Reengineering the Weimar Republic (3)

HindenburgThere was, however, one more problem that neither Reichsstatthalters nor the national police force (nor even the Enabling Act) could solve. Adolf Hitler still did not have the absolute power in Germany.

Yes, he was the head of the government who now had both executive and legislative powers (the latter meant that rather sooner than later he would acquire a judicial power as well).

However, there was still one man in Germany who could put an end to that almost instantly – by dismissing Hitler from the position of Reich Chancellor. That man was President of the German Reich Generalfeldmarschall Paul Ludwig Hans Anton von Beneckendorff und von Hindenburg.

Given that Hindenburg was still a popular war hero and a revered figure in the Reichswehr, there was little doubt that the Reichswehr would side with Hindenburg if he ever decided to sack Hitler. And despite its 20:1 numerical superiority, the SA was no match for a well-trained and superbly commanded professional army.

Despite the solid support that he got from Hindenburg after becoming Chancellor, Hitler had no illusions about his future. He knew that he needed a genuine miracle to avoid being sacked by the Reich President.

First, Hindenburg being an aristocrat and the German (actually, Prussian) general of the highest rank, fundamentally disliked Hitler whom he considered plebeian. True, he approved of Hitler’s efforts to create the volksgemeinschaft (“people’s community”) in Germany – his dream since 1914 and viewed Hitler’s “Government of National Concentration” the fulfilment of his dream.

Hindenburg did sign the “Reichstag Fire Decree” almost instantly – but only because he hated Communists far more than he disliked Hitler. A diehard monarchist, he forced Hitler to make a solemn promise that after Germany “regained full sovereignty” (i.e. returns all its lands and frees itself from the humiliating terms of the Treaty of Versailles), the latter would restore monarchy in Germany.

Hitler had no desire to do so and knew that von Hindenburg ultimately would figure that out – with disastrous consequences for his Chancellor. He also knew that rather sooner than later his brutal, criminal and murderous methods will become unacceptable for the Prussian aristocrat.

It did happen – and, indeed, very soon, barely a year after the Enabling Act gave Hitler almost absolute power in Germany. During the summer of 1934, Hindenburg grew increasingly alarmed at Nazi excesses (which for that time became evident even for those willing to give Hitler enormous benefit of the doubt).

With President’s support, on June 17th, Vice-Chancellor Franz von Papen gave a speech at the University of Marburg calling for an end to state terror and the restoration of at least some freedoms. Which for all practical purposes would have been the end of “Nazi revolution”.

When Propaganda Minister Joseph Goebbels got wind of it, he (wisely) not only canceled a scheduled tape-delayed broadcast of the speech, but ordered the seizure of newspapers in which part of the text was printed (another wise move).

Von Papen was furious, telling Hitler that he was acting as a “trustee” of Hindenburg (which was formally true), and that a “junior minister” like Goebbels had no right to silence him.

Hindenburg was equally outraged, and ordered Minister of Defense Generalfeldmarschall Werner von Blomberg to give Hitler an ultimatum: unless Hitler took steps to end the growing tension in Germany and rein in the SA, Hindenburg would sack Hitler, declare martial law and turn the government over to the army.

The Night of the Long Knives did rein in the SA and earn Hitler the personal thanks of Hindenburg. The crisis was defused, but Hitler knew that it was only a matter of time before the President figured out that it was not the SA that was a problem – it was Hitler.

Fortunately for Hitler (for whom it was another Act of Providence), von Hindenburg time was what von Hindenburg did not have. On August 2nd, two weeks after the Marburg speech which almost cost Hitler his job, Reichspräsident von Hindenburg died peacefully in his sleep at the age of 86 from lung cancer at his home in Neudeck, East Prussia.

The day before, Hitler had got word that Hindenburg was on his deathbed. He then had his cabinet pass the “Law Concerning the Highest State Office of the Reich,” which stipulated that upon Hindenburg’s death, the offices of president and chancellor would be merged under the title of Leader and Chancellor (Führer und Reichskanzler).

Two hours after Hindenburg’s death, it was announced that as a result of this law, Hitler was now both Germany’s head of state and head of government, thereby eliminating the last legal instrument by which he could be legally dismissed and  making him the absolute ruler of Germany.

In reality, Hitler correctly predicted that von Hindenburg would not survive a year (this time his intuition – or his mystical powers – served him well) four months earlier, in April of 1934.

He prepared the abovementioned law and got the Reichswehr the only force in Germany powerful enough to remove him with Hindenburg gone to support his bid to merge the offices of President and Chancellor (and thus become the Führer of Germany) after Hindenburg’s death.

On April 11th, on board of the brand-new heavy cruiser Deutschland (it was commissioned just ten days earlier) he met with top Reichswehr commanders – Minister of Defense von Blomberg, army commander Generaloberst (four-star general) Werner von Fritsch and Head of the Naval Command Admiral Erich Raeder.

Hitler offered them a deal. In return for the armed forces’ support for him becoming the Führer of Germany, he will suppress the SA (alleviating the topmost concern of Reichswehr brass) and solemnly promised that the armed forces would be the only military force in Germany under his watch.

Raeder agreed right away, but Blomberg and Fritsch withheld his support until May 18th, when all senior generals of the Reichswehr unanimously agreed to back Hitler as Hindenburg’s successor. Hitler did not forget their hesitations and three years later orchestrated the infamous forcing both to resign in disgrace from their posts in early 1938.

However, it was still not enough – Adolf Hitler still had to overcome one more obstacle on his path to absolute power in Germany. Weimar Constitution had been amended in 1932 to place the president of the High Court of Justice, not the chancellor, first in the line of succession in the event of President’s death and even then, only on an interim basis pending a new presidential election.

Which made the “Law Concerning the Highest State Office of the Reich” and thus the assumption of the office of the President by Hitler plainly unconstitutional and therefore invalid.

To overcome this obstacle, Hitler ordered a plebiscite held on August 19th, 1934 thus going directly to the German people. By that time Hitler managed to radically improve the German economy (unemployment went down 40%) and conducted several popular reforms.

Consequently, it is not a surprise that over 88% of the votes were in favor of his proposal (by that time already a reality). While under the Reichstag Fire Decree and the Enabling Act (and Gestapo and special political courts working at full power) the referendum could hardly be called free and fair, there is no doubt that the majority of the population supported his becoming the Führer of Germany.

However, Hitler had no desire to keep the promise made to the military. On September 24th, 1934 (five months after making his solemn promise to Reichswehr commanders) he ordered establishment of the SS-Verfügungstruppe (SS-VT) – the military wing of the Nazi Party. Which in a few years became Waffen SS – the most fearsome military force in modern history.

Hitler’s ultimate objective was to ultimately incorporate Wehrmacht into Waffen SS and into the State Protection Corps devised by Heinrich Himmler. This was the only way he could become genuinely absolute ruler of Germany as the Wehrmacht still had a certain degree of independence from The Führer.

After the beginning of the World War II this objective became clear to Wehrmacht top brass. They had no desire to do away with their commander-in-chief during the war (big mistake after 1941) but after the victory Hitler had a snowball-in-Hell chances of political (and even physical survival).

Top Wehrmacht commanders (even loyal to Hitler) had no desire to become victims of the Night of the Long Knives II, which was the only way for Adolf Hitler to replace the Wehrmacht generals with the ones from Waffen-SS and incorporate the former into the latter.

Thus the military coup after Hitler’s victory in World War II was inevitable. Consequently, the Third Reich (and personally Adolf Hitler) were doomed either way, regardless of whether they won or lost the war.

However, in March of 1933 the Great War II was not even on the horizon. Hitler knew how to establish a firm administrative control over Germans and achieved this very ambitious objective in just three years (no small feat).

But the administrative control was not enough. To fulfil his enormous responsibilities and to achieve his grandiose objectives, he needed a firm control over the hearts, minds and souls of his subjects.

Which required a mighty and a very efficient machine. Nazi propaganda machine.

 

Reengineering the Weimar Republic (2)

SiPoHis responsibilities were so enormous and his objectives were so grandiose that Adolf Hitler simply could not afford any political opposition. Consequently, he needed a powerful national political police force that will make sure that all political opposition is eliminated in the shortest possible and never ever “returns from the dead”.

One of his enormous responsibilities was to radically increase material and emotional well-being of Germans. To achieve this objective, he obviously had to radically bring down street crime and ideally to eliminate organized crime altogether. And keep it that way, of course. Which required a very powerful national criminal police force.

He faced a very serious obstacle – traditionally, law enforcement functions in Germany were relegated to local, municipal and state (Land) governments. This tradition was so entrenched that it took him more than three years to establish the genuinely national police force that will combine political, criminal and order police.

On June 17th, 1936, Hitler signed into law the decree of the unification of all police forces in Germany and appointed SS-Reichsführer Heinrich Himmler to the position of Chief of German Police.

In this position Himmler was nominally subordinate to Wilhelm Frick (Reich Interior Minister), but as Reichsführer-SS, he answered only to Hitler personally. By that time the SS was already far more powerful than the Interior Ministry (the latter being just a typical civilian bureaucracy) so it is no surprise at all that in no time all German police forces (all three of them – political, order and criminal) – were de-facto absorbed into the SS.

Himmler divided his police empire into two components – Security Police (Sicherheitspolizei – SiPo) that united Gestapo (political police) and Kripo (criminal police) into a single organization and Order Police (Ordnungspolizei – OrPo).

SiPo was functionally identical to the FBI (which was rumored to be Himmler’s inspiration); only in Nazi Germany, unlike in the United States there was no local, municipal or even state police force after 1936. OrPo included not only uniformed police, but also all emergency response organizations, including fire brigades, coast guard, factory security guards, civil defense, etc.

In addition, Himmler had under his command another organization that performed security functions, only for the SS and NSDAP, not the Nazi State. It was the SS Intelligence Service (Sicherheitsdienst – SD).

It had two branches. The first one was domestic intelligence (Inland-SD), a rough equivalent of present-day BfV (German Federal Office for the Protection of the Constitution (German – Bundesamt für Verfassungsschutz). The second one was foreign intelligence (Ausland-SD), a rough equivalent of present-day CIA or MI-6.

The most “functionally rich” (by far) was Ordnungspolizei (OrPo). It performed thirteen police and related functions and thus included the following components (departments):

  1. Administration was (among other responsibilities) the command authority for civilian law enforcement groups, which included the Gesundheitspolizei (health police), Gewerbepolizei (commercial or trade police), and the Baupolizei (building police).
  2. State protection police was state uniformed police in cities and most large towns, which included police-station duties and barracked police units for riots and public safety.
  3. Municipal protection police was a municipal uniformed police in smaller and some large towns. Although fully integrated into the Ordnungspolizei-system, its police officers were municipal civil servants. The civilian law enforcement in towns with a municipal protection police was not done by the Verwaltungspolizei (central OrPo office), but by municipal civil servants. Until 1943 they also had municipal criminal investigation departments, but that year, all such departments with more than 10 detectives, were integrated into the Kripo.
  4. Gendarmerie (state rural police) were tasked with frontier law enforcement to include small communities, rural districts, and mountainous terrain. With the development of a network of motorways or Autobahnen, motorized gendarmerie companies were set up in 1937 to ensure the traffic safety.
  5. Traffic police (was the traffic-law enforcement agency and road safety administration of Germany. The organization patrolled Germany’s roads (other than motorways which were controlled by Motorized Gendarmerie) and responded to major accidents. The traffic police was also the primary escort service for high Nazi leaders who usually traveled (often covering great distances) by automobile rather than by train or by aircraft.
  6. Water police was the equivalent of the coast guard and river police. Tasked with the safety and security of Germany’s rivers, harbors, and inland waterways, the group also had authority over the SS-Hafensicherungstruppen (“harbour security troops”) which were Allgemeine-SS units assigned as port security personnel.
  7. Fire police consisted of all professional fire departments under a national command structure.
  8. Freiwillige Feuerwehren, the local volunteer civilian fire brigades. At the height of the Second World War, in response to heavy bombing of Germany’s cities, the combined fire police and Freiwillige Feuerwehren numbered nearly two million members.
  9. Fire Departments – volunteer fire departments, conscripted fire departments and industrial fire departments were auxiliary police subordinate to the Ordnungspolizei.
  10. Security and Assistance Service – emergency response force, roughly equivalent to FEMA in the United States if viewed together with Technical Emergency Corps (TeNo) – a corps of engineers, technicians and specialists in construction work that in 1937 became a technical auxiliary corps of the German police.
  11. Radio protection (Funkschutz) was made up of SS and Orpo security personnel assigned to protect German broadcasting stations from attack and sabotage. The Funkschutz was also the primary investigating service which detected illegal reception of foreign radio broadcasts.
  12. Postal protection (Postschutz) comprised roughly 45,000 members and was tasked with the security of Germany’s Reichspost, which was responsible not only for the mail but other communications media such as the telephone and telegraph systems.
  13. Railway police (Bahnschutzpolizei) tasked with ensuring the security of passenger and freight railway traffic and railway infrastructure.
  14. Factory protection police (Werkschutzpolizei) were the security guards of Nazi Germany. Its personnel were civilians employed by industrial enterprises, and typically were issued paramilitary uniforms.

The only problem with thus structure was that it artificially separated Gestapo and Kripo with the SD intelligence agency. Although the latter was formally the Party, not the state organization, in reality it served both supplying both components of SiPo with vital domestic and foreign intelligence information.

Hence, it was not a surprise at all that on September 27th. 1939 Himmler combined Gestapo, Kripo and SD into Reich Main Security Office (Reichssicherheitshauptamt – RSHA). Gestapo became Amt IV (Department IV), Kripo Amt V, Inland-SD Amt III and Ausland-SD Amt VI.

The RSHA was often abbreviated to RSi-H in correspondence to avoid confusion with the SS-Rasse- und Siedlungshauptamt (RuSHA; “SS Race and Settlement Office”) which was established earlier – in 1931 (even before Nazis came to power).

Reengineering the Weimar Republic (1)

IMG_0671On March 23rd, 1933, the German parliament (both Reichstag and Reichsrat chambers) passed the Enabling Act. After it was signed into law by President Paul von Hindenburg on the same day, it gave Adolf Hitler enormous, almost absolute power in Germany.

With this power came enormous responsibilities. Not just do away with unemployment, but guarantee every able-bodied man the job that will earn sufficient income to provide for himself, his homemaking wife and children.

Radically improve financial, material, emotional and spiritual well-being of Germans, making German people a genuinely happy nation. Provide German workers with a solid “safety net” of unemployment, disability, health insurance and sufficient retirement income.

And, of course, make sure that the horrors of hunger of 1917-19, hyperinflation of 1921-23 and the Great Depression of 1929-33 never happen again.

Restore the power and the glory of Germany by making it again an economic, political and military superpower. Return territories taken at gunpoint by the “Versailles criminals” in 1920. Unite all German lands (including Austria) into Ein Reich.

Transform German people into a nation of Übermenschen – “superhuman beings”. Make Germany self-sufficient in foodstuffs, natural and financial resources. Provide the German people with economic, social and political stability. Make Germany a genuine “equal opportunity nation” where anyone can achieve anything regardless of which class or social group one has been born into.

But, first and foremost, fight and win the existential war with the Bolshevist Soviet Union and thus save Germany, Europe and the whole Western civilization from being conquered and destroyed by the “Red Plague”.

Adolf Hitler incorrectly believed that this existential war was the “racial war” with the “Jewish race” (that existed only in his imagination). Consequently, he sincerely (and incorrectly) believed that it was his responsibility to make Germany and all German-controlled territories Judenrein – “clean of Jews”.

To fulfil these enormous, mind-boggling responsibilities and achieve these grandiose objectives, he had not only to transform a tiny Reichswehr into a mighty Wehrmacht making the latter the most powerful, efficient and fearsome military force in the entire world, but to transform the German state and the German society into a mighty and invincible army based on the omnipresent and all-important Führerprinzip.

In other words, he had to radically reengineer the Weimar Republic into the army-style Führerstaat. Not an easy job to do as the former in 1933 was very much a federative state where the governments of the Lands (German states) possessed significant political and economic powers. For starters, there was no national police force – all law enforcement functions were performed by local, municipal and Land police agencies.

To remedy that unacceptable situation, on April 7th, 1933 (just two weeks after the Enabling Act was passed), Adolf Hitler re-established the Office of Reichsstatthalter (Imperial Governor), radically expanding the functions bestowed on this office in the Imperial Germany.

This law was established by the Second Law for Synchronization of the States with the Reich (Zweites Gesetz zur Gleichschaltung der Länder mit dem Reich) which assigned one Reichsstatthalter (governor) to each German states.

Doing away with the state, local and municipal political freedoms and powers and essentially transforming the federative Weimar Republic into a centralized Third Reich. For all practical purposes, killing the former.

In Prussia, the largest of the German Lands, Hitler took direct control by appointing himself as Reichsstatthalter. However, he delegated his authority to Hermann Göring, who had been installed as Prussian prime minister without an election. The Prussian provinces were administered by an Oberpräsident, usually the local Gauleiter (the provincial NSDAP leader).

Formally, the Reichsstatthalters had purely political, not administrative, functions. According to the abovementioned law, they were tasked to “carry out the general policy of the Chancellor” (i.e. Adolf Hitler).

In reality, they were given complete administrative powers over the state governments: appointing and dismissing the state minister-president (head of state government); dissolving the state parliament and calling new elections; issuing and announcing state laws (making the abovementioned law the “Enabling Act” for the state level); appointing and dismissing key state officials and judges; and even granting amnesty.

Thus, the Enabling Act and the Second Law for Synchronization of the States with the Reich de-facto transformed Germany from a federal republic into a highly centralized state.

To make it de-jure, on January 30th, 1934 (exactly a tear after he was appointed Chancellor) Adolf Hitler signed into law the Law for the Reconstruction of the Reich (Gesetz über den Neuaufbau des Reiche).

This law – for the first time in German history – formally de-federalized the Reich. The state parliaments were abolished, and their powers were transferred to the Reich government. The Reichsstatthalters were made responsible to the Reich Minister of the Interior. For all intents and purposes, the once powerful and semi-autonomous states were reduced to mere provinces.

To expand and strengthen his control over the state governments, exactly a year later (it appears that he really liked that date), Adolf Hitler signed into law The Reich Governors Law (Reichsstatthaltergesetz).

This law essentially stripped the heads of state governments of just about all their executive powers transferring the latter to the Reichsstatthalters. Formally, the governors the authority only to “inform” the heads of provincial governments about the guidelines and the recommended measures to fulfill them. In practice, this “information” was an order – cut and dry, loud and clear, plain and simple.

For all practical purposes, this law resulted in Reichsstatthalters taking over just about all functions of state government, and gave the governors power to appoint the mayors of all towns and cities with populations fewer than 100,000. Giving them (and thus the Reich Interior Ministry) almost total control over local government as well.

The Interior Minister directly appointed the mayors of all cities with populations greater than 100,000 (though Hitler reserved the right to appoint the mayors of Berlin and Hamburg himself if he deemed it necessary).

After the Anschluss of Austria in 1938, the latter (at that time also a federal republic) was incorporated in a centralized totalitarian Ein Reich using the same system of Reichsstatthalters and the corresponding laws which now were in force in the formerly Austrian territory as well.

 

Crushing the Opposition to the Nazis

SABy itself, elimination of political opposition by the leaders of the country committed to making a Quantensprung of the magnitude that the Third Reich had to make, is not a crime.

It is actually a necessity as country leaders are facing problems and challenges of such an enormous magnitude that they simply can not afford any opposition. Hence it is no surprise that no quantum leap of a comparable scale (comparable to Nazi Germany that is) was achieved in a democracy.

It has been achieved by either a ruthless dictatorship (Soviet Union – twice, Nazi Germany, China, South Korea, Taiwan, etc.) or under occupation administration (post-WW2 Germany and Japan).

Democracy works (sometimes well, sometimes not so much) during periods of stability; in the times of a severe crisis (especially existential crisis) it can be outright deadly. During those times only the ruthless dictatorship can save the nation in question. In other words, to prevent the country from being destroyed, one must destroy the opposition.

Using the optimal tools and methods. Including deportation and even internment (under house arrest, in jail or even in a concentration camp) of leaders of opposition and other individuals deemed by the security agencies to be a threat to the Quantensprung. And unlike in the democratic environment, during the times of crisis it is far better to “over-detain” than to “under-detain”.

Consequently, annihilation of the opposition by the Nazis was criminal (although nowhere as criminal as the one committed by Stalin and his henchmen at exactly the same time) not because of their objective (which was absolutely necessary for the very survival of Germany), but because of the tools and methods that were used. Tools and methods that were far more brutal, murderous and criminal than necessary.

I will cover in sufficient detail the whole Nazi project of eliminating the opposition (including the infamous Night of the Long Knives) in the chapter devoted to Hitler’s crimes. In this section I will only briefly cover the four key tools used by the Nazis – the Sturmabteilung (SA) paramilitaries, secret political police (Gestapo), detention centers (concentration camps) and special political courts (Sondergerichte).

Contrary to a popular misconception, in just about all their peacetime endeavors (with the exception of those related to their “racial” and “Jewish” questions) were highly pragmatic.

Consequently, they understood that (a) positive motivation was far more powerful than the negative one; and (b) an ounce of prevention (of anti-Nazi activities) is far more valuable than a ton of punishment.

Hence in their management of their German subject they put emphasis on positive stimuli (i.e. on propaganda and actually caring for the German people by identifying their needs) rather than on a negative one (fear of being punished by the Nazis).

And the fundamental objective of their political repression system was to prevent anti-Nazi activities from happening in the first place rather than to punish the “wrongdoers”.

Consequently, the primary function of the SA (until they were relegated to political oblivion in July 1934), Gestapo, concentration camps and special courts was intimidation, not punishment of actual or potential political opponents.

Historians generally agree that these instruments of intimidation (especially the much-feared Sondergerichte) performed their functions very well and had a strong deterrent effect against active opposition to the Nazis. The latter appears to be was sufficiently intimidated through psychological terror to refrain from active (or even passive) resistance to the Nazis.

The Sturmabteilung (SA) was the only “terror and intimidation” tool (and a very efficient one at that) used by the Nazis prior to their acquisition of absolute power in the end March of 1933.

Nazi stormtroopers beat up their political opponents; prevented, disrupted and dispersed meetings and rallies; attacked and destroyed the premises (headquarters and branches) of political parties; kidnapped and detained opposition activists (by the time Nazis came to power, the SA operated a vast network of illegal detention centers).

After the Nazis had obtained the absolute (plenary) powers in Germany after the Reichstag Fire Decree and especially the Enabling Act became laws, they no longer needed the SA to suppress the opposition. Now they had the whole law enforcement system of Germany (police, prosecutors, the courts and the penitentiary system) to do this job for them.

Actually, this was the primary reason for the spectacular fall of the SA in 1934 – they simply had nothing to do any more. Their last valuable contribution to Nazi cause was made weeks before the Enabling Act – just before the March 1933 elections (the last multi-party elections in a unified Germany until 1990).

The SA unleashed a nationwide campaign of violence against the Communists, Social Democrats, other left-wingers, trade unionists and even the centrists. Which, however, did not achieve the desired outcome – Nazis still got only 44% of the votes (still short of an absolute majority).

After the Night of the Long Knives when just about all SA leaders were either murdered or incarcerated, SA functions were reduced to just one – attacks on the Jews.

For over four years, the Brownshirts were the main perpetrators of anti-Jewish violence which culminated on the infamous Kristallnacht in November of 1938.

After the murder of German diplomat Ernst vom Rath on November 7th by Herschel Grynszpan (a Polish Jew), the SA were used for “spontaneous demonstrations” against this very much terrorist act (which, however, does not justify the subsequent pogrom at all).

In very violent riots, the stormtroopers shattered the glass storefronts of about 7,500 Jewish stores and businesses (hence the name Kristallnacht – “Crystal Night”) given to the events. Jewish homes were ransacked throughout Germany.

Members of the SA and SS (and a lot of “ordinary Germans” who participated in the event en masse) damaged and in many cases destroyed, about 200 synagogues (nearly all Germany had), dozens of Jewish cemeteries, more than 7,000 Jewish shops, and 29 department stores. Dozens of Jews were beaten to death and more than 30,000 Jewish men were arrested and taken to now very much legal concentration camps (just about all of them were soon released).

Thereafter, the SA predictably became overshadowed by the SS, and by 1939 had little (if any) remaining significance in the Nazi Party and in the Third Reich in general.

Hitler’s Economic Program (2)

346px-Hjalmar_SchachtBy itself, budget deficit (even a large one in absolute terms) is not really such a big deal. After all, these days just about every developed nation (with a notable exception of Germany) – the United States, China, Japan, France, Great Britain, Italy, Spain, etc. – runs a substantial budget deficit and has already accumulated an impressive national debt.

These deficits are not considered a major problem, because it is believed that government spending increases gross domestic product (market value of all the final goods and services produced annually in the country in question). In other words, fuels economic growth.

Which in a law-abiding country (and the Nazi Germany was very much so – Gestapo and Kripo took good care of that) automatically increases government tax revenue, enabling the latter to pay off public debt.

Provided, of course, that the latter (and budget deficit) stays within “common economic sense”. Which in the Third Reich was not the case – Adolf Hitler’s Mission was to win the existential war, not to keep the government books in balance. When the very existence of the nation was at stake, who cared about the damn financial accounts? Hitler and the Nazis obviously did not – and justifiably so.

As borrowings on international financial markets (now-standard means of financing government budget deficits), getting loans from foreign banks, printing money, and (God forbid) defaulting on its domestic debt were out of the question, Adolf Hitler had to resort to other ways and means of paying off massive government debts. Alas, to mostly criminal ones.

The obvious benevolent source of funds (successfully used in Italy by Il Duce) was large-scale privatization. Unfortunately, it was just about the only legitimate one – all other ones were very much criminal (if not outright murderous).

Despite all his hysterics about “the existential Jewish threat”, “racial war”, etc., one of the key reasons behind Hitler’s Judenrein project was a purely financial one. The fundamental objective of this project was to physically deport Jews somewhere outside Germany (and subsequently German-controlled territories) robbing them of all their valuables.

Which could then be used for either direct financing of German economic recovery or for paying off government debt accumulated by runaway deficit financing of economic growth.

There was another – far more sinister – idea that was actually implemented, believe it or not. Force Jews to lend money and other valuables to the Nazi government and then… kill them. A very common method used by the organized crime characters to deal with creditors. Which made Nazi state a very much criminal organization (in some ways not unlike the proverbial Mafia).

Like just about all other Nazi crimes, this one was a monumental blunder. It is a well-established fact that Jews are the most efficient and productive nation by far (in terms of creating aggregate value – financial, functional and emotional).

Which Jewish (forced) immigrants from Germany proved beyond the reasonable doubt in Palestine in the 1930s, performing an economic miracle quite comparable to (and in many ways more impressive than) the one performed by the Nazis in Germany at the same time.

Consequently, Germany would have been far better off using its Jews (and then the Jews on German-occupied territories as well) to generate financial, functional and emotional value than robbing, deporting and murdering them.

Especially given the fact that even the diehard Nazis knew that the tales about the “fabulous riches of the Jews” were just that – fairy tales. In reality, valuables taken from the Jews essentially at gunpoint (i.e. proceeds from armed robberies of the latter) were not nearly enough to pay off the mammoth national debt accumulated by the Nazis through their economic revival and rearmament programs (let alone wartime military spending).

Nazis desperately needed another source – and they quickly found it (most likely, it was known to them all along). Making someone else pay off their debts. This “someone else” included not only population of German-occupied territories (i.e. essentially German colonies in Europe) but also their allies – Italy, Romania, Bulgaria, Hungary, Slovakia and Croatia.

I will cover these crimes (and these were crimes indeed) in sufficient detail in the chapter devoted to Hitler’s crimes. In this section I will only touch a few key points.

Financial exploitation of occupied territories was mostly simple and straightforward (although Nazis did employ some highly creative financial schemes).

First, grab as many valuables as possible; sell them in the open market (domestic or international) and use the proceeds to pay off government debt. Second, exchange government bonds for land, buildings, other real estate or shares in businesses in German-occupied territories (i.e. colonies).

Third, force the population of newly-acquired colonies to work essentially for food, clothing and shelter; import products (foodstuffs mostly) into Germany; print money to pay off government debt and then use these products to “cover” printed money (thus balancing demand with supply and putting a firm check on inflation).

Financial exploitation of German allies was far more subtle and creative but was surprisingly explicit. Nazi message to their allies was cut and dry, plain and simple, loud and clear:

“We save you from being conquered and destroyed by the Bolsheviks and you must in return pay us with your money and with the blood of your soldiers”

As Nazis did not view their occupied territories in Western Europe as colonies (the latter was reserved to occupied territories in the East), their message to the citizens of France, Benelux countries, Denmark, Norway and Greece was essentially the same (sans “blood of your soldiers”).

However, even in these transactions (let alone in ones with neutral nations – also critically important for the Nazis), Hitler and his government had to solve one no less critical problem – catastrophic lack of foreign currency.

It is estimated that for its foreign trade to function properly, the country in question had to have sufficient reserves of foreign currency for six months. In 1933-34 Germany often had the reserves for six days. Making foreign trade work under such constraints was a genuine miracle.

The ways to deal with this potentially crippling problem, were obvious. Establish tight import controls (all imports had to be approved by a special government agency). Institute tight foreign exchange controls so that no individual or organization could take precious foreign currency out of the country over a very small limit.

Convince foreign vendors to sell their goods for Reichsmarks – and then use proceeds to buy German goods (thus fueling economic growth in the Reich). Develop and sign extensive barter agreements with foreign nations, essentially exchanging their goods for the German ones.

This was Hitler’s economic program in a nutshell. However, to make it and thus his Quantensprung – his economic miracle – a reality, he needed someone who would become his “economic tsar”, the “Führer of German economy”. Someone who would take responsibility for reviving the German economy, eliminating unemployment, getting Germany out of Great Depression and implementing a gargantuan rearmament program.

Fortunately for Adolf Hitler and Germany, there was exactly such a man in the Reich. Hjalmar Horace Greeley Schacht – a 56-year old (a very senior citizen by the standards of youngish Nazi leadership) prominent economist, banker and politician (in 1918 he was one of the founders of the centrist German Democratic Party (it was dissolved in 1930, way before Hitler came to power).

Hjalmar Schacht had impeccable credentials for this job. A half-German, half-Danish aristocrat (his mother was Baroness Constanze Justine Sophie von Eggers), he studied political science (among other subjects) at universities of Munich, Leipzig, Berlin and Paris before finally earning a Ph. D. in economics at a University of Kiel.

His doctorate thesis was on mercantilism – national economic policy designed to maximize the exports of a nation. A very appropriate topic for Germany in 1933 which desperately needed to earn (or at least conserve) foreign currency.

In addition to extensive banking experience in Germany (he rose to the position of a deputy director at Dresdner Bank – then one of the largest German banks), and in government service (he was the Banking Commissioner for Occupied Belgium and subsequently the currency commissioner in Weimar Republic), he had extensive – and very high-level – connections in international finance.

Which included the famous American banker J. P. Morgan, as well as U.S. president Theodore Roosevelt. And the Governor of the Bank of England, Montagu Norman, was so close to the Schacht family that he was godfather to one of Schacht’s grandchildren.

After his economic policies helped battle German hyperinflation and stabilize the German mark, Schacht was appointed president of the Reichsbank at the requests of then-President Friedrich Ebert and then-Chancellor Gustav Stresemann.

Like Adolf Hitler, Schacht was firmly committed to restoring German power and glory and making again a global political, economic and military superpower. By 1930, he became convinced that Weimar Republic would never be able to achieve this all-important objective and began slowly but surely drifting towards the Nazis (who in his opinion would – if they ever come in power in Germany).

Although he never officially joined the Nazi party, Schacht helped to raise funds for the Nazis. After the July 1932 elections, in which the NSDAP won more than a third of the seats, Schacht was one of those who organized a petition of industrial leaders requesting that president Hindenburg appoint Hitler as Chancellor.

On March 17th, 1933 (even before the Enabling Act gave him essentially absolute power in Germany), Adolf Hitler re-appointed Schacht as Reichsbank president (on March 7th, 1930 the latter resigned from this position over disagreement with then-Chancellor over payment of war reparations).

But it was obviously not enough. To make Schacht the genuine “Führer of German Economy” (in full accord with all-important Führerprinzip), Hitler had to make the banker Reich Minister of Economics as well.

And, of course provide him with the necessary support. Which would become possible only after crushing the opposition to the Nazis, transforming the Weimar Republic into a centralized Führerstaat and developing and implementing a mighty and omnipresent propaganda system.

 

Hitler’s Economic Program (1)

IMG_0258One of the many common misconceptions about Adolf Hitler is that he knew next to nothing about economics. In reality, he knew enough to (a) understand the “Mussolini Blueprint” – successful economic reforms implemented by Il Duce; (2) figure out how to adapt this blueprint to very different situation in Germany; (3) hire the best individual to the position of the “economic Führer” of the Third Reich; (4) control the latter and provide him with the necessary support; and (5) replace him with the more appropriate one once the initial Mission was accomplished.

Eliminating unemployment (i.e. bringing the German workforce to the state of full employment) was the most fundamental need and demand of German citizens. And, therefore, it became Hitler’s top priority, his job #1.

One did not have to have a Ph. D. in economics (facts, logic and common sense were enough) to figure out that the only way to quickly reduce (and subsequently eliminate) unemployment in Germany in 1933 was by massive government spending. Primarily on civilian projects.

For a very simple reason – although radical expansion of German armed forces and of the armaments industry were (obviously) highly efficient ways to radically reduce unemployment, in spring of 1933 Hitler (and Germany) were still not strong enough politically and economically to openly violate the terms of the Treaty of Versailles.

Hence the bulk of massive government spending had to go into construction (expansion of public and residential building), transportation (building roads and increasing production of motor vehicles), land reclamation (creating additional agricultural land) and reforestation.

As the Reich government did not have (and will not have) the financial resources needed to underwrite such a massive public spending program, it had to take the road of deficit financing.

The hyperinflation of 1921-23 was still fresh in German (and Hitler’s) memories so covering the budget deficit by printing money was, obviously, out of the question. So was borrowing abroad.

German economic recovery (the so-called “Golden Era” of the Weimar Republic) in 1924-29 was financed by loans provided by American banks through the Dawes Plan (adopted in 1924) and the Young Plan (adopted in August of 1929).

However, after these banks have been hurt (and hurt severely) by the Wall Street Crash of October 24th, 1929 and subsequent Great Depression, they predictably withdrew their loans to German companies (and to Germany in general). Which immediately sent German economy into a tailspin creating severe problems that Adolf Hitler now had to fix.

Hence, the Nazi government had to restrict itself only to domestic sources of funds for covering the inevitably massive budget deficits. The other three were (obviously) borrowing from banks, corporations and individuals. Ideally in a form of government bonds (interest-bearing securities) that could be used as “parallel currencies” until they mature and will be repaid in full from the state budget.

There was no need to create a specific incentive for German businesses to invest in these government bonds – the budget will simply pay them with the latter for the jobs done for the government.

Because these bonds were designed as the essentially “industrial currency” (a very common instrument to finance rapid economic growth), the business in question will be able to pay its suppliers or creditors with this “currency” and so on.

Borrowing from individuals was a different matter entirely. To motivate Germans to invest into government bonds, Hitler had to first make them trust the German government with their money. Not a small feat after hyperinflation, Great Depression and other economic calamities.

And then to carefully managing consumption, making sure that (a) German households consume enough goods and services for a comfortable lifestyle; and (b) still have enough disposable income to invest into government bonds.

The latter essentially meant making certain items simply inaccessible to the majority of Germans so that they had nothing to spend a certain share of their income on other than investing into government bonds (i.e. on savings). And, of course, conducting a massive propaganda campaign promoting savings and investments.

Obviously, managing consumption required tight control over wages and prices (making Nazi Germany not exactly a market economy). This control was needed anyway – to avoid inflation (the word that scared Germans more than Count Dracula and Frankenstein monster combined).

Now the trillion-Reichsmark (literally) question was how on Earth Hitler’s government would be able to pay off these gargantuan debts once they come due (and sooner or later they obviously will).

 

Hitler’s “Pet Projects”

IMG_0375Although Adolf Hitler, unlike just about all politicians of that time worked mostly for his people, satisfying their needs as he perceived them, he (like just about any other politician of any time) had a number of his own “pet projects”.

His most ambitious project by far was transformation of German people into a fast-growing nation of Übermenschen – “superhuman beings”. By itself it was a noble undertaking; unfortunately, it was accompanied by two related very criminal and outright murderous projects (which I will cover in detail in the chapter devoted to numerous Hitler’s crimes). As it often happens, both projects were much worse than horrendous crimes – they were monumental blunders.

The chronologically first murderous project was sterilization and murder of “genetically inferior” (and thus undesirable) individuals which culminated in the infamous Aktion T4 – mass murder through involuntary euthanasia.

The second one was making Germany (and subsequently German-controlled territories as well) Judenrein – “free of Jewish blood”. Although initially this highly criminal objective was supposed to be achieved by forced emigration, in a few years it escalated to mass deportations (the infamous “Madagascar Plan”) and ultimately to mass murder (the Holocaust).

There was, however, a related project that saved, not destroyed lives. The lives of unborn babies. Determined to make German nation as fast-growing as possible, he outlawed abortion almost as soon as he acquired absolute power (both the doctor who performed an abortion and a woman who aborted a baby could face a death sentence). If the baby was deemed genetically heathy, of course.

Another very much criminal (thankfully, not murderous) and very much pet project pursued by Adolf Hitler was cleansing and expansion of art collections in Greater Germany (Germany + Austria + territories returned to Germany after invasion and occupation of Poland).

Although after having been poisoned by mustard gas in October of 1918, Hitler could no longer paint or draw, he still was very much a connoisseur of arts (or at least considered himself such).

But not of all arts – only of classic arts that Hitler declared emotionally and spiritually healthy for a German nation. Hitler considered Cubism, Futurism, Dadaism and other “-isms” of the “modern art” decadent and thus poisonous for the German minds, hearts and souls.

Consequently, it is no surprise at all that after he came to power he began to vigorously cleanse German museums and art galleries from the abovementioned “garbage”. By either selling the art abroad (and then using the proceeds for military or civilian purposes) or destroying paintings or sculptures (if no buyer could be found).

The “works of degenerate art” were to be replaced first by “classics” confiscated from the Jews (who were forced to leave just about everything behind when they left Germany) and then by items obtained by plundering museums, art galleries and the like in German-occupied territories. His ultimate objective was to establish the European Art Museum in his almost native Linz.

Fortunately, not all Hitler’s pet projects were of criminal (let alone murderous) nature. He loved animals dearly and so was fundamentally and fiercely opposed to vivisection (surgery conducted for experimental purposes on a living animal, often without proper anesthesia).

Hence he made it his priority to outlaw the practice (common at the time worldwide) making Germany the first nation to do away with this diabolical method. Most such laws in the world (including those that require humane slaughter of livestock), are derived from the laws put forth by the Nazi Party.

It, however, did not prevent Nazi doctors from performing vivisection on living humans – often without proper anesthesia. Or from murdering millions of Jews, Russians, Poles, etc.

Another his concern was protection of German wildlife. In 1934, a national hunting law was passed to regulate how many animals could be killed per year, and to establish proper ‘hunting seasons’. These hunting laws have now been adopted in most countries.

The Nazi Government also footed the bill for education on animal conservation at Primary, Secondary and College levels. The next year another law was passed, – the Reich Nature Protection Act. This law placed several native species on a protection list including the famous grey wolf and Eurasian lynx. Additions were added later as to afforestation (creation of forests) and the humane slaughter of living fish.

Without this law it is very likely that many species would have completely disappeared from Germany’s forests.

Another Hitler’s pet project that ended up saving quite a few lives, was his anti-smoking campaign. He hated the smell of tobacco smoke so much that he couldn’t stand someone lighting up in the same room (hence no one dared to), and publicly called this habit “a waste of money”.

Hence it is not a surprise at all that the NSDAP and the Nazi government launched one of the most expensive (and very successful) tobacco movements in modern history. While during the 1930s and 1940s, other anti-tobacco movements failed miserably in other countries, in Nazi Germany it was an outstanding success.

The Nazis banned smoking in restaurants and public transportation systems, citing public health, and severely restricted the advertising of smoking and cigarettes. There was also a high tobacco tax, and the supplies of cigarettes to the Wehrmacht were rationed. Several health organizations in Nazi Germany even found out (and preached) that smoking heightened the risks of miscarriages by pregnant women, now a commonly known fact.

The statistics of annual cigarette consumption per capita in 1940 was very impressive – an average German smoked four times less cigarettes than an average American – 749 versus over 3,000.

Although Adolf Hitler never entered the School of Architecture, he was always keenly interested in the subject. And, according to memoirs of Albert Speer (who at that time had no incentive whatsoever to praise his former boss), Hitler did have an unquestionable talent for architecture.

And a penchant for the grandiose. Hence it is not surprising at all that his favorite pet project was Welthauptstadt Germania. Even well before he acquired absolute power in Germany, Hitler made no secret of his plans (plans, not dreams) to create a genuinely new world and make Berlin (renamed Germania) the capital of that world.

Which was supposed to eclipse all modern world capitals and being comparable only to ancient Babylon and Rome – the capital of the original Roman Empire. It was a key part (a core part, actually) of Adolf Hitler’s vision for the future of Nazi Germany after the seemingly inevitable victory in World War II.

The official plan for rebuilding Berlin, which Albert Speer was put in charge of, was called the Gesamtbauplan für die Reichshauptstadt “Comprehensive Construction Plan for the Reich Capital”.

And not only for the Reichshauptstadt, but for the Welthauptstadt – the Capital of the World. The Mittelpunkt der Welt – the Center of the World.