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The German military first encountered American Bazookas in Tunisia in 1943, and quickly put in place a program to copy and improve on the design. At that point, the latest German antitank weapons was the Racketenwerfer 43 “Puppchen”, which was a locked-breech rocket launcher built on a carriage like a standard AT gun. It had a substantial range and a very effective 88mm shaped charge warhead, but lacked the one-man mobility offered by the Bazooka. So, the Rackenetpanzerbuchse 43 - shortly thereafter renamed the Panzerschreck - was developed in late 1943.

The Panzershreck kept the 88mm bore of the Puppchen, so that the warhead could be kept unchanged. The rear half of the munition was redesigned to fit an open tube type of launcher. The early Bazookas captured by German forces were at that time fitted with a battery-powered firing system, which the Germans opted to replace (as would the Americans, in later versions). The Panzerschreck trigger used a small generator, where a heavy spring pushed an iron core through a copper winding and magnet, this creating an electrical charge to fire the rocket.

One shortcoming of the Panzerschreck compared to the Bazooka was that the German rockets did not burn completely within the launch tube - the motors continued to fire for about the first 2 meters of flight. This meant that the shooter would receive substantial burns to the face and hands if protective gear was not worn when firing. Initially, troops were instructed to wear filter-less gas masks and winter gloves when shooting, but it was quickly recognized that this was an impractical burden. Soldiers in the field began to craft protective shields to mount on the tubes, and these were formalized in a windowed shield was introduced in 1944 as standard on new production launchers and as a kit to retrofit existing weapons in the field.

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