Fascism in Germany. Robin Blick 1975
In many ways, Hitler’s decision to align his rapidly growing party with the ‘National Opposition’ against the Young Plan had proved an enormous success. Money, influence, a wider and new audience for his policies – these were the direct results of the formation of his bloc with the Hugenberg monarchists. However there were also drawbacks. By drawing close to the leaders of the traditional right, Hitler exposed himself to charges inside his own movement – namely from the new and older ‘radicals’ – that he had sold out to ‘reaction’. The rumblings of disgruntled SA men were first heard in Nazi ranks in 1928, when the party leadership decided to switch to Hitler’s ‘rural’ strategy, a policy which involved concentrating most of the movement’s forces in areas of agrarian unrest such as Schleswig-Holstein. Here, where the crisis in German farming was at its most acute, the Nazis gained a foothold amongst the small independent farmers either already bankrupt or faced with imminent ruin. Their revolt had initially been directed against the larger landlords of the region, but with the arrival of the Nazis, the movement began to take on a very different character. Active from the beginning of the revolt had been the remnants of the old North German Strasser group, and they, together with ‘National Bolsheviks’ such as Ernst Niekisch and the ex-Free Corps officer Ernst von Salomon, had pushed it further to the left than Hitler thought desirable, in view of his new strategy of seeking allies in the business and landed classes. Nazi policy was to sidetrack and defuse the revolt (which frequently exploded into riots and attacks on government tax collectors and officials) by directing it against the Versailles Treaty, the source of all Germany’s ills. But the Nazis found they were riding a tiger, and a large section of the desperate peasantry stuck to their original leaders, one of whom, Claus Heim, acquired almost legendary stature for his terrorist activities, being dubbed the ‘peasants’ general’. There were also splits inside the Nazi leadership itself, with the journalist Bodo Uhse, editor of the NSDAP Schleswig-Holstein daily, defecting to the KPD. The Nazi leaders revealed their true opinions on the agrarian question when in a heated argument with Heim, who refused to accept either their policies or leadership, they told him ‘in a burst of irritation at the distrust and stubbornness of the peasants... that after the [Nazi] seizure of power the Schleswig-Holstein peasants would be driven from their farms with whips’.  Having failed to capture what was at its base a militantly anti-landlord and potential anti-capitalist movement, the frustrated Nazi leaders proceeded to denounce its leaders to the police and the local authorities, a move which produced fresh wave of unrest on the party’s plebeian wing.
The larger the party grew, the more precarious became Hitler’s balancing act on the tightrope between his newly-won allies in the business and Junker world on the old monarchist right, and the masses of radicalised petit-bourgeois and backward workers to his ‘left’. Fascism, which once in power displays many of the features of a Bonapartist regime (though with the essential difference that it has to contend with a plebeian base), also exhibits all the contradictions of Bonapartism even before it comes to power. Every attempt by the Nazi demagogues to extend their mass base by wild promises of action against big business tended to undermine the other and complementary side of Hitler’s strategy, which was to win the support of these very capitalist interests. And by the same token, each new conquest in the ruling class, whether he be banker, industrialist, Junker or monarchist politician, rendered less plausible Nazi claims to represent the interests of the downtrodden and poverty-stricken. Try as he might, Hitler could never completely escape from or resolve this dilemma. From the revolt of the Strasser – Goebbels faction in 1925 right through to the massacre of the Röhm group in June 1934, Hitler was faced with the threat of a rebellion by the plebeians, those who had fought the workers’ movement not simply in order to make Germany safe for big business, Junkers and the general staff, but to carve out for the Nazified petit-bourgeois hordes a niche far larger and more luxurious than anything they had enjoyed under the rule of the ‘Jewish’ and ‘Marxist’ Weimar Republic. Not once, but many times, the KPD took the revolts of the Nazi ‘plebs’ and pseudo-radicals to be a groping towards genuine proletarian socialism. In fact their goal was a petit-bourgeois utopia in which all the ‘bad’ sides of capitalism – monopoly, the class struggle, exploitation, poverty, etc – would be removed, while preserving its ‘good’ aspects, the most important being the ‘nation’ and protection of private property. That is why none of these revolts, though undoubtedly embarrassing for Hitler, ever came anywhere near undermining his position of supreme leadership. Being based on the middle class, and expressing all its political confusion and inability to develop an independent stand on any basic question, such challenges to the ‘reactionaries’ in the Nazi leadership, after promising much, fizzled out, leaving the KPD with nothing save a ‘capture’ of aristocratic ‘National Bolsheviks’. (In fact one of the main reasons why Hitler was able to hold his movement together as well as he did, despite its enormous internal social contradictions, was the policy of Third Period Stalinism, which deepened divisions within the proletariat, the only force that could have broken the oppressed but confused petit-bourgeois masses from National Socialism. Instead, the KPD turned its back on the reformist workers, and went chasing after the Nazi ‘radicals’ in a way that could only have even more alienated workers loyal to the SPD.)
Illustrative of the difficulties involved in building a mass counter-revolutionary movement (one in which support from decisive segments of the ruling class is also essential) were the Nazi Party’s zigzags over the anti-Young Plan campaign. Goebbels, still finding the going tough in solidly proletarian Berlin (where more than 60 per cent of its inhabitants – in other words, nearly all its workers – voted either SPD or KPD), struck a radical pose against the Hugenberg monarchists by vehemently denying in his Angriff that the Nazis intended to join the ‘National Opposition’ of reactionaries in their anti-Young Plan referendum. Goebbels claimed that such talk was an invention of the ‘Marxist press’ put about to discredit the true socialist friends of the German workers. When Hitler did announce his party’s adherence to the National Opposition, he had to reassure the ‘radicals’ that the move was only a manoeuvre, which in part it was. At the same time, Hitler now found himself more exposed to the charge of betraying the movement’s programme than at any time since the dispute over the Princes’ property referendum. In Saxony, where the party was making rapid headway amongst the poorest sections of the artisans and small textile employers, a local party leader, Captain H von Muecke, resigned from the NSDAP, revealing that in his own district the organisation was in the pocket of the big textile manufacturer and one of Hitler’s keenest capitalist financiers, Robert Mutschmann. In an open letter dated 3 August 1929, von Muecke declared it an ‘open secret that the influence of Herr Mutschmann is due to the fact that being a rich manufacturer, he has laid Herr Hitler under a financial obligation to him’. Von Muecke’s resignation and revelations, while symptomatic of the problems facing Hitler as he edged closer to the ruling class, aroused little interest at the time because neither the Nazi Party nor its Saxon critic were regarded as national political factors of the first rank. Altogether more sensational, and indicative of Hitler’s chosen course, was the defection of Otto Strasser.
Once again the dispute originated in ‘Red’ Saxony, where in April 1930 an official strike brought all industry to a halt. Otto Strasser, anxious that the party should not be exposed as a tool of the big employers, engaged in one of the left manoeuvres at which he and his fellow north Germans had proved themselves such past masters:
I decided to support it [the strike] with the full weight of the NSDAP of the North and to put my papers at the disposal of the cause... It is easy to imagine the fury of the pundits of industry with whom Hitler had recently come onto terms. For some time now the SA had only been financed by Thyssen... Without his new friends Hitler could count himself lost, and he received from the Federation of German Industrialists of Saxony an ultimatum couched in rather abrupt terms: ‘Unless the strike order [of the trade unions] is condemned and opposed by the NSDAP and its papers... the entire German Federation of Industry will cease its payments to the party.’ Such an ultimatum to the party could not remain secret. We knew the contents of this shameful ultimatum; we knew that Hitler was sold to the capitalists and we realised that there was nothing more to hope from him, for he accepted the ultimatum. A resolution of the Reich [Nazi] Party Executive forbade any member of the NSDAP to take part in the strike. It was signed by Hitler himself. 
Otto Strasser and his small group of supporters (who did not include his brother Gregor, who had temporarily made his peace with Hitler) decided to confront Hitler over the Saxon affair and its implications for the future course of the party. What ensued was the now well-known debate on 21 and 22 May 1930 between Hitler and Strasser, preserved for posterity in the latter’s memoirs. They contain the most candid remarks ever put on record by Hitler about the Nazi leadership’s attitude to big business, socialism and the working class:
OS: You want to strangle the social revolution for the sake of legality and your collaboration with the bourgeois parties of the right.
AH: ... Your kind of socialism is nothing but Marxism. The mass of the working classes want nothing but bread and games. They will never understand the meaning of an ideal, and we cannot hope to win them to one... There is only one possible kind of revolution, and it is not economic, or political or social, but racial, and it will always be the same; the struggle of inferior classes and races against the superior races who are in the saddle... What I want is a picked number from the new ruling classes who... are not troubled with humanitarian feelings, but who are convinced that they have the right to rule as being a superior race, and who will secure and maintain their rule ruthlessly over the broad masses...
OS: Are you convinced, as I am, that our revolution must be a total one in the political, economic and social spheres? Do you envisage a revolution which opposes Marxism as energetically as capitalism? Do you consequently admit that our propaganda should attack both equally in order to obtain German socialism?
AH: It is Marxism... In fact, it’s Bolshevism. Democracy has laid the world in ruins and nevertheless you want to extend it to the economic sphere. [The same theme already encountered in Mein Kampf and Hitler’s addresses to business leaders, where he upheld ‘personality’ in economics and politics – RB] It would be the end of the German economy. [Strasser says that at this point: ‘Hitler launched into a long tirade in which he tried to prove that capitalism did not exist, that the idea of autarchy is nothing but madness (this being the policy of the Strasser group)... and finally that nationalisation or socialisation... was nothing but... Bolshevism.']
OS: Let us assume, Herr Hitler, that you came to power. What would you do about Krupps? Would you leave it alone or not?
AH: Of course I should leave it alone... Do you think me crazy enough to want to ruin Germany’s greatest industry?
OS: If you wish to preserve the capitalist regime, Herr Hitler, you have no right to talk of socialism. For our supporters are socialists, and your programme demands the socialisation of private enterprise.
AH: That word ‘socialism’ is the trouble... I have never said that all enterprises should be socialised. On the contrary, I have maintained that we might socialise enterprises prejudicial to the interests of the nation. Unless they were so guilty, I should consider it a crime to destroy essential elements in our economic life. Take Italian Fascism. Our National Socialist state, like the Fascist state, will safeguard both employers’ and workers’ interests while reserving the right of arbitration in a dispute.
OS: But under [Italian] Fascism the problem of labour and capital remains unsolved. It has not even been tackled. It has merely been temporarily stifled. Capitalism has remained intact, just as you propose to leave it intact.
AH: ... There is only one economic system, and that is responsibility and authority on the part of directors and executives. That is how it has been for thousands of years, and that is how it will always be. Profit-sharing and the workers’ right to be consulted are Marxist principles. I consider that the right to exercise influence on private enterprise should be conceded only to the state, directed by the superior class... The capitalists have worked their way to the top through their capacity, and on the basis of this selection, which again only proves their higher race, they have a right to lead. Now you want an incapable government council or works council, which has no notion of anything, to have a say; no leader in economic life would tolerate it. 
Rather self-flatteringly, Strasser recalls that Hitler:
... relieved of the millstone represented by the real revolutionaries among his followers, sailed full steam ahead towards the reactionary forces of the old regime. Nothing was left to stop him from contracting a close alliance with capitalism and heavy industry... Thyssen was a harbinger, the first swallow announcing the spring. The prize he was really after were Hugenberg and Schacht. 
Strasser gives some revealing details about the way Hitler finally managed to gain entry through the door of big business and high finance; not to speak of the terms on which it was opened:
One man in his [Hugenberg’s] confidence was Councillor Bang [Pan-German leader] of Dresden, one of the industrial leaders who had issued the ultimatum to Hitler [on the Saxony strike]. This man was also in contact with the Führer. The councillor adroitly brought the two together. Schacht and Hitler were brought together in similar fashion. Dr Schacht had recently left the DDP because of his opposition to the expropriation of the princes and, unknown to the party, a meeting between Schacht and Hitler took place a little later. [the meeting took place in Goering’s Berlin home, provided for out of funds supplied by Thyssen – RB] ... We later learned that Schacht had made his cooperation with Hitler dependent upon the latter’s sacrificing the Strasser brothers. The road was thus cleared, or very nearly cleared. 
But not quite, for there still existed several strong barriers – objective and subjective – preventing Hitler from consummating his strategy of aligning the Nazi movement with the interests of big business. Subjective, because many industrialists and bankers still took seriously the ‘socialist’ aspects of the Nazi programme, while others – even those who had secretly financed and supported the party in the pre-election period – now feared that the sheer magnitude of Hitler’s success on 14 September would enable him to take up a more independent political stance and press yet harder for the ousting of the old bourgeois parties and leaders – a step that not even Thyssen or Kirdorf were as yet ready to countenance. Finally, big business feared that the workers’ movement would close its ranks in the face of the Nazi menace, and that either the Social Democrats would be driven into total opposition (forming a bloc with the KPD) or that, if the SPD continued to cling to the ghost of the liberal bourgeoisie, the party’s working-class base would go over en masse to the KPD. The German bourgeoisie had Müller and Thälmann (supported, needless to say, by the formidable authority of Stalin and the entire Comintern apparatus) to thank that neither dreaded alternative came to pass. But just as a considerable section of the bourgeoisie failed to grasp the class essence and counter-revolutionary role of fascism, so too did others in the ruling class mistake the KPD’s bellicose adventurism and leftist-inspired attacks on Social Democracy for genuine Communist policy and tactics. These impressionist moods and reactions greatly influenced the conduct of the German – and indeed international – bourgeoisie in the immediate aftermath of the elections.
No sooner were the elections results known than Geheimrat Kastl of the Federation of German Industries, a man who had been pressing harder than most since the beginning of the economic crisis for a complete reversal of the SPD’s reformist policies, expressed to business and political colleagues his ‘concern about further political developments’, and informed the Chancellor that the Federation (many of whose members only a few days before had been demanding that he renounce the support of the SPD in the Reichstag) considered that Brüning should widen the basis of his government – not, as one might have been led to expect, by seeking agreement with the ‘National Opposition’ but ‘in cooperation with the Left’. And only a week later, Papen wrote to Schleicher (both of whom desired a government leaning to the far right) that ‘the bankers are clamouring at Brüning’s door – and mostly those who gave election money to the Nazis are wailing now for the immediate formation of the Grand [Weimar] coalition’.
The run-of-the-mill German businessman, who until the crisis had relied on one or other of the main bourgeois parties to represent and defend his interests, was utterly bewildered by the election results of 14 September. He was capable neither of comprehending the titanic social contradictions refracted in the stupendous rise of the Nazi vote, nor of grasping how such a movement as Hitler’s, with all its extreme social demagogy and attacks on the world of business, could still be employed to crush the enemies of capitalism. On the Berlin stock exchange, where share prices had been declining steadily for the last two years, panic set in, with the Reichsbank losing 10 points in a matter of days. Other shares hit by the political crisis included IG Farben (six points) and Siemens (seven). The recall of foreign loans, which had of course been under way since the crash of October 1929, now accelerated as overseas investors took fright at the possible implications of the Nazi success. Neither were these fears due solely to the magnitude of the Nazi vote on 14 September. Nine days later, there opened at the Supreme Court in Leipzig the trial of the three young officers arrested earlier in the year for pro-Nazi activities – Scheringer, Ludin and Wendt. Called as a witness by the defence lawyer Hans Frank (later to serve Hitler as the butcher of occupied Poland), Hitler was pressed by the President of the Court to define the often-used Nazi term ‘national revolution’. Here Hitler had to tread warily. For his supporters in the business world and the monarchist right, it meant purely the destruction of Marxism and the entire workers’ movement, the restoration of the monarchy and a return to the imperialist policies of the Hohenzollerns. But for the millions of ‘small people’ who had rallied with such fanatical zeal to the Nazi banner in the previous weeks and months, the ‘national revolution’ meant jobs, the protection of small property, action against the big banks and department stores as well as the organisations of the working class. Hitler had to walk the tightrope between these two conceptions, and he did so with all the skill of a consummate and experienced demagogue. Legality and revolution; respect for the constitution and the destruction of the ‘system’ on which it rested; loyalty to the army and its permeation by Nazi ideology – Hitler reconciled them all:
I have always held the view that every attempt to disintegrate the army was madness. None of us has any interest in such disintegration. We will see to it that when we have come to power, out of the present Reichswehr shall rise the great army of the German people. There are thousands of young men in the army of the same opinion... Our movement does not require violence. If we have two or three more elections the National Socialist movement will have the majority in the Reichstag and then we shall make the National Revolution. [Its]... concept is always taken in a purely political sense, but for National Socialists this means exclusively a rescuing of the enslaved German nation we have today...
At this juncture, the President of the Court reminded Hitler of a remark made during the Ruhr occupation, when the Nazi chief had warned that one day, ‘heads would roll in the sand’, and asked him to reconcile this with his claims of legality. Hitler replied:
I can assure you that when the National Socialist movement is victorious in its fights, then there will come a National Socialist court of justice, then November 1918 will find its retribution and then heads will roll.
At which pledge the Nazi-packed public galleries erupted in frenzied applause. Hitler had found the perfect formula – the legal ‘national revolution’ and then the equally legal massacre of those responsible for the ‘November crime’ – the leaders and activists of the German labour movement. And this in fact proved to be the course taken by the Nazis towards their seizure and consolidation of power. But in the autumn months of 1930, few in the ruling class could be expected to believe him. They saw only the brown-shirted hordes howling for the blood of bankers and Weimar politicians. Neither were they reassured by the conduct of the party on the reopening of the Reichstag on 14 October. Under orders to stage a rowdy demonstration of contempt for the ruling body of the hated ‘system’ (for it was this hatred that had, paradoxically, thrust the 107 Nazi deputies into the Reichstag), the NSDAP fraction hooted, screamed and whistled their abuse at the leading representatives of the government parties, and even jostled Carl Severing of the SPD. Even more horrifying for the staid monarchist right was Feder’s Bill, couched in the classic language of the ‘struggle against the thraldom of interest’, calling for the expropriation of the ‘bank and stock exchange princes’, the nationalisation of all large banks, the limitation of interest rates to four per cent, and, as a ‘national’ touch, the expropriation of all ‘eastern Jews’ and all ‘persons of foreign race in general’. Was it for this that Hugenberg and his monarchist brood had joined with Hitler in the National Opposition? Had bankers and industrialists been doling out their subsidies to Hitler now to discover that, far from fighting the Marxists, he and his movement had joined and even surpassed them in their radicalism? 
Obviously themselves disturbed at the largely hostile reaction of the business community to their election victory, the Nazi leaders immediately set out to reassure it that only National Socialism had prevented a far greater increase in support for Communism. Industry and finance had to learn that Nazi demagogy directed against capitalism was now becoming a condition of its survival:
If we were to imagine a Reichstag without the 107 elected National Socialist deputies the consequences would not be an increased mandate of 107 voters for the Brüning coalition, but instead of the 107 National Socialists there would be at least 200 Red and Communist comrades in the Reichstag... Having considered this possibility is to be put to the credit of the National Socialists alone. 
Not all business circles reacted in this panicky fashion. The Bergwerkszeitung, organ of Ruhr heavy industry, was as opposed as ever to a return of the Social Democrats to the government. Commenting on the lessons of the elections results, it said:
The broadest segments of the population (first and foremost the bourgeoisie) wish not parliamentary tactics but action; they want not parliamentary impotence, but unqualified clarity, and this even of the hard variety. They have served notice that they want to know nothing of complex deliberation, of ‘problems’, and the like. What they want is a train of thought and the kind of slogans that are absolutely simple and, precisely for this reason, will enable them to see the underlying causes. The elections were prompted by the economic problem. The present Reichstag will confront the question whether socialist or capitalist thought is to prevail in Germany... The industrialists have no choice but to apply their greatly enhanced political dynamism... which must be manifested above all in the dynamism of a strong personality. [Emphasis added]
Speaking for those industrial interests where Hitler had secured his firmest footing, the paper invited the Nazis to join the ranks of the anti-Marxist front of the bourgeois parties:
This [invitation] applies equally to the party which scored the biggest success in the last elections, which will therefore, according to parliamentary procedure [sic!], be inducted into the new government and which has already declared its consent. The latest elections showed that National Socialism recruits its forces not from socialism, but from the [petit] bourgeoisie. The sooner National Socialism is politically enlisted to assume responsibility, the greater will be the chances of keeping it within politically tolerable bounds. If, on the other hand, no responsibility is placed on it... it will sooner or later gain still greater success, and will hardly be able to assume political responsibilities without a grave upheaval, for then the party will, at least externally [NB], have to become a revolutionary party, whereas now it can still adopt a conservative stance.
The usually pro-DVP Deutsche Allgemeine Zeitung was also sanguine about the sudden emergence of the Nazis as a national force contending for power:
No new compromises and no endless talk about coalitions, which cause nothing but indignation among the broad, not even National Socialist, circles, and are sure to whip up still more hatred (if this is at all possible) of everything to do with parliament. What we need are firm and effective reforms. The lesson of the elections, the elections of national protest... can only be the following: effect reforms not only against the Social Democrats, who have shown conclusively their opposition to these reforms and are now in dread of the Communists, but reforms against parties generally and against parliament. The National Socialists are captives of their own agitation. It would be better for them to have entered the Reichstag in lesser numbers. With 50 or 60 seats they could depart more easily from their line, at least in economic matters... [However]... many voted for the National Socialists because they were sure their socialism should not be taken too seriously. Indeed, if the National Socialists come to power, the socialist aspect will be quickly jettisoned.
And one banker not begging for the return of the Grand Coalition was Hjalmar Schacht. Out in the political wilderness since 1926, when his party’s support for the KPD – SPD referendum on the expropriation of the princes led to his resignation from the DDP on the grounds that it had deserted the sacred cause of defending private property, and for the previous six months, a vehement critic of government economic and financial policy, which he considered to be far too conciliatory towards the working class, the former Reichsbank President was among the first to grasp the real significance of the Nazi victory on 14 September.
Schacht was in London en route to the United States when he heard the news of Hitler’s staggering success at the polls. He recalls that he was ‘astounded’ at the Nazi performance since he had previously ‘taken hardly any notice of the National Socialist movement’.  That was a state of affairs Schacht soon remedied. Meanwhile, during his speaking tour of the USA, where he addressed meetings of businessmen and politicians on Germany’s economic problems, he let it be known that the rapid growth of Nazism in that country was greatly due to the Allied powers’ reparations policy. Schacht had therefore already appreciated how the Nazis could be used as a threat to pressurise Britain, France and the USA into relaxing their financial grip on the German economy. It did not take him much longer to see that the NSDAP was an even more effective means of counteracting the still quite powerful influence of the SPD on the Brüning government, which of course relied on Social Democratic support in the Reichstag. Schacht’s political views and economic programme on the eve of his first meeting with Hitler are faithfully recorded in his book The End of Reparations, this being based on the 50 or so lectures Schacht gave during his tour of the USA:
The mass lacks the initiative which the individual puts forth. That is why the masses are so eager to follow a real leader. The Social Democratic system attempts in vain to replace the individual sense of responsibility and initiative by a bureaucratic body of officials... For industry this means that the inspiring struggle to obtain the maximum product and the maximum economic success gives way to the ruinous thought of crawling to public charity... This Marxist system affects not only the material but the moral foundations of human society... Men who hope to rise and make themselves count as a result of distinctive achievement become indifferent workers who insist upon their political guaranteed rights... The sense of duty to work, the impulse to save, in short that which makes a nation great and exists in every healthy human being – this... socialism kills. This will to save is weakened, the impulse to squander money extravagantly is fortified... The more the political domination of the socialist trade unions succeeded, by the wage agreement system, in equalising wages, the more emphatically the employers demanded that wages should correspond to actual performance. 
Such ruggedly ‘social Darwinian’ views were remarkably close to those of Hitler, who both in Mein Kampf and in his speeches to businessmen repeatedly emphasised the virtues of ‘personality’ and the harsh ethic of the ‘survival of the fittest’ in economic as well as political life. In this book, Schacht posed quite sharply the alternatives before Germany. The future lay with one or other of the two movements which were gaining from the consequences of the economic crisis. He saw quite clearly that the era when the Social Democrats would exert pressure on a government through their domination of the working class and their strong position in the Reichstag was drawing to an end. But – publicly at least – Schacht did not propose an alternative to a government relying on the support of the SPD. He instead pointed out the dangers implicit in a policy which ignored the revolt against the Weimar system:
Part of the SPD still believes that by manipulating the power of the state it can still maintain its system of special privileges, but the conviction is spreading through the working class and in the expropriated middle class that this [that is, reparations] is a problem of life and death for every individual, particularly for the man of small means; Communists and National Socialists are competing in the effort to exploit this feeling politically and are attacking the privileged Social Democratic trade union bureaucracy. To meet such a movement with military force would be to risk arousing forces of which any responsible and thoughtful political leader may well be afraid. 
Schacht demonstrates here how far ahead he was of the vast majority of the German business community at this time. He not only desired an end to Social Democratic influence over government policies, regional authorities and the administration of the economy in all its aspects: this he shared with thousands of bankers and industrialists. He also understood why the era of German reformism had drawn to an end, and the nature of the forces – both from the far right as well as the Communist left – that were squeezing it out of its last footholds of power. The Social Democratic and trade union bureaucracy was, with the onset of the crisis, under attack simultaneously from the radicalised proletariat and the newly politicised but highly reactionary petit-bourgeoisie – those of ‘small means’. Having indicated the polarities of the range of options open to the German bourgeoisie, Schacht made his own choice at the end of 1930. The approach from Hitler came from an old colleague of Schacht’s at the Deutsche Bank, von Stauss, who was already converted to the Nazi cause. Schacht recalls that Stauss:
... asked me to a dinner one evening to which he has also invited Hermann Goering. I was naturally very pleased to have the opportunity of meeting one of the foremost leaders of the National Socialist movement. This dinner of three discussed the universally burning topics of the economic situation, the rising unemployment figures [now at an horrendous four million – RB], the timidity [sic!] of German foreign policy and all the other relevant questions. Goering turned out to be a pleasant, urbane companion... I could not possibly have deduced from the conversation anything that might have been described as an irreconcilable or intolerable political radicalism. Consequently when, not long afterwards, I received an invitation to dinner from Hermann Goering and his wife, l had no scruples about accepting, particularly as the invitation was accompanied by a note to the effect that Adolf Hitler would be there. 
This was to prove a truly historic meeting. But first let us put the record straight on Schacht’s claim that Goering gave no hint of his movement’s ‘intolerable political radicalism’. This was scarcely necessary, since the banker was already well acquainted with the policies and philosophy of the Nazi party’s leader, as he admitted in a testimony to the Nuremberg war crimes tribunal:
When in the elections of September 1930 Hitler’s party suddenly and surprisingly obtained 108 seats [actually 107], I began to take an interest in the phenomenon [sic!] and on board ship going to the United States I read Mein Kampf and, of course, also the Party Programme. 
Hitler was, therefore, no political stranger to Schacht when the two met for the first time in Goering’s Berlin flat on 5 January 1931. Schacht later gave three accounts of this meeting – one to the International Military Tribunal, another in his apologia, Account Settled (1949) and a third in his autobiographical My First Seventy-Six Years (1955). In the most recent, he simply says that Hitler’s ‘ideas were not unreasonable and were entirely free from propaganda pathos’,  while in his earlier book, we learn just a little bit more, that Hitler’s two-hour speech ‘contained nothing calculated to shock us’ and that ‘everything he said revolved around the two points which were closest to the hearts of all Germans, namely the recovery of political equality with foreign nations and the problem of how to provide the 6.5 million [unemployed] with work’.  Under pressure at Nuremberg, however, Schacht was more forthcoming. True, Hitler’s programme was close, if not to the hearts of all Germans, then certainly to bankers like Schacht and industrialists such as Thyssen. Neither indeed would these same business interests regard what Hitler proposed as ‘unreasonable’. But what Hitler in fact declared as the goal of his movement was not simply equality with other nations, nor the ‘solution’ of the unemployment problem:
In social questions Hitler expressed a number of good ideas; he was especially intent on avoiding class struggle and on eliminating strikes, lock-outs and wage disputes by decisive intervention of the state in labour relations and the direction of economic affairs. There was no demand for abolishing private enterprise, but merely for influence in its conduct. It seemed to us these ideas were quite reasonable and acceptable... Hitler... asked that we as representatives of economy should have understanding for his ideas and give him practical advice. 
Schacht and Thyssen did just that. Schacht says that:
... following the experience of this evening I took the opportunity during the ensuing weeks of urging the Chancellor and other politicians with whom I was in touch to incorporate the National Socialists in a coalition government as soon as possible. Only thus, it seemed to me, could the complete transfer of power into the hands of this radical right-wing movement be avoided. In a coalition... National Socialism might have been kept within reasonable bounds by having to share the responsibilities of government. 
‘Domesticating’ the Nazis was also the goal of Thyssen at this juncture, since the big business revolt against Brüning and his reliance on the Social Democrats lay some months ahead. However the Nazi leaders, especially the ex-radical Goebbels, were wary of drawing too close to a politician who, for their millions of newly-won supporters, symbolised the hated Weimar ‘system’. Thyssen recalls that the Nazis were:
... willing to tolerate Brüning [that is, perform the same function as was currently being undertaken by the SPD – RB] if the Chancellor would be prepared to say that he would part company with the socialists. Josef Goebbels at that time said: ‘If Brüning breaks with the socialists we will support him without entering the cabinet.’ That should have been done, but the offer was refused. 
Could the Bonapartist nature of Brüning’s regime have been illustrated more succinctly? The Chancellor’s cabinet, standing on the narrow foundations of a confessional party itself the amalgam of hostile class forces and political tendencies, clung onto power for as long as Brüning could succeed in playing off his support on the left – the crisis-ridden Social Democrats – against the growing Nazi menace on the right. It was a cunning game, but left out of account the rapidly deepening economic crisis, with its consequent effects on the already deeply distressed petit-bourgeoisie and industrial working class. These two massive social layers, between them comprising more than 90 per cent of the German population, faced each other as mortal enemies (not because of any objective incompatibility between their social interests, but through the utter bankruptcy of the leadership of the workers’ movement, which proved itself totally unable to convince the middle class of its ability to solve the problems of the petit-bourgeoisie). Beyond a certain, though unpredictable point, the further growth of one – or indeed both – of these poles would compel a drastic change of course at the top of the Bonapartist pyramid. Instead of a regime leaning on the reformist left, the leaders of the economy would demand one that rested to one degree or another on the extra-parliamentary as well as parliamentary forces of the extreme right which, after the elections of 14 September, meant primarily the Nazis. This was the significance of Schacht’s meeting with Hitler at the beginning of 1931, for that year was to witness not only the severest crisis in the history of German banking and a continued growth of the NSDAP, but the formation, on a much broader and more menacing scale, of the National Opposition which first saw light of day two years previously in the campaign for the Young Plan referendum.
Others in the world of business had already been active on behalf of the Nazi cause some years before Schacht. Apart from Thyssen, Borsig, Kirdorf and Mutschmann, there was Wilhelm Keppler, who joined the party in the spring of 1927. A manufacturer with a wide circle of contacts in industry and finance, he from quite early on acted as unofficial adviser to Hitler on economic questions, gradually usurping Feder, whose conception of National Socialism was too radical for many prospective supporters of the NSDAP. Keppler was entrusted with the task of winning them over, as he explained at the Nuremberg Trials:
I met the Führer in the fall of that year  when he visited me. I told the Führer at that time that the economic programme of the Party and their ideas were not to my liking, and that I thought it suitable that they should be altered. If I, in spite of it, had become a member of the Party, this had been for different reasons, particularly social-political reasons. This criticism of the economic work I often repeated to the Führer... The position of business toward the Party was rather sceptical. The Führer had tried during the years 1927-28... through lectures before industrialists in the Ruhr, to find more understanding for his economic programme. These efforts were not very successful. First of all the lecture halls remained empty, later on they were overcrowded, the enthusiasm during the lectures was also there but it never lasted very long. Suspicion against the Party was caused to a great extent by the fact that these industrialists were also of the opinion that the economic programme of the Party did not allow success to be anticipated. So, when I approached these members of industry and economy and told them quite frankly that the Führer had ordered me to reconsider all economic questions and asked whether they were prepared to give me their advice, there was a definite sense of relief among those industrialists. 
Keppler’s appointment as mediator between the party and big business dates from the autumn of 1931,  at a time when large numbers of prominent industrialists and bankers, exasperated with Brüning’s inability to sever his last tenuous links with the SPD, were pressing for the formation of a government of ‘National Concentration’. But even in the early months of that year, there were clear signs that Brüning was losing the support of important sections of the business community. Addressing a meeting of Saxon industrialists in Chemnitz on 23 January, Brüning found himself heckled by a claque of pro-Nazi employers who vociferously demanded a ‘change of system’. His retort that such a ‘change of system’ was ‘already being carried out in Germany’ utterly failed to temper their charge that the Chancellor was capitulating to the Social Democrats (and this was the government the KPD had designated as being fully fascist!). Not that Brüning attempted to play down the depth and extent of the crisis. Two weeks earlier, in a speech at Ratibor on 9 January, he admitted that after the September elections, ‘a panic mood had been called forth with the result that in the autumn and winter, the state economy for months long hovered between life and death. Hitherto it has been necessary to keep silent regarding this, but now it must be proclaimed openly.’ All this was grist to the mill of the Nazis and them alone, since a weakening of Brüning’s grip on the political situation would turn the eyes of the bourgeoisie and Junkers towards the only viable alternative to the prevailing leftward-leaning, semi-Bonapartist cabinet – one that leant decisively towards the far right. With party membership running at about 400 000 (more than thrice the KPD, and nearly half the SPD) and with a rapidly swelling street army, the SA, 1931 was obviously going to prove a fruitful year for Hitler if the workers’ parties continued on their current courses of rampant opportunism and ultra-left adventurism. Lending strength to Hitler’s challenge was the split in the leadership of Brüning’s own party, where von Papen was becoming increasingly disgruntled with the Chancellor’s policy of working within the Weimar party framework. Like many others of his ilk who later conspired to bring Brüning down, von Papen was initially quite sanguine about the political prospects for the government which followed the fall of Müller:
Now that the Socialists had withdrawn their support from the coalition, the new Prime Minister should have sought his majority in combination with the right-wing parties... Dr Brüning was not prepared to adopt this approach because he feared having the Socialists in opposition at a period of economic crisis... Dr Schacht... had pleaded with Brüning in... February  to take the Nazis into coalition. Such coalitions existed in Thuringia, Brunswick and Oldenburg, where the Nazis had had to temper their programme to that of their coalition colleagues. There was no good reason why this could not be done in the Federal Government. Brüning does not appear even to have considered this possibility. He preferred to make the fate of his government dependent entirely on the attitude of the Social Democrats and resisted every suggestion of a coalition with the right. 
While von Papen was busy undermining Brüning’s government inside the Centre and among his old army friends and Junker acquaintances, Walther Funk, editor of the Berliner Börsen Zeitung, was doing precisely the same thing in industrial circles, thereby supplementing the parallel efforts of Schacht amongst his banking colleagues, and the explanatory activities of Keppler. His Nuremberg testimony on this question provides perhaps the most comprehensive account of the relations that were developing between the Nazis and big business at this time, and for this reason is reproduced nearly in its entirety:
Funk: Since the middle of 1931 I headed an economic-political information service and before that for 15 years was editor-in-chief of the Berliner Börsen Zeitung. I headed the Economic and Political Service at the request of German industry and economy and joined the party in 1931... It (the service) was mainly for leading people of leading offices. I was press chief in the office for only seven months and then took over as [Nazi] party press chief.
Question: Were you asked to become liaison in the Ministry of Economics [presumably of a future Nazi-dominated regime]?
Funk: A wide circle of industries, mainly coal and mining people and especially certain organisations called Bergbauverein in Essen.
Question: What are the names of the people who asked you?
Funk: Albert Vögler [of] Vereinigte Stahlwerke, Knepper [of] Gelsenkircher Bergwerksverein.
Question: Was IG Farben [the chemical trust] on your list?
Funk: All mining companies. [IG had a coal mining interest in the Flick trust – RB]
Question: Name the individuals with whom you had contacts.
Funk: Thyssen... Peter Klockner, had old mining industry. Diehn [of the] Kalisyndicat [Potash syndicate]. Rosterg [of] Wintershalls. [Funk also named Krupps – RB] They approached me. When I was editor-in-chief of the Berlin paper, people approached me saying they wanted someone to exert economic and political influence in the new party which they assumed would eventually gain power in Germany – but these people were in doubt as to the economic aims of the party and wanted them clarified. I was in touch with the party men in Munich – Gregor Strasser and later Hitler.
Question: Did you get a contribution from the industries for the Nazi Party? 
Funk: Not directly but whenever I put these people in touch with Hitler – then there would be a conference with Hess or someone and they would organise collections for the party. It was only in some instances during the elections in 1932 [the Reichstag elections of November 1932 – RB] when the party was seriously financially embarrassed that they would contact me and I would obtain initial funds for the party from industries.
Question: How much?
Funk: In three or four cases where direct intervention was sought, the total was approximately half a million marks.
Question: Were there any other funds or gifts for the party from industry?
Funk: No, they were always for Hitler – they went through [his deputy] Hess.
Question: What position did you hold in the party?
Funk: ... I was recognised as the economic adviser of the party. Before I joined, the paper [the Nazi Economic and Political Service] was relatively small and since I had a well-known name [with the Berliner Börsen Zeitung] a good many industrialists started to subscribe. The paper was owned by a Nazi, Dr Wagener, who held some sort of economic position with the Nazi party. I think there were approximately 60 [subscribers in industry] but they paid very well. 
Funk then explains how with varying degrees of success he began to detach business leaders from their loyalties (which in many cases were already nearing breaking point) to the traditional parties of the German bourgeoisie. Once again, we note that this activity, while reaching a climax in the last months of the Weimar Republic, began on a large scale in early 1931, following the conversion of Schacht:
The economic circles with which I was mainly connected belonged... predominantly to the DVP, the DNVP and the DDP. August Heinrichsbauer in Essen, who I had known as editor of an economic publication, introduced me to [SS] Oberlieutenant Schatz who played a role in the party as closest helper of Gregor Strasser, to whom he introduced me personally. Strasser, Schatz, Heinrichsbauer and his friends in industry, especially the leading personalities of the Association for mining interests in the Rhineland and Westphalia  [the so-called ‘long name association’ – RB] strengthened me in my decision to enter the NSDAP in order to persuade the party to follow the cause of private enterprise. At that time the leadership of the party held completely contradictory and confused views on economic policy (Feder, Wagener, Keppler). I tried to accomplish my mission, by personally impressing on the Führer and the party as a whole that private enterprise, self-reliance of the businessman, that is, the creative powers of free enterprise, be recognised as the basic economic policy of the party. The Führer stressed time and again during talks with me and industrial leaders, to whom I had introduced him, that he was an enemy of state-economy and of so-called ‘planned economy’ and that he considered free enterprise and competition as absolutely necessary in order to gain the highest possible production. My industrial friends and I were convinced in those days that the NSDAP would come to power in the not too distant future and that this had [emphasis in original] to be if Communism and civil war were to be avoided.
At that time (early 1931) I learned of the existence of friendly relations between Dr Emil Kirdorf, the leading personality of the Ruhr coal industry, and the Führer... Through Kirdorf and later Fritz Thyssen the Führer was introduced to influential Rhenish-Westphalian industrial circles who supported the party financially. Among the Rhenish-Westphalian industries the following men (among others) stayed aloof during the early days (1931-32), Krupp, Peter Klinker, Reusch... Definitely in favour of National Socialism [at this time] were besides Kirdorf, his nephew Kauert, Thyssen, Tengelmann, Springorum, Vögler, Knepper, Winkhaus, Buskuhl, Kellerman... In the IG Farbenindustrie, the following were liaison men to the party: Director von Schnitzler and Dr Gattineau who was the private secretary of Geheimrat Duisberg. I personally after an hour-long discussion [at the IG Plant] at Leverkusen, won over Geheimrat Duisberg [the one-time exponent of close collaboration with... organised labour! – RB] to an attitude toward the NSDAP that at least could be termed neutral. Director von Winterfeld tried to obtain understanding for the party at Siemens [electrical combine] whose management was [like IG] DDP. The AEG [also DDP] stood aloof. 
From this account it is evident that the quickest and greatest successes were won in the centre of German heavy industry – the Rhine-Westphalian region – and that the going was far harder and slower in other centres where either the residues of a more liberal political tradition were more resistant to erosion by the crisis, or where the nature of industry itself, oriented more towards the consumer market, rendered it less susceptible to the ultra-imperialist and bitterly anti-labour policies of heavy industry. Bankers stood in the main somewhere between these two extremes:
The large industrial enterprises in central Germany had a definitely reserved attitude in those days. It was possible for the Führer to win to his side parts of these circles with an address at a meeting of leading personalities of the central brown coal industries (Deutsche Erdael, Brebag, Leopold, Anhaltsche Kohlenwerke). The potassium industry under the leadership of Rosterg and Diehn already at that time had a positive attitude toward the Führer and the party. Baron von Schröder (Cologne) had the closest relations to the party in the banking world. His senior chief Stein was a friend of Dr Schacht. I introduced Dr Otto Fischer (Deutsche Credit Gesellschaft) and Friedrich Reinhart (Commerzbank) to the Führer personally. Dr von Strauss of the Deutsche Bank had connections with the Führer, Goering and Goebbels [which, as we have seen, brought Schacht towards the party – RB]. Late in 1931 or early in 1932 I was visited by Dr Schacht who told me that he had joined the party as he too was convinced that the NSDAP would soon take control of Germany. Schacht, who at that time was working with Dr von Strauss, had already made personal contacts with Goering. He again had contact with Dr Schmitt and Hilgard of the Allianz Insurance Corporation and the Munich Corporation (Reinsurance). I introduced Schmitt and Hilgard, as well as Dr Kubbert of the Verkehersen AG and the Baugesellschaft Lenz and Co, to the Führer. Hamburg shipping circles under [former Chancellor] Cuno [Hamburg-America Line] and commercial circles in Bremen under Roselius also had relations to the party. The powerful Cologne industrialist and businessman Otto Wolf [linked to the Flick steel trust] supported the party financially through Dr Ley. Individual provincial party leaders probably had their own connections with concerns within their territory [Gaus] that is, Rust-Hanover – with Conti-Rubber: Murr-Stuttgart – with Krehn-Trossingern... Wilhelm Keppler, who later became State Secretary and who served as economic adviser to the Führer for many years before me, assembled a special circle of industrialists, but also with Krupp and concerns in Hanover, and he also knew Baron von Schröder (Cologne). He participated in the famous F von Papen meeting held with Schröder and was also founder of the [SS] Reichsführer Himmler’s organisation ‘Friends of the Economy’.  Other members of the organisation were Krahnefuss, who with Keppler’s friends (Rasche, Maier and Luer) dominated the Dresdner Bank and who later became general director of the Brebag. The fuel products of the entire brown coal industry were included in the Brebag. 
On another occasion, Funk added more names to this already impressive list.
Question: What were the industries which you represented in your negotiations with the Nazi Party in 1931?
Funk: Represented is not the word. It would be better to say, which of the circle of industrial people urged me to enter the Nazi Party [on their behalf]. Especially those from the mining industry. Knepper, in the coal industry, Kellerman, Vögler, Tengelmann, Diehm, Rosterg, also some businessmen from banking contingents such as Fischer, Reinhardt, from insurance companies Schmidt, Hilgard, Winterfeld (Siemens), Pönsgen (United Steel Works [Flick combine]), Duisberg (IG Farben), Kastl [who had after the September 1930 elections, taken fright at the Nazi success and called for a return to the grand coalition! – RB], Herle (Federation of German Industries).
Question: Who, besides you and Schacht, were negotiating with industry for support of the Nazi Party prior to 1933?
Funk: Secretary of State Keppler. He worked in Cologne area with Schröder... Heinrichsbauer in the Ruhr industry (Essen). That’s all. 
Hitler and the Bank Crisis
To appreciate fully the enormity of the crisis which brought German capitalism to its knees in the summer of 1931 (thereby creating the political as well as economic conditions for the strengthening of ties between big business and National Socialism) we have first to retrace our steps to the spring of the previous year, when the new Brüning government took its first tentative steps towards implementing the ‘reforms’ being vociferously demanded by industry and the banks. On 12 April 1930, with unemployment running at about two million, and a wave of farm bankruptcies threatening to devastate entire sectors of German agriculture, Brüning chose simultaneously to hit the working class and to bolster the agrarians by opting for a policy of protectionism, which necessarily involved higher food prices. Then on 7 July, and again by Presidential decree, Brüning further deflated an already rapidly contracting economy by slashing expenditure on the unemployment insurance fund by 100 million marks. Other savings were effected through increasing various direct and indirect taxes. But even these measures, severe though they were, made scant impact on the colossal unemployment insurance fund deficit, now running at 750 million marks, and the public works fund deficit, which stood at 100 million marks. In fact each deflationary measure enacted by Brüning (a policy partly attributable to the haunting memories of the 1923 inflation, which most economic experts were determined to avoid at all costs) quickly proved counter-productive in these spheres since they led to an increase in the number of workers without jobs and a consequent rise in the numbers of those seeking various forms of relief benefits. So on 1 December 1930, with the jobless figures now double the level of a year previously, Brüning once again resorted to article 48  in securing President Hindenburg’s approval of a further batch of deflationary emergency measures, involving not only cuts in dole payments and categories of workers entitled to them, but increases in insurance contributions and reductions in wages. Thus spending powers were greatly reduced, leading directly to an accelerated decline in production of consumer goods and an even more catastrophic drop in output in heavy industry, which supplied the consumer goods industry with its means of production and raw materials. With the rapid contraction of world demand hitting German exports, Ruhr industry was on the verge of grinding to a total halt. Under-utilisation of capacity, always a problem for heavy industry with its proportionally high fixed costs as compared with light and medium industry, now became chronic, as the following table illustrates:
|Industry as a whole||67||36|
|Production of means of production||68||30|
|Production of means of consumption||67||43|
|Production of iron and steel||80||35|
|Production of non-ferrous metals||78||35|
Profits had declined by much more, falling in 1930 to a mere 33 per cent of their boom peak level of 1928. The big banks, in contrast to heavy industry, had thus far survived the worst effects of the crisis. Their profits had only dropped to 69 per cent of the 1928 level, while the withdrawal of foreign (mainly US) short-term loans after the Wall Street crash had, until the panic of the September 1930 election, resulted in a loss in foreign exchange of only one million marks – a trifling sum compared with the vast quantities that were to be disgorged in the summer of 1931. However the boom-time policy of the big banks, one of reducing their liquidity ratio from the customary 10 per cent to as low as three per cent in order to facilitate loans to a capital-starved heavy industry, rendered Germany’s financial structure particularly vulnerable to a depression of the type that set in from 1929. The intimate links established over the previous half century and more between the banks and industry necessarily meant that finance would share not only in the profits of the latter, but also its losses and crises. And so it proved.
The first link in the banking chain broke, not in Germany proper, but in Austria, where the prestigious Credit-Anstalt bank published, on 11 May 1931, a balance sheet revealing that the bank had over the previous financial year lost 140 million Austrian schillings – all but five million of its total capital. It was in effect a declaration of virtual bankruptcy, and it at once precipitated panic throughout not only Austrian banking circles, but those of Germany where, it was discovered, the Credit-Anstalt had raised short-term loans amounting to several millions of schillings; obligations which it was now clearly unable to meet.
Those German banks that had lent to the Credit-Anstalt (in the belief that its security of 145 million schillings was good) could not hope to recover these loans, let alone the interest, since the Anstalt had in its turn loaned them to industrial concerns in Austria, which (like their German counterparts and rivals) were experiencing drastic reductions in both production and profits. The news of the Anstalt’s near-bankruptcy broke on 11 May 1931. The very next day, the run began on all Austrian banks, which by the end of the month had stripped the Anstalt of 25 per cent of its foreign credits. The bank’s directors then went cap in hand to the national bank, which rediscounted the Anstalt’s bills to avert – or at least postpone – its total insolvency and collapse. The haemorrhage was such that in three days, the National Bank of Austria’s cover for the currency in gold and foreign reserves fell from 83.5 per cent to 67.5 per cent. That the government was prepared to take such risks to save the Credit-Anstalt is only explicable by the bank’s having important holdings in almost every sector of the Austrian economy. It was in fact the country’s major industrial bank. If the Anstalt was permitted to crash, it might well drag down the whole of industry with it, unleashing cataclysmic social and political turmoil. The Austrian government consequently turned abroad for aid, and on 16 June, the Bank of England forwarded a loan of 150 million schillings as a short-term measure pending more comprehensive steps to rescue the Austrian financial structure. But by this date, the crisis had ceased to be an Austrian one.
The run on the Credit-Anstalt spread at once to the German banks. Foreign investors (many already under pressure at home to meet obligations), finding that the Austrian bank was unable to honour its debts, withdrew deposits from the big German banks instead. There was also the understandable fear that the Anstalt’s close connections with German finance would, sooner rather than later, lead to serious embarrassment for its Berlin business partners. Hence the panic rush to withdraw while the reserves were still available to pay out. From 11 May to the beginning of June, no less than 11 million dollars of short-term credits were withdrawn from German banks by US investors. The run accelerated in the early days of June, with the Reichsbank losing in the first week 180 million marks and in the second, 540 million. To stem the outflow, the interest rate was raised from five to seven per cent, but this proved counterproductive, since it was seen as a panic measure. On 19 and 20 June, the Reichsbank lost 150 million marks, bringing the total loss in the three weeks ending on 23 June to 974 million in foreign exchange, while its holdings of discounted bills rose to 534 marks. This outflow and increased liability brought it near to the point (forbidden under reparations agreements) where it could no longer provide the minimum cover for the national currency. Germany’s national bank was teetering on the brink of insolvency, just as Austria’s had done a month previously. Neither was it a question of the Reichsbank alone. The Berlin ‘big five’ had also suffered an enormous loss of funds as a result of the panic withdrawals by foreign – mainly American – investors. For the Darmstadter und National (Danat) Bank, the crisis was shortly to terminate its independent existence, its losing 97 million marks of foreign credits. Only the Berliner Handelsgesellschaft, which had pursued a cautious policy during the boom years, escaped unscathed. The remaining four, the Danat, Deutsche Bank, Commerz und Privat and Dresdner, lost between them in May alone a total of 263 million marks. Then on 5 June appeared a press report that the Danat was bankrupt (vehemently denied, but confirmed by subsequent developments), followed on 17 June by the thunderbolt that the textile giant, the Norddeutsche Wollkammerei (Nordwolle) was insolvent. What rendered this news all the more shattering was the fact, revealed on 31 June, that the firm’s largest single creditor was the Danat bank. Total liabilities amounted to 250 million marks, of which more than 40 million was owed to the Danat. Now there could be no question of the Danat meeting its own considerable debts to domestic and overseas investors. On 12 July, the Danat closed its doors, a decision explained the next day by its chairman, Jacob Goldschmidt:
The fact that the hope of foreign credits was not fulfilled, gave foreign customers cause to act according to the principle ‘sauve qui peut’ [save himself who can]. This movement was further strengthened by constantly renewed rumours which, as time went on, could no longer be contested. Originating in a political atmosphere, the nervousness became continually greater, owing to the failure of the Nordwolle. [Emphasis added]
Meanwhile, Brüning had secured partial and temporary relief by the US President Hoover’s moratorium on all German war debt payments, which became effective from 21 June. There was then a brief lull during which the withdrawal of foreign credits ceased, and, for a period of two weeks, it seemed as if the storm was abating. Then early in July, withdrawals began once more, forcing the closure of the Danat bank (which had now lost 650 million marks), with British investors now for the first time heavily involved, since many had money tied up in the bankrupted Nordwolle.
Beginning on 11 July, and with the closure of the Danat now inevitable, the Brüning government commenced a series of crisis meetings with economic leaders, diplomats and foreign government leaders. The initial upshot of these talks was that on Monday, 13 June, the government announced approval for the closure of the Danat, while refraining from intervention in other almost equally hard-pressed sectors of the banking system. Once again, this stop-gap measure further undermined confidence, since millions of small investors and savers now rushed to withdraw their deposits from the other banks while they still remained solvent or open. By the end of 13 July, the Berlin savings banks had paid out seven million marks, leaving them with a bare one million to meet the expected next day’s panic rush. The petit-bourgeoisie, already in the grip of political fever that had swept them en masse towards National Socialism, were seething with desperation, haunted by the memories of 1923, when a breakdown in Germany’s financial system had reduced them to pauperism. Brüning now had no alternative than to declare a banking holiday, while fresh attempts were made to seek international support for the tottering German economy. Brüning’s first move was to introduce exchange controls, bringing all movements of foreign exchange under the control of the Reichsbank, and forbidding all dealings in precious metals. This had the immediate effect of severely reducing Germany’s import bill, and therefore hit hardest those industries dependent on imported raw materials.
Then there broke the news of two more banks in difficulties – the Dresdner and the Bremen bank of JF Schröder, the latter having sustained losses with the Nordwolle. Worse still was the bank’s close involvement with an important industrial concern, Deschimag, the machine tool combine. For this reason, both the Brüning government and Bremen local authorities decided to bail out the Schröder bank before the rot spread to such a strategic sector of German industry as engineering. But as fast as one hole was plugged, another appeared. On 27 July, the Ultraphon company suspended all payments to its creditors, while in Cologne the Ford works closed down through lack of orders, throwing thousands more on to an already severely curtailed unemployment relief. Brüning’s next task was to rescue the Dresdner bank, now only days away from collapse. His solution was to underwrite the bank’s debts by government purchase of a share issue of 300 million marks. The Danat’s reprieve was brought about by the intervention of heavy industry (in which it had its largest investments), with Flick’s United Steel leading a rescue bid which involved a consortium of Ruhr tycoons taking over the bank’s share capital with money provided by the state. In both instances, therefore, the crisis had led to a further growing together of the banks, industry and the capitalist state (in fact, the two banks merged before the year was out, reducing the number of big banks from five to four). Defending the government’s role in the bank crisis, the Dresdner chairman declared on 28 August that state support for private banking was ‘not only a question that involved the Dresdner Bank, nor the German banks alone, but perhaps of the whole system’. It is important to bear in mind that throughout this crisis, Brüning had ruled entirely by Presidential decree. The Reichstag, adjourned on 26 March with the approval of the Social Democrats, did not meet once during the entire period of the run on the big banks and the attendant business failures. The deeper the crisis, the more the centre of decision-taking and policy formulation moved away from elected bodies towards the minority cabinet of Brüning’s ‘experts’  and other unofficial advisers. Measures were enacted, without any attempt to seek the approval of the Reichstag, by the simple device of securing the signature of the President in accordance with Article 48 of the Weimar Constitution. This massive erosion of bourgeois democracy took place with the tacit agreement of its self-appointed custodians – the Social Democratic leaders of the SPD and the ADGB.
It was in the midst of this economic and political maelstrom that the already growing interest in and partial support for the policies and activities of the Nazi party among big business began to transform itself into something more tangible and, for the German working class, far more ominous. Brüning’s rigidly deflationary policies irked heavy industry especially,  since they provided no basis for the economic expansion necessary to secure fresh contracts from its customers in other sectors of the economy. With unused capacity running in some cases as high as 70 per cent, the Ruhr barons were demanding an expansion of the economy which, at the same time, denied to labour the traditional advantages it enjoyed in such periods of growing production. An upturn would, unless counteracted by other, non-economic factors, inevitably lead to an increased demand for labour, and a consequent enhancement of the bargaining position of the trade unions. This the heavy industrialists sought to avoid at all costs, since with organised labour once more on the advance, and wages and social benefits rising, all the old problems experienced with profit margins and capital accumulation would return in an even more acute form. It is in this context that we have to consider the strenuous attempts being made throughout the summer of 1931 to renew the National Opposition, a campaign finally consummated in the joint Nazi – monarchist rally at Bad Harzburg on 11 October.
For Hitler, his renewal of the bloc first formed to fight the Young Plan had but one purpose – that of widening the breach already opened in the wall of exclusiveness that surrounded the world of German high finance and big business. Desperate times demanded desperate remedies, and the Nazi leadership seized with both hands the opportunities provided by the banking crisis and the increasing hostility being displayed amongst industrialists towards Brüning’s political and economic policies. As riots flared up in Germany’s industrial heartlands, with hungry unemployed workers deprived of their benefits breaking open food shops and fighting pitched battles with the police, the Ruhr correspondent of the liberal Berliner Tageblatt commented:
Nowhere are the contrasts in the present period to be seen more plainly than here. Two fronts are emerging more and more clearly, for there will soon be only two wings, the Communists and the reaction. The actual middle parties play no political role any more. The Social Democrats, the party of stability, in the present state, is nowhere more weakened than here, is nowhere losing influence faster than here, which is the bitterest sector of the latest struggle between master and men. 
And this was true. In the crisis months of June and July, the SPD, not at its strongest in the Communist-dominated Ruhr region even before the banking crisis, lost ground rapidly to the KPD as even hardened reformist workers took to the streets to vent their hatred of the SPD-tolerated Brüning regime and the capitalist system it was so patently defending. In the ‘struggle between master and men’, the Social Democratic bureaucracy found itself powerless to perform its accustomed role of mediator and buffer. As for the old bourgeois parties, their following had deserted almost in toto to the Nazis. Only the Centre stood firm in this, the most deeply Catholic of regions outside of Bavaria. Where indeed were the ‘masters’ to turn if it was not to the Nazis, the ‘reaction'? Two days later, on 15 July, the Nazi tycoon Thyssen addressed a meeting of industrialists in this same Ruhr, demanding a complete change of course on the part of the government in both economic and political policy:
It is now necessary to aim at a definite policy to be pursued in the future. Palliatives cannot alter the situation. A radical and fundamentally clear reform in the German economic system must be carried through. The only way out of the present situation is a new inflation. With this, the German economic system can kill two birds with one stone. First, the burden of foreign debts will diminish [with the fall in the exchange rate of the mark – RB], and, secondly, there will be a considerable reduction of wage costs and expenditure for social services. The result will be that Germany can again compete on the world market.
This was the authentic voice of National Socialism, and it found a partial echo four days later in the right-wing Deutsche Zeitung, which called for a ‘National Dictatorship’, and the Deutsche Allgemeine Zeitung, which was even more explicit with its demand for a ‘national concentration cabinet’ that included representatives of the Nazi Party. In little more than 18 months’ time, the paper was to see its wish fulfilled. 
German big business was therefore ripe for the new initiative Hitler was about to launch in the summer of 1931. According to the account of his press chief and liaison man with heavy industry, Otto Dietrich:
Adolf Hitler, more than anybody else, had always considered the value of individuality as the main factor of his thought and deed. He soon realised that, besides striving to gain the support of the broad masses, he must make every possible appeal to economic magnates, the firmest adherents of the old system. These magnates had individually accomplished much in past years. In the summer of 1931, in Munich, our leader suddenly decided to concentrate systematically upon convincing the influential magnates, who ruled the civic parties of the centre... Whoever had witnessed the great power of conviction, which Adolf Hitler himself exerted upon the most resolute opponents, knew that this plan of undermining the old system must mature into valuable success. Immediate action followed this quick decision. In the following months, our leader traversed Germany from end to end in his Mercedes, holding private interviews with personalities. Any ‘rendezvous’ was chosen, either in Berlin or in the provinces, in the Hotel Kaiserhof [the NSDAP Berlin headquarters close to the government buildings – RB] or in some lonely forest glade. Privacy was absolutely imperative, the press must have no chance of doing mischief. Success was the consequence. The pillars of the government began to crumble. 
What had set Hitler on this new course was not some sudden intuition, but the gathering economic crisis, and, we can be sure, information from his various contacts (Keppler, Schacht, Funk) that a political climate more favourable to National Socialism was detectable in big business circles.  The first step towards the formation of what became known after the October rally as the Harzburg Front was taken by Hitler in May, when through the good offices of Dietrich, the Nazi Party chief gave a confidential interview with Dietrich’s former paper, the ultra-nationalist Leipziger Neuste Nachrichten (on which Dietrich had worked until 1930 as its Munich correspondent). As in all his exchanges with leading representatives of or spokesmen for the big bourgeoisie, Hitler spoke with a very different voice from that which he employed at mass rallies. Indeed, Hitler prefaced his remarks at the first interview (details of which only became available in 1971, when they were published in book form) on 4 May by insisting of the Leipziger Neuste Nachrichten’s editor Richard Breiting that he ‘promise that what we discuss here will remain a matter between us and that no word of it will be published’. 
And we can appreciate why Hitler was so anxious that the interview be kept secret (except from those to whom his remarks were directed) since it was on Hitler’s part nothing but a plea for a more understanding attitude towards his movement by the leaders of the German economy – hardly a position that could be reconciled with the public Nazi stance of attacking big business and all its works. First Hitler acknowledges that at last, his party is beginning to win the recognition it deserves from industry and finance:
The day of reckoning is not far off. An increasing number of industrialists, financiers, intellectuals and officers are now looking for a man who will at last bring some order into affairs at home, who will draw the farmers, the workers and the officials into the German community once more. 
Hitler then goes on to make an observation which remains to this day, a crushing refutation and indictment of the ultra-leftist line being pursued by the Stalinists, with their rejection of the united front with the reformist organisations, and denunciation of Trotsky for his insistence that the two workers’ parties form a bloc against fascism. Hitler asserted that neither big business nor fascism could achieve their aims if they faced a united working-class movement, and that therefore the greatest menace was the policy being advocated by Trotsky:
The Bolshevik Trotsky calls upon the Socialists and Communists to make common cause against National Socialism. High finance must recognise that, with a common Marxist front [that is, a bloc of the ‘Marxist’ SPD and the KPD – RB], the economic crisis cannot be overcome. 
Hitler not only reveals in this interview a considerable grasp of the main tendencies and disputes within the German workers’ movement (not to speak of the many factional groupings within the bourgeoisie). His conception of how the struggle for power would proceed is also remarkable for its grasp of essentials. For example, he declares that the Nazis are ‘prepared to support a transition government against the Communist menace’ and that in fact there would be such a government ‘before we ourselves seize complete power’.  And such proved to be the case, with the Nazi-’tolerated’ regime of von Papen blasting the road for the Nazi assumption of power in January 1933. But before this penultimate stage could be reached, it was first necessary, as Dietrich correctly points out, for Hitler to detach the main economic leaders from their already half-hearted support for the Brüning government, which still clung obstinately to its policy of depending on Social Democratic toleration for its survival:
When Krupp, [the banker] Schröder and the other captains of industry realise that we stand for order, they will be happy to be accepted into the party. They are supporting our movement financially – but they have not the courage to allow a German state a national government and a national leader. I have no alternative but to bring them to that decision by pressure from the people. [In other words, the ‘plebeian’, ‘Jacobin’ solution whereby the bourgeoisie is forced ‘from below’ to accede to a solution of its problems by fascist methods – RB] ... At the next elections we shall win 15 million votes. [The Nazi vote was in fact 13.7 million at the Reichstag elections of July 1932 – RB] Then Hindenburg, Schleicher, Hugenberg, von Papen and the financial captains of the Ruhr will realise that order cannot be established in Germany without our collaboration. Our emissaries are already in contact with their people, and things are moving our way. 
Aware that there still existed grave doubts as to the economic policy the party would pursue when in power, Hitler explains what the Nazi programme really meant by socialism:
We have an economic programme. Point no 13 in that programme demands the nationalisation of all public companies, in other words, socialisation or what is known here as socialism. It is a bad word. It does not mean that all these concerns must be socialised, merely that they can if they transgress against the interests of the nation. So long as they do not do that, it would, of course, be criminal to upset the economy... I want authority; I want individuality; I want everyone to keep what he has earned subject to the principle that the good of the community takes priority over that of the individual. 
In public Hitler and the rest of the Nazi leadership vehemently denied charges that they sought the destruction of the free trade unions. National Socialism simply desired their ‘liberation’ from political – namely Marxist – influences. Nor were the Nazis opposed to economic and social demands of the workers, so their spokesmen and press claimed. Here again, this private interview gives us an opportunity to contrast the public, pseudo-radical face of fascism with its secret, real and utterly counter-revolutionary aims:
Do you think that I shall compromise with Marxism when [our] revolution comes? I make no compromises – none whatsoever. If I compromise, then Marxism will revive in 30 years’ time. Marxism must be killed. It is the forerunner of Bolshevism... For us the great question mark is simply: Bolshevism or Fascism? These are the two great new concepts. The great ideologies, on which the future must decide... We can only fight Bolshevism if we confront it with a stern ideology... If we do not succeed, we shall go to the dogs... Naturally an end must be put to trade union policy in its present form. The trade union policy has ruined us. Between 1925 and 1928 the budget increased by 18 milliard marks as a result of the trade union policy on wages, social security, unemployment insurance, etc. The two milliard annual reparations payments are nothing compared to this. If we had no more reparations to pay, Social Democracy, in other words trade union policy, would immediately demand wage increases to absorb the two milliard saved. That is nonsense and it should not be. As you will realise, I cannot say that at a public meeting. Similarly I cannot express my views on private property at a popular meeting in the same way as I have done here. 
The interview resumed some three or four weeks later, with Hitler concentrating on foreign policy questions. Once more, the Nazi leader proves himself conversant with the latest developments within the workers’ movement, drawing attention to Stalin’s nationalist policy in the Soviet Union, which of necessity ran counter to the struggle for a genuine revolutionary policy in the KPD:
Even if in our propaganda we equate our Communists with those of the Soviet Union, they are in fact two different worlds. In the KPD there are forces and tendencies representing their own interests and struggling for their own existence. We have no need to be frightened of intervention by the Russians for a long time to come. We shall isolate Russia before she becomes a danger to us. We shall rouse the anti-Communist forces in all countries. If we do not do so, one day we shall be threatened both militarily and politically by this Bolshevist Russia. The political threat will be there on the day we seize power. Even today, therefore, we are thinking of an anti-Comintern policy in all countries. Once Germany is provided with a modern army, the Soviet Union will never be a danger to her. But this Weimar Germany will be an easy prey for the Bolshevists... It is in the interests of Italy, England, France, Belgium, Holland and the Scandinavian countries to keep Bolshevism as far from their frontiers as possible. Once this East European rear... has become a German military protectorate, the destruction of this colossus with feet of clay – should it oppose German interests – will be a mere bagatelle. 
Hitler’s optimism regarding the strictly non-interventionist attitude of the Soviet government was proved more than justified by subsequent events, as indeed were his expectations that the Vatican would put no obstacles in the way of the creation of a Nazi regime, despite the implications that the formation of such a ‘totalitarian’ system would have for the continued existence of Germany’s numerous Catholic organisations:
There will definitely be no Vatican crusade against us. We know Monsignor Pacelli since he was the Vatican’s diplomatic representative in Germany for 12 years; as Secretary of State and adviser to Pope Pious XI it is greatly in his interest that the German Catholics should at last have a statute. People like von Papen and many others in Munich are already at work and are establishing good relations with the Vatican... Pacelli saw the Red [Soviet] Republic in Munich; so have no fear, there will be no second ‘kulturkampf’ [a reference to Bismarck’s struggle against the ‘anti-national’ Catholics – RB] in Germany. 
Returning to domestic problems, Hitler emphasises one of the main lessons learned from the Nazi Party’s fruitless 10-year struggle to break the German worker from his allegiance to his traditional class organisations, whether they be reformist or Communist:
It is due to Marx that we can no longer recapture the proletariat by words alone. It will not even be enough simply to solve their social problems. We shall find ourselves forced to use administrative [sic!] methods... We intend to recapture the politically-minded masses by this method. The internal and international [Marxist] criminal gang will either be forced to work or simply exterminated. I wish to transform the non-political police into a political instrument of the highest state authority... We shall set up great labour camps... Even today we must calculate how we can best render innocuous those who try to incite people to internal unrest and general strikes. 
It is on this note of a war unto death against the class-conscious German proletariat that Hitler concludes the interview. To turn these pledges into deeds, however, first of all required the formation of what Hitler had termed in the interview a ‘transitional government’ – one composed of the most reactionary, pro-Nazi leaders of the old ‘national’ and monarchist right. That the forces were already being assembled for the formation of such a regime is clear from Hitler’s revealing remark in the second interview that ‘there will shortly be a meeting between people from the Stahlhelm and the Landbund, representatives of the Reichswehr and of finance such as Schacht, to find some common basis for reconstruction’.  This projected meeting proved to be the rally of the National Opposition at Bad Harzburg on 11 October 1931.
Rivals during the election campaign of the previous summer, the Hugenberg Nationalists and the Nazis had nevertheless worked closely together in the Reichstag, with the NSDAP deputies setting a new all-time low in chauvinist demagogy and pseudo-radical attacks on the ‘system’ and its leading party representatives. Where Goering and Goebbels stridently led, Hugenberg and ageing bands of monarchists bravely attempted to follow. The alliance began to assume an extra-parliamentary character in June 1931, when just as two years previously (only now with the DNVP cast in a very reduced role) the two parties came together to campaign for the referendum to hold new landtag elections in the state of Prussia. The DNVP had been demanding such a poll since the Reichstag elections of September 1930, which, argued the extreme right, had given conclusive proof that the SPD – Centre coalition in Prussia no longer reflected the desires of the majority of the electorate. Meeting in Hugenberg on 9 July 1931, Hitler agreed once more to combine with the monarchist Right in a ‘National Opposition’ against the Weimar ‘system’. The first joint blows would be struck on 9 August in the referendum for the dissolution of the Prussian parliament. Here the Nazi – monarchist bloc met with a severe setback, for even with the support of the Stalinists, who carried their ultra-leftism to the revolting extreme of aligning their party with the Nazis against the ‘social fascists’,  their referendum failed to secure anything like the necessary majority of Prussian voters (nine million voted for the Nazi – monarchist – Stalinist referendum – 37 per cent of the Prussian electoral roll).
Also in August, Hitler paid a call on Chancellor Brüning, offering him a final opportunity to ally himself with the ‘national’ right by ending his policy of relying on the parliamentary toleration of the Social Democrats. Brüning declined, leaving Hitler with no alternative but to press even harder for the Chancellor’s downfall. To this end, Hitler invited some 30 to 40 leading industrialists to a meeting at a hotel owned by Kirdorf. Aware that heavy industry was turning against Brüning’s deflationary policies, not to speak of his continued reliance on the ‘Marxists’ of the SPD and the ADGB, Hitler insisted that they withdraw all support from the government and work for the formation of a cabinet of ‘national concentration’. No agreement was reached at this conference, held at the end of August 1931. Hitler had no more success at another and similar gathering in Berlin on 11 September,  when once again the main leaders of the economy baulked at the ultimatum Hitler presented to them – either overthrow Brüning or be dragged down to economic ruin and political chaos. (Active in preparing these two meetings were Vögler, Thyssen, Knepper and Pönsgen of the United Steel Works, and Ernst Brandt and Fritz Springorum of the Höscht Steel Works.) The tide only began to run Hitler’s way after 20 September when following the devaluation of sterling by the newly-formed Macdonald National Government in Britain, the big employers found their hopes of a revival in the export markets dashed. German products could now only compete against their main European rivals on the basis of severe price cuttings, which in turn demanded wholesale wage reductions throughout German industry, not to speak of other ‘economies’ in social services, unemployment insurance and the like. This, the Schacht plan, now became the programme of the dominant sectors of industry and high finance, and it was with an acutely-felt necessity for an onslaught on the living and working conditions of the German working class that the big employers began their serious turn towards a bloc with the Nazis. On 20 September, the day of the British devaluation, the Berlin Bourse shut its doors, while the bank rate jumped from 4.5 to 6.0 per cent. Two days later, the unemployed figures indicated an increase of 109 000 over the previous two weeks, and now stood at 4 324 000. On 25 September, at the Hamburg municipal elections, the NSDAP emerged as the second largest party in what had, since the pioneer days of the workers’ movement, been a stronghold of German labour and a hotbed of proletarian radicalism. 
In this same week, when preparations were nearing completion for the National Opposition rally in Bad Harzburg, the Federation of German Industries issued a declaration in the name of all employers’ organisations which demanded far larger cuts in wages than Brüning had either carried out in the past or could, in view of his continued reliance on the SPD and ADGB bureaucracy, dare implement in the future. Also included in the declaration were calls for further economies in social expenditure and as a means of reducing the costs of big business, the lowering of postal and freight charges. And finally, at the end of this crisis-wracked month, with the German stock and money markets closed indefinitely as business confidence plunged hourly, the coal barons of the Ruhr rebelled against an arbitration decision of the coal industry, just as the iron masters had done under Müller in the winter of 1928-29. Even though the court had found for a seven per cent wage cut, and a working week of only 30 hours (both proposals being turned down by the trade union concerned), the Krupps and the Kirdorfs found such measures ludicrously inadequate. And they said so with such vehemence as to intimidate the arbitration court into declaring the wages ruling not binding on the coal employers. They were now free, for the first time in the history of the Weimar Republic, to cut workers’ wages by as much as they could enforce (and with unemployment in the pits running as high as 50 per cent, the ability of the miners to resist such cuts was gravely weakened). Now it was not only Hitler and Hugenberg, but leaders of industry, banking and the armed forces who bayed for Brüning’s blood.  The Chancellor’s last-minute bid to blunt the Harzburg offensive by restructuring his cabinet on 10 October (the eve of the rally) proved a fiasco.
Gröner – hated by the far right – assumed the duties of Minister of the Interior as well as of Defence, while the dismissed Foreign Minister Curtius’ responsibilities were taken over by Brüning himself. Only the inclusion of Hermann Warmbold, non-party Minister of Economics, could be considered a move in the direction of openly appeasing big business, since Warmbold had close links with IG Farben. But even here, it was not the appointment big business would have liked, since the chemical trust had still to break from its long-established policy of supporting the moderate, pro-Weimar bourgeois parties, notably the DDP. The deepening economic and political crises, and the patent inability of Brüning to cope with either, proved powerful incentives for those hovering on the brink of opposition to desert the Brüning camp entirely and to join forces with the National Opposition gathered at Bad Harzburg.
As a final boost for its Nazi participants, their leader secured an audience with President Hindenburg on its very eve, which while not bringing any immediate rewards (on the contrary, the old Junker monarchist was visibly discomforted by his confrontation with the ‘Bohemian corporal’ upstart from Braunnau), at least established Hitler as a serious contender for the highest office in the eyes of the political ‘establishment’.
Five principal groupings were represented at Bad Harzburg on 11 October, first being the rally’s main instigators and organisers, the Hugenberg monarchists of the DNVP and the Nazis, represented by their leader Hitler. The monarchist veterans’ league, the Stahlhelm, which had also adhered to the National Opposition two years previously, was present in great force, even outnumbering the massed ranks of the SA and Himmler’s SS (the latter élite Nazi squadron collaborating with the local police in stewarding the rally). Seldte, now drawing close to Nazis, and Duesterberg were the two main spokesmen for the Stahlhelm at the rally, while representing the agrarian interest were Gayl, Wendhausen, von Sybel, Sieber, Bethge, Lind, von Kreigsheim, von Wangenheim, von Munchhausen and von Helmot-Hessen. The old monarchists, while forbidden under the terms of the rally from openly demanding the restoration of the Hohenzollerns (the Nazis could scarcely afford to expose themselves as allies of such die-hard reaction), were also there in strength: Schulze-Naumburg, von Morozowicz, von Kleist-Schmenzin, von Zitzwitz, together with several scions of the former royal houses – Prince Eitel-Friedrich of the House of Hohen, the Prinz zu Lippe and the Prinz zu Salm-Horstmar. Hitler’s mentor Dr Class, together with von Vietinghoff-Scheel and Count von Brockdorff von Hertzberg attended on behalf of the Pan-German League, while the armed forces sent the largest delegations of all – no fewer than 15 officers of general or admiral rank, including for the Reichswehr Generals von der Goltz, von Dommes, von Seeckt (whose sister had recently become a keen Nazi supporter) and for the Navy, Admiral Levetzov. Finally there arrived what was for Hitler the most important contingent of all – that of German industry and finance.
Headed by Schacht, it contained some of the leading personalities of industry, trade, manufacturing and banking: Schlenken, an agent of several Ruhr iron and steel concerns; Pönsgen of the United Steel Works; Ravene, an iron and steel merchant; Blohen and Gok, Hamburg shipbuilders; Brandi of the Essen Mineowners Union; Kruger of the Potassium Trust; Delius (textiles) and Reinacker (engineering). Thyssen and Gustav Krupp, en route by steamer to the United States, sent their apologies for not being able to attend. Schacht’s speech set out the economic programme of the National Opposition – one of unrelenting war on the already declining living standards of the German working and lower middle classes:
The fact that a business man with no party affiliation is able to speak to you today is a further sign that the purport of this assembly extends far beyond the framework of any party-inspired affair. The interests of German economy are indeed most vitally bound up with the ultimate success of the National movement [that is, the Nazi – monarchist bloc – RB]. Production has shrunk by at least a third; huge unemployment figures look like being permanent; a daily increasing toll of bankruptcies  is simply an expression of our liabilities at home, just as the impossibility of repaying our foreign loans as they fall due is an expression of our liabilities abroad; our currency no longer serves to promote regular trade, but merely to conceal the liquidity of our financial institutions and our public authorities. Such is the state of affairs in Germany today. Further, we have a public financial system of which even the Minister of Finance himself cannot say on what it is to continue to subsist during the coming months, or even weeks. Truly the new government will inherit a heavy burden. Yet even more serious than these staggering facts are the wrong foundations underlying the hitherto prevailing system, its insincerity, its dubious legality, its lack of freedom of action. Our financial situation in particular has always been – and still is – far worse than has been suggested to the public. Our foreign liabilities, for instance, are considerably greater than represented in the Basle report. But no one ventures to state such facts openly. No one says that the Reichsbank portfolio now consists of a mere fraction of Reichsbank bills – for fear that the public might grow nervous and in reckoning the gold coverage some hundred million foreign exchange bills are included which will shortly fall due for repayment... [Another]... feature is deserving of censure, namely lack of courage when it comes to taking action. The others are no whit cleverer or wiser than we are, and the whole business world would breathe a sigh of relief if Germany were to take the initiative in bringing about a recovery. They demand that we should put forward a programme. But even the finest programme which the present authorities could seize upon could only work out detrimentally in their hands. Germany’s recovery is not a question of individual items in a programme; it is not a question of intelligence; it is a question of character. The restoration of a permanent and assured justice, of uprightness and honesty in all matters of public life, and the determination to act on one’s own initiative – those are the things that matter. No magic, no printing of paper money, no foreign loans can help us. The programme which a National Government [that is, one headed by the National Opposition leaders represented at Harzburg: Hugenberg, Seldte, Hitler – RB] will have to carry out rests solely on a few fundamental ideas. It is the same programme that Frederick the Great [of Prussia] carried through after the Seven Years War [1756-63]; namely, to depend solely on our own resources, to extract from our native soil whatever can be extracted, and, finally, to live frugally, to save, and to work hard for an entire generation. I have had the personal experience of what it means to fight the foreigner at the conference table, while one’s own government at home fails to back one up. That is why I hope that the national hurricane which is now sweeping over Germany many not subside until the roads are once more open to self-determination and ultimate success. 
Hitler’s speech harped on the grave dangers to ‘National’ Germany posed by the growth of working-class radicalism, and declared ‘either Communism or National Socialism must prevail in Germany’. But the stark alternative was still not accepted as valid, not even by those such as Hugenberg and his fellow monarchists who, while desiring the downfall of Brüning and the Weimar system, had no intention of handing over the monopoly of political power to the Nazi plebeians. Tensions were indeed clearly visible at the rally itself. Fearful that his party’s pseudo- revolutionary image would be compromised by too close an identification with the traditionalist, conservative right, Hitler refused to take part in the official parade of the National Opposition that preceded the rally and left before the Stahlhelm units had completed their march past the saluting base.
Historians of the period have, however, tended to dwell on these undeniable conflicts to the near-exclusion of any serious appreciation of the importance of Hitler’s participation in the Harzburg rally and front.  Few bother to refer to the programme of the National Opposition subscribed to by all its constituent members, and this is a serious omission for the resolution adopted on 11 October at Bad Harzburg not only mapped out the short-term policies of the Right (namely the overthrow of Brüning and the removal of the Prussian Social Democrats – both achieved within less than a year), but the programme of the Hitler ‘government of National Concentration’:
For years the National Opposition has been warning against the failure of governments and state institutions in face of the bloody terror of Marxism, increasing Bolshevik ideology, of the destruction of the nation by the class struggle, of a policy which in the political, economic and military debilitation of Germany goes even beyond the Versailles Diktat, of a policy which abandons domestic self-help in favour of universal Utopianism, of a policy of subservience to the foreigner, which achieves for Germany neither equality of status nor protects the ravaged East against invasion. We are resolved to secure our country from the chaos of Bolshevism, by practical self-help to save our country from the vortex of economic bankruptcy and thereby to help the world to genuine freedom. We are prepared to take on the responsibility of government of the Reich and of Prussia. We will reject no honourably offered helping hand. We must however refuse to support and camouflage a government which props up the present system and the forces behind it [that is, the SPD and ADGB]. Any government formed against the wishes of the National Opposition must reckon on our enmity. We demand the immediate resignation of Brüning and Braun [Prime Minister of Prussia], the immediate repeal of the dictatorial powers of those governments whose composition does not correspond to the will of the people and who now only rule by emergency decrees. [The National Opposition was not averse to making demagogic capital out of Brüning’s Presidential system of rule, even as it cleared the road for its own eventual triumph – RB] We demand immediate new elections to the superannuated representative bodies, first of all in the Reich and Prussia. In full awareness of the responsibility entailed, we declare that the groups comprising the National Opposition will defend the life, home and property and workplace of those who publicly support us, should there be any disturbances, but that we refuse to shed one drop of blood in defence of the present government and system. We demand the restoration of German military grandeur and equality of armaments. We stand united on these demands. Whoever tries to break our front is outlawed. We vow to President Hindenburg that he is the choice of millions of patriotic men and women and in the final hour the appeal from a truly national government will lead to salvation by a change of course. The advocates of this national government know the wishes and needs of the German people. They have foretold the development of recent years. Events have shown the correctness of their proposals and demands. We are most sincerely convinced of the justification for taking over the government. Only a strong national state can protect the economy and the ability to work. Only a strong national state can bring about maximum efficiency and carry through the necessary social measures for a genuine people’s society. We ask for duty and sacrifice from all comrades. We have faith in the realisation of our objectives because we trust in German strength and the culture of our people.
The Reichstag representatives of the National Opposition were as good as their word. When parliament re-convened on 13 October, the NSDAP and DNVP delegations moved a joint resolution demanding that ‘the Reichstag withdraw its confidence from the government’. It was a move that had immediate repercussions inside the deeply-divided DVP, whose industrialist members were now calling for Brüning’s head. When put to the vote on 16 October, Brüning scraped home by 295 mandates to 270  with a mere five DVP deputies casting their ballot for the defence of a government in which their party was officially represented. On the announcement of the result, the Nazis and Hugenberg Nationalists marched out of the Reichstag in a calculated and prearranged display of contempt for the Reichstag and the ‘system’ it symbolised in the minds of their supporters. The KPD deputies, who had voted with the ‘National Opposition’, remained in their seats, once more finding themselves outmanoeuvred by the Nazis. The Reichstag was then prorogued, with the tacit support of the Social Democrats, to February 1932.
Hitler had good cause to be satisfied with the first fruits of the Harzburg front. He had drawn the magnates of industry and finance, the power and purse behind the main bourgeois parties, closer to the Nazis, while even in the Reichswehr leadership, a change of attitude towards the NSDAP could be observed.  There remained several hurdles to clear before his movement could consider itself an actual, as opposed to potential contender for power – namely the Brüning government, and the Social Democratic administration in Prussia, a state which embraced not only two-thirds of the German population, but the bulk of its industrial resources. Holding court in the Kaiserhof with British and United States press representatives in November 1931, Hitler declared with genuine conviction – and much truth – that ‘the decisive battle against Bolshevism will be fought in Germany. The National Socialists feel that it is their task to win this fight for the whole [capitalist] world.’ Only in the persecuted and numerically insignificant ranks of the International Left Opposition were the horrific implications of this statement fully appreciated and acted upon. As for the Stalinists, they were hell-bent on undermining and even destroying the principle target of Hitler’s offensive – the five-million-strong trade unions of the ADGB.
The year of 1931 saw the continued growth of the Nazi Party into a truly formidable mass counter-revolutionary movement. Periodic revolts by deluded radicals, while embarrassing for a leadership that claimed to be fighting ‘the reaction’, did little to detach the petit-bourgeois masses from the party, and certainly helped to convince the more cautious of business circles that Hitler really intended to defend their interests when he came to power. The year of 1931 also witnessed the consolidation of the two main fighting units of the party: the SA, from 1 January under the command of Ernst Röhm, and the SS, the élite Security Squadron of Heinrich Himmler. Röhm’s return from Bolivia was occasioned by Hitler’s turn towards ‘legality’ and his policy of seeking allies in the old ruling élites and propertied classes. Röhm was an old friend of General Kurt von Schleicher, chief of staff of the Reichswehr, and his return to the SA command heralded a marked improvement in relations between the party and the army leadership, which had deteriorated to freezing point with the arrest and trial of the three Nazi officers. The previous SA chief, von Pfeffer, had been sacked by Hitler on 2 September 1930, after failing to squash promptly enough a revolt by disgruntled members of the Berlin SA, a unit whose lumpen-proletarian elements had earned a reputation, both within and outside the party, for indiscipline and often criminal conduct. Röhm’s first task was to project a new image for the SA, one of working within the system for the destruction of Marxism and its allies – while defending the existing organs of law and order. To this end, Hitler issued a proclamation to the SA on 20 February 1931, instructing the Brown Shirts to end street fighting with their enemies. ‘I understand your distress’, he explained in plaintive tones to his frustrated and trigger-happy followers, ‘but you must not bear arms.’ This formal repudiation of any intention to usurp the functions of the regular army and state police certainly helped smooth Hitler’s chosen path towards an alliance with the monarchists and the leaders of the economy and the armed forces. But it almost at once angered his own ‘plebeians’, not to speak of those in higher society who had taken seriously the party’s demagogy about a socialist as well as nationalist Germany. In his prison cell serving his 18-month sentence, Lieutenant Scheringer learned that Hitler had made his peace with the very bureaucratic caste that he and like-minded young officers had joined the Nazi Party to fight. He openly broke from the party, and declared his support for the... KPD!  Hitler’s pronouncement on the future role of the SA also led to a revolt in the north German section of the Storm Troop command against his leadership.
The last straw came on 29 March, when Hitler ordered the SA to obey a Brüning decree issued the previous day curbing ‘excesses’ of political warfare – namely street-fighting and the carrying of arms. Headed by Berlin SA chief Captain Walter Stennes, a former officer of the ‘Black Reichswehr’, the rebellion against Hitler’s order spread from the capital to other disaffected units, mainly in areas which six years before had been the preserve of the north German ‘radicals’. When expelled from the party by Hitler at the beginning of April, Stennes, the prime mover in the revolt of the previous summer, did in fact adhere for a while to Otto Strasser’s ‘Black Front’, which claimed to represent the true ‘revolutionary’ traditions of National Socialism now betrayed by the NSDAP leadership. (Following the victory of the Nazis, he collaborated briefly with the Black Front exile centre in Prague, and then quit German politics for good by entering the service of Chiang Kai-shek as commander of the Chinese dictator’s bodyguard.) On his removal from the party, Stennes wrote in Angriff (still under the control of the dissident SA men in Berlin) on 2 April that ‘the political leadership of the NSDAP in Munich has strayed from the idea of revolutionary National Socialism... The revolutionary force of the SA has been saturated with bourgeois liberal tendencies.’ Hitler could not afford to permit this charge to go unanswered, and two days later replied in the Munich-based Völkischer Beobachter that the Stennes group represented the ‘buffoons of salon Bolshevism and salon socialism’ who wanted ‘to introduce into the SA a series of concepts that... belong to the continuously seditious prerequisites of the Communists...’. The liberal Berliner Tageblatt had already come to this conclusion when it wrote on 3 April:
Where are the discontented elements to go when the split is there? He [Goebbels] knows just as we do, that they will go straight to the Communists, who are holding out their arms to receive the fugitives. There is only one place for the straying elements: it is the revolutionary party, it is Moscow to where their path leads. 
The SA unit of Hanover East deserted en masse from the party, and on 10 September 1931 published an open letter to Hitler, whom they accused of betraying the original goals of the movement:
For years our SA has worked hard for you and the NSDAP; for years the party membership have undergone the severest sacrifices. Comrades have been thrown into prison because of their Nazi beliefs and no party leaders have shown concern for them. Unemployment among the SA men is catastrophic [in some Berlin troops, it ran as high as 60 per cent – RB] and yet their contributions have been ruthlessly squeezed out of them. Anyone who could not pay was thrown out... Through your striving after ministerial posts [this was shortly after Hitler’s meeting with Brüning – RB], you provoke the opposition of all true National Socialists... We do not dream of supporting you in your plan to join a Brüning government... It will be our task to open the eyes of all SA men so that they recognise that Germany cannot be saved by a parliamentary party, but only through revolutionary action.
Their heads stuffed with chauvinist petit-bourgeois ‘National Bolshevik’ fantasies, and full of hatred for Marxism and the organised proletarian movement, the Nazi dissidents endured the same dismal fate as their predecessors. All SA commanders except Stennes’ own staff submitted to Hitler’s demand for a personal oath of loyalty to him as the sole leader of the movement. Goering, the contact man for big business, was placed in charge of a purge of the SA ‘radicals’, while a ban on further recruits was maintained until Goering had completed his assignment. Unruly ‘plebeians’ were ousted from their commands and more reliable party members put in their places. A police report dated 15 June 1931 stated that the new SA leadership being groomed by the party nearly all ‘belonged without a doubt to the better classes’. Typical in this respect was the appointment to the vacant Berlin SA command of Count Wolf Heinrich von Helldorf, who in this capacity later began negotiations on behalf of the party with Friedrich Flick of the giant United Steel Works (Helldorf was also involved, together with Röhm, in the talks with von Schleicher). The plebeians were not of course driven out of the SA entirely – such a move would not only precipitate further revolts, but certainly lead to a rapid decline in its following amongst the lower reaches of the working petit-bourgeoisie and the backward, mainly unemployed strata of the working class. What Hitler needed to hold the SA in check was another movement selected from different social layers, and trained along more conservative political lines. Such was the role of Himmler’s SS.
Himmler came from a family background typical of so many of the top Nazi leadership – stolidly nationalist and middle-class, staunchly Catholic (like Goebbels, Hitler and Goering) and earnestly seeking to advance its offspring yet further up the ladder of social respectability (Himmler enjoyed a head start in this respect, having been godfathered by Prince Heinrich of Bavaria, to whom his teacher father had been a personal tutor in languages). Born in 1900, and therefore too young to fight in the war, Himmler was nevertheless a rampant chauvinist, eagerly following the exploits of the German army. Russians he despised especially – they ‘multiplied like vermin’: a remark made just before his fourteenth birthday! Himmler first donned a uniform in earnest as a member of his local Bavarian (Landshut) Free Corps unit, not to fight either the French, British or Russians, but the German proletariat, whom Himmler’s thoroughly bourgeois-nationalist upbringing had already taught him both to fear and hate. His reactionary outlook was further buttressed during his stay at the Technical High School of Munich University, where he studied for a diploma in agriculture (Himmler later put this training to profitable use when he became the owner of a poultry farm). Membership of various student societies introduced him to that unique brand of romanticised chauvinism, tinged with anti-Semitism, only to be found in the German universities of the period, and which did so much to prepare an entire generation of intellectuals for service under the Third Reich. While still a student, and a member of his local Free Corps unit, he met Ernst Röhm at a rifle club meeting in Munich, finding the Nazi pioneer ‘very friendly’ but ‘pessimistic about [defeating] Bolshevism’. Röhm found little difficulty in drawing Himmler towards the young NSDAP, which he formally joined in August 1923. He took part in the abortive Munich Putsch as an ensign to Röhm’s contingent, but his role was such a minor one that he escaped even the mild punishments handed out to the main instigators of the coup.
After more than a year’s political freelancing on behalf of the various volkisch groups that functioned in lieu of a centralised fascist movement, Himmler rejoined the reconstituted NSDAP in August 1925, and after a short period as assistant to the Strasser brothers, became second-in-command of a small party formation, numbering no more than 200 men, known as the Schutzstaffel (Security Squadron) – the SS. This body had been in existence for three years, and represented Hitler’s first attempt to fashion an élite corps that owed its allegiance not to the Nazi movement as a whole, but personally to its leader. Founded in March 1923, their all-black uniforms, military-style decorations and the notorious ‘death’s head’ insignia from the very beginning set them apart from – and above – the brown-shirted SA, which in the early days of the movement, looked more to its former Free Corps officers for leadership and political programme than to the Nazi Party headquarters in Munich. First seeing service as Hitler’s personal bodyguard, the SS under Himmler’s guidance and, after January 1929, direct leadership, became transformed into the élitist backbone of the Nazi Party, just as ready to swoop on any internal ‘radical’ dissidents as to carry out intelligence missions (under the supervision of future Third Reich security chief Reinhard Heydrich) inside the organisations of its left-wing enemies. As already stated, the turning point for the SS was reached in 1931, the year of Harzburg and the intensification of the economic crisis, of Hitler’s secret negotiations with big business and of the biggest SA revolt against the Munich leadership. It was the SS units which restored order to the Berlin and other rebellious SA units, and from the summer of 1931, it was the SS which increasingly became a centre of recruitment to the party among the highest echelons of German society. In June 1931, the former Naval intelligence officer Heydrich, a new recruit to the Hamburg SS, journeyed to Munich to seek a post on Himmler’s rapidly-expanding staff. Impressed both with his social connections (he was on intimate terms with the family of Commander Canaris, a future intelligence officer of the Third Reich) and his political background (like Himmler he had been from his earliest youth a fanatical nationalist, and at 16 had joined the Free Corps), the SS chief placed him in charge of a new department, the Sicherheitsdienst (Security Service) or SD. Heydrich’s sole task was to hunt down and earmark for destruction all the party’s enemies, actual or potential, and to extend the scope of his investigations up to the highest levels of the NSDAP itself.
Himmler issued an order of the day for Heydrich’s new department:
Our enemies’ efforts to Bolshevise Germany are increasing. Our information and intelligence service must aim to discover, and then to suppress, our Jewish and Freemason enemies: this is the most important task of the SS today.
Each SS district leadership was charged with the responsibility of spying on the local left-wing movements, and with reporting all information so gathered to the central office in Munich.
And as the role of the SS became more obviously counter-revolutionary, so the most reactionary elements of the bourgeoisie and aristocracy flocked into its ranks – or rather leadership – eager to don the uniform of Himmler’s custodians of racial purity and anti-Bolshevik intransigence.
While the SA sported a mere three counts – Helldorf, du Moulin and Spreti – the SS could parade some of the leading representatives of the former royal houses. Giving evidence before the International Military Tribunal at Nuremberg, Freiherr von Eberstein, a member of Himmler’s staff, declared that ‘before 1933 a great number of aristocrats and members of German princely houses joined the SS’. These included Prince von Waldeck, Prince von Mecklenburg, Prince Lippe-Biesterfeld and the Prince of Hohenzollern-Sigmaringen. Three other prize recruits to Himmler’s élite murder squad included General Graf von Schulenburg and a brace of worthy clerics, the Archbishop Gröber of Freiburg and the Archbishop of Brunswick. The aristocracy infiltrated the SS to such good effect that by 1935 they provided 58 of its 648 leaders from regimental commander up (that is, roughly nine per cent) while comprising less than one per cent of the total German population (the percentage of persons whose name began with the aristocratic prefix ‘von’ was 0.74). A similar takeover of the SA began following the purge of Röhm’s ‘radicals’ in June 1934. By 1935, no fewer than seven of the 19 SA top commanders were aristocrats. Sales of black leather, swastika armbands and death’s head badges were also booming in other illustrious quarters. Hitler’s economics adviser Keppler had for some time been a close collaborator of Himmler’s in the party (it was in fact Himmler who introduced Keppler to Hitler, and was partly responsible for the Nazi businessman’s rapid rise to the top circles of the NSDAP), and now that Keppler was at last succeeding in his task of drawing prominent fellow capitalists towards the Nazi movement, Himmler took this opportunity to integrate them still further by offering them membership of the SS. Keppler’s ‘circle’ took on a new title – Himmler’s ‘Circle of Friends of the Economy’. According to the testimony of the Nazi banker, Baron Kurt von Schröder, the founder members of Himmler’s ‘circle’ were Schacht, Rosterg of the Potash Syndicate, Reinhard of the Commerz und Privat Bank; the leading Hamburg merchant Krogmann; Meyer, Chairman of the Dresdner Bank (one of the ‘big five’); Otto Steinbrinck, Director of the Mitteldeutsche Stahlwerke (a subsidiary of the Flick combine, the United Steel Works) and Count Bismarck, a government official and leading agrarian. All donations to the Nazi Party from the circle were collected by Meyer and paid into Himmler’s private account with the Dresdner bank. A letter from Steinbrinck to Karl Raabe, Chairman of Flick’s Maximilliansheutte steelworks, dated 28 March 1936, reveals that this link with the SS leader was established in the same year that saw Hitler’s big campaign for support in industry and finance, and the beginning of the ascendancy of the SS ‘élite’ over the SA ‘rabble’:
If it [donations] concerns an SS regiment, then you may safely point to the fact that – in accordance with a special agreement between our group and the Reich leader SS [Himmler] – we undertook to make any contributions whatever direct to the Reich leadership SS. This agreement has been in existence since 1931 and had been, at that time, approved by the Führer himself. 
This new source of funds enabled Himmler to expand considerably membership of the SS. A mere 280 in 1929, it had risen to more than ten times that number by the end of 1931, being open only to those of spotless ‘racial’ and social pedigree (after January 1932, SS members were obliged to obtain from the leadership a certificate of the racial purity and worthiness of their intended wife before permission for marriage could be granted – a measure foreshadowing the Third Reich’s experiments in ‘racial breeding’ – and, by the same token, elimination of ‘inferior’ peoples and other ‘defectives’).
But Hitler could not for one moment afford to neglect the protection of his ‘left’ flank, now rendered all the more vulnerable by the rise of the SS, the demoting of the SA and his party’s participation in the National Opposition. Here the activities of Goebbels’ propaganda department and the section of the party devoted to work in factories – the NSBO – took on a special importance. Goebbels was a past master in the dissemination of a vague but strident brand of populism, that while appearing to promise everything to the oppressed and exploited, committed the party to nothing specific. A typical product of his demagogic pen was the pamphlet produced for the 1930 election campaign:
We are nationalists because we, as Germans, love Germany, and because we love Germany, we demand protection of its national spirit and we battle against its destroyers... We are socialists because we see in socialism the only possibility for maintaining our racial existence and through it the reconquest of our political freedom and the rebirth of the German state. Socialism has its peculiar form first of all through its comradeship in arms with the forward-driving energy of a newly-awakened nationalism. Without nationalism it is nothing, a phantom, a theory, a vision of air, a book. With it, it is everything, the future, freedom, fatherland! It was a sin of the liberal bourgeoisie to overlook the state-building power of socialism. It was a sin of Marxism to degrade socialism to a system of money and stomach. Socialism is possible only in a state which is free inside and outside. Down with political bourgeois sentiment; for real nationalism! Down with Marxism: for true socialism... We are enemies of the Jews because we are fighters for the freedom of the German people. The Jew is the cause and the beneficiary of our misery. He has used the social difficulties of the broad masses of our people to deepen the unholy split between Right and Left among our people. He has made two halves of Germany. He is the real cause for our loss of the Great War... That is the reason why we, as nationalists and as socialists, oppose the Jew...
This seemingly crude but in practice brutally effective brand of propaganda was especially designed for the nationalist petit-bourgeoisie, awakening to political consciousness under the impact of the economic crisis, but utterly unable on its own to fight in a coherent or united way against its real exploiters, the monopolist bourgeoisie. ‘Socialism’ was presented to this class as a natural and inevitable complement and outgrowth of their nationalist prejudices, hatred of Jews and detestation of Marxism and the workers’ movement. Nazi ‘socialism’ was the ‘true socialism’, while the Marxists had betrayed it to the sinister moneyed powers and crude materialism. Indeed, Nazi propaganda was directed quite consciously at the small propertied strata, depicting the party as a defence organisation for the artisan, trader and peasant. Thus a new recruit to the NSDAP, explaining why he joined the party, wrote at the end of 1931 that the middle class had become ‘the whipping boy of the system’:
Now the fight must begin... Craftsmen, now we have our chance. If we miss this opportunity to join the German Freedom Movement, then we have lost everything. Look back at the last 10 years again and ask yourself the question: What would have become of our Mittelstand [middle class] if we had no Hitler, where would we be today? Social Democracy and Communism are the same in their basic ideas and from time immemorial have been one in their suppression of the Mittelstand. Only in the last few years has Adolf Hitler torn the mask from their face and they are now beginning to waver. 
And to be sure, the plight of the Mittelstand was grave indeed. Retail trade, conducted for the most part through small, independent establishments owned by a family and employing but a few hands, had fallen from a turnover of 36.6 milliard marks in 1929 to 23.1 milliards in 1932, a drop attributable mainly to the sudden decline in the spending power of the masses due to the rising unemployment rate and the Brüning government’s deflationary policy of wage and welfare cutting. By ‘tolerating’ the reactionary Brüning regime, one that was quite patently bringing ruin to millions of small traders, peasants and artisans, the Social Democrats were providing the Nazis with a golden opportunity to divert the justified wrath of the middle class away from the monopolist bourgeoisie towards the political representatives of the ‘system’ – namely the dwindling band of Brüning supporters and the ‘Marxists’ of the SPD. Here too, support for the ‘lesser evil’ helped prepare the victory of the ultimate one.
However, an even more demagogic brand of propaganda was required to intercept the many thousands of previously conservative workers moving, under the impact of the crisis and the mounting unemployment, towards the SPD and, more frequently, the KPD. Such figures as are available tend to confirm Nazi claims that but for their intervention, support for the workers’ parties would have been much greater after 1930. For while the bulk of the Nazi vote came from the petit-bourgeoisie, the collapse in support for the old bourgeois parties between 1930 and 1933 was also partly due to the defection of their working-class supporters (akin to British working-class Tories) to the Nazi banner. Only marginal successes were registered by the KPD in attracting these newly awakened, but enormously confused, layers of the proletariat, just as the Nazis made scarcely any impact, despite their many years of campaigning, on the compact masses of the German labour movement, who remained loyal to their parties and unions to the end. The joint KPD – SPD vote for the last four Reichstag elections was 1930: 13.2 million, July 1932: 13.3 million; November 1932: 13.2 million; March 1933 (conducted under conditions of terror and with the KPD already outlawed): 12.0 million.
Goebbels also knew how in his writings and speeches to pander to the confusions and prejudices of a worker who, while breaking free from the tutelage of the bourgeois parties, rejected the class discipline and basis of the proletarian movement. Here the main target of Nazi propaganda was the bourgeoisie, not only the more customary ‘political’ variety, but the big employers as well. Thus in his pamphlet Questions and Answers for National Socialists, Goebbels departs from normal Nazi practice by justifying the notion of class struggle:
There can surely be nothing more hypocritical than a fat, well-fed capitalist who protests against the proletarian idea of class struggle... Who gave you the right, to throw out your chest, swollen with national responsibility, in indignation against the class struggle of the proletariat? Has not the capitalist state for some 60 years been an organised class state, which brought with it as an inevitable historical necessity the proletarian idea of class struggle? ... Yes, we call ourselves the workers’ state. This is the first step away from the capitalist state. We call ourselves a Labour Party, because we want to set labour free, because to us creative labour is the progressive element in history, because labour means more to us than property, education, rank and bourgeois origin. That is why we call ourselves a Labour Party... We call ourselves socialist, as a protest against the lie of capitalist social compassion. We want no compassion, we want no social outlook. We despise the rubbish which you call ‘social legislation’. It is too little to live with and too much to die with... We demand a full share of what heaven gave us and what we create with our hands and our brains... That is socialism!
But even in the midst of such a flow of pseudo-Communist rhetoric, Goebbels took care not to cross the class Rubicon:
We protest against the idea of class struggle. Our whole movement is one great protest against the class struggle... But at the same time we call things by their right names: if on one side 17 million proletarians see their only salvation in the class struggle, this is because from the Right side, they have been taught this in practice for 60 years. How can we find any moral justification in fighting against the class struggle unless the capitalist class state is first absolutely torn in shreds and abolished, through a new socialist organisation of the German people? 
But propaganda alone, however accurately pitched, was not sufficient to ensnare the backward workers the party was seeking. For this task, a special organisation was required, one that carried the fight right into the territory of the Social Democratic and Communist enemy, into the union branch, factory, mill and mine. The year of 1931 was one of important advances for the Nazi factory cells, the NSBO. Under the leadership of Muchow and Krebs, two former officials of the nationalist white collar ‘union’ of the DHV, and encouraged by Goebbels, the NSBO was, after several years in the doldrums, at last able to make a serious bid for influence in the main industrial centres of Germany. Muchow’s directive on propaganda style, issued on 1 January 1931, showed how much the Nazi ‘lefts’ had learned from the workers’ movement, especially their most bitter enemies, the Communists:
The style of our propaganda must be clear, unequivocal, concise, unromantic and non-prolix. It will be suited to the background and character of the masses. For the execution of our propaganda, it is always worthwhile to consider the fact that our propaganda in technical, mechanical form cannot turn its back completely on the linguistic usage of Marxist propaganda which the masses have lived with for decades.
An example of this technique of employing Communist-sounding language to impart a Nazi message is Goebbels’ already-quoted pamphlet.
Eight months later, on 1 September 1931, the NSBO launched its first serious offensive to gain a firm foothold in industry under the slogan ‘Into the Factories’. Goebbels wrote in his Angriff of 29 August that the fight to break workers from their allegiance to the SPD and KPD would involve the use of propaganda that ‘placed the primary stress... on the presentation of our revolutionary socialistic purpose’. Little headway could be made in such a drive, however, while the Munich leadership continued to maintain their ban (imposed at the dictates of their newly-won adherents in industry and finance) on supporting strikes called by the ADGB trade unions. As late as 1 April 1931, the NSBO organ Arbeitertrum had eschewed strikes against employers, declaring ‘if we German workers want to lead a strike that would really be crowned by success then it can only be the general strike against the Young Plan’.
So here again, the Nazi high command found themselves balancing precariously between a ‘left’ course that would alienate all but the most perspicacious of their business supporters, and an openly reactionary one that would provoke fresh revolts and defections among the party’s deluded ‘plebeian’ following. Hitler’s solution was to permit the NSBO to back already existing strikes only when not to do so would leave the party hopelessly compromised in the eyes of its proletarian members and supporters. In fact the NSBO endorsed only four strikes in the year between March 1931 and March 1932. On, one occasion, in August 1932, Röhm’s SA men were employed as strike-breakers in a big dispute, and when the NSBO protested, Röhm ruled that the brown-shirted scabs would honour NSBO picket lines (which were, because of the lack of its following, almost non-existent) but not those of the ADGB. According to Muchow’s January 1931 directive, the NSBO was ‘not to concentrate on individual employers as objects of hate, but only on employers as the inevitable product of the liberal-capitalist economic system’. Neither were the trade unions to be attacked as such, but simply, after Hitler’s teachings, as the perverted instruments of Marxist class war: ‘The point of National Socialists remaining in the trade unions is to penetrate and conquer them’, a goal forced on the Nazis after their realisation that the mass of the workers could never be induced to desert their traditional organisations for a bogus Nazi ‘trade union’. And neither did the NSBO accomplish its goal of ‘conquering’ from within. Well into 1932, the ADGB leadership (the ‘social fascists’ or ‘corporatists’) replied to these Trojan Horse tactics by expelling each and every Nazi who dared to show his true political colours in a trade union branch or in a plant organisation. Consequently on each occasion that the NSBO measured its strength against the established workers’ parties in elections for posts in the factory councils, they received a drubbing, scoring their only successes amongst clerical workers. Only in the high tide of the Nazi advance, in the early months of 1932 through to the Reichstag elections of July that year, did the NSBO threaten to gain heavily at the expense of the workers’ movement in the big industrial concentrations. This truly horrific episode belongs to a later chapter, and so we shall conclude by emphasising once again the point made throughout this work – that the Nazis were only able to secure, deepen and maintain their hold on the broad, largely petit-bourgeois masses and youth by default, by the criminal opportunism of the Social Democrats, who drove masses of former middle-class democrats into the arms of reaction by upholding the rule of the parties that had so cynically betrayed them to big business and the banks. This betrayal was supplemented by the ultra-leftist course of the Stalinists, whose refusal to adopt Leninist united front tactics in the face of the mounting Nazi menace prevented the proletariat from exerting its potential power of magnetic attraction on the exploited petit-bourgeoisie, without which there can be no question of a challenge to the rule of capital. These were the twin pillars of opportunism – right and left – which in 1931 raised the Nazi Party towards Hitler’s goal of total power and the annihilation of the German workers’ movement.
1. E von Salomon, The Answers of Ernst von Salomon (London, 1954), p 148.
2. O Strasser, Hitler and I (London, 1940), pp 99-100.
3. Strasser, Hitler and I, pp 123-24, emphasis added. Thus the leading exponent of the corporate state explicitly and quite vehemently set himself against a Social Democratic (in Hitler’s eyes, ‘Marxist’ or even ‘Bolshevik’) proposal to regulate and smooth over the class struggle. Workers Press seems unable to grasp that far from welcoming trade union or other elected workers’ representatives onto the boards of big companies (a policy which the paper quite correctly denounces as reactionary), this was precisely the system of reformist class collaboration that Hitler and his big business supporters were, after 1929, seeking to end with the utmost speed and brutality. And Hitler kept his word. There were no profit-sharing and ‘worker directors’ under the Third Reich. Yet in Workers Press of 12 February 1973, we read the following gross over-simplification – and in fact distortion – of this vital theoretical and historical point: ‘The TUC is cooperating with the Tory government to implement a scheme of worker-directors in British industry. This corporatist move is in line with legislation on “industrial democracy” which the Common Market will be introducing throughout the nine member countries later this year.’ (’tUC Study Group Approves Corporatist Moves’, Workers Press, 12 February 1973, p 10) This not only makes the TUC an actual supporter of the corporate state (of the system of class rule introduced first by Mussolini and then Hitler and Franco), but by implication also the entire trade union leadership of the Common Market countries, all of which by the end of 1973 were, along with Britain, living under a corporate state disguised as industrial democracy. Principled opposition to all such forms of class collaboration (for that is what they are, not fascism, which is based on a rejection of class collaboration) does not involve denouncing every variety of reformist betrayal as corporatism, as the Workers Press, following in the footsteps of Third Period Stalinism, seems to believe. In order to fight a tendency, one has to designate its historical origin, class nature and role as accurately as possible. Blurring the all-important distinctions that exist between the most right wing of reformists and corporatists does not aid, but obstructs such a task.
4. Strasser, Hitler and I, p 124.
5. Strasser, Hitler and I, p 124.
6. Feder’s proposed bill (which had been moved as a matter of routine by the Nazis at previous Reichstag openings) caused so much consternation in business circles that Hitler at once ordered him to withdraw it. Whereupon the KPD deputies reintroduced Feder’s bill without changing a word – not even the clause pertaining to the expropriation of Jews and other ‘aliens’. Clearly the KPD leadership had already embarked on the dangerous and reactionary manoeuvre of ‘unmasking’ the Nazis by claiming to be the more consistent nationalists as well as socialists.
7. Völkischer Beobachter, 19 September 1930, emphasis added.
8. H Schacht, My First Seventy-Six Years (London, 1955), p 272.
9. H Schacht, The End of Reparations (London, 1931), pp 199-202.
10. Schacht, The End of Reparations, p 210.
11. Schacht, My First Seventy-Six Years, pp 278-79.
12. H Schacht, ‘Testimony’, IMT, Volume 12, p 419.
13. Schacht, My First Seventy-Six Years, p 279.
14. H Schacht, Account Settled (London, 1949), pp 29-30.
15. Schacht, ‘Testimony’, IMT, Volume 12, p 421, emphasis added. Evidence of Schacht’s views at this time was an article by him in the right-wing daily, the Deutsche Allgemeine Zeitung of 1 December 1930, which called for a Hitler-led government. Von Seeckt, former army chief of staff, also wrote on the same theme, while the paper itself carried long extracts from Mein Kampf.
16. Schacht, My First Seventy-Six Years, p 280. Other banking circles were also beginning to take an interest in the Nazis, undeterred by the party’s noisy radicalism. On 17 November 1930, Fritz Klein, chairman of the Darmstadter National Bank (the ‘Danat’), wrote to a banking friend that the Nazis ‘could contribute to the removal of internal difficulties’, though there was still some ‘economic dirt’ to be erased from the NSDAP programme. He considered it ‘crazy’ to reject Hitler’s services because of his anti-Semitism, since ‘the Jews themselves were to blame for anti-Semitism’.
17. F Thyssen, I Paid Hitler (London, 1941), p 123.
18. W Keppler, ‘Testimony at the Flick Trial’, IMT, Volume 12, pp 289-90.
19. Party leaders had been busy for some time reassuring big business that Nazi ‘socialism’ had nothing in common with the socialism of the workers’ movement. The local NSDAP chief in Dresden wrote in a letter dated 18 February 1930 to a factory manager named Fritsche in Weimar: ‘Do not let yourself be continually confused by the text of our posters... Of course, there are catchwords like “Down with capitalism"... but these are necessary (unquestionably), for under the flag of “German national” or “National” alone, you must know, we should never reach our goal, we should have no future. We must talk the language of the embittered socialist workmen... or else they wouldn’t feel at home with us. We don’t come out with a direct programme... for reasons of diplomacy.’
20. F von Papen, Memoirs (London, 1941), pp 132-41.
21. With their Reichstag representation now greatly enlarged, the Nazis were in a position more than to compensate some of their business benefactors. On 21 January 1931, at a session of the Reichstag appropriations committee, the NSDAP deputy Reinhardt proposed a subsidy of 600 000 RM for the Lahn Freigerlander Mining Company, Flick’s United Steel Works (by now in serious financial difficulties) and Krupp AG. Also on 21 January, the Nazi Reichstag fraction voted for a subsidy of seven million RM for the firm of Mansfeld AG. Apart from replenishing the depleted coffers of the investment-starved firms, the party’s active support for government aid to big business did much to dispel doubts concerning Hitler’s economic and social policy.
22. W Funk, ‘Testimony at Interview’, 4 June 1945, PS-2828.
23. Heinrichsbauer wrote shortly after the war (in his Heavy Industry and Polities, 1948) that ‘in making these payments the mining industry reasoned that contact must be established and maintained continuously with the [Nazi] Party, and that this could best be done by steady subsidies. It was believed that the party could count on a considerable increase in membership because of the deepening economic crisis, as a result of Communist propaganda for a civil war, and in view of the ever more evident failure of the parliament, the government, etc, it would be dangerous to leave a party that had so many deputies, who were trained only in propaganda and not in constructive work and responsibility, to its own designs. There were no scruples against taking that sort of an interest, in as much as relations were maintained with other parties also, and as the avowed programme of the NSDAP... seemed to be one to which everyone could subscribe. It was considered opportune, however, not to place the subsidies in the hands of the party’s executive, as there could then be no check upon the uses to which they were put, but rather someone should be selected in whose political common sense and honest administration of funds one could have confidence. Gregor Strasser, organiser for the Nazi Party, who enjoyed a splendid reputation in the [Rhine-Westphalian] region, seemed the proper person. Accordingly, beginning in the spring of 1931 [NB], a monthly sum of RM 10 000 was placed at Strasser’s disposal. The chief argument for this form of subsidy was the desirability of consciously strengthening the hands of persons and offices within the party whose views were in contrast to those of men like Goebbels and Goering...’ This last observation throws a new light on relations between heavy industry and the Nazis. If Heinrichsbauer is right in what he says, then the coal barons did not share either Schacht’s or the iron and steel masters’ confidence in Goering, preferring to work through the party organiser Gregor Strasser, who in some business circles was regarded as a member of the party’s radical wing. Therefore it must have been in the former capacity that he received funds from the Rhenish-Westphalian coal syndicate.
24. W Funk, Statement of 28 June 1945, EC 440.
25. The meeting referred to was that held at the Cologne house of banker Baron Kurt von Schröder, on 4 January 1933. Present apart from Schröder, who arranged the meeting, were von Papen, Keppler, Himmler and Hitler, who was using Papen’s intimate relations with President Hindenburg and his son Oskar to secure the removal of his rival von Schleicher and the formation of a government of ‘National Concentration’ headed by Hitler and staffed largely by leaders of the monarchist right. The ‘Friends of the Economy’ was in fact an enlarged version of the original Keppler circle set up in 1931 on Hitler’s initiative. Under Himmler’s leadership, the circle enrolled businessmen into the officers’ corps of the SS (rather than the plebeian SA) thus further cementing the already burgeoning alliance between reactionary big business and the Nazi Party. The ‘Friends of the Economy’ continued to function throughout the 12 years of the Nazi rule. Its activities will be examined in the chapter ‘Capital and Labour in the Third Reich’.
26. W Funk, Statement of 28 June 1945, EC 440.
27. W Funk, ‘Testimony at Interview’, 26 June 1945, 2828-PS.
28. The shift towards Presidential-Bonapartist rule initiated by Brüning can be illustrated graphically. In 1930, the Reichstag passed 98 laws, in 1931 only 34, while Hindenburg issued 42 emergency decrees under Article 48. In 1932, a mere five laws were made by the Reichstag, while President Hindenburg approved 60!
29. Among those called in to advise the hard-pressed Brüning government was Schacht, whose connections with the Nazis were by this time well known. This did not dissuade the Chancellor from offering the former Reichsbank President the post of Reichs Commissioner ‘and in that capacity to bring order out of the chaos of the bank crisis’. It was an invitation that Schacht, busy undermining Brüning’s standing in business circles, politely but firmly declined. ‘Nor would I budge an inch, even when President Hindenburg sent Herr Meissner, his Secretary of State, who conveyed the President’s own wish that I would accept the position.’ (Schacht, My First Seventy-Six Years, p 288) Schacht was playing for far higher stakes than a post in Brüning’s doomed cabinet.
30. According to a report of the special advisory committee of the Bank for International Settlements dated December 1931, ‘in the first seven months of 1931, 2900 million RM (690 780 000 dollars) short-term credits were withdrawn, principally in June and July... The Reichsbank reserves which stood at 2685 million RM at the end of 1930 and even at 2576 million RM at the beginning of June 1931 had fallen to 1613 million RM on 31 July 1931. Of this last amount, however, it owed at short term 630 million RM in respect of the rediscount credits granted to it by the BIS and the central banks, and to the Goldiscontbank and by an American banking consortium. [Despite emergency measures]... the reserve has fallen still further, until on 15 December 1931, it was no more than 1161 million RM of which 630 million RM represent the amounts due under the rediscount credits referred to above. The percentage for the note issue has thus fallen to 25.6 per cent or if the 630 million RMs be excluded, to 11.7 per cent...’ The report then outlined the measures taken by Brüning to effect reductions in central government and local expenditure to counter this drastic drop in currency reserves: ‘The decline of economic activity, the fall of profits resulting from the falling prices, and the lower yield of the taxes on wages due to increasing unemployment and lower wage rates have seriously reduced the yield of taxation. This fall (taken in conjunction with the cost of maintaining the growing amount of unemployed) had produced a critical situation in the public finances of Germany. In the five years preceding the depression, the revenue and expenditure of the Reich, the Federal States and the communes showed a rapid increase... The revenue receipts for 1930-31 fell considerably short of the original estimates... Fresh estimates made in September 1931 showed an estimated fall in the total receipts from taxes collected by the Reich... of not less than 1000 million RM... Apart from the increase in taxation, attempts are being made to meet the falling off in revenue by sweeping reductions in expenditure. So far as the Reich is concerned, expenditure on all objects other than service of the debt transfers to the Federal States, extra war burdens and emergency unemployment relief, were reduced from 1929 to 1932 from 4780 million RM to 3720 million, that is, a reduction of 1060 million RM or 22 per cent... [the German government] devoted all [its] efforts in securing the balance of the budget, not only in the Reich but also in the states and communes. Direct taxation was augmented by two increases of the income tax; indirect taxation by the imposition of further heavy duties on beer and tobacco, while finally the turnover tax has lately increased from 0.85 to 2.0 per cent. Sweeping economies have been effected in the expenditure of the Reich; a series of cuts in the salaries of all public servants, reducing them by over 30 per cent, has been made in the last 18 months, so that salaries will be now on a lower level than at the beginning of 1927. Similar measures have been taken with regard to the budgets of the Federal States and communes. The latter have been authorised, and in certain cases compelled, to levy new and additional taxation in the form of a poll tax, a local beer duty and a tax on beverages. The reductions in salaries also apply to officials employed by these bodies... In the sphere of wages, a general reduction approximately the level prevailing at the beginning of 1927 has to take place.’ (Federal Reserve Bulletin, Volume 18, no 1, January 1932) And still the industrialists and bankers were not satisfied.
31. Berliner Tageblatt, 13 July 1931. Fears concerning the outcome of the crisis were not confined to the German bourgeoisie and its press. A letter dated 15 June 1931 from the US Ambassador in Berlin to his state secretary Stimson reported that ‘the situation in Germany is exceedingly critical... more critical than, at any time during the last six years... The key to the situation seems to rest with the US and France... It is no use disguising our fear that if confidence is not speedily restored we may be faced not merely with a complete cessation of reparations payments, but with a financial collapse in Germany and Austria, involving serious risk of political and social trouble in those countries, and consequent repercussion on the rest of Europe.’
32. The necessity of a political solution to the chronic problems facing German capitalism did not escape the economic experts of the Institute for Business Research, which, at the end of 1930, produced a detailed and searching analysis of the causes behind the current credit crisis and the acute shortage of capital reserves for industrial investment: ‘An ample supply of credits for the German economy depends, as before, on the influx of long-term foreign credits... The prerequisite... is... that the economic and political confidence necessary for the granting of credits be established.’ This conclusion, implicitly a criticism of Brüning’s policy, was echoed by von Papen’s journal Germania: ‘The business situation is not unlikely to experience a further deterioration. Much could, however, be done to counteract such factors as make for a further recession, if the politically engendered “crisis of confidence” could be eliminated.’
33. O Dietrich, With Hitler on the Road to Power (1934), pp 12-13, emphasis added.
34. Industrialists and bankers were not the only men of property to take an increasing interest in Hitler’s party during 1931. Hermann Rauschning, agrarian leader and DNVP President of the Danzig Free State Senate, who joined the Nazis in that year, writes: ‘I believe today just as much as I did 10 years ago that we were driven into the Nazi movement by justified misgivings and apprehensions... justified on the ground that the late fruit of the revolution in Germany... was entirely out of date and that this admittance of the idols of national democracy was as mistaken for Germany as for all the new national states of Central Europe... I entered the party in the summer of 1931... It is perhaps an indication of the fact that the great crisis brought into the political arena elements that had seen no inclination until just then of playing any active part in political life. Just as the mass of the lower middle class suddenly became interested in politics and crowded into Nazism, so sections of the educated felt compelled to play their part in public life. It was not Nazism but necessity that made these classes politically-minded and brought them into action – the necessity born of the inadequacy of the political leaders and the failure of essential problems to find a solution.’ (H Rauschning, Make and Break With the Nazis (London, 1941), pp 87, 130)
35. E Calic, Unmasked (London, 1971), p 20.
36. Calic, Unmasked, p 22.
37. Calic, Unmasked, p 23, emphasis added.
38. Calic, Unmasked, p 24.
39. Calic, Unmasked, pp 24-25.
40. Calic, Unmasked, p 32.
41. Calic, Unmasked, pp 36-40, emphasis added.
42. Calic, Unmasked, pp 59-62, emphasis added.
43. Calic, Unmasked, pp 86-87. Pacelli negotiated the Concordat between the Vatican and the Third Reich. Concluded on 8 July, and negotiated on Hitler’s behalf by the Catholic von Papen, it granted what the Nazis had long sought – the liquidation of all Catholic political and trade union organisations, and greatly facilitated Hitler’s onslaught on the Catholic youth. On its conclusion, German and Vatican Catholic leaders subscribed to a statement issued by Hitler which asserted that the Concordat furnished ‘sufficient guarantee that the German citizens of the Roman Catholic faith will from now on place themselves in the service of the new National Socialist State’.
44. Calic, Unmasked, pp 78-79, emphasis added.
45. Calic, Unmasked, pp 78-79.
46. A full analysis of the so-called ‘red referendum’ appears in Chapter XXII, ‘Stalin Over Germany’.
47. The following invitation for this meeting was sent to Gustav Krupp by the Nazi agent in the Ruhr, Heinrichsbauer. Dated 3 September 1931, it reads: ‘Dear Mr [Krupp] von Bohlen, Mr Hitler is very anxious to meet a circle of gentlemen from the Rhenish-Westphalian Industry for a fundamental discussion of the present situation. It appeared expedient for certain reasons not to arrange this discussion in the [Ruhr] district, but in Berlin. Since Mr Hitler has asked me to act as intermediate, I take the liberty to inquire if you are interested in such a discussion. It is arranged for 11 September, 8.30 pm in the flat of Prince Wied, Berlin, W62, Kurfursten Street 122. I have further approached the gentlemen Brandi, Fickler, Hold, Kirdorf, Kootzbach, Knepper, Ernst Pönsgen, Reusch, Springorum, Fritz Tengelmann, Vögler and Winkhaus, in this matter. I would be obliged for a speedy reply. I take the liberty to ask for confidential treatment. Yours truly, signed, Heinrichsbauer.’ (N1446). Taken together with Hitler’s claim in the already quoted interview that Krupp was giving money to the Nazis as early as May 1931, this letter throws fresh light on the oft-repeated assertion that only after Hitler was in power did Gustav Krupp reveal any political sympathies for the Nazis.
48. Seats, with previous results in brackets, were distributed as follows: SPD 46 (60), KPD 35 (27), NSDAP 43 (3), DNVP 9 (22), DVP 7 (20), State (DDP) 14 (21), Economic 2 (4), Centre 2 (2), Christian Socialists 2 (0). Once again the pattern of the September 1930 Reichstag elections emerges, with the Nazis mopping up a huge slice of the former bourgeois party vote, while the two workers’ parties hold their ground, with the KPD gaining appreciably on the SPD.
49. Naturally Papen was among those clamouring at this time for a sharp change of course. In his Germania, Papen wrote: ‘The concealed dictatorship of the Chancellor must strip off its parliamentary trimmings. The Chancellor should and must direct a national cabinet, a government, a dictatorship on a national foundation...’ Of the growing Nazi movement, Papen said it was Brüning’s duty to ‘forge these glowing masses before they overflow with hostility; above all this youth, still undisciplined, to be sure, but valuable material, must be fitted into the state, and by education won for the state’.
50. Business failures for the first nine months of 1931 totalled 15 461, with September recording 1341 bankruptcies compared with only 759 for the same month in 1930.
51. Quoted in Schacht, My First Seventy-Six Years, pp 291-92, emphasis added.
52. Erich Eyck writes that the Nazi-monarchist alliance consummated at Bad Harzburg ‘was a complete miscarriage’, and that ‘the total effect of the raucous meeting at Bad Harzburg was the addition of one more entry to the dictionary of political terminology: “The Harzburg Front"...’ (A History of the Weimar Republic, Volume 11, p 333, p 355). William Shirer also deemed it of little or no import: ‘Within a few days the Harzburg Front was facing collapse; the various elements of it were once more at each others’ throats.’ (The Rise and Fall of the Third Reich (London, 1962), p 154); while Alan Bullock takes a similar line in his biography of Hitler, devoting less than a page to the rally: ‘The united front of the National Opposition had virtually collapsed before it was established...’ (Hitler (London, 1960), p 169) All overlook the contradictory nature of the Hitler – monarchist alliance; that it flowed from an agreement on aims – the destruction of Marxism (by which was meant the entire German workers’ movement) – and a bitter disagreement over the methods and as to whom should wield the political power in a truly ‘national’ Germany – the old élites or Hitler’s plebeians. The latter dispute repeatedly forced the two main partners in the National Opposition apart, but the even more fundamental unity over social and economic goals just as often pulled them together again – long and hard enough to make possible the formation in January 1933 of the government of the ‘National Opposition’. Thus ‘vulgar’ Marxism – the mechanical projection of economics into politics – and liberal conceptions of historical and social development – namely the denial or, more often, minimisation of the class basis of National Socialism – tend to supplement each other. They both fail to penetrate to the contradictory reality that lay beneath Hitler’s antagonistic relationship with all the parties and leaders of German conservatism.
53. On the eve of the vote, Hitler addressed an open letter to Brüning in the Völkischer Beobachter, which declared that ‘although I have the greatest respect for you personally, Herr Chancellor, I regard the vanquishing of your system and your government as the overcoming of the last obstacle to the emancipation of the German people for their historic task of combating Bolshevism’.
54. During November and December, Hitler conducted talks with chief-of-staff General Kurt von Schleicher, the preliminary work for this reconciliation having been conducted by Ernst Röhm in the period after his return to leadership of the SA at the beginning of 1931 (the first fruits of Captain Röhm’s return were the lifting of a Reichswehr ban on the employment of NSDAP members in army arsenals and depots). Commenting on the talks, which were correctly seen in ruling class circles as a further recognition of the growing power of the Nazi movement, Funk’s Berliner Börsen Zeitung wrote: ‘After the open-minded talk between Adolf Hitler and the Reichswehr Ministry we may hope that the relationship between other governmental agencies and the strongest German party on the right will also be re-examined.’
55. Scheringer’s defection to the Stalinists, and its wider political implications, are discussed in Chapter XXII.
56. Stennes and his supporters had no intention of enrolling in the ranks of the KPD, but the Berliner Tageblatt was certainly nearer the mark when it asserted that the Stalinists would have welcomed their arrival with open arms.
57. N18497, emphasis added.
58. Anton Aigner, ‘Why Did I Become a National Socialist? Die Mittelstands Front’, supplement to Die Front, 28 November 1931.
59. Goebbels struck an entirely different note in his propaganda after the Nazi seizure of power. One of his definitions of Nazi ‘socialism’ likened it to ‘the legacy of the Prussian army, of Prussian officialdom. It is that kind of socialism which enabled Frederick the Great and his grenadiers to carry on a war for seven years’, a parallel that quite possibly had been stolen from Schacht’s speech to the Bad Harzburg rally two years before.