In the centre of Munich, behind the Frauenkirche, you’ll find a traditional Bavarian Wirtshaus (pub) called the Bratwurst Glöckl am Dom
The original proprietors came from Nürnburg, so the place specialised in Franconian food. It did a brisk trade in those small Nürnburger sausages (which Americans would call breakfast sausages), served with sinus -scorching horseradish, and washed down by lashings of Augustiner beer. The Glöckl still stands today.
By the early 1930s, the Zehnter family had run it with great success for a number of years. On the untimely death of his parents, 24 year-old Karl Zehnter took the helm.
As is German custom, Zehnter kept Stammtische, or standing tables for regulars. One such table belonged to a group of Karl’s buddies. It became known as Stammtisch 175, after the notorious paragraph 175 of the German criminal code which outlawed homosexuality.
Among the Stammtisch regulars were Edmund Heines, a particularly brutal murderer and enforcer, and his boss, Ernst Röhm. Röhm and Heines were numbers one and two in the Sturmabteilung, a group of militarized criminal rabble who sowed fear among Nazi enemies. They were a very useful bunch.
Zehnter moved in right-wing political circles, too, and all were assumed to be part of the same homosexual subculture.
So, to answer the question, if Röhm’s homosexuality was a secret, it was an open secret. Goebbels, a straight womaniser, was initially respectful — even fond — of Heines and Röhm. I understand that Goebbels visited Stammtisch 175 on a number occasions, and expressed loyalty to the two SA officers. The SA was an extremely effective tool for the Nazis. Stammtisch 175 even made it into the party press.
If any of this proved a scandal, it was a mild one. Initially.
Hitler’s opinions were another matter. Like many fascists, Hitler acted prudish in public but was deeply sexually insecure and messed up in private. (A rather horrifying account of his tastes can be found in Ian Sayer’s book The Women Who Knew Hitler). Putting aside the highly efficient, ruthless management of their own growing power base, the open sexuality of Röhm and Heines disturbed the squeamish Hitler.