Nazi BOOK THREE: Economic Policy 1933-45

What was the economy based on when Hitler took to power in 1933?

• small business

• light manufacturing

• large numbers of traditional craftsmen, retail shops, and cafes

How many businesses a year had been lost since 1933

100,000

What problems did hitler have to address when he took power?

• mass unemployment

• restoring agriculture

• state investment

• winning over the workers

What was unemployment at in 1933?

6 million

Why was state investment necessary?

hitler badly needed to stimulate the economy but it was difficult due to the lack of monetary resources the state had following the removal of US

Why was wining over the workers necessary?

as a class they'd generally not voted NSDAP due to the strength of the socialist parties and their links to trade unions

Who was president of the Reichsbank?

Hjalmar Schacht

Who was minister of economics?

K. Schmidt

Were Schacht or Schmidt nazis?

no - this was a problem for hitler as economic policies were not alligned with his political view

[tackling unemployment] Throughout the 30s hitler had campaigned on a promise of what and how did this affect his policies?

'Arbeit und Brot' [work and bread] - he now had to be seen delivering on that promise

[tackling unemployment] By 1936 what had unemployment fallen to?

2.5 million

[tackling unemployment] unemployment was sucessfully reduced in the recovery years. Name the ways hitler did this.

• massaging the figures

• work creation programme

• R.A.D/Reich labour service

• general improvement in the world and german economy

• rearmament

[tackling unemployment] [massaging the figures] what were the invisible unemployed?

people that had no jobs but were never included in the govt. stats as they were ideologically unsuitable - this was largely responsible for 1933's drop in the unemployed

[tackling unemployment] [work creation programmes] who began them?

Bruning, Von Papen, and Von Schleicher

[tackling unemployment] [work creation programmes] were the successful and why?

had little success due to the lack of funds available at the height of the depression

[tackling unemployment] [work creation programmes] when did they expand and become more used by the govt.?

June 1933 - Law to Reduce Unemployment

[tackling unemployment] [work creation programmes] State expenditure on construction rose from what in 1933 to what in 1938?

18.4 billion RM to 37.1 billion RM

[tackling unemployment] [work creation programmes] What was a particular part of this programme?

the Autobahn Law of 1933

[tackling unemployment] [work creation programmes] Who began the autobahn law and when?

September 1933 - Fritz Todt

[tackling unemployment] [work creation programmes] By decemeber 1941, when wartime needs brought construction to a halt, Germany had completed how many km of the autobahns?

2500

[tackling unemployment] [work creation programmes] How many jobs was the autobahn construction mean to create?

600,000

[tackling unemployment] [work creation programmes] At its height, how many were employed under autobahn construction?

120,000

[tackling unemployment] [work creation programmes] What was the construction itself marked with?

sickness, death, hunger, misery, and regular strikes - tho the public was not told this

[tackling unemployment] [R.A.D] when was it started?

1932

[tackling unemployment] [R.A.D] What did a law passed in June 1935 say?

made 6 months labour compulsory for all men 19-25 and was eventually extended to women in 1939

[tackling unemployment] [R.A.D] What made it unsuccessful?

• poor conditions

• low pay

• barrack style living away from home

[tackling unemployment] [R.A.D] What did it manage to achieve?

removed people from the 'official unemployment figures'

[tackling unemployment] When did rearmament start secretly?

1933

[tackling agriculture] What image of the peasants was presented as propaganda to the german people?

the 'blood and soil' image as the racial stock of the Herenvolk

[tackling agriculture] Why did Hitler like the peasants so much?

• they provided the backbone of Hitler's electoral support

• were needed for his later drive for self-sufficency in food

[tackling agriculture] Who was the minister of Agriculture and Reich Peasant Leader?

Darre

[tackling agriculture] When was the Reich Food Estate Office and what did it do?

September 1933 - took control of the overall planning and organisation of agriculture

[tackling agriculture] What did the Reich Food Estate Office control and organise?

controlled food imports and organised quotas and distribution

[tackling agriculture] What were farmers attitudes to the Reich Food Estate Office?

much resented by farmers

[tackling agriculture] What was the Battle of Agricultural Production (1934)?

Propaganda encouraged the peasantry while subsidies were used in an attempt to increase production, especially grain

[tackling agriculture] Was the Battle of Agricultural Production (1934) successful?

largely unsuccessful due to the lack of new machinery, labour, and poor harvest

[tackling agriculture] What was the Reich Entailed Farm Law (1934) intended to do?What

• keep the peasants on the soil as the 'blood spring' of the race

• help increase production, particularly in the drive for autarky

[tackling agriculture] What did the Reich Entailed Farm Law (1934) prohibit?

outlawed the selling of farms, which resulted in farms staying the same (usually small size), nor could they be split between children

[tackling agriculture] What was the ultimate result of the Reich Entailed Farm Law (1934)?

a flight from the land began into the major cities, where industrial work was better paid and appeared more stable

[tackling agriculture] There was a sharp deterioration in peasant morale despite farmers' income rising by how much?

41% up to 1937

[tackling investment] What were MEFO bills?

credit notes issued by the Reichbank and guaranteed by the govt

[tackling investment] What did MEFO bills allow the govt to do?

allow the govt. to continue to invest, though it lacked the real means to do so

[tackling investment] How did MEFO bills work?

They were to be converted in Reichmarks and payable, with interest after 5 years from hopefully increased tax revenues

[tackling investment] By 1937 how many RM had the govt, paid out in MEFO bills?

12 billion - funded half of Germany's rearmament programme while disguising military expenditure

[tackling investment] What was the consequence of MEFO bills on businesses?

Many large companies could cope with the deferred payments however smaller firms struggled and many went bankrupt due to the slow repayment of debts by the state

[winning over the workers] what two schemes established by the German labour front?

• Strength through joy (kdf)

• beauty of work

[winning over the workers] What was the strength through joy campaign?

created a host of leisure and social activities for the workers to participate in

[winning over the workers] What was the beauty of work campaign?

focuses on improving working conditions

[winning over the workers] Between 1936 and 1939 it appeared wages were increasing, why was this?

only because the working day had increased as rearmament sped up

[winning over the workers] by 1939, what had happened to 'real wages'

'real wages' had fallen as the cost of living had continued to rise, with only big business owners seeing any financial benefit from supporting the regime

What lead to a balance of payment crisis?

As govt. expenditure grew and the economy began to grow there was growing demands for imported goods

What did the army want?

an increased share of raw materials for rearmament and pressed for an 'economic dictator'

What did Hitler do as a concession to the army and big business?

appointed schacht as economic supremo

When was schacht appointed economic supremo and what power did this give him?

July 3rd 1934 - gave him dictatorial powers over the economy

When and what was Schacht's response to the economic crisis?

'New Plan' - September 1934

What happened to govt. imports under the New plan?

controlled through strict supervision of foreign exchange - cut substantially

What trade agreements were made under the New Plan and why?

Bilateral trade Agreements - Germany sought closer economic ties with South East Europe

What method was used to trade under the New Plan?

much of the trade was done on a simplistic barter system to avoid the necessity of formal currency exchange

What was done to the currency under the New Plan?

regulated - Germany only agreed to purchase foreign goods on the condition that the reichmarks could only be used to buy back German goods

What happened to Mefo bills under the New Plan?

continued to be used

Despite on face value the New Plan looking like a success, what was the problem with it?

it only hid fundamental structural weaknesses which would come to head again in 1936 as the pace and demands of rearmament grew

What two things led hitler to take an important new turn in the economy?

• balance of payment crisis of 1935 and 1936

• Guns vs Butter

What was the Guns vs Butter debate?

• emerged following balance of payments crisis

• Schacht suggested a reduction in arms spending because consumer goods could be exported to earn foreign exchange

Why did Hitler not approve of the Butter strategy?

made a lot of economic sense but NOT ideological sense

What did Arms production fall to in 1936 as a result of Guns vs Butter?

70% of 1935's levels

When was the Four Year Plan introduced?

October 1936

Who devised the four year plan?

Goring

From the point of the introduction of the four year plan what was the economy driven by?

political/ideological demands NOT economic ones

What happened to Schacht as a result of the four year plan?

• Left him marginalised.

• He would continue in the post for another 12 months becoming increasingly frustrated by Goring's 'amateur' approach, before resigning in 1937

Who did Goring rely on after being given over sight on all economic ministeries?

dominant figures from big business to help him guide the economy - Carl Krauch of I.G. Farben

What was the organisation of the four year plan like?

• not clearly co-ordinated

• haphazard collection of separate policies

What type of war was the economy being prepared for under the four year plan?

a short-term, blintzkreig-type war, not a long total war of economic attrition

What was a key driver behind the four year plan?

Autarky - self sufficiency

What were Hitler and Goring convinced of the need for in order to achieve Autarky?

Erzats produts

What was another key driver behind the four year plan?

the need to control big business

What happened to companies under the four year plan and what was this known as?

remained in private ownership, but the free market and business independence was lost to increasing state control - COMMAND ECONOMY

by 1939 Germany had a peacetime economy employing what percentage of its work force on war related products?

40-50%

Impact on peasantry under Nazi peacetime economy? [3]

• saw more regulation (Reich entaied farm law)

• however production of grain would increasing during autarky

• constant battle due to labour shortages

Impact on the mittelstand (small business) under Nazi peacetime economy? [3]

• figured largely in Nazi support

• small-business/shopkeeper/artisan classes were not well rewarded for their loyalty to the party

• vast propaganda campaign to represent it as the 'backbone of the nation'

• number of enterprises fell by 100,000

Impact on big business under Nazi peacetime economy?

• earliest 'mainstream' supporters of Hitler

• gradual imposition of more and more political control over big business (however not a sudden change from a relationship of Nazi-business partnership to Nazi dominance)

Impact on working class under Nazi peacetime economy?

• lost their independent trade unions and socialist parties

• KdF glossed over increased working hours as rearmament developed

List the successes of the economy in 1939 [4]

• growth of heavy and advanced industries

• disappearance of unemployment

• some improvement in living standards and goods

• greater preparedness for war

List the failures of the economy in 1939 [4]

• agriculutre

• consumer industries starved of raw materials by emphasis on rearmament

• demand for consumer goods deliberately restricted by low wages

• main problem was the result of the whole of Nazi policy (particularly the 4 year plan) - it was a series of often contradictory policies

How were germans better off under hitler? [3]

• most german men were in work

• Kdf and 'beauty thru work' campaigns improved working conditions and morale

• average weekly wages rose from 86 marks in 1932 to 109 marks in 1939

How were germans worse off under hitler? [3]

• trade unions were abolished and workers had fewer rights

• the cost of living went up in the 1930s - cancelled out the rise in wages

• average hours of work went up from 43 hours per week in 1933 to 47 in 1939

What three things drew attention to an economic crisis rapidly developing in 1939?

• the demand for consumer goods were rising

• inflation was beginning to surface

• labour shortages were growing worse as rearmament progressed

[Wartime economy - plunder] How long did the economic 'policy' of plunder last?

1939-1942

[Wartime economy - plunder] What era of the war was plunder effective enough for the german economy?

the era of blitzkrieg - successful, rapid campaigns against specific targets

[Wartime economy - plunder] what was plunder?

unplanned, haphazard and based on force and involved the brutal exploitation of Europe's resources in Germany's interests

[Wartime economy - plunder] How did big business benefit?

force slave labour was taken from eastern europe for use in German

[Wartime economy - plunder] How did the homefront benefit from plundered slave labour?

put little pressure on the homefront, keeping civilian morale high

[Wartime economy - plunder] What were the results?

dissapointingly poor as it lacked any coherent central planning or control

[Wartime economy - total war] How long did the economic 'policy' of total war last?

1942-1945

[Wartime economy - total war] Why was it needed?

by the end of 1941 germany was at war with GB, USSR, and the USA though it was producing less armaments than just britain

[Wartime economy - total war] What did hitler realise and what did he issue as a result?

realised there was a waste of labour materials, and had issued a 'reationalisation Decree'

[Wartime economy - total war] Who died and what was his role?

Fritz Todt - Armamanets minister

[Wartime economy - total war] Who replaced Todt and what did this benefit?

Albert Speer - marked a significant turning point in war production

[Wartime economy - total war] What did Speer use to cut across all the squabbling interested parties and what was the result?

used the 'fuhrer princip' and provided mass production for the nation's interests

[Wartime economy - total war] What was the result of mass production for the nation's interests?

• Ammunition production increased by 97%

• Tank production rose by 25%

• Total arms production by 59%

[Wartime economy - total war] By the second half of 1944 when war production peaked, there had been a what percentage increase under speer's control?

300%