German World War II Economy: Industrial Policy (1942-44)


Figure 1.--

Minister of Armaments Fritz Todt was killed in a never fully explained plane crash shortly after taking off from Hitler's eastern headquarters at Rastenburg (February 8, 1942). Albert Speer, at the time primarily Hitler's chief architecht, had arrived in Rastenburg the previous evening after an arduous trip to occupied areas of the Soviet Union. He had an offer by Todt to fly him back to Berlin. He canceled because he was tired and had met with Hitler late in the evening. After the crash, Hitler immediately appointed a shocked Speer the Reich's new Armaments Minister. We do not know why Hitler did this. He was impressed by Speer's performance as architecht in some important projects. But this was nothing like this assignment. Reichmarshal Hermann Göring raced to Rastenburg hoping to take over Todt's responsibilities an increase his control of the economy. Hitler surprised him with the fait accompli of Speer's appointment. [Speer, pp. 193-96.] Göring had done very little to put the Reich's industry on a true war footing. In part because that would have required real work on his part and taking on powerful NAZI Party Gaulitiers. Speer on the other hand with virtually no experience with industry and economics, set in motion an ambitious program, often described as rationalizing industry, that significantly expanded war production despite the escalation of the allied strategic bombing campaign.

Existing Industrial Policy (1939-42)

The German economy after 2 years of War, unlike the British and Soviet economies and now the American economy was not on a full war footing. The War economy was run through the structures set up under Göring's 4-year Plan (1936-40). Consumer goods were still being produced at nearly the same level as before the War. In addition, the Reich was also exploiting occupied countries like France for food and consumer goods. And arms production was not being efficently coordinated by Göring. Part of the Fascist philosophy was that command by an all-poweful leader would lead to efficency. Nothing could have been further than devoid from what developed in NAZI Germany. There were five 'Supreme Authorities' that had various jurisdiction over armament production. And even these authorities did not have the final say. The powerful NAZI Gultiers often overrode the authorities or got exemptions for pet projects that both required both labor and critical materials. And one of the important authorities, the Ministry of Economic Affairs, had declared that conditions did not permit an increase in armament production (November 1941). Few German women were employed factories, especially married women. Critical arms plants were running only one shift a day. Even before the Battle of Britain, the British had begin to outproduce Germany in aircraft constryction and now Germany had to contend with the masiv output of Soviet and American poduction.

Fritz Todt

Minister of Armaments Fritz Todt was killed in a never fully explained plane crash shortly after taking off from Hitler's eastern headquarters at Rastenburg (February 8, 1942).

Appointing Speer

Albert Speer, at the time primarily Hitler's chief architecht, had arrived in Rastenburg the previous evening after an arduous trip to occupied areas of the Soviet Union. He had an offer by Todt to fly him back to Berlin. He canceled because he was tired and had met with Hitler late in the evening. After the crash, Hitler immediately appointed a shocked Speer the Reich's new Armaments Minister. We do not know why Hitler did this. He was impressed by Speer's performance as architecht in some important projects. But this was nothing like this assignment. Reichmarshal Hermann Göring raced to Rastenburg hoping to take over Todt's responsibilities an increase his control of the economy. Hitler surprised him with the fait accompli of Speer's appointment. [Speer, pp. 193-96.] Göring had done very little to put the Reich's industry on a true war footing. In part because that would have required real work on his part and taking on powerful NAZI Party Gaulitiers. Speer on the other hand with virtually no experience with industry and economics, set in motion an ambitious program, often described as rationalizing industry, that significantly expanded war production despite the escalation of the allied strategic bombing campaign. Soon after his appointment, Speer went to visit an important Berlin armament factory. He found it dark and inactive despite the pressing need at the front. No one was on the premises. [Fest, 1999, p. 139-41.]

Speer Reforms

Speer addressed the Reich's pressing needs primarily by centralizing power over the entire war economy, combining the authority of existing Supreme Authorities. Speer was not seeking his appointment. And aqs he explains was 'thunderstruck'. And he agreed to it only if Hitler gave him complete authority. Speer reports that Hitler told him, "Speer, I'll sign anything that comes from you." As much as Hitler's minions preached the Führer Principle, Hitler himself believed in dividing power which ensured his supremecy and made the rise of any real rival impossible. At the same time, Speer moved to give factory managers autonomy. Speer called it 'self-responsibility'. He also pushed each factory to focus on one single product. [Sereny, p. 295.] Speer divided the armament industry by weapon system. Technical experts rather than civil servants were chosen to direct each department. Actually this suggestion came from Hitler. [Spper, p. 273.] Selection was made without consideration of political connections. Speer insisted on this from the beginning and Hitler acceprd it. [Speer, p. 273.] Speer wanted to weed out elderly men. No one older than 55 years could be chosen. He saw elderly managers to be susceptible to 'routine and arrogance'. [Fest, 2007, p. 76.] And further more, no deputy was to be older than 40 years. Speer had each of these departments report to a central planning committee that he chaired. The committee took increasing responsibility for arms production and as time went by for the overall German economy. Despite Speers achievements, he made many enemies--especially within the Party. This was because he put an end to the pet projects of the Gaulitiers who were using both scarce labor and critical materials. And this mean that he had a bitter enemy at the Chancellery--Party Secretary Martin Bormann. Speer tried to rationalize production in the occupied countries, but here had less success, largely because he nver ontained Hitler's backing and military reverses undermined the NAZI hold.

Speer's Position

Speer quickly established his authority. When questioned at the onset at apreviously arranged conference in the arms industry, he called upon Hitler to as promosed back him. Hitler spoke for an hour to an assembly of industrialists, civil servants, and military authorities. He left no doubt that Speer had his full backing (February 13, 1942). The minutes of a subsequent Wehrmacht High Command conference (March 1942) indicated "It is only Speer's word that counts nowadays. He can interfere in all departments. Already he overrides all departments ... On the whole, Speer's attitude is to the point." [Fest, 1999, pp. 142-44] Goebbels noted in his diary, an especially good source on NAZI politics. "Speer is still tops with the Führer. He is truly a genius with organization." [Goebbels, June 1943.] Speer's performance was so spectacular that many in the NAZI hoerarchy began to look on him as a possible successor. [Sereny, pp. 376-77.]

Göring's Role


Peenemunde Raid (August 17, 1943)

The Polish underground reported on the work at Peenemünde as did a Danish pilot. RAF reconnaissance also found the site. Kammhuber learned of a major British raid through a RAF intercept, but did not know the target. He prepared a substantial force to oppose the attack. The Bruitish carefully prepared the attack--Operation Hydra. It was one of their largest 1943 raids. The sent a decoy Pathfinder group of Mosquitos to drop flares over Berlin. This was normal procedure, the first step of a raid. At this time Kammhuber communication line in the Netherlands was cut, presumably by the Ressistance. German ground controllers cut off from Kammhuber, scrambled the bulk of the nihjt figter force to Berlin. When they arrived the Berlin Flak batteries opened up them. In the meantime the British force of 597 bombers attacked Peenemünde. Some of the Luftwaffe fighters saw the glow from flares and bombs to the north and asked for permission to head north. They were refused permission, but some defied orders and caught the final British wave and succeeded in shooting down many of the 40 British bombers lost in the raid. Mamy facilities at the research facilities survived the raid. The British did hit the housing areas and camps for foreign workers. About 700 staff members were killed, this included Walter Thiel, the head of engine development. The Germans as a result moved the production of the V weapons to secret underground facilities deep into Germany.

Underground Arms Plants

Until 1942 the Allied strategic bombing campaign had only minimal impact on the Reich. This began to change in 1942 when RAF Bomber Command began to get Aero Lancaster, a subperb long distance bomber and iitgiated night raids. The Americans joined the cmpaign for aronf the clock bombing (1943). Losses were heavy, but the Germans or the first time began to feel the consequences for the war they launched. The Germans had not anticipated this. Reich Marshal Göring assured Hitler and the German people that the Allies could never bomb the Reich becuse of the Luftwffe's superiority. When this proved chatrostrophically wrong. the Germans begn to go underfround. The Peenemunde Raid was particularly sobering (August 1943). And it put back both th V-1 and V-2 programs back several months. Several underground spaves existed, many relate to mining acivity. The Germans began moving high priority industry into hese spaces. Unfortunately for the Germans, the most important facilities, the synthetic petrolum plants could not be moved underground. They moved the v-weapons production lins as well as many tank and airplane production lines underground where they would be safe from the bomb attacks. This was not a perfect solution as they were delays associated with the move. And some of the output was destroyed waiting for delivery, during delivery. Slave labor was used and some reports suggest the quality of production declines. We can not yet confirm that. And as the strategic bombing campaign ibcreasingly targeted transportation lines, especially the aril lines, deliveries became more and more disrupted.

Speer's Fall (July 1944)

Speer ruled the German arms industry for about 2 years. Devoting himself night and day to his tasks achiebing huge success in increasing arms production. Had the Germans organized put industry on aar footing from the beginning, there is every liklihood they would have won the War. Byt they dud not, Perhaps because of his long hours an ebormous stress, Speer fell sick (January 1944). Unavle to defend his Ministry and associates, he lost influence. He made many ememies and men like Bormann lost no opportunity to undemine him with the Führe. It is likely that Himmler tried to have him killed as he was cared for in a SS hospitl. The final blow was the July Bomb Plot (July 1944). Lists of a new government included Speer's name. He came close to arrest, but in the end no real evidence was found of his complicity. The relationship with Hitler was never the same. And his reforms, especially making appointments with political connections began to unravel. But by this time it made little differebce. The Luftwaffe was largely destoyed and after the Normandy breakout, the Allied forces begn to reduce German citie to vast piles of rubble and to destroy transportation lines. German industry essentially began collapsing (November 1944).

Strategic Bombing Campaign

Many opponents of the Allied Strategic Bombing Campaign point out that Geman war production avtually rose during 1942 and 43 which is true. What they do not address is how much more it would have risen had it not been for the bombing. Sper in his menoir makes it clear that the bombing caused all kinds of problems and wonders whuybit was not pursued more aggresively. And often ignored by the critics is the resulting destruction of the Luftwaffe, essential for vthe cross-Channel invasion and liberation of Western Europe.

Sources

Fest, Joachim. Albert Speer: Conversations with Hitler's Architect (Polity Press, 2007). Translated by Patrick Camiller. These interview expand on Speer's book, Inside the Third Reich.

Fest, Joachim. Speer: The Final Verdict, translated by Ewald Osers and Alexandra Dring (Harcourt, 1999).

Goebbels, Josef. Diary.

Schmidt, Matthias. Albert Speer: The End of a Myth (St. Martins Press, 1984).

Sereny, Gitta. Albert Speer: His Battle With Truth (Knopf, 1995).

Speer, Albert. Inside the Third Reich (Avon, New York, 1970), 734p.







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Created: 8:36 PM 2/20/2014
Last updated: 8:36 PM 2/20/2014