Schütze was born in Flensburg, and started his naval career in the Reichsmarine aboard German torpedo boats in April 1925, before transferring to the new U-boat division ten years later in October 1935. There he commanded U-19 for two years, before being relieved to take destroyer training - before returning to the U-boat arm in command of U-11. When war broke out he commanded U-25, with which he sailed on three patrols, mainly in the Bay of Biscay and off the Portuguese coast.