In such a manner were the youth trained for life and work and death in the Third Reich. Though their minds were deliberately poisoned, their regular schooling interrupted, their homes largely replaced so far as their rearing went, the boys and the girls, the young men and women, seemed immensely happy, filled with a zest for the life of a Hitler Youth. And there was no doubt that the practice of bringing the children of all classes and walks of life together, where those who had come from poverty or riches, from a laborer’s home or a peasant’s or a businessman’s, or an aristocrat’s, shared common tasks, was good and healthy in itself. In most cases it did no harm to a city boy and girl to spend six months in the compulsory Labor Service, where they lived outdoors and learned the value of manual labor and of getting along with those of different backgrounds. No one who traveled up and down Germany in those days and talked with the young in their camps and watched them work and play and sing could fail to see that, however sinister the teaching, here was an incredibly dynamic youth movement.
The young in the Third Reich were growing up to have strong and healthy bodies, faith in the future of their country and in themselves and a sense of fellowship and camaraderie that shattered all class and economic and social barriers. I thought of that later, in the May days of 1940, when along the road between Aachen and Brussels one saw the contrast between the German soldiers, bronzed and clean-cut from a youth spent in the sunshine on an adequate diet, and the first British war prisoners, with their hollow chests, round shoulders, pasty complexions and bad teeth—tragic examples of the youth that England had neglected so irresponsibly in the years between the wars.
THE FARMER IN THE THIRD REICH
When Hitler came to power in 1933 the farmer, as in most countries, was in desperate straits. According to a writer in the Frankfurter Zeitung, his situation was worse than at any time since the disastrous Peasants’ War of 1524–25 devastated the German land. Agricultural income in 1932–33 had fallen to a new low, more than a billion marks below the worst postwar year, 1924–25. The farmers were in debt to the amount of twelve billions, almost all of it incurred in the last eight years. Interest on these debts took some 14 per cent of all farm income, and to this was added a comparable burden in taxes and contributions to social services.
“My party comrades, make yourselves clear about one thing: There is only one last, one final last chance for the German peasantry,” Hitler warned at the outset of his chancellorship, and in October 1933 he declared that “the ruin of the German peasant will be the ruin of the German people.”
For years the Nazi Party had cultivated the backing of the farmers. Point 17 of the “inalterable” party program promised them “land reform … a law for confiscation without compensation of land for common purposes; abolition of interest on farm loans, and prevention of all speculation in land.” Like most of the other points of the program, the promises to the farmers were not kept—with the exception of the last provision against land speculation. In 1938, after five years of Nazi rule, land distribution remained more lopsided than in any other country in the West. Figures published that year in the official Statistical Year Book showed that the smallest two and a half million farms had less land than the top. 1 per cent. The Nazi dictatorship, like the Socialist-bourgeois governments of the Republic, did not dare to break up the immense feudal estates of the Junkers, which lay to the east of the Elbe.
Nevertheless, the Nazi regime did inaugurate a sweeping new farm program accompanied by much sentimental propaganda about “Blut und Boden” (Blood and Soil) and the peasant’s being the salt of the earth and the chief hope of the Third Reich. To carry it out Hitler appointed Walther Darré, one of the few party leaders who, though he subscribed to most of the Nazi myths, knew his field professionally and well. An outstanding agricultural specialist with suitable academic training, he had served in the Agriculture Ministries of Prussia and the Reich. Forced to leave them because of conflicts with his superiors, he retired to his home in the Rhineland in 1929 and wrote a book entitled The Peasantry as the Life Source of the Nordic Race. Such a title was bound to attract the attention of the Nazis. Rudolf Hess brought Darré to Hitler, who was so impressed with him that he commissioned him to draw up a suitable farm program for the party.
With Hugenberg’s dismissal in June 1933, Darré became Minister of Food and Agriculture. By September he was ready with his plans to make over German agriculture. Two basic laws promulgated in that month reorganized the entire structure of production and marketing, with a view to ensuring higher prices for farmers, and at the same time put the German peasant on a new footing—accomplishing this, paradoxically, by putting him back on a very old footing in which farms were entailed, as in feudal days, and the farmer and successive inheritors compulsorily attached to their particular plot of soil (provided they were Aryan Germans) to the end of time.
The Hereditary Farm Law of September 29, 1933, was a remarkable mixture of pushing back the peasants to medieval days and of protecting them against the abuses of the modern monetary age. All farms up to 308 acres (125 hectares) which were capable of providing a decent living for a family were declared to be hereditary estates subject to the ancient laws of entailment. They could not be sold, divided, mortgaged or foreclosed for debts. Upon the death of the owner they had to be passed on to the oldest or youngest son, in accordance with local customs, or to the nearest male relative, who was obliged to provide a living and an education for his brothers and sisters until they were of age. Only an Aryan German citizen who could prove the purity of his blood back to 1800 could own such a farm. And only such a man, the law stipulated, could bear the “honored title” Bauer, or Peasant, which he forfeited if he broke the “peasant honor code” or ceased, because of incapacity or otherwise, to actively farm. Thus the heavily indebted German farmer, at the beginning of the Third Reich, was protected from losing his property by foreclosures or from seeing it shrink in size (there being no necessity to sell a piece of it to repay a debt), but at the same time he was bound to the soil as irrevocably as the serfs of feudal times.
And every aspect of his life and work was strictly regulated by the Reich Food Estate, which Darré established by a law of September 13, 1933, a vast organization with authority over every conceivable branch of agricultural production, marketing and processing, and which he himself headed in his capacity of Reich Peasant Leader. Its chief objectives were two: to obtain stable and profitable prices for the farmer and to make Germany self-sufficient in food.
How well did it succeed? In the beginning, certainly, the farmer, who for so long had felt himself neglected in a State which seemed to be preoccupied with the interests of business and labor, was flattered to be singled out for so much attention and proclaimed a national hero and an honored citizen. He was more pleased at the rise in prices which Darré obtained for him by simply arbitrarily fixing them at a profitable level. In the first two years of Nazi rule wholesale agricultural prices increased by 20 per cent (in vegetables, dairy products and cattle the rise was a little more) but this advantage was partially offset by a similar rise in the things which the farmer had to buy—above all in machinery and fertilizer.
As for self-sufficiency in food, which was deemed necessary by the Nazi leaders, who already, as we shall see, were plotting war, the goal was never achieved, nor—given the quality and quantity of German soil in relation to its population—could it ever be. The best the country could do, despite all Nazi efforts in the much-advertised “Battle of Production,” was to reach 83 per cent of self-sufficiency and it. was only by the conquest of foreign lands that the Germans obtained enough food to enable them to hold out during the second war as long as they did.
THE ECONOMY OF THE THIRD REICH
The foundation of Hitler’s success in the first years rested not only on his triumphs in foreign affairs, which brought so many bloodless conquests, but on Germany’s economic recovery, which in party circles and even among some economists abroad was hailed as a miracle.
And indeed it might have seemed so to a good many people. Unemployment, the curse of the Twenties and early Thirties, was reduced, as we have seen, from six million in 1932 to less than a million four years later. National production rose 102 per cent from 1932 to 1937 and the national income was doubled. To an observer, Germany in the mid-Thirties seemed like one vast beehive. The wheels of industry were humming and everyone was as busy as a bee.
For the first year Nazi economic policies, which were largely determined by Dr. Schacht—for Hitler was bored with economics, of which he had an almost total ignorance—were devoted largely to putting the unemployed back to work by means of greatly expanded public works and the stimulation of private enterprise. Government credit was furnished by the creation of special unemployment bills, and tax relief was generously given to firms which raised their capital expenditures and increased employment.
But the real basis of Germany’s recovery was rearmament, to which the Nazi regime directed the energies of business and labor—as well as of the generals—from 1934 on. The whole German economy came to be known in Nazi parlance as Wehrwirtschaft, or war economy, and it was deliberately designed to function not only in time of war but during the peace that led to war. General Ludendorff, in his book Total War (Der Totale Krieg) whose title was mistranslated into English as The Nation at War, published in Germany in 1935, had stressed the necessity of mobilizing the economy of the nation on the same totalitarian basis as everything else in order to properly prepare for total war. It was not exactly a new idea among the Germans, for in Prussia during the eighteenth and nineteenth centuries some five sevenths of the government’s revenue, as we have seen, was spent on the Army and that nation’s whole economy was always regarded as primarily an instrument not of the people’s welfare but of military policy.
It was left to the Nazi regime to adapt Wehrwirtschaft to the third decade of the twentieth century. The results were truthfully summed up by Major General Georg Thomas, chief of the Military Economic Staff: “History will know only a few examples of cases where a country has directed, even in peacetime, all its economic forces deliberately and systematically toward the requirements of war, as Germany was compelled to do in the period between the two World Wars.”12
Germany, of course, was not “compelled” to prepare on such a scale for war—that was a deliberate decision taken by Hitler. In the secret Defense Law of May 21, 1935, he appointed Schacht Plenipotentiary-General for War Economy, ordering him to “begin his work already in peacetime” and giving him the authority to “direct the economic preparations for war.” The inimitable Dr. Schacht had not waited until the spring of 1935 to start building up the German economy for war. On September 30, 1934, less than two months after he had become Minister of Economics, he submitted a report to the Fuehrer entitled “Report on the State of Work for War-Economic Mobilization as of September 30, 1934,” in which he proudly stressed that his ministry “has been charged with the economic preparation for war.” On May 3, 1935, four weeks before he was made Plenipotentiary for War Economy, Schacht submitted a personal memorandum to Hitler which began with the statement that “the accomplishment of the armament program with speed and in quantity is the [italics his] problem of German politics; everything else therefore should be subordinate to this purpose …” Schacht explained to Hitler that since “armament had to be camouflaged completely until March 16, 1935 [when Hitler announced conscription for an army of thirty-six divisions], it was necessary to use the printing press” to finance the first stages. He also pointed out with some glee that the funds confiscated from the enemies of the State (mostly Jews) and others taken from blocked foreign accounts had helped pay for Hitler’s guns. “Thus,” he cracked, “our armaments are partially financed with the credits of our political enemies.”13
Though at his trial at Nuremberg he protested in all innocence against the accusations that he had participated in the Nazi conspiracy to make aggressive war—he had done just the contrary, he proclaimed—the fact remains that no single person was as responsible as Schacht for Germany’s economic preparation for the war which Hitler provoked in 1939. This was freely acknowledged by the Army. On the occasion of Schacht’s sixtieth birthday the Army publication Militaer-Wochenblatt in its issue of January 22, 1937, hailed him as “the man who made the reconstruction of the Wehrmacht economically possible.” And it added: “The Defense Force owes it to Schacht’s skill and great ability that, in defiance of all currency difficulties, it has been able to grow up to its present strength from an army of 100,000 men.”
All of Schacht’s admitted wizardry in finance was put to work to pay for getting the Third Reich ready for war. Printing banknotes was merely one of his devices. He manipulated the currency with such legerdemain that at one time it was estimated by foreign economists to have 237 different values. He negotiated amazingly profitable (for Germany) barter deals with dozens of countries and to the astonishment of orthodox economists successfully demonstrated that the more you owed a country the more business you did with it. His creation of credit in a country that had little liquid capital and almost no financial reserves was the work of genius, or—as some said—of a master manipulator. His invention of the so-called “Mefo” bills was a good example. These were simply bills created by the Reichsbank and guaranteed by the State and used to pay armament manufacturers. The bills were accepted by all German banks and ultimately discounted by the Reichsbank. Since they appeared neither in the published statements of the national bank nor in the government’s budget they helped maintain secrecy as to the extent of Germany’s rearmament. From 1935 to 1938 they were used exclusively to finance rearmament and amounted to a total of twelve billion marks. In explaining them once to Hitler, Count Schwerin von Krosigk, the harassed Minister of Finance, remarked that they were merely a way of “printing money.”14
In September 1936, with the inauguration of the Four-Year Plan under the iron control of Goering, who replaced Schacht as economic dictator though he was almost as ignorant of business as was Hitler, Germany went over to a total war economy. The purpose of the plan was to make Germany self-sufficient in four years, so that a wartime blockade would not stifle it. Imports were reduced to a bare minimum, severe price and wage controls were introduced, dividends restricted to 6 per cent, great factories set up to make synthetic rubber, textiles, fuel and other products from Germany’s own sources of raw materials, and a giant Hermann Goering Works established to make steel out of the local low-grade ore. In short, the German economy was mobilized for war, and businessmen, though their profits soared, became mere cogs in a war machine, their work circumscribed by so many restrictions, by so many forms to fill out, that Dr. Funk, who succeeded Schacht in 1937 as Minister of Economics and in 1939 as president of the Reichsbank, was forced to admit ruefully that “official communications now make up more than one half of a German manufacturer’s entire correspondence” and that “Germany’s export trade involves 40,000 separate transactions daily; yet for a single transaction as many as forty different forms must be filled out.”
Buried under mountains of red tape, directed by the State as to what they could produce, how much and at what price, burdened by increasing taxation and milked by steep and never ending “special contributions” to the party, the businessmen, who had welcomed Hitler’s regime so enthusiastically because they expected it to destroy organized labor and allow an entrepreneur to practice untrammeled free enterprise, became greatly disillusioned. One of them was Fritz Thyssen, one of the earliest and biggest contributors to the party. Fleeing Germany at the outbreak of the war, he recognized that the “Nazi regime has ruined German industry.” And to all he met abroad he proclaimed, “What a fool [Dummkopf] I was!”15
In the beginning, however, the businessmen fooled themselves into believing that Nazi rule was the answer to all their prayers. To be sure, the “inalterable” party program had sounded ominous to them with its promises of nationalization of trusts, profit sharing in the wholesale trade, �
��communalization of department stores and their lease at a cheap rate to small traders” (as Point 16 read), land reform and the abolition of interest on mortgages. But the men of industry and finance soon learned that Hitler had not the slightest intention of honoring a single economic plank in the party program—the radical promises had been thrown in merely to attract votes. For the first few months in 1933, a few party radicals tried to get control of the business associations, take over the department stores and institute a corporate state on lines which Mussolini was attempting to establish. But they were quickly thrown out by Hitler and replaced by conservative businessmen. Gottfried Feder, Hitler’s early mentor in economics, the crank who wanted to abolish “interest slavery,” was given a post as undersecretary in the Ministry of Economics, but his superior, Dr. Karl Schmitt, the insurance magnate, who had spent his life lending money and collecting interest, gave him nothing to do, and when Schacht took over the ministry he dispensed with Feder’s services.
The little businessmen, who had been one of the party’s chief supports and who expected great things from Chancellor Hitler, soon found themselves, many of them, being exterminated and forced back into the ranks of wage earners. Laws decreed in October 1937 simply dissolved all corporations with a capital under $40,000 and forbade the establishment of new ones with a capital less than $200,000. This quickly disposed of one fifth of all small business firms. On the other hand the great cartels, which even the Republic had favored, were further strengthened by the Nazis. In fact, under a law of July 15, 1933, they were made compulsory. The Ministry of Economics was empowered to organize new compulsory cartels or order firms to join existing ones.
The Rise and Fall of the Third Reich Page 42
