created Ministry of Armaments and Munitions began to coordinate the arms efforts.
The company was Hitler's second biggest arms supplier. At its scattered plants Rheinmetall made nearly every important kind of gun the German Army used. From 1944 - 1945 production facilities were damaged and destroyed by air raids, hence production relocated to many other places in what was to become the GDR and what is today Poland.
The huge munitions firm of Rheinmetall Berlin AG used thousands of concentration camp laborers during the war. In 1957 Rheinmetall was taken to court by Jewish survivors, but the charges were dismissed. In 1966, the Rheinmetall Company, one of Germany's largest armaments manufacturers, created a fund of DM 2,500,000 (then approximately $625,000) for payment to Jewish slave laborers. Although "there were no strings attached" to this fund, in contrast to the other settlements, "the amount was so inadequate that only a most restricted distribution would be possible." The International Tracing Service "had a list of more than a thousand women who had been taken from Buchenwald to work for Rheinmetall at Sommerda. A great deal of information was available about two other Rheinmetall plants at Unterluss and Hundsfeld near Breslau. It was decided by Compensation Treuhand that only those three camps could be considered. Those concentration camp inmates who had been in Rheinmetall camps about which very little was known would have to be sent away empty handed. The alternative would have been to have a long and costly screening procedure, at the end of which the beneficiaries might have received only a pittance. The $625,000 received from Rheinmetall was sent to twenty different countries: 806 recipients were in Israel, 380 were in the United States, 65 in Canada, and 29 in Sweden. Only 80 of the Rheinmetall slave laborers could be found in their native land of Hungary, while 33 were traced to Romania and 29 to Czechoslovakia. The others had found new homes in Australia Brazil, Mexico, Chile, Great Britain, and other lands. The total amount distributed to the claimants was DM 2,546,095. The amount that each surviving Rheinmetall slave received was DM 1,700 - $425.
In 1936, with an eye to the experience in the First World War, the Nazis embarked on an ambitious plan to make Germany completely self-sufficient in strategic war materials such as rubber, gasoline, and steel, in a period of four years, so that Germany would be fully prepared for aggressive war. The responsibility for the execution of this program was entrusted to the office of the Four Year Plan under Goering.
Out of the few factories permitted by the Versailles Treaty there had arisen the mightiest armament industryw existing in the world. It attained the performances which in part equalled the German wartime performances and in part even surpassed them. Germany's crude steel production was by 1939 the largest in the world after the Americans. The aluminum production exceeded that of America and of the other countries of the world very considerably. The output of rifle, machine gun, and artillery factories was larger than that of any other state.
World War I brought great suffering to Europe. At the end of the war in 1919, the Allies emerged as victors (winners) determined to avoid future losses such as those they had suffered in the war. The European Allies wrote the Treaty of Versailles to provide what they thought to be their best defense against future aggression from former Central Powers. New democracies were created in many countries in Europe, such as Germany's Weimar Republic. But, this republic was replaced by a Nazi dictatorship. The worldwide depression that took place in the 1930s, including the economic crash of 1929, led to political responses to the depression such as the New Deal in the United States, and the rise of Nazism in Germany.
Had it not been for the economic collapse that began with the Wall Street stock market crash of October 1929, Hitler probably would not have come to power. The Great Depression hit Germany hard because the German economy's well-being depended on short-term loans from the United States. Once these loans were recalled, Germany was devastated. Unemployment went from 8.5 percent in 1929 to 14 percent in 1930, to 21.9 percent in 1931, and, at its peak, to 29.9 percent in 1932. Compounding the effects of the Depression were the drastic economic measures taken by Center Party politician Heinrich Brüning, who served as chancellor from March 1930 until the end of May 1932. Brüning's budget cuts were designed to cause so much misery that the Allies would excuse Germany from making any further reparations payments. In this at least, Brüning succeeded. United States president Herbert Hoover declared a "reparations moratorium" in 1932. In the meantime, the Depression deepened, and social discontent intensified to the point that Germany seemed on the verge of civil war.
Seeking national victory for the Nazi Party in the Reichstag (German Parliament), Hitler promised to create new jobs by rebuilding the German economy and repudiating the Treaty of Versailles. In 1931, the last free election of the Weimar Republic resulted in 37 percent of the voters expressing support for the Nazi Party. A succession of failing Chancellors led to a political deal in which Paul von Hindenburg, President of the German Republic, appointed Adolf Hitler the new Chancellor of Germany on January 30, 1933.
The Nazi drive for power was the best prepared drive, in a military, economic and psychological sense, for world conquest ever conceived with the Nazis employing a pay-as-you-go war technique. Special economic units accompanied the military forces with the charge to obtain resources for the continuation of war through looting and reorganizing the conquered territories in order to pay the bills for new conquests. Occupation authorities were given quotas for workers to be transported to Germany with the workers' remittances paid for by the occupied country.
The significance of the economic measures adopted and applied by the Nazis can be properly appraised only if they are placed in the larger social and political context of Nazi Germany. These economic measures were adopted while the Nazis were directing their vast propaganda apparatus to the glorification of war. They were adopted while the Nazis were perverting physical training into training for war. They were adopted while the Nazis were threatening to use force and were planning to use force to achieve their material and political objects. In short, these measures constitute in the field of economics and government administration the same preparation for aggressive war which dominated every aspect of the Nazi state.
The task of mobilizing the German economy for aggressive war began promptly after the Nazi conspirators' seizure of power. It w2s entrusted principally to Schacht, Goering, and Funk. Schacht was appointed President of the Reichsbank in March 1933, and Minister of Economics in August 1934. The world did not know, however, that the responsibility for the execution of this program was entrusted to the office of the Four Year Plan under Goering. Nor did the world know that Schacht was designated Plenipotentiary for the War Economy on 21 May 1935, with complete control over the German civilian economy for war production in the Reich Defense Council, established by a top secret Hitler decree.
They degraded the standard of life of the people of occupied countries and caused starvation, by stripping occupied countries of foodstuffs for removal to Germany. They seized raw materials and industrial machinery in all of the occupied countries, removed them to Germany and used them in the interest of the German war effort and the German economy. In all the occupied countries, in varying degrees, they conds- cated businesses, plants, and other property. In an attempt to give color of legality to illegal acquisitions of property, they forced owners of property to go through the forms of "voluntary" and "legal" transfers. They established comprehensive controls over the economies of all of the occupied countries and directed their resources, their production and their labor in the interests of the German war economy, depriving the local populations of the products of essential industries.
Throughout the occupied territories the Nazis conscripted and forced the inhabitants to labor and requisitioned their services for purposes other than meeting the needs of the arniies of occu-pation and to an extent far out of proportion to the resources of, the countries involved. All the civilians so conscripted were forced to work for the German war effort. Civilians were required to register and many of those who registered were forced to join the Todt Organization and the Speer Legion, both of which were semi-mili- tary organizations involving some military training.