Lone Sentry: The Economic Organization of the German Army (WWII Tactical and Technical Trends, No. 33, September 9, 1943)

Introduction

The German Wehrmacht has displayed a clear understanding of the importance of economic factors in modern warfare and has attempted successfully to apply this understanding in the practical sphere of operations.

The importance of economic factors in influencing the outcome of a modern war was driven home to the German armed forces by the events of the First World War. German post-war military doctrine blamed the outcome of the First World War in large part on the failure of Germany to prepare in advance for a long, industrial-type war. A substantial section of influential military opinion held that the economic factor was decisive in Germany's losing the war. The war of attrition that developed after the First Battle of the Marne found Germany unable in the long-run to match the production potential of the Allied Powers. Germany's failure to build up large stockpiles of essential imported raw materials, expand domestic food production, arrange for an orderly shift from peacetime to wartime production, devise an efficient rationing system, and develop plans for the incorporation of the economy of the occupied nations into the German economy meant that it was forced to improvise in the economic sphere.

Although Germany's economic efforts in 1914-1918 compared favorably with those of the Allied Powers, its initial failures meant that it forfeited its only real opportunity to offset its inferior resources by a more effective and prompter economic mobilization. The greatest single blow to the Central Powers came with the entry of the United States into the war. It was the unexpectedly prompt harnessing of the American production potential and the near exhaustion of the limited German potential that was in large part responsible for the final military collapse of Germany.

The significance of the American effort was not lost upon the German military leaders. The post-war army leaders were determined to avoid the economic mistakes of the First World War. The failure to carry out effective mobilization in the pre-war period was blamed largely on the inability of the German military and civilian authorities to grasp the potential importance of economic factors in determining the outcome of the war. The logical answer to avoiding repetition of this experience was to secure within the armed forces a body of officer personnel competent to cope with the problems of economic mobilization. This procedure would overcome the major weakness of the pre-World War I military personnel in the economic sphere, which was the lack of interest in, and an understanding of, economic problems on the part of the General Staff. This lack of interest meant that the military failed to play a decisive role in formulating economic mobilization plans and failed to exercise a general supervision over the economy sufficient to ensure an adequate arms production and sustained powers of resistance over an indefinite period.

Preliminary Military-Economic Research

Out of the First World War experience, then, a German military doctrine as to the proper role of the military in a war economy arose. The essential element of the doctrine was that representatives of the armed forces should assume authority for the over-all planning of economic mobilization and the coordination of the military and civilian phases of the economy.

The first actual step taken in the post-war period was the undertaking of a careful study of the experiences of the first war in the Historical Section of the General Staff, camouflaged as a section of the Reichsarchiv. The economic studies were published as a series, Kriegrustung und Kriegswirtschaft (War Armament and War Economy). Two volumes, dealing with the pre-World War I experience were published by 1930, while the other volume, dealing with World War I economic mobilization, was Kept secret. These studies contained the blueprints and drawings for the mass production of armaments under the Hindenburg program of 1916.

Shortly after the establishment of the Historical Section, a small economic section devoted to the preparation of economic mobilization plans was established within the Heereswaffenamt (Arms Office, i.e., Ordnance Department) of the Reichswehr. This section was called the Nachschubstab (Supply Staff) and was a part of the Testing Division of the Ordnance Department. As early as 1926, the Nachschubstab began to place officer-economists with the various corps area commands (Wehrkreiskommandos) for the purpose of exploring quietly the armament potential of the districts to which they were assigned. At the same time, the first attempts were made to interest certain leaders of industry in economic mobilization problems. At the instance of the Heereswaffenamt a committee of industrialists, disguised behind the name of Statistical Society, was created under the chairmanship of Privy Councilor von Borsig.

Preliminary Organization

The officers first engaged in the economic studies and planning were largely outside the 100,000 men permitted the Reichswehr under the Versailles Treaty. They were men who had studied engineering and technology as part of their military education and who, but for their camouflaged employment, would have had to remain in the private businesses to which demobilization had sent them.

The need for additional officers specially trained for the economic phase of modern warfare, and particularly younger officers for field-inspection work, soon became apparent. A small but steadily increasing number of officers on the active list were therefore sent to study engineering and economics in various technical institutes.

The use of non-military institutions was necessary because the military academies had been abolished under the Versailles Treaty. The chief place of study was the Technical Institute at Berlin-Charlottenburg. The emphasis in the training was upon industrial engineering problems such as production management in armament factories, problems of standardization, control of raw material flows, and rational use of manpower.

The training of the officers included at least one year of practical work in factories and other production plants and numerous inspection trips to mines, factories, and producing and fabricating centers.

Upon this pioneer work of the Reichswehr, the Third Reich proceeded to build an elaborate system of military control of economic mobilization. In 1933 a new body, the Wehrwirtschaftsstab (War Economy Staff) was instituted under the leadership. of Colonel Georg Thomas and with a small staff recruited from the officer-economists trained in the 1920's. The Wehrwirtschaftsstab represented the direct successor to the Nachschubstab of the Ordnance Department.

Working Organization - The WiRü

The Wehrwirtschafts und Rüstungsamt im Oberkommando der Wehrmacht (War Economy and Armament Office of the High Command of the Armed Forces)

The Wehrwirtschaftsstab functioned under the control of the High Command of the Armed Forces as the key economic organization of the Wehrmacht. From 1933 until 1938, command of the Armed Forces was exercised by the Wehrmachtamt (Armed Forces Office), a special office in the Reich War Ministry (Kriegsministerium) composed of representatives of the Army, Navy, and Air Force.

In 1938 the Oberkommando der Wehrmacht (High Command of the Armed Forces) took the place of both the old War Ministry and the Wehrmachtamt. As a part of the general reorganization, the name of the Wehrwirtschaftsstab was changed to Wehrwirtschafts und Rüstungsamt (WiRü). Under Colonel Thomas, later promoted to general, this economic staff remained under the supervision of the High Command of the Armed Forces as before and was composed of representatives of the three services.

The principal duty of the Wehrwirstschaftsstab-WiRü was to plan the mobilization of the German war economy. This involved the WiRü in a thoroughgoing examination of German resources and the preparation of detailed plans for the conversion of German industry into armament production.

(a) Mobilization Plans

The formulation of mobilization plans by the WiRü involved it in policy decisions on a variety of important questions, such as the distribution and accumulation of raw materials, conversion of existing plant facilities, location of the armament industry, personnel requirements of the new armament industry, broad principles of price and wage policy, and regulations governing the administration of the Wehwirtschaft.

The scope of the activities that had to be undertaken by the WiRü in preparing its mobilization is indicated by its organizational structure, the WiRü being divided into four branches:

War Economics Division
Armaments Economics Division
Raw Materials Division
Price and Contracts Examination Division

This phase of the work of the WiRü was analogous to the economic mobilization planning activities of the United States Army-Navy Munitions Board in the same period. In contrast to subsequent developments in the United States, however, the program planned by the WiRü was followed by the German Government.

(b) Implementation

The implementation of the broad plans developed by this military body was carried out by a variety of governmental departments, largely civilian. In 1936, when the Four Year Plan was introduced, the Office of the Four Year Plan, under Göring, received supreme authority for the subsequent reorganization of the German economy and the WiRü nominally functioned under directives from this Office. However, this development created apparent rather than actual overlapping of functions. Colonel General Thomas (promoted to General der Infanterie in 1940), Chief of the WiRü, was one of the organizers of the Four Year Plan, and the WiRü continued its operations undisturbed.

Although the WiRü was primarily a planning group, it acquired more and more administrative functions as the German economy shifted onto a highly mobilized basis. The most important of these functions revolved about the supervision of the German armaments industry. Armaments inspectorates were established, first in every corps area (Wehrkreis), and later in smaller districts. Each corps area inspectorate was placed under a Rüstungsinspektor, whose rank varied from colonel to major general, depending on the industrial importance of the Wehrkreis, and who was chosen from any of the three branches of the armed forces. This officer was successor to the economic officer of the Reichswehr but had far more power. His primary function was to serve as counsellor on all economic questions involving the needs of national defense. This involved supervision of all armaments and related plants in the district. The inspectorate staff undertook detailed studies of available industrial capacity in their districts and made recommendations on such matters as the establishment of new plants, conversion of existing plant facilities into armament production, and shift of old plants to safer areas.

The field inspection system of the WiRü became increasingly important as the bulk of German industry shifted into war production. This development moreover involved the WiRü in a number of very important new functions, most important of which was the coordination of the military requirements schedules submitted by the Army, Navy, and Air Force with the available supply of labor, raw materials, and capital equipment.

(d) The WiRü Subdivided

The system as developed in the pre-September 1939 period lasted without important modification until May 30, 1942, when the WiRü was split into two branches. The Rüstungsamt (Armament Office) was transferred to the Ministry of Armaments and Munitions under Speer. The Wehrwirtschaftsamt (War Economy Office) remains under the Oberkommando but some of its officer personnel are subject to Speer's orders as well.

The splitting up of the WiRü meant a definite curtailment of military authority over the German economy. There are several explanations for the action undertaken on May 30, 1942. In the first place the 1941 Eastern Campaign had revealed certain defects in the existing system--duplications and overlapping of authority, a mounting volume of paper work, administrative bottlenecks, etc. In the second place, the curtailment of military authority fitted in with the current policy of concentrating power more and more into the hands of trusted Nazis. Under the reorganization, final reconciliation between civilian and military requirements was taken out of the hands of the Oberkommando and placed under the control of two leading Nazis: Walther Funk and Albert Speer.

(e) Walther Funk and the War Economy Office

Under the present system demands for war materiel which originate in the various branches of the Armed Forces are first sent to the War Economy Office (Wehrwirtschaftsamt), which sets up a balanced program of requirements. From here the program is transmitted to the Armament Office (Rüstungsamt) now a part of the Ministry of Armaments and Munitions, where it is adjusted to the available raw materials and labor supply and the productive capacity of the German economy. This board, therefore, has in effect the power to veto the requests of the War Economy Office and is thus the central directing agency of German arms production.

Supreme command over the civilian branch of the German war economy is exercised by Walther Funk, Minister of Economics and Plenipotentiary for War Economy. Speer, in his capacity of Minister of Armaments and Munitions, exercises similar authority over the military sector. If Speer and Funk fail to agree on fundamental policy, the issue may be carried to Göring as Chairman of the Ministerial Council for Defense of the Reich or even, ultimately, to Hitler. Arbitration of this kind, however, is the exception.

The military requirements program, as formulated by the War Economy Office and modified by the Armament Office, is translated into actual production schedules, usually on a three-month basis, by the Ministry of Armaments and Munitions. The allocation of raw materials to industry is carried out by a special department of this Ministry, organized as a limited-liability company, christened the Rüstungskontor.

The determination as to who is to produce and how the war material is to be manufactured is in the hands of the Ministry of Armaments and Munitions and the various German industrial organizations, especially the Main Committees (Hauptausschüsse) and Industrial Rings (Industrieringe). These organizations are represented on the Rüstungsrat (Armament Council), composed of five high army and navy officers and eight industrialists, which serves as an advisory body to the Minister of Armaments and Munitions, Albert Speer.

(f) Speer's Armament Office

The regional administrative organization of the German economy was unaffected by the May 30, 1942 decree. In this sphere also considerable confusion had developed as a result of a multiplicity of regional officials and bodies with ill-defined jurisdictions. Finally on September 17, 1942, after all previous efforts to achieve greater coordination among the regional agencies had failed, Göring established by decree 42 regional armament commissions (Rüstungskommissionen) in the 42 party districts (Gaue).

These armament commissions have complete authority over the agencies represented on them, which comprise all the organs of regional economic control, those of the state and army as well as the self-governing agencies of industry:

(1) Rüstungsinspektor of the-Ministry of Armaments and Munitions (frequently the chairman). Also the Wehrwirtschaftsinspektor (who may also be the Rüstunginspektor).

(2) Armaments chairman (Rüstungsobmann) representing the Main Committees and Industrial Rings.

(3) The president of the provincial labor exchange (Landesarbeitsamt) operating under the authority of the Ministry of Labor.

(4) The president of the provincial economic office (Landeswirtschaftsamt), operating under the authority of the Ministry of Economics.

(5) The president of the district economic chamber (Gauwirtschaftskammer) and his economic advisers.

Whenever the need arises, the chairman of the Armament Commission may call in other officials such as the presidents of the regional railway administrations and the managers or leaders of the regional organizations of industry proper. The chairman of each commission is appointed by and is responsible to the Minister of Armaments and Munitions, who can thus control all the regional agencies involved in the execution of the war production program.

One of the important features of the decree of September 17, 1942, was the abandonment of the old corps areas as administrative units in favor of the party districts (Gaue). Armaments Inspectors are now appointed for each of the 42 Gaue, thus giving the Minister of Munitions the opportunity to appoint "loyal" inspectors and, if necessary, replace the old corps area armaments inspectors.

Field Operations of the WiRü

(1) Economic Troops

In addition to its planning and administrative work, the WiRü functioned as 'the economic intelligence branch of the Armed Forces. In this connection it undertook in the pre-1939 period detailed studies of the economic resources of the other European countries. Emphasis was placed on the principal tangible resources, such as raw material stockpiles, key mines, public utilities, plant equipment, and readily available foodstuffs, the seizure of which would prove of major usefulness to the German war economy.

The first opportunity of the WiRü to put into practice a system of field organization for the sequestration of important resources came in September 1939. With the German armed forces concentrating on the offensive against Poland and standing on the defensive in the West, it became necessary to abandon temporarily small tracts of land in the Saar. The WiRü was called upon to devise ways and means of withdrawing all of the most useful materiel to safer territory. Since the Saarland ranks next to the Rhineland as the most concentrated industrial district of Germany, this was a difficult assignment.

The task before the WiRü was the equivalent of carrying out the prompt sequestration and removal of the key resources of a small but highly strategic bit of occupied territory. The WiRü carried out the assignment with efficiency and dispatch. The civilian population was evacuated promptly and three thousand carloads of machinery and supplies were moved into the interior of Germany. The work of evacuation of equipment was carried out by representatives of the WiRü, assisted by three provisional companies--one mining company to take care of the mines and prevent their flooding, one electrical company to protect the essential utilities, and one company for miscellaneous jobs--formed for this particular operation.

Later, when the French Army withdrew from its advanced positions beyond the Maginot Line and, incidentally, failed to carry out the obvious operation of shelling the most important factories and immovable mining and utilities equipment before withdrawing, the WiRü agents immediately assumed responsibility for the restoration of production in the Saarland. Evacuated machinery and supplies were brought back, except in those cases where the new and less exposed location of a particularly strategic ex-Saar plant was believed preferable.

The results achieved by the WiRü in the Saarland were distinctly superior to those of the regular Armed Forces in the Polish campaign. There it was found that the regular troops had destroyed or seriously mishandled much valuable economic materiel and had not tracked down supplies of foodstuffs, raw materials, and finished products ruthlessly enough.

On the basis of this autumn 1939 experience, the Oberkommando delegated to the WiRü the responsibility for extending field assistance to the combat forces on all economic matters. These include the physical task of requisitioning raw materials, finished products, and machinery in newly seized areas and the prompt occupation and restoration of production of the most strategic mines, utilities, and plants in those areas.

In the six months prior to the May 1940 campaign, the WiRü devised an effective program for carrying out the field tasks assigned to it. As a first step, officers from the WiRü were attached to the staff of the G-4, GHQ, and later to the G-4 sections of the various Army (and sometimes Corps) Headquarters. These officers served as liaison with the WiRü, and advised the G-4 on all economic problems.

(2) Special Units

Plans were then drawn up for carrying out the requisitioning of foodstuffs, raw materials, and equipment and the occupation of selected utilities, mines, and industrial plants. A variety of special units were to be used for the purpose. Although secrecy has been preserved as to the actual method of recruitment, the following represents a probable close approximation of the method used.

In setting up these special units, the WiRü undoubtedly approached the groups most experienced in the problems to be confronted, viz., the managers of German mines and plants of types similar to those in the territory to be overrun, and obtained their advice as to the proper methods of seizure and maintenance or evacuation of specified plants and the type and number of technical personnel required to accomplish the objectives. On the basis of such information, the WiRü could prepare tables of organization for the appropriate specialist companies.

It is probable that the activation of these companies was postponed until just prior to hostilities, with the technical personnel lined up weeks beforehand directly from German industry and supplemented at the last minute with regular military personnel for use as operating cadre. It is believed that German engineers who had had previous experience in the districts to be overrun were included in the companies whenever they were available. The specialist units were initially assigned to GHQ, and then reassigned to the particular echelons which were to advance into the sectors in which the previously-designated mines, utilities, and plants were located. The economic staff officers attached to the various commands advised on the proper use of the specialist units, particularly as to when they were to be detached to occupy the economic objectives. Once these objectives were occupied, supervisory control over the units reverted to the WiRü.

A substantial number of such specialist units were apparently used in the 1940 campaign. Particular emphasis was placed in this campaign upon public utilities, mines, and armaments plants. Electrical units were utilized to occupy promptly the local gas, water, and electrical works to ensure that the essential public utilities were maintained or restored. This was deemed of especial importance as a means of facilitating the prompt restoration of industrial activity in the occupied districts. "Mining units" were used to prevent so far as possible damage to, and flooding of, certain highly strategic mines (especially the Lorraine iron ore mines, the coal mines in Northern France, Belgium, and Holland, and the Norwegian molybdenum mines). These mines entered heavily into German calculations as important sources of essential raw materials in which Germany was relatively deficient.

In addition to the specialist units with their predetermined industrial objectives, the WiRü set up special provisioning units for the purpose of requisitioning local foodstuffs and petroleum stocks for the immediate use of the armed forces. Still another group of WiRü units, which followed after the ordinary provisioning units, undertook the sequestration of raw material stocks and movable materiel and equipment.

All the WiRü-controlled units were intended solely for emergency use during the active phases of combat and the first phases of occupation. The more permanent work in the occupied areas was left largely to other units, especially the Bautruppen (construction troops) of the Army, the Technische Nothilfe (Technical emergency corps), and detachments of the Todt Organization,* which worked at times independently and at times under the supervision of the WiRü.

Regional Field Administration of the WiRü

Prior to the 1940 campaigns, the WiRü was apparently scheduled to be used in occupied territories for emergency purposes only, with the more permanent phases of economic conquest being entrusted to the civilian authorities.

The unexpected rapidity of the French military collapse disorganized the plans for a gradual shift from military to civilian economic administration. The limited scope of WiRü operations as originally planned was inadequate to cope with the situation that actually arose. Consequently a regional branch of the WiRü was established in Paris. Although nominally under General von Stülpnagel, the Military Commander in France, this Wehrwirtschafts und Rüstungsstab (War Economy and Armament Staff) was directly responsible to General Thomas.

The War Economy and Armament Staff consisted of four central bodies: Special Security Offices, four Armament Inspectorates, Special Buying Offices, and a Central Order Bureau.

The Special Security Offices (Spezialsicherungsstellen) undertook the initial disarmament of the country. Wirtschaftstruppen were used to requisition the most accessible raw material stockpiles, while special salvage columns (Bergungskolonnen) collected the arms and ammunition of the defeated army. Once these operations were completed, the Special Security Offices ceased to function for the War Economy and Armament Staff and came under the control of the Gestapo.

The most elaborate and important divisions of the Staff were the four Armament Inspectorates, which were responsible for the detailed supervision of the French armament and related industries. The inspectorate staffs of regular WiRü - officer personnel - were assisted in their work by a variety of organizations. In the early phases of the operations, the WiRü economic troop units were used for the purpose. Other organizations also assisted. For example, the Paris Inspectorate was provided initially with organized salvage and wrecking groups as well as engineers and technicians from the O.T. (Todt Organization).

The Special Purchasing Offices were created for the purpose of provisioning the troops engaged in the campaign against Britain.

A Central Order Bureau was established in Paris to assist the War Economy and Armament Staff and the Industrial Section of the Administration for Occupied France (Verwaltungstab). Its personnel was drawn in equal proportion from the WiRü and the Reich Ministry of Economics (civilian). The Bureau was the central office for placing German orders with French industry, all orders above 5,000 Reichsmarks being passed on by it.

Gradually, the bulk of economic activity in Occupied France was left to the Industrial Section of the Administration for Occupied France. The War Economy and Armament Staff increasingly confined its attention to supervision of the industrial production undertaken for German account, leaving the detailed administrative activity to the civilian authorities. The principal explanation for this development is the limited number of officer-economists available; they were needed in Germany and later in Eastern Europe.

As a result of the successful French experience, elaborate plans were made to use the WiRü in facilitating the economic conquest of Russia. A special Eastern Economics Staff (Wirtschaftsstab Ost) was instituted, and economic staff officers were assigned to the various commands. It was planned to use specialist units on a much larger scale than in France, and in the early phases of the operation this aim was apparently achieved. However, the Soviet policy of carrying off or destroying everything useful to the enemy raised almost insuperable obstacles in the way of effective utilization of the economic troops. The task of rehabilitation became a long-time project involving comprehensive planning and thousands of skilled workers operating under a relatively stable military-civil affairs administration.

*For further details of the operation of these organizations see Tactical and Technical Trends No. 30, p. 25.