Blockade of Germany (1939–1945)

• 1. Introduction

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  The Blockade of Germany, also known as the Economic War, began the moment Britain and France declared war in September 1939. Within hours of that declaration, a British liner was torpedoed off the Hebrides, killing 112 people. Yet even as the shooting war erupted at sea, a quieter and perhaps more consequential struggle was already underway: a systematic attempt to strangle the Nazi war machine by cutting off the minerals, fuel, metals, food, and textiles it needed to keep fighting.

  This was not a new idea. Britain had used naval blockade against Napoleon a century earlier, and against Germany itself in World War I, where the strategy eventually played a decisive role in the Central Powers' collapse by late 1918. Now, with Adolf Hitler having become Chancellor of Germany in 1933 and the signs of another war growing unmistakable, British planners began reviving that same weapon years before the first shot was fired.

  What unfolded between 1939 and 1945 was an economic contest fought on the North Sea, in the Mediterranean, across the neutral ports of Scandinavia, and in the mail rooms of Manhattan. The questions at the heart of it are not merely military. How do you economically isolate a continental power that shares land borders with dozens of neutral nations? What do you do when neutral countries profit from both sides? And how does a blockade hold when the Soviet Union is actively trading with your enemy?

• 2. Germany's Achilles Heel

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  By 1900 Germany had the biggest economy in Europe, built on the export of high-quality manufactured goods. But underneath that industrial strength lay a structural vulnerability: Germany depended heavily on imported raw materials to feed its factories. When World War I ended, that dependence had proved catastrophic. Industrial production fell to 57% of its pre-war value. Per capita GDP dropped to 73% of the 1913 level. The country that had entered the war with plentiful gold reserves and strong credit ratings emerged from it broken.

  The Weimar Republic then endured hyperinflation, a brief recovery in the mid-1920s, and then the Great Depression, which hit Germany harder than any country except the United States. Hitler exploited that misery to seize power. When he came to office he inherited a country with almost no foreign exchange reserves and zero credit on international markets. His economic minister Hjalmar Schacht, and later Walther Funk, resorted to financial devices including the Mefo bill, a kind of IOU issued by the Reichsbank to pay armaments manufacturers that deliberately kept rearmament spending off the official budget. In Hitler's own words, it was merely a way of printing money.

  To insulate Germany against a future blockade, Hermann Göring established the Four Year Plan in September 1936, aiming to make Germany self-sufficient by 1940. Göring built the Hermann Göring Works in the area bounded by Hanover, Halle, and Magdeburg to smelt steel from low-grade domestic iron ore. Heavy investment went into ersatz industries: textiles from cellulose, rubber and oil from coal, coffee from chicory, beer from sugar beet. Even so, journalist William L. Shirer, who had lived in Berlin since 1934 and broadcast regularly to the US for CBS, noted that there were shortages of basic goods even before war was declared. On the 24th of August 1939, a week before the invasion of Poland, Germany announced rationing of food, coal, textiles, and soap. Men were allowed one overcoat, two suits, four shirts, and six pairs of socks for the duration.

• 3. Planning the Economic War

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  Sir Frederick Leith-Ross, the British government's chief economics adviser, began pressing senior officials from late 1937 onward to plan a revival of the World War I blockade. Leith-Ross brought a remarkable breadth of experience to the task, having led major overseas missions to Italy, Germany, China, and Russia over the years. His vision went beyond simply stopping ships at sea. He wanted Britain's vast commercial network in cities like New York, Rio de Janeiro, Tokyo, Rome, and Buenos Aires to function as an intelligence-gathering system, feeding advance word on contraband shipments to the Navy before vessels even reached port.

  Prime Minister Neville Chamberlain was initially reluctant; he still hoped to avoid war. But after his appeasement of Hitler at Munich in September 1938, Chamberlain too began preparing. A joint British-French staff paper issued in April 1939 concluded that in the first phase of any war with Germany, economic warfare was likely to be the Allies' only effective offensive weapon. Royal Navy war plans delivered to the fleet in January 1939 identified three priorities: defending British trade in the Atlantic, protecting trade routes in the Mediterranean and Indian Ocean, and prosecuting a vigorous blockade against Germany and Italy.

  Leith-Ross assembled more than 400 administrative workers, bankers, statisticians, economists, and experts in international law for the Ministry of Economic Warfare. He had also spent the months before the war compiling detailed records on the normal import levels of every country bordering Germany. When those countries exceeded their peacetime quotas in wartime, that was the signal that goods were being funnelled to the Nazis. A joint British-French strategic paper from April 1939 described economic warfare as, in the first phase of the conflict, the Allies' likely only effective offensive weapon.

• 4. Contraband Control at Sea

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  The day after Britain declared war, the Admiralty announced that every merchant vessel was liable to examination by the naval Contraband Control Service. Three home ports were chosen: Weymouth and The Downs in the south to cover the Channel, and Kirkwall in Orkney to control the North Sea. Three more inspection stations were established at Gibraltar, Haifa in northern Palestine, and Aden on the Yemeni coast at the entrance to the Red Sea.

  The practical work was painstaking. A team of two officers and six men would set out in a fishing drifter or motor launch to board a stopped ship, apologise to the captain, seal the wireless cabin, and inspect the ship's papers, manifest, and bills of lading. Control Officers were instructed to be scrupulously polite, though the job required considerable tact in the face of irate Dutch and Scandinavian skippers who had long traditions of trading with Germany. If anything was suspicious, the cargo was directed to a Prize Court controlled by the Admiralty Marshall. A broad definition of contraband was used deliberately: "any goods capable of being used for or converted to the manufacture of war materials".

  Two months into the war the Ministry reintroduced the Navicert system, first used in World War I. A Navicert was essentially a commercial passport for goods, certified as non-contraband by a British ambassador in the country of origin. Ships carrying valid Navicerts could pass Contraband Control without delay. Ships without them faced potentially ruinous hold-ups for their perishable cargoes. In the first four weeks of the war alone, the Royal Navy officially confiscated 289,000 tons of contraband and the French Marine Nationale a further 100,000 tons. In just the first seven days of October 1939, British Contraband Control seized 13,800 tons of petrol, 2,500 tons of sulphur, 1,500 tons of jute, 570 tons of copper, and a range of other materials. Neutral captains who tried to conceal cargo were often astonished to discover how much British officials already knew about their manifests before the boarding party even arrived.

• 5. The Soviet Loophole

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  By the 15th of September 1939 William Shirer was already recording in his diary that the blockade had cut Germany off from 50% of her normal imports of nickel, cotton, tin, oil, and rubber. France's fall from the supply chain and the loss of French iron ore had left Germany almost entirely dependent on Sweden for that vital material. But the most significant gap in the blockade was one that geography could not close: the Nazi-Soviet Pact of August 1939.

  The Soviets provided Germany with refuelling and repair facilities at Teriberka, a remote Arctic port east of Murmansk. More remarkably, the Soviet Union accepted large quantities of American wheat, tin, petrol, and rubber at its Arctic and Black Sea ports, then released equivalent volumes of those same materials to Germany in the west, effectively laundering goods through a land border no naval patrol could reach. Before the war, US exports to the Soviet Union were estimated at less than one million pounds per month; by this stage they were known to exceed two million pounds per month.

  In February 1940 the German negotiator Karl Ritter signed an increased trade deal in Moscow worth 640 million Reichsmarks beyond what had already been agreed. In exchange for Russian grain, wheat, oil, cotton, phosphates, and soya beans, Germany delivered heavy naval guns, a brand-new Panzer III tank, thirty of its latest aircraft including the Messerschmitt Bf 109, Bf 110, and Junkers Ju 88, turbines, generators, locomotives, and even the plans to a battleship. The situation became so acute that on the 30th of March 1940, with his next Blitzkrieg already being planned, Hitler ordered that delivery of goods to Russia should take priority even over supplies to his own armed forces. The Soviet route would remain open until June 1941.

• 6. Neutrals, Mail, and Smuggling

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  From the beginning, the blockade's most persistent weakness was the ring of neutral nations bordering Germany. A third of all Dutchmen derived their livelihood from German trade. In the first five months of the war, the Netherlands' imports of key materials from the United States increased by four and a quarter million pounds. Norway's purchases in the same category tripled to three million pounds a year. Sweden's grew by five million pounds and Switzerland's by two million. The items were almost entirely the same: cotton, petrol, iron, steel, and copper.

  In the Balkans the situation was even more open. Yugoslavia, Romania, and Bulgaria exported large parts of their surplus oil, chromium, bauxite, pyrites, maize, wheat, meat, and tobacco to Germany as a matter of course. Britain countered by using the United Kingdom Commercial Corporation to compete directly in these markets, deliberately underselling and overbidding to deny Germany supplies, though Germany paid well above market rates to secure what it needed.

  A stranger front opened in the United States. A steady stream of packages marked Gruss und Kuss, meaning "greetings and kisses", flowed from American addresses through neutral countries to Germany. One mail company, the Fortra Corporation of Manhattan, admitted to shipping 30,000 food packages to Germany in less than three months, a business worth more than one million US dollars a year. Of 25,000 packages British inspectors examined over three months, 17,000 contained food, cash in various foreign currencies, diamonds, pearls, and maps of potential military value. When a ton of airmail from a Pan American Airlines flying boat was confiscated in Bermuda, the American government banned parcel shipments through the US airmail entirely. The Italian Lati Airline, flying between South America and Europe, was also used to smuggle diamonds and platinum, sometimes concealed within the airframe itself, until British intelligence engineered a breakdown in relations between the airline and the Brazilian government, leading to the confiscation of the airline's Brazilian assets.

• 7. The Magnetic Mine Crisis

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  In mid-October 1939 Adolf Hitler warned the Allies of a new secret weapon. Within days, ships of all sizes began blowing up in British coastal waters, including harbours, channels, and estuaries too shallow for conventional submarines. The Germans were using magnetic mines, dropped by seaplanes, that detonated not on contact but in response to the magnetic field of a steel hull passing overhead. They ranged from 200-pound devices dropped in dozens at a time to one-ton versions lowered by parachute onto shallow bottoms, equipped with triggers that were nearly impossible to sweep.

  Six ships went down in the mouth of the Thames. The new cruiser was badly damaged at the entrance to the Firth of Forth. Over the weekend of 18-the 21st of November six neutral ships were sunk off the English coast, among them a 12,000-ton Japanese liner. Prime Minister Chamberlain declared in a war speech that Britain knew the secret of the magnetic mine and would soon master it, but two more ships sank shortly afterwards, bringing one week's total to 24. Evidence that Germany was using illegal floating mines accumulated quickly: a British freighter was sunk at anchor in a port, two mines detonated together off Zeebrugge, and a whale was found near four German mines on the Belgian coast with a large hole in its side.

  The eventual solution, known as degaussing, involved girdling ships in electric cable to neutralise their magnetic signature. It was quickly applied across the fleet. Other minesweeping methods were developed using aircraft and vessels fitted with fuse-provocation equipment to trigger the mines safely. In direct response to the mine campaign, from early December 1939 Britain began blocking German exports as a reprisal, a policy the Ministry estimated could reduce Germany's sea trade by 45%.

• 8. The Blockade's Limits and Legacy

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  By the spring of 1940 British optimism about the blockade had given way to a harder reckoning. Germany appeared to be maintaining and even increasing its imports despite the naval net. Speaking to the House of Commons on the 17th of January 1940, the Minister of Economic Warfare Ronald Cross said that after four and a half months, Germany was in roughly the same economic stress it had been in after two full years of the previous war, but the structural gaps in the blockade made it clear that the economic war alone could not end the conflict.

  The most celebrated of these gaps was Sweden's iron ore trade. Sweden supplied Germany with nine million tons of high-grade ore per year via Baltic ports that froze in winter. An alternative route ran from the Norwegian port of Narvik down what Churchill called the Norwegian Corridor, a sea lane partially concealed behind the Skjaergaard, a continuous chain of some 50,000 glacially formed islands, sea stacks, and rocks running the full 1,600 kilometres of Norway's west coast. Churchill considered this the greatest single impediment to the blockade, and pressed repeatedly for mining it, but Norway refused.

  After the rapid Axis conquest of most of Europe in 1940-1941, including Scandinavia, the Benelux countries, France, and the Balkans, the blockade's character changed fundamentally. Germany now controlled the major industrial and agricultural centres it had previously needed to import. The economic war shifted toward the bombing of economically important targets inside German-held territory and the buying up of war materials in neutral markets to deny them to the Axis. With the United States entering the war in December 1941 after Pearl Harbor, and after the heavy military defeats that followed D-Day in June 1944, the Axis position deteriorated on every front simultaneously. The 278 companies and individuals on the Ministry of Economic Warfare's original blacklist, published in mid-September 1939, had been the first move in a war of attrition that would outlast every optimistic forecast made at its beginning.