In this quote from the play version of The Diary of Anne Frank, Mr. Frank is responding to the way the tense and anxious inmates of the attic hideaway are fighting over food. Food had become very scarce all across the Netherlands at this point in World War II, as the Nazis commandeered most of the available food resources to support their own army in their failing war effort. Hunger was severe and widespread, and, of course, extended to the Franks and the Van Damms, hiding away and dependent on others to feed them. They quarrel in this scene over potatoes, over dividing the food fairly, and over whether some should leave the annex so that there will be more food for the rest. The Jews here are destroying themselves through infighting and through some of them putting their own needs above the good of the community. They need to stick together: if everyone is willing to sacrifice a little without endless quarreling and complaining, the group as a whole is more likely to survive.
It was horribly hard to be cooped up in the annex for everyone, especially Anne. Anne had to share her bedroom, her desk, and her life with a stranger. She was constantly squabbling with her mother. Most of these squabbles were small, but she had nowhere to escape. There was little to no privacy for anyone and strict lights off and no talking hours had to be observed. No one could go outside and tension ran high when news of the war was not forthcoming. Besides all this, there were constant bombings and the fear of being discovered. Relationships broke down, but I would wager the Franks and the others in hiding did extremely well considering their situation. The annex became a microcosm of the outside world, mirroring those tensions and emotions others felt in the real world.
They are destroying themselves by arguing about everything and anything, they are mad at each other and by being mad at each other they are destroying themselves