Report of the Commander in Chief, Navy, to the Führer on 23 October 1939.

Present: Generaloberst Keitel

1. On 16 October the Commander in Chief, Navy, gave a report on the methods used by the Navy in carrying out economic warfare, and showed how it would be possible to intensify the war against merchant shipping. As the Navy is the branch of the Wehrmacht most closely connected with economic warfare, the Commander in Chief, Navy, begged leave to report on the opinion of the Naval Staff on the significance of economic warfare and the necessity that it be organized under strict control. A memorandum entitled "Preliminary Observations concerning the Conduct of Economic Warfare and the Creation of a Unified Command Organization" was read by the Commander in Chief, Navy (see Annex 1). The Führer's authority is necessary as support for the OKW and for the Staff for Economic Warfare which the Führer ordered set up today (see Annex 2), since political and economic departments must receive strict and uniform instructions.

The Führer is in agreement and fully appreciates the significance of economic warfare apart from purely military warfare. British pressure is decisive in Belgium and Holland; Germany cannot exert pressure on these countries unless she occupies them. Pressure on the northern countries is easiest to exert. The Führer will give his full authority for carrying out the necessary measures.

2. The Commander in Chief, Navy, requests that the DEUTSCHLAND be left in the Atlantic, contrary to the wish recently expressed by the Führer that owing to her name she should be recalled as her possible loss might be taken as a bad omen by the people. The return voyage would be more dangerous than staying in the Atlantic. If worthwhile results have been achieved, she might return when the nights are long. The Fuehrer agrees.

3. The Führer has been informed of the plan to allow as many neutral steamers as possible to pass through the Kiel Canal in order to have better control over them. The Führer warns against sabotage. Steamers carrying cement are not to be allowed passage.

4. The attack by He 115's in the coastal waters off southern England resulted in the loss of 4 aircraft; this area therefore appears unsuitable for attacks. The Commander in Chief, Navy, declares that conclusions have already been drawn from this experience, namely, that the anti-aircraft defenses are apparently very strong along the southern part of the coast of England. Moreover, in this case the Ju 88's which flew ahead, alerted the defenses. The Commander in Chief, Navy asks that no organizational measures be taken as is being rumored - for instance, that combined operations over the sea are being considered - for it is absolutely necessary to train and operate naval aircraft in closest cooperation with naval forces. The Führer declares that there is no question of organizational measures.

Annex 1

Preliminary observations concerning the conduct of economic warfare and the creation of a unified command organization.

I. Allied warfare up to the present time has shown that neither Britain nor France is inclined to make any large military and economic sacrifices in this war. The recent evidence of the potentialities of our submarines and our Air Force confirm Britain's desire not to sacrifice still more and perhaps to jeopardize her empire by taking military and economic risks. Consciously foregoing any dangerous armed action, Britain and France are both confining themselves to economic warfare and a war of propaganda. Their methods have the single purpose of cutting Germany off from all trade connections, while avoiding any losses of their own. An elaborately constructed and ruthlessly executed blockade and control of trade, combined with extreme political and economic pressure, prevents the neutral countries from pursuing their regular commercial traffic and compels them to support British economic warfare against Germany. The British methods of economic warfare thus oblige the German authorities to create a determined defensive and offensive front and to adopt the same type of brutal economic warfare.

The necessity for total economic warfare is generally recognized, to be sure. However, since a war against Britain and France was not expected before 1944-45, we did not make any of the necessary preparations, and in no way organized the needed economic and military measures.

In the present preliminary stage of the war against Britain, the preparatory measures which were not executed in peacetime can now be carried out quickly and openly by taking advantage of the present predicament of the neutral nations. Thus we may hope to regain the time lost.

II. In economic warfare, the political and economic considerations as well as the military measures for warfare on land, sea, and in the air form an inseparable whole. It is absolutely necessary that there be a common, responsible command, uniform leadership and a single, clear recognition of all the major problems of economic warfare, and of the measures required for their solution. In view of the numerous aspects of economic warfare, real success in striving for the common goal can be achieved only by coordinating the work in all sectors and by centralizing responsibility and leadership at one point.

It must be realized that in a war against Great Britain the problems of economic warfare will concern the Navy more than anyone else. The Navy, above all, must execute the operations dictated by economic warfare. Naval measures are affected most directly by political and economic demands. The strategic goal of offensive naval warfare, which is to paralyze the enemy's war economy by cutting off his supply lanes, as well as the defensive task of protecting our own supply lanes, fall unmistakably within the province of economic warfare. Thus naval warfare must be considered a part of economic warfare. This part is of considerable importance, since there is scarcely a problem of offensive or defensive economic warfare which does not directly and vitally concern naval warfare. Therefore it is natural that the Navy, already in peacetime, concerned itself extensively with the whole field of economic warfare. For practical reasons alone, the Navy is absolutely justified in desiring to establish closest contact with the other authorities involved in the conduct of economic warfare, and in desiring to exert considerable influence on the conduct of this type of warfare.

The actual conduct of economic warfare and the coordination of all efforts must, however, remain the sole responsibility of that office which is responsible for the conduct of the war as a whole, i.e., the OKW.

III. The aims of economic warfare are clearly indicated:

1. To protect and develop the resources of the German people for the purpose of guaranteeing that Germany can continue the war indefinitely.

2. To paralyze the enemy economy and to sever the enemy's economic connections with other nations, so that his will to fight will be broken within the shortest possible time, and he will be forced to seek peace.

a. Politics (and propaganda)
b. Economy (and finance)
c. Armed Forces (and sabotage)

Concerning "a". Employment of political weapons: The methods with which Britain forced economic warfare on her dominions and on the neutral countries are obviously of a political nature. Being well aware of the fact that any military pressure is all the more successful if preceded or accompanied by political and economic pressure, Britain exerted a unique political influence on all neutral nations so as to make her initial position with respect to Germany as favorable as possible. The demand for exploitation of all political possibilities for the purpose of making economic warfare as effective as possible dominate also all German considerations. Political influence must extend to all neutral states which have any direct or indirect trade relations with the enemy as well as with the Reich.

The nature and degree of the political pressure will depend on the following:

(1) On the geographical and economic situation of the neutral nation concerned and on its power of resistance, as well as on the mentality and the internal political conditions of the various nations.

(2) On the character of the German economic connections with the nation and on the extent to which our war economy depends on this nation.

The political measures should be founded upon large-scale and uniformly conducted propaganda and should be supported by planned propaganda attacks. These must furnish definite slogans which should all be directed towards the goals of economic warfare, which are as follows:

Weakening of the enemy economy.
Promotion of our own economy.
Creation of a united front of all neutral countries against the enemies of Germany.
Economic and financial isolation and cultural boycott of the enemy.
Crippling of enemy production by the support of strike movements.

(1) To stop entirely all commercial traffic of neutrals or allies of the enemy with Britain and France.

(2) To reorganize trade relations in the entire European economic area with the exclusion of Britain and France, for the purpose of establishing a German war economy which will be capable of supporting the war indefinitely.

The attitude of the neutral nations toward the war and toward Germany must be changed completely by clear and definite directives and by measures on the part of Germany. More than ever before it must be driven home to the neutrals that they can never emerge from this war as laughing victors in the face of an economically destroyed or weakened Germany. This is a war of the entire European economic area, and in this war the fate of all the neutral states of Europe, especially the Scandinavian and Baltic states, is inextricably linked to the fate of Germany in victory as well as in death.

Concerning "c". Employment of military weapons: The scope for activity in the military phase of economic warfare is very different for the three branches of the Wehrmacht. Whereas the Army will have only occasional and limited opportunities for action, the Luftwaffe will be charged with decisive tasks in attacking important industrial installations, commercial centers, and bases, as well as trade communications by land and sea. For the Navy, economic warfare clearly means warfare against merchant shipping. Its extent, possibilities, intensification, and effects are explained in the memorandum on intensified naval warfare against Great Britain. As long as the political situation does not require a sudden change to the moat severe and ruthless type of warfare against merchant shipping, we may expect to intensify such warfare bit by bit, corresponding to the procedure of British economic warfare.

IV. All measures hitherto taken by the Navy have complied with the strategic requirements of the situation at the time in question. When taken out of the framework of an organically constructed and uniformly directed economic war, they therefore represent only incomplete fragments with more or less satisfactory chances for success. The Navy's means for achieving real success will remain inadequate as long as they are not supported by all available political and economic weapons of economic warfare. A vigorous economic offensive with a complete concentration of all political and economic weapons must support the slow, often fumbling attempts of the naval command in warfare against merchant shipping. The organizations, commissions, and workers' groups which grew up gradually as necessity demanded without any over-all recognition of the significance and the problems of economic warfare as a whole, must now be unified under a new control organization with definite objectives which operates according to the directives of the Führer. This organization should aim for the best possible execution of economic warfare, having the ultimate goal of obtaining a complete concentration of all political, economic, and military measures on the requirements of economic warfare.

V. The Naval Staff considers that the best organizational solution for a unified command of economic warfare lies in the creation of a "Commission for Economic Warfare" under the OKW. In order to make sure that the Navy will have a decisive influence on those problems of economic warfare which touch on the vital interests of the Navy, the Naval Staff believes that this commission should be headed by an admiral. The "Staff for Economic Warfare" of the OKW should be incorporated into the "Commission for Economic Warfare". Aside from the experts of the OKW and of the branches of the Wehrmacht who are constantly occupied with this work, this commission is to include responsible representatives of the section on economic policy in the Foreign Office (Ambassador Ritter's section), of the Deputy for the German Economy, and of the Food, Finance, and Transportation Ministries.

Furthermore, in order to assure uniform execution and treatment of all major command problems of economic warfare, a committee will be formed within the commission, in which the Deputy for the Four Years' Plan, the Foreign Minister, the Deputy for the German Economy, and the Commanders in Chief of the branches of the Wehrmacht will be represented.

Annex 2

Berlin, 23 October 1939.

The war against merchant shipping and all other measures for attacking the economic installations, resources, and trade connections of the enemy nations are to be directed uniformly by the OKW according to my orders.

The Chief of the OKW will appoint a staff for the comprehensive treatment of the problems arising therefrom and for preparation of my decisions.

The Deputy for the Four Years' Plan, the Foreign Minister, the Deputy for the German Economy, and the Commanders in Chief of the branches of the Wehrmacht will be represented on this staff.

The Chief of the OKW will issue the necessary orders for carrying out these plans.

Handwritten note: On the basis of this order of the Führer, Admiral Schuster is assigned to the post of Chief of the Special Staff for Economic Warfare in the OKW. Kapitän zur See von Weichold is to be Chief of Staff.

The Change of Fleet Commanders October 1939.

In peacetime the organizational setup of Groups West and East was generally recognized as correct. According to the instructions from the Commander in Chief, Navy, they were to take over the operational control of naval warfare in the west and the east, while Naval Commanders West and East, subordinate to them (the Fleet Commander in the main theater of war), were to deal independently with the tasks at sea assigned to them by the respective group commander. Since the whole communications service constituting the basis for operations was concentrated at the Group Command, whose duty it was to inform the Naval Commanders, the latter could operate freely at sea without being tied to the port or the telephone, as was the case with the Fleet Command during the [First] World War. At the same time there was no longer the necessity for the Naval Commanders at sea to communicate by radio with the units under their command before making contact with the enemy, thereby revealing their position, as the Group Command took over transmitting information from its fixed position on the mainland.

Since a flare-up appeared imminent primarily in the east, Group East was set up first and provided with the necessary personnel. As the Führer did not anticipate complications in the west until much later, for the beginning only one person, Kapitän zur See Wever, was appointed in 1939 to the staff of the Commanding Admiral, North, to work on the preparation of Group West. The Fleet Command repeatedly declared that it was not in a position to carry out the work of preparation. Moreover it was desired that the Fleet Command should be fully available for commanding the naval forces in both theaters of war, so long as it was not clear where the focal point of naval warfare would be. When the political situation in relation to the Western Powers became more threatening at the beginning of summer 1939, I ordered that the staff of Group West be set up under the Commanding Admiral, North Sea Station, Admiral Saalwächter. The latter carried out the preparatory work for warfare in the North Sea very energetically and worked to my entire satisfaction from the first day of the war on.

Group East also fulfilled its duties to the fullest extent. After the termination of the Polish War there were only two tasks to be carried out in the Baltic: The war against merchant shipping, and preventing enemy submarines from penetrating into the Baltic. It appeared expedient therefore, for the purpose of economy in personnel, to combine Group East with the Commanding Admiral, Baltic Sea, and to place only two officers at his disposal as operational group; this number could be increased at any time, should the need arise. The Commanding Admiral, Defenses, Baltic, could carry out the duties of Operational Commander at the same time; he remained in Swinemünde.

In the west from the beginning there were difficulties in the relations between the Fleet Commander, Admiral Boehm, and the Group Commander, though Admiral Boehm had accepted the organizational setup as such. He thought, however, that he himself had claim to the position of Group Commander. To be sure, he was well fitted operationally for the task and had directed the fleet well in peacetime. In addition, the organization of the Group was conceived originally for a war at a later date, for which we should have had a much larger fleet, the training and control of which would have utilized the Fleet Commander and his staff to a far greater and more satisfactory extent. Since the organization was accepted as satisfactory, however, I could not possibly allow a change just at the outbreak of the war, especially as Admiral Saalwächter had directed and carried out the difficult operations at the beginning of the war in an excellent manner. I found an opportunity to speak to both, and I appealed to them to set aside their personal differences. Admiral Saalwächter complied without further ado. Admiral Boehm, who finds it difficult to keep his personal dislikes from interfering with business, and who certainly must have suffered under the existing situation, promised me in Kiel (at the time of the address to the submarine personnel) to do his utmost to insure a smooth functioning of the organization. I took this opportunity to point out to him that according to my information the Fleet Staff was complicating the situation by the way in which it worked with the staff of the Group Command, and that rumors to this effect were leaking out from the Fleet Staff. I asked him to have a talk with the Fleet Staff. I was convinced that without this attitude on the part of the Fleet Staff, the First Staff Officer of which was particularly disposed to criticism, the situation would not have become so serious. In order to make the position of the Naval Commander as unequivocal as possible, and to ensure as far as possible his having influence on the execution of operations, I issued an order on (date not supplied) according to which the Naval Commander has the right to voice his misgivings concerning training and equipment of his forces at any time with the Group Command, and to submit his own proposals for operations. At the same time I authorized the Chief, Officer Personnel Division, to inform the Fleet Commander that it was planned to appoint him Group Commander, West, at the end of the year, particularly as I was considering Admiral Saalwächter for a position in the Naval High Command [OKM].

Following this there were repeated differences of opinion between the Group Commander and the Fleet Commander regarding details concerning the execution of operations; when these were submitted to me for a decision, I was always obliged to decide in favor of the Group Commander. The last incident of this kind occurred in connection with the mine-laying operation by destroyers in the Humber. The Fleet Commander wished the six destroyers, which were approximately seventy miles from the coast of England, to be met at dawn by cruisers and the two battleships. These were to cruise during the day west of the German danger zone, in other words close to the enemy coast. The Group Commander, on the other hand, intended the destroyers to be met at dawn by units of the Luftwaffe. The latter proposal was undoubtedly the correct one; the Fleet Commander's proposal repudiated all the experience of this war; it would have been correct during the [First] World War. Moreover, it was contrary to the opinion held by the Fleet Command so far, and approved by me, that the heavy forces should be disposed, trained, and operated as far away as possible from the British Air Force.

This matter attained special significance because the Fleet Commander considered it necessary to state in the operational order that the destroyers were not to be picked up at dawn by cruisers, etc., instead of stating that they were to be picked up by units of the Luftwaffe. Apart from the fact that this formulation probably had a bad effect on the morale of the crews, it must have seemed like a "demonstration" or a criticism of the Group Commander's measures and of my decision. The effect of this was crushing for me as well as for the Staff of the Seekriegsleitung. I sent the Chief of Staff of the Seekriegsleitung [Admiral Schniewind] to the Fleet Commander with the following message:

1. I did not suppose that this was meant as a "demonstration"; had I done so I would at once have asked for his removal.

2. I requested him to substitute for the offending paragraph in the operational order words such as "to be picked up at dawn by units of the Luftwaffe".

3. I would relieve his First Staff Officer, Kapitän zur See Weichold, of his duties.

1. No "demonstration" was intended.

2. The Fleet Commander is answerable for the Staff Officer and must ask to be relieved of his duties if the Staff Officer is dismissed. He requested confirmation of my decision.

Even if Admiral Boehm denied having intended a "demonstration", it is still obvious from Kapitän zur See Weichold's statement to the Chief of Staff, Fregattenkapitän Schulte-Mönting, that the objectionable wording did not somehow slip into the order and was overlooked on reading it through; on the contrary, it was discussed in detail just how one could put the thought into the order. In view of this it is impossible for me to keep the Fleet Commander either in his present function or as Group Commander, West. I asked Admiral Carls whether, if he were appointed Commander in Chief, Navy, he would work with Admiral Boehm. He suggested - evasively - that the latter should be sent on a mission to Italy or Russia.