Germany’s problems were also familiar, foremost among them overpopulation, lack of resources, and the need for living space. “I set the following tasks,” Hitler concluded his memorandum. “I: The German Armed Forces must be operational within four years. II: The German economy must be fit for war within four years.” With the announcement of the Four-Year Plan in October 1936, Hitler set Germany on a course of reckless rearmament with the express purpose of waging war in the near future. The primary function of economic activity was now to be preparation for war, so much so that by the spring of 1939 military production occupied one-quarter of the entire German labor force while German financial and economic stability had been imperiled by the breakneck speed of rearmament. The mandate given to Goering was clear: to make Germany ready for war, in terms of armaments and economic self-sufficiency in key raw materials, in four years. No specific war plan had yet been formulated, but implicit in this was Hitler’s belief that a clash with Russia was unavoidable.18
Hitler also had a clear sense of the purpose of a war for Lebensraum: the hold of the so-called Jewish plutocrats over the world’s economic resources and capital had to be broken in order to provide the German people with a living standard commensurate with their racial value. World War I, the British blockade, starvation, German defeat, the Treaty of Versailles, debt and reparations, the ruinous inflation of 1923, and the calamity of the Great Depression served as proof to Hitler that the international economic system was stacked against Germany. The only way to gain national freedom, then, lay in unilateral action to smash the existing system and establish a German-dominated “New Order,” a European economic bloc that could compete on an equal footing with the Anglo-American powers. This was, after all, a Darwinian world of struggle where the strong could do as they wished and the weak were compelled to do as they must. Ironically, Hitler proposed to free Germany from the shackles of this alleged Jewish-dominated system in much the same way he believed the two ascendant forces in the world economy, Great Britain and the United States, had achieved their predominance: through force.
The immediate dilemma for Hitler was that German rearmament could be achieved only through reckless financing that would imperil the domestic standard of living while also promising to so alarm Germany’s potential adversaries that they, too, would begin rapid rearmament. The military constraints imposed by Versailles had left Germany so weakened that even the ambitious rearmament program of 1933–1935 had left it barely able to defend itself, with offensive operations out of the question. To make good his determination to resolve the vital issue of Lebensraum no later than 1943, which he revealed to his startled military and foreign policy leaders in November 1937, Hitler contemplated peacetime military expenditures unprecedented in a Western capitalist economy (only Stalin’s actions in the Soviet Union after 1928 were comparable). In the event, this breakneck policy of rearmament did surprisingly little to increase the effective strength of the German military since it resulted in a series of production bottlenecks, raw material and foreign currency shortages, interservice feuds over allocation of scarce resources, and an inability to establish which weapons should be given priority in production. Furthermore, even if moves to absorb Austria and Czechoslovakia did not result in Western military action, aggressive German rearmament would almost certainly touch off a response by the other powers. Given its inferior economic and resource base relative to its rivals, this would inevitably touch off an economic competition that Germany ultimately could not win. Time was, thus, not on Germany’s side, as any initial military advantage would not last. Hitler, however, believed that the only solution to Germany’s dilemma lay in expansion, so the time factor merely dictated action sooner rather than later. Despite, or perhaps because of, its precarious financial, food, and raw material situation, Germany, Hitler believed, had to escape the restrictions of Central Europe through force.19
Rearmament problems, awareness of German deficiencies in food, capital, and raw materials, irritation with the failure of Britain to act as he wanted, a growing fear of a renewed encirclement of Germany by hostile enemies: all acted to produce in Hitler a growing sense of frustration that exploded in late 1938. Since his racial obsessions infused all aspects of life and policymaking in the Third Reich, the racial-ideological dimension of policy represented the flip side of the military-strategic coin. From the beginning of his rule, Hitler faced a self-imposed “Jewish problem,” for by definition Jews were considered aliens and, thus, could not be a part of the racial community, the Volksgemeinschaft, that Hitler promised as the cornerstone of his new Germany. From the outset, as well, the solution to this Jewish problem resulted in a myriad of difficulties, ranging from the failure of the economic boycott of April 1933, to troubles associated with the emigration of German Jews, to the international condemnation of Nazi anti-Jewish actions. In all this, Hitler saw his belief confirmed that a Jewish world conspiracy actually existed and that its mission was the destruction of Germany. Typically, the more radical and aggressive Nazi policies became both at home and abroad, the more Hitler imputed hostile intentions to this alleged Jewish conspiracy. In a virtually perfect self-reinforcing spiral of paranoia, stepped-up persecution of German Jews, followed by foreign condemnation and pressure, only further convinced Hitler of the truth of his great insight about the hostility of “international Jewry.”20
In step with foreign policy, 1938 proved to be the key year in the radicalization of racial policy as well. From 1933, Nazi policy had aimed at the emigration of all German Jews, primarily to Palestine. By 1938, however, Nazi officials regarded these efforts as a failure: fully three-quarters of the 1933 Jewish population still lived in Germany, and other countries had mounted increasing obstacles to Jewish immigration. Moreover, top Nazis themselves, influenced by Foreign Office arguments, had become more sensitive to Arab opinion and alert to the perceived danger of creating a Jewish state that would threaten Germany in the future. New ideas were mooted, including one from Reinhard Heydrich’s SD (Security Service) that the Jews be expelled to some inhospitable place such as Madagascar, an idea long circulating in European anti-Semitic circles. In any case, the final aim remained the removal of all Jews from Germany through some sort of emigration or expulsion, although Hitler, Heydrich, and others now assumed that such an action might take up to ten years. In the meantime, and characteristically, Hitler suggested to Goebbels that German Jews could be held as hostages.21
As perhaps the most radically anti-Semitic of all the top Nazis, Joseph Goebbels seethed with impatience at the lack of progress in “cleansing” Germany, and especially Berlin, of Jews. Typically, the Nazis blamed the Jews themselves for the emigration logjam and responded in characteristic fashion: they would simply increase the incentive for the Jews to leave, through a renewed wave of physical violence and terror. The way forward had already been shown in March in Vienna, where, following the annexation of Austria, a storm of violence and popular anti-Jewish rage had been unleashed. With the tacit approval of Hitler, Goebbels had already in the summer of 1938 launched a new round of discriminatory and propagandistic assaults against the Jews of Berlin, actions that were quickly taken up in other German cities. Significantly, this radicalization of Jewish policy accompanied a sharp increase in international tensions associated with the brewing Sudeten crisis: as Hitler’s hopes for the realization of his long-anticipated alliance with Britain faded, his anger at international Jewry boiled over, for which the Jews of Germany would have to pay. Nor did the outcome of the Munich Conference at the end of September 1938 assuage the Führer. Hitler evidently had hoped to have a short war against Czechoslovakia that autumn, with the expectation that Britain and France, acquiescing once again in a fait accompli, would now grant him the desired free hand in the east. Instead, he had to be satisfied with the Sudetenland. Although foreign tensions had dissipated, the radical turn domestically had produced a menacing anti-Jewish atmosphere.22