The Greater Hamburg Act of 1937 removed Lübeck's status as a sovereign German state and made it part of the Prussian Province of Schleswig-Holstein.

Schröder then returned to the Reichstag as a deputy for electoral constituency 13, Schleswig-Holstein, at the April 1938 election, and remained a member until the fall of the Nazi regime.

On 31 May he was made permanent Police President and also was appointed to the Lübeck state administration as Senator for Internal Affairs by the Reichsstatthalter (Reich Governor) Friedrich Hildebrandt.

On 20 April of that year, he left the NSKK and was accepted into the SS (member number 290,797)[2] as an SS-Oberführer, and posted to the Sicherheitsdienst (SD) Main Office headed by Reinhard Heydrich.

On 4 August 1941, Schröder was appointed by Reichsführer-SS Heinrich Himmler as SS and Police Leader (SSPF) "Lettland" in the Reichskommissariat Ostland with headquarters in Riga.

He reported to Higher SS and Police Leader (HSSPF), SS-Gruppenführer Hans-Adolf Prützmann, and the Generalkommissar (General Commissioner) of Lettland, Otto-Heinrich Drechsler, who also was the Oberbürgermeister (Lord Mayor) of Lübeck.

[1] With the British 11th Armored Division approaching Lübeck, Schröder, along with Oberbürgermeister Drescher, advised against further resistance and the city surrendered largely without a fight on 2 May 1945.