In economic terms, Nazism ‘worked’, or perhaps Hitler was simply lucky. His programme drew substantially on existing plans and budgets from the late Weimar period. He also seems to have benefited from a ‘natural’ cyclical upturn. Whether the work-creation schemes actually made any difference is unclear.78 Most of the money set aside for them had not been spent by the end of 1933. One way or the other, it seemed as if Hitler’s insistence that the key to prosperity was politics rather than economics had been vindicated. Business confidence eventually recovered. Within a year, German unemployment had fallen by more than a third; six months later it was 60 per cent lower than at the start of Hitler’s chancellorship. Even allowing for statistical sleights of hand, it was an impressive achievement, and, as Hitler himself was quick to point out, a better performance than FDR had managed in the United States.79 Whether or not the Führer deserved the credit, he reaped the political benefits.
Luckily for Hitler, the spectre of German emigration receded after 1933. To be sure, there was a dramatic outflow of Germans opposed to Nazism, about 360,000 people by the end of the decade (not counting Austrians), but these were elements the Führer was glad to be rid of, even if he maintained a watchful eye on the activities of émigré circles. Unlike the nineteenth and early twentieth centuries, however, there were few purely economic emigrants, probably because the United States was still in the throes of a Depression from which Nazi Germany was beginning to emerge.
In the autumn of 1933, about nine months into his chancellorship, Hitler made a ‘State of the Reich’ speech to the Imperial Commission behind closed doors. It was revealing both of what Hitler thought he had accomplished, and of his sense of what remained to do. On 20 September 1933, Hitler summoned the ‘General Council of the Economy’, which included figures from leading German business such as Siemens, Thyssen and Krupp. He began by emphasizing the importance of ‘will’ and ‘willpower’ in restoring hope and life where previous governments had given up. Hitler admitted that there had been ‘mistakes’ but made the Tolstoyan observation that ‘the greatest and most successful war, which appears to world history as a single grandiose event, was actually ‘the sum of all decisions taken, a mixture of right and wrong ones’. ‘Usually,’ Hitler continued, picking up an argument he had made during January 1933, victory went to those ‘who had merely made the fewest mistakes’. If this period would ‘certainly later appear as a period of storm and stress’,80 Hitler concluded, its results had still been overwhelmingly positive. Here Hitler was historicizing his first months, indicating that the domestic turbulences of the seizure of power were not only inevitable and excusable, but now a thing of the past.
It was the future, however, with which Hitler was primarily concerned. He repeated his old dictum that ‘the political deed’ was anterior to economic activity.81 He now called upon industry to maintain the momentum, to create employment and encourage consumption and investment. The key to this was confidence, which is why Hitler, either consciously or unconsciously, resorted to FDR’s rhetoric in his first inaugural speech that the ‘only thing’ Americans had to fear ‘was fear itself’. Germans, he explained, were in a perpetual state of ‘fear’: the fear that the ‘neighbours’ would consider expenditure profligate, fear of political instability and fear of taxation. Hitler wanted to ‘exterminate’ this ‘complex of fears’. ‘Only when people regain a certain joy of living,’ he argued, ‘will they gradually ensure that money circulates again.’ The key, he explained, was to ensure ‘that everybody did not want to limit themselves, but that everybody wanted to better themselves’. ‘One must construct a ladder,’ he continued, ‘which everybody can somehow climb up.’
The role of the state in all this, according to Hitler, was to give the ‘patient’ enough ‘injections’ to revive him. ‘One must,’ he explained, ‘wind up the economy so far that there is a general undertow which then carries along others as well.’ Hitler put his faith in two stimuli. The first was, as we have seen, public works, especially ‘giant road construction projects’. The second was in the field of ‘house repairs’, with the purpose of ‘tempting a much larger sum out of hiding through the investment of a comparatively small amount and thus making it productive’. This was what we would today call the ‘multiplier effect’.82 ‘Somebody must begin with [repairing] the first window pane,’ Hitler demanded, the rest would follow. He was articulating, so to speak, a ‘broken windows’ theory of economic recovery.
Behind the Führer’s bravura, however, lay ill-concealed anxiety. He worried about the return of mass unemployment, especially in the winter. ‘We naturally have only one concern this winter,’ he announced, which was to ensure that ‘the number of unemployed must not rise under any circumstances’.83 Hitler was also anxious about the relationship between the army, which was his preferred vehicle for German rearmament, and the SA, which hoped to play that role itself. He worried about the interference of the party in the state and economy. Above all, Hitler feared the hostility of the outside world, which had been put on its guard, as he saw it, by Germany’s domestic resurgence and rearmament. He warned that ‘the whole world currently stands together against us’. This was dangerous, Hitler explained, because it would take another three to four years before the Reich could offer any effective defence. There was thus a ‘perilous interval’ before Germany was ready to bestride the European stage again. Finally Hitler worried about the Jews, because they were ‘often very influential abroad’.84
On the domestic front, Hitler responded with the ‘Winter Relief Project’, which was designed to create a sense of national solidarity to get Germans through the physically and psychologically difficult winter months. He also called upon party leaders ‘to completely reduce the revolutionary manifestations’. ‘There is no more National Socialist goal in Germany,’ Hitler declared, and stressed that ‘gradual evolution was the precondition for the economic revival which Germany desperately needs’. In case anybody hadn’t got the message, Hitler laid down that ‘direct interventions by the imperial commissars into the administration must cease’, especially ‘in judicial matters’. (They didn’t, of course.) On military questions, he signalled that ‘the Wehrmacht was the sole bearer of arms in Germany’, and that ‘he did not at all intend to establish a second army in Germany beside it’.85 For now, Hitler could not go much further, partly because he wanted to avoid confrontation with Röhm and partly because, despite public denials, he was dependent on cooperation between the SA and the Reichswehr to defend Saxony, Silesia and East Prussia against Czech or Polish attack, and the Rhineland and Palatinate against the French.86
In this context, Hitler stressed the importance of ‘camouflaging’ rearmament by disciplining the home front. ‘All agencies in the Reich,’ Hitler ordained, should exercise ‘the greatest care’ and ‘press reports on German rearmaments should be avoided on principle’. The press should also stop ‘constantly publishing pictures of the SA’, as their paramilitary bearing tended to excite suspicion.87 Hitler even opposed a relaxation of domestic gun law, on the grounds that it was ‘currently undesirable for foreign-political reasons’, because it would give ammunition to the claims of outside powers that Germany was secretly rearming. As for the Jews, he claimed that he would have preferred a ‘gradual intensification’ of measures but had been forced by the ‘Jewish-inspired boycott’ to undertake immediate harsh reprisals. That said, Hitler did not want his enemies to be ‘given any sort of propaganda material against Germany’. He gave an example of an incident in Nuremberg in which a non-Jewish German girl had had her pigtails cut off because of a relationship with a Jew. ‘This event,’ Hitler lamented, ‘found its way into the entire foreign press.’ 88 In short, Germany would have to tread softly on the ‘Jewish’ front for the moment.
Despite these concerns, Hitler now made another dramatic move. In October 1933, he took Germany out of both the Geneva Disarmament Conference and the League of Nations itself. In the preceding cabinet meeting, he dismissed the dange
r of ‘sanctions’ by saying that it was just a question of ‘holding one’s nerve’.89 The move was flanked by gestures to the other malcontents of the international system. Hitler expressed willingness to receive the Soviet ambassador.90 The following month, he sent Göring to Italy in order to secure a first personal meeting between himself and the Duce. To be on the safe side, Hitler warned party leaders to avoid provoking the French, especially in the Rhineland, so as not to give them a pretext for military intervention.91 As Hitler predicted, the League and the western powers responded only with bluster. A few days after the announcement, a relieved Hitler noted that ‘the critical moment has passed’.92 Not for the first or the last time, Hitler had called the bluff of the international community.
Rather than push his luck further, the Führer drew back from the brink and tried to prevent the powers from combining against him. He signalled his desire for an understanding with Britain through the colonial issue. He knew well, of course, how central the Empire was to British power and he was also conscious of how the French had brought their subject races to bear on European battlefields in the past, both subjects which he had rehearsed many times before, and reprised from to time after he took power. ‘According to remarks of the French minister for war,’ he reminded his listeners in March 1933, ‘a large part of the coloured French forces can immediately be used on the French mainland.’93 For this reason, the Führer continued, one should include them among the forces to be discussed at the Geneva rearmament conference. In his various interviews with the British press in 1933, he laid claim to colonies himself, but left open where these were to be found, denied that he would ever go to war for them and generally emphasized his desire not to antagonize Britain on this account.94 In truth, Hitler remained focused on the east.
Nearer to home, Hitler sought to prise open the Franco-Polish ring of encirclement. In November–December 1933, in the face of considerable resistance from the German Foreign Office, Hitler instructed his diplomats to reach agreement with Warsaw.95 On 26 January 1934, the German-Polish Declaration was signed. It was a major achievement.96 This rapprochement was not merely a temporary, insincere expedient. It formed part of Hitler’s long-term plan to co-opt the Poles for a junior partnership against the Soviet Union. ‘The German-Polish policy,’ he told Rosenberg shortly afterwards, ‘should not end after ten years, but should continue.’97 Over the next four years or so, relations with Warsaw were generally excellent. Senior Nazis such as Göring and Goebbels visited. Hitler repeatedly expressed his admiration for General Piłsudski, and deeply regretted his death; in private conversation, he spoke of the Poles as the best soldiers in the world, next to the British and Germans.98 Hitler not only provided money for a German-Polish Institute in Berlin but specifically laid down that the Battle of the Annaberg, an iconic event when German Freikorps had worsted Polish ‘bandits’ in 1921, should not be commemorated.99 So close was the relationship, that Nazis in the German minority in Poland, such as Gauleiter Forster of Danzig, complained that they were being marginalized.100
Hitler was by no means out of the woods, either at home or abroad. The French remained hostile. Louis Barthou, who was appointed foreign minister in early February 1934, was well aware of Hitler’s plans. He had read Mein Kampf in German. Barthou was the driving force behind a Franco-British-Italian warning to Hitler in mid February 1934 not to interfere in Austria. He also sought a rapprochement with Russia, as well as trying to breathe new life into the ‘Little Entente’ of Czechoslovakia, Romania and Yugoslavia. Hitler now feared an understanding between Austria, France and perhaps Italy at his expense. ‘The Führer asked me,’ Rosenberg noted in his diary in mid May 1934, ‘how I imagined that the French could be held in check throughout the autumn.’101 Most importantly, Barthou had the support of the British, who were increasingly on their guard against Hitler. His decision to leave the League of Nations precipitated the first serious thinking in London about a new continental military commitment. The permanent under-secretary in the Foreign Office, Vansittart, was already speaking of ‘Germany as the eventual enemy’.102 The ring of encirclement Hitler had broken up through his Polish gambit was being restored in different form. A fresh effort would be required to escape international isolation.
Throughout the first half of 1934, therefore, Hitler made renewed attempts to win over the Angloworld. In early April, he gave an interview to Louis Lochner designed, as the Völkischer Beobachter put it, ‘to make the personality of Adolf Hitler more accessible to the American people’.103 There, Hitler announced that he was a fan of personal diplomacy and wanted to conduct face-to-face negotiations with all the main world leaders, including President Roosevelt. On 2 May 1934, he met with James D. Mooney, head of General Motors, which was the owner of the major German car manufacturer Opel. His agenda was partly to promote the production of automobiles, and partly to impress his visitor with the political dynamism of the Third Reich.104 Perhaps more significant was Hitler’s meeting with the press baron William Randolph Hearst, which took place at the Führer’s request in the summer of 1934. When Hitler challenged him as to why he was so ‘misrepresented, so misunderstood’ in North America, Hearst not only responded that his compatriots ‘believe in democracy and are averse to dictatorship’, but also referred pointedly to the ‘very large and influential and respected element in the United States who are very resentful of the treatment of their fellows in Germany’.105 This, of course, could only reinforce the fateful connection in Hitler’s mind, between American power and world ‘Jewry’.
In diplomatic terms, the key was London, in what Rosenberg, after one of his many consultations with Hitler on this matter, called ‘the struggle for Britain’. Hitler told Rosenberg in early May 1934 that next to the ‘implementation of our ideology’, his most important concern was ‘the struggle for Britain’. Adding to Hitler’s frustration were his terrible relations with the British ambassador in Berlin, Phipps, and his unhappiness with the German ambassador to London, Hösch, whom he–rightly–suspected of being hostile to the Third Reich. He now began to ruminate about a suitable replacement. Despite many other preoccupations, Hitler obsessed about the British, who remained a ‘dangerous enemy’ in the light of his own experiences in the First World War. ‘The “battle for Britain”,’ Rosenberg noted later that summer, ‘continues constantly.’106
12
Guns and Butter
Despite all his successes, Hitler was still not completely in the clear domestically. Germany had survived the winter of 1933–4 without too much hardship, but although unemployment continued to fall, the economy was in dire straits. The huge rearmament and infrastructural contracts kept industry so busy that it was failing to export, thus reducing the vital flow of foreign currency necessary to purchase scarce raw materials. Hitler warned in late March 1934 that it was now a matter of ‘preventing a catastrophe’.1 ‘Every shell needs a copper ring,’ Hitler pointed out, adding that ‘we have no copper in Germany’. Everybody, he declared, should understand what that meant. Hitler also feared a ‘bank catastrophe’ sparked off by defaulting loans to department store owners. The finance minister, Kurt Schmitt, pleaded that military expenditure be reduced. The Reichsbank president, Hjalmar Schacht, told Hitler at a meeting on the Obersalzberg that rearmament trumped all other considerations, and declared the increased army budget viable on that basis.2 By the summer of 1934, however, the distortions caused by massive armaments spending and the raw materials crisis showed no signs of abating. Hitler demanded that the German economy develop locally sourced or produced alternatives, be they synthetic oil and rubber, artificial fibres for clothing or soy beans. ‘If necessary,’ he said, the Reich should support these endeavours ‘financially’.3
There was also a tension in Nazi economics between spending, which was needed to fuel the recovery, and saving, which was required to fund rearmament; the maintenance of ‘living standards’ in the here and now clashed with the capture of ‘living space’ in the future. Hitler encouraged Ge
rmans to save, as an antidote to ‘liberal finance capital’, as a patriotic duty, and in order to fund houses, travel and cars.4 Most of the money thus ‘lent’ to the Reich was invested in weaponry. Hitler, to borrow the language of the time, gave Germans ‘guns not butter’; not jam today, but war tomorrow. There was no contradiction in Hitler’s mind, though, because he believed the American example showed that the seizure of ‘living space’ was vital to the provision of ‘living standards’.
In the sphere of high politics, Hitler faced two challenges. First, the antagonism between the SA and the Reichswehr remained unresolved and was rapidly turning into a battle of wills between Hitler and Röhm. In late February 1934, Hitler issued his ‘Guidelines for Cooperation with the SA’. These gave Blomberg ‘sole responsibility’ for the ‘defence of the Reich’, and thus control of ‘mobilization’ and the conduct of operations in wartime. The SA was given the task of ‘pre-military training’ after the ‘toughening-up’ of German youth, and ‘the training of all those who have not been drafted to serve in the Wehrmacht’. Hitler justified these functions with reference to strategic necessity and military reality. He expected ‘economic turbulence’ in about eight years. This, he explained, could only be avoided ‘if one found living space’ for Germany’s ‘excess population’. This might require ‘short decisive blows towards the west and then the east’, for which the SA was not suitable.5 The dispute with Röhm was also symptomatic of a much broader divide. Whereas the brownshirts wanted to take Germany further to the ‘left’ and spoke openly of the need for a ‘Second Revolution’, Hitler sought a period of domestic calm in order to grow the economy and rearm.
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