After two relatively quiet years, discrimination against the Jews again intensified. Increasingly radical steps were initiated to eliminate them from the economy, and from more and more spheres of social activity. The Security Service (Sicherheitsdienst, SD), whose ‘Jewish Section’ (Judenreferat) was run by the ambitious Adolf Eichmann, had in fact since the start of the year been advocating renewed pressure on the Jews to force them out of the economy and speed up their emigration from Germany.226 The manufacture of a ‘popular mood hostile to Jews’ and the deployment of illegal ‘excesses’ — mob violence, which was seen as particularly effective — were recommended.227 By autumn, the climate was becoming more hostile than ever for the Jewish population.228 Schacht’s loss of influence, and finally his departure from the Economics Ministry on 27 November, now removed an obstacle to the ‘aryanization’ of the economy. Pressure to fulfil this aspect of the Party’s Programme mounted.229 Göring, by this time in effect in charge of the economy, was more than ready to push forward the ‘aryanization’. The upswing of the economy made big business, losing the uncertainties of the first years of Nazi rule, willing partners, eager to profit from the takeover of Jewish firms at knock-down prices.230 By April 1938 more than 60 percent of Jewish firms had been liquidated or ‘aryanized’.231 From late 1937 onwards, individual Jews also faced an expanding array of discriminatory measures, initiated without central coordination by a variety of ministries and offices — all in their way ‘working towards the Führer’ — which tightened immeasurably the screw of persecution.232 Hitler’s own contribution, as usual, had largely consisted of setting the tone and providing the sanction and legitimation for the actions of others.

In world affairs, events beyond Hitler’s control were causing him to speculate on the timing and circumstances in which the great showdown would occur. By the end of 1937, the signs were that radicalization was gathering pace not just in anti-Jewish policy (and, largely instigated by the Gestapo, in the persecution and repression of other ethnic and social minorities), but also in foreign policy.233

Hitler began the year by expressing his hope to those at his lunch table that he still had six years to prepare for the coming showdown. ‘But, if a very favourable chance comes along,’ commented Goebbels, ‘he also doesn’t want to miss it.’ Hitler stressed Russian strength and warned against underestimating the British because of their weak political leadership. He saw opportunities of winning allies in eastern Europe (particularly Poland) and the Balkans as a consequence of Russia’s drive for world revolution.234 Hitler’s remarks followed a long briefing by Blomberg earlier that morning in the War Ministry about the rapid expansion of rearmament and the Wehrmacht’s preparations for ‘Case X’ — taken to be Germany, together with its fascist allies against Russia, Czechoslovakia, and Lithuania. The question of German occupation was evidently raised. Hitler, Goebbels, and Blomberg discussed the installation of senior Gauleiter as Civilian Commissars. Hitler was satisfied with what he had heard.235

A foretaste of what might be expected from the German leadership in war followed the dropping of two ‘red bombs’ on the battleship Deutschland, stationed off Ibiza, by a Spanish Republican plane on the evening of 29 May, killing twenty-three and injuring over seventy sailors. Admiral Raeder, Commander-in-Chief of the Navy, was dispatched by Blomberg to Munich to bear the brunt of Hitler’s fury. Hitler’s immediate reaction, ‘fuming with rage’, as Goebbels put it, was to bomb Valencia in reprisal. But after a hastily arranged conference with Blomberg, Raeder, Göring, and von Neurath, he ordered instead the cruiser Admiral Scheer to fire on the southern Spanish harbour town of Almería. Hitler, seething but nervous at the outcome, paced up and down his room in the Reich Chancellery until three o’clock in the morning. The shelling of Almería for an hour left twenty-one civilians dead, fifty-three injured, and destroyed thirty-nine houses. Hitler was satisfied. He had seen it as a prestige question. Prestige had now been restored.236

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