The English term "Master Race" is irredeemably associated with Nazi Germany.
The word "Master" - especially to the American ear - is inextricably linked with "slave" - we even see it in computer hardware.
"Master" , in the 1930s in UK English, had more positive overtones- A highly skilled or learned person, a teacher, one in loco parentis.
My German was never great and these days is very rusty, but I would not translate "Herrenvolk" from that passage as "master race" - at least not now, in 2010. I might have done in 1930.
There is an implication of paternalist nobility in the original, which we, knowing what happened, are quite unable to endorse.
If I had been an honest translator- ie one trying to convey the writer's apparent intent- I should have said " A noble people", "A people destined to rule" or some thing similar- implying the same sort of obligation to rule which Kipling referred to as the "White man's burden". Manifest Destiny, in other words. It was a common idea at the time and in far more lands than Germany. The notion is rather alien in our latterday world, but perhaps not so alien as it ought to be.