The Transfer Agreement (49 page)

No time was wasted in suppressing the rebellion. Dr. Wagener and his assistants were promptly sent to a concentration camp. The charges were summed up as attempting to "rob the Fuhrer of his freedom of decision."
⁸
This set off a wave of anarchy, with mid-level Nazi leaders jailing businessmen and taking over companies.
⁹

Later that day, June
30,
British Ambassador Rumbold reported the chaos in a letter to Foreign Secretary Simon. "Can he [Hitler] control them? ... Nobody can foresee the actions of leaders like Frick, Goering, Ley, and Wagener, who seem to possess authority to incarcerate anyone at a moment's notice ....
It
is doubtful whether the Nazi .leaders in the provinces even trouble to refer to Berlin for authority to make arrests.
¹⁰

The madness continued for days, with contravening Nazi authorities ordering private businessmen to make large donations, abrogate contracts, suspend debts, rehire workers and postpone layoffs. Those who did not seem to cooperate fully were arrested and tried by party bureaus.
¹¹
In many instances, fear and fear alone kept companies operating.

On July
2,
Hitler gathered all major SA and SS leaders at Bad Reich-en hall and admitted what the diplomats had been saying for weeks—the success of the Third Reich depended wholly on a solution to the unemployment crisis. And he was aware that the swelling ranks of unemployed Brownshirts were creating the impetus for a second revolution. He promised to crush ruthlessly any such action because any second wave would only bring chaos.
¹²
That chaos would probably result in civil war.

Hitler's July
2
rebuke did not work. The hairline cracks were becoming distinct as the unemployment panic escalated the batteries against German business. A Bavarian director was told to consider himself lucky for being ordered to contribute as little as RM 30,000
to the local Nazi unit. The
Berlin Municipality was forced to hire unemployed men to work in imaginary public works programs. The Municipality announced that its normal creditors would therefore not be paid.
¹³

A prominent Saxon Nazi employed as a salesman was unafraid to inform the British embassy's commercial section that his local faction had decided to forbid all foreign goods and rule Saxony's commerce as they saw fit. When the embassy staffer reminded the man of Hitler's speeches forbidding interference with private enterprise, the salesman answered that the Nazi leaders of Saxony "had lost patience" with the government and would do as they pleased.
¹⁴

The anarchy was most visible in a massive resurgence of anti-Jewish boycotts. Such boycotts had been forbidden shortly after the aborted April First attempt. Reich leaders knew that of all the foreign provocations, boycotting Jews was the most likely to provoke like retaliation. Yet provincial Nazi units, in open defiance of instructions from Berlin, ordered local newspapers to publish boycott notices. In many districts, party members were ordered to denounce for arrest any Aryan seen entering a Jewish store.
¹⁵

Anti-Jewish boycotts of course increased general unemployment. Although it appeared as though Jewish commerce was being diverted to Aryan businessmen, thereby increasing Aryan employment, the exact opposite was true. Jewish firms ruined by boycott were invariably forced to fire their German employees and default on their debts.

The spiraling effect on employment of these Jewish defaults was made clear to Hitler personally during these first days of July. His new economics minister, Kurt Schmitt, appealed for an emergency meeting to discuss the imminent bankruptcy of Germany's second-largest department store chain, the Jewish-owned Hermann Tietz stores. The massive Tietz chain operated over one hundred stores throughout western Germany, employing I4,000
people directly and providing employment to thousands more who worked for Tietz suppliers. Furthermore, there were several other Jewish department stores that, like Tietz, had been boycotted into near bankruptcy. Schmitt explained to Hitler that if these chains went bankrupt—Tietz in particular—the entire German economy would suffer a major overnight increase in unemployment. The employees of Tietz and many of its suppliers would lose their jobs, and hundreds of creditors would be ruined. Schmitt told Hitler the only solution was to reach somehow into dwindling government reserves and provide Tietz with a special subsidy. Hitler was outraged. The very thought of diverting precious government funds to subsidize a Jewish enterprise was blasphemy. At that point, Schmitt showed Hitler a stack of financial analyses of what would happen if Tietz went out of business. For example, the financial condition of food-processing plants, whose products were well represented in Tietz's stores, would be dangerously weakened. The excited debate lasted two hours. But in the end, money was found to bail out the Tietz operation.
It
was a stunning lesson in economics for Adolf Hitler.
¹⁶

Der Fuhrer took immediate steps. On July 5, Hitler addressed an open letter to the leading Nazi officials of Brunswick to stop mass arrests and trials of businessmen and industrialists. Hitler stressed that business must be allowed to function normally. The next day, Hitler's minister of labor issued a similar warning to the so-called Nazi Cell Organization, which included numerous bottom-echelon clerical workers. Later on July 6, Hitler chastised key party leaders in Berlin for National Socialist experiments that were destroying the remnants of German industry. "History will not judge us," he warned, "according to whether we have removed and imprisoned the largest number of economists but ... whether we have succeeded in providing work."
¹⁷

But once more Hitler's warnings went unheeded. The cancerous decay of German business was spreading. In a report to Washington, American charge Gordon, described how explosive the unemployment issue was: "The tremendous pace at which the new revolutionary wave ... [is] sweeping over Germany ... shows that what is known here as the 'Druck von Unten'—that is to say, the
pressure from below
on the part of the rank and file of the Nazi Party who feel that ... they have in no wise obtained the material benefits which ... they feel are due them ... is still a very acute reality." Gordon added that Germany was on the very brink of the so-called "second revolution," and Hitler had decided to stop it.
¹⁸

And so on July
II,
Hitler announced that "the revolution was over." Interior Minister Frick circulated a grave warning to all high-ranking government and police authorities, stipulating in plain German: "The Chancellor has made it clear beyond doubt that the German revolution is closed ....
The foremost task of the government is now to lay intellectual and economic foundations .... But this task will be seriously endangered by further talk of a continuance of the revolution, or of a second revolution. He who talks thus must realize that . . . he is rebelling against der Fuhrer himself and will be treated accordingly. Such utterances . . . are particularly calculated to expose the German economic system .... the marked fall of unemployment, must in no circumstances be disappointed."
¹⁹

The warning was again ignored. Transparent references to a "marked fall in unemployment" fooled no one. When 5 to 6 million wage earners in a country of approximately I5 million households have been out of work for two or three years, they know it. Only food on the table can change such people's minds. The talk of a second revolution was indeed a frantic attempt by these 5 to 6 million jobless Germans to transfer their political loyalties to anyone who could finally accomplish that one heroic deed: put some food on the table.

Along with Frick's warning, an announcement was issued to all newspapers by Rudolf Hess, Hitler's personal deputy, ordering all boycotts against Jewish-owned department stores to stop, explaining: When the Third Reich "finds its most important task to provide work and bread for as many unemployed Germans as possible, National Socialists cannot ... deprive hundreds of thousands of employees ... of their jobs in department stores and enterprises which depend on them. I therefore strictly forbid all members of the NSDAP to take any actions against department stores or similar enterprises."
²⁰

In the frenzy to survive, it was not only the poor and unemployed who demanded change, but also the rich and powerful.
If
Hitler was going to rehabilitate the German work force and rearm, continued support from the magnates of German industry was vital. And Germany's leading industrialists enjoyed vast alliances with the underarmed, understaffed, but nonetheless fully organized German military, the Reichswehr.
²¹
The Reichswehr was still an uncertain factor in German politics. At the end of the second week of July, the wealthy needed immediate reassurance.

On July
I
3, I933,
a panel of German industrial leaders and financiers met with Minister of Economics Schmitt to hear the government's plan to seize business back from the Nazi factions. Schmitt outlined a seven-point policy, and it was just what they wanted to hear. Businessmen were to be given full police protection against Nazi interference. Government price controls would be dropped. An advisory council, comprised of Carl Bosch, Gustav Krupp, Fritz Thyssen, Karl Siemens, and thirteen other German executives, would be granted a special voice in future economic decisions. Cartels and markets were to be stabilized. The department stores were to be fully protected from "irresponsible elements." Various so-called fighting organizations of middle-class Nazis were to be dissolved.
²²

In particular, Schmitt was alarmed about the sudden rise of massive middle-class economic associations. The Estate for Handicraft and Trade was the most threatening. This Estate originated in May
I
933
as a paper-shuffling party bureaucracy committed to the Nazi doctrine of native crafts and small enterprise. In recent days, however, the Estate had grown to an enormous membership and had taken a defiant position against big business. More important, the Estate had asserted itself as the
sole
competent authority in economic organizing and was even obligating employers to join its ranks. The Estate represented more than just a threat against big business.
It
represented an alternative power base with the potential to intevene and redistribute jobs. And so Schmitt assured that the Estate would be dissolved at once to avoid the danger that a "whole series of non-authorized persons would engage in experiments and seek to build up a sphere of influence so as to realize all kinds of plans."
²³

Schmitt reassured the gathered executives that the new seven-point program would commit the Hitler regime to economic recovery through
traditional
business methods. The industrialists heartily approved. Gustav Krupp said a word of thanks on behalf of the "German economy"
²⁴
for the last attempt to rescue capitalism in the Third Reich.

While Schmitt was reassuring German industrialists on July
I
3,
Hitler was espousing the new economic philosophy to a party leadership conference in Berlin. He tried to explain that in politics a single swift and decisive blow was required, but "in the economic sphere other laws of development must determine our action. Here we must move forward step by step without suddenly destroying what already exists and thereby imperiling the basis of our own existence." Hitler stressed that he was preoccupied with his prime economic task: restoring the German worker's job and consumer power.
²⁵

Though Nazi leaders agreed that the paramount issue was jobs, there was now considerable disagreement over the best way to preserve and restore them. Schmitt and Hitler in their new alliance with the German magnates had their ideas. But the Estate, which pursued a more common man's commerce, had its ideas.
If
any entity could play a role in a second revolution, it was this new Estate.
²⁶

So the next day, July
I
4,
the Reich issued a new emergency measure stating unequivocally that the Nazi party was the only legitimate party in Germany. Political activities were limited to privileged members of the party. No new parties of any kind could be initiated. This was a telling emergency measure since the Nazis had been the only real political party since April, and even the remnants of their right-wing affiliates had been wholly absorbed in late June. Whatever Estate leaders were planning, under whatever name, Hitler would not allow it. United States Ambassador Dodd, explaining the new law to Washington, commented, "There can be little doubt now that this law was directed not so much against the defunct political parties as against attempts to split the Nazi Party from within."
²⁷

A few days after the July I4 proclamation, Hermann Goering was vacationing on the Island of SyIt in the North Sea when his entire Prussian cabinet suddenly assembled on the island for an urgent conference. The next day, Goering cut short his vacation and flew back to Berlin. At the airport he said little except that he would move "with an iron hand" against the enemies of the state.
²⁸

Goering then convened an emergency conference of all the Prussian prosecutors, police chiefs, presiding judges, Gestapo heads, and senior SA and SS commanders. Wholesale arrests of entire dissident Storm Trooper units were already under way, but Goering wanted arrests stepped up. Prosecutors were ordered to clear their dockets of all but dissident cases to provide the swiftest possible punishment.
²⁹