Nazi Germany Economic Policies 1933-45
Economics - 1933-45
Big economic problems due to the Wall Street Crash
Major rearmament - increased economics in the country
Autarky - self-sufficiency
Labor policies - Implementation of the National Labor Service to reduce unemployment and boost public works projects.
Layton (Ch 4)
Key Dates:
March 1933 - Schacht appointed as President of the Reichsbank
July 1934 - Schacht appointed as Minister of Economics
September 1934 - New Plan introduced
October 1936 - Four Four-Year Plan was established under Goring
November 1937 - Resignation of Schacht as Minister of Economics
December 1939 - War Economy decrees
December 1941 - Rationalisation decree by Hitler
February 1942 - Albert Speer becomes Minister of Armaments
August 1944 - Peak of German munitions production
Hitler careful not to be tied down to an economic policy
Feb 1933 - told his gov to avoid all detailed statements concerning an economic programme
Ideas:
Policy of autarky - self-suffiecincy - creation of a large trading or economic community under influence of Germany which would eventually rival other great economic powers
Defict financing - spending money on public works - create jobs which would help grow the economy
Wehrwirtschaft - defence economy - Germanys peace-time economy was geared to demands of a total war to avoid an economic collapse as happened after WW1
Hilter felt best with the third idea
No coherent plan by Jan 1933
Hitler had no interest in the political economy and it mainly fell to bankers and civil servants
Big lack of direction and a mix of all three approaches
1933-6?
Early years: economic control was given to Hjalmar Schacht (President of Reichsbank) and Minister of economics
Nazis had to work with the powerful businessmen
Schacht was already very respected due to his role in creating the new currency after the 1923 economic crisis
Mass unemployment, poverty, trade slump, banking crisis
The state assumed greater responsibility for the capital in the economy
Set interest rates lower and rescheduled the large debts of the local authorities
Huge revival of public investments - led by the state
The state increased its expenditure to help stimulate demand and raise national income
Did this by:
Lowering tax levels for groups like farmers
Gave grants for house repairs or rehiring of domestic servants
Huge investment in work creation schemes like reforestation, land reclamation snf creation of Labour service
Motorization - policy of developing the vehicle industry and roads
Construction - housing and public buildings
The effect of these policies was to triple the public investment (1933-36) and to increase government expenditure by 70%
Schacht maintained high taxes and ec]ncouraged private savings in state saving banks so gov deficit wasnt out of control
1935 - Unemployed: 2.1 Mil down from 6 mil
Also was aided by the recovery of the worlds economy after the wall street crash
Two worries:
Fear of inflation due to growing demand and the emergence of a balance of payments deficit as Germany increased its imports without increasing exports
No inflation as there was still a huge slack in the economy and the was strict control of wages and prices (economic move made possible by the abolishment of trade unions in May 1933)
The balance of payments problem emerged in 1934 summer and continued to happen
Germany was short of foreign exchange so which part of the economy should have the priority in spending the money
The economic minister wanted to reduce unemployment by manufacturing more consumer goods for the public
However more powerful voices in armed forces and big buisness wanted the money for the rearmament programme
Hitler couldnt ignore this
Schmitts policy was rejected and he was removed as minister
Schacht combined offices of the minister and president of reichsbank
July 3rd - Given dictatorial power over economy
Introduced ‘New Plan’ of September 1934
Gave the government control over all aspects of trade and currency exchange
1934 - imports of raw cotton and wool were cut to satisfy import demands of heavy industry
Tried to promote trade by signing bilateral trade treaties with countries of south-east europe and south america
Took form of straightforward barter agreements
Also agreements of germany to buy a countries raw materials with the condition that the money could only be used to buy back german goods
Once estimated that the German Mark had 237 different values depending on country and situation
Gained a powerful economic hold over Balkans
Mid-1936 - unemployment: 1.5 mil, industrial production 60% increase and GNP (gross national product) growth of 40%
Four Year Plan - War time ecnomy during peace
Schacht belived that the combo of a budget defict and a balance of payment deficit could not be maintained
1936- clear that as the demands for rearmament and consumption increased, the german balance of payments would be in debt
Suggested a reduction in arm so they could increase the production of industrial exports which could be sold to earn foreign exchange
This was unacceptable to leadership
Four Year Plan helped solve the political-economical crisis in 1936
Was introduced in Oct by Goring
Aim was to make the german armed forces and economy ready for war in 4 years
Aims:
Increase agricultural prodcution
Retraining of key sectors of the labor force
Government regulation of imports and exports that satisfy strategic priority
Achivement of self sufficiency in raw materials like rubber, oil and metals - if necessary by means of development of ersatz (synthetic) substitutes
Nazi control tightened
Schacht resigned in Nov 1937
Replaced by Funk but Goring was the real economic dictator
Mixed success of plan:
Production of key materials like aluminum and explosives had risen
Targets for amounts of rubber and oil and other commodities fell short
Arms production never met the desired levels
Germany still relied on imports for for ⅓ of its raw materials
B.H Klein
Belived that this partial mobilization was a deliberate policy allied to the military strategy of Blizkrieg
He thought that Hitler recognized Germanys carful position with raw materials and used stratgyes for shorts wars to avoid the economic strain of a total war
He believed that pre 1939 civilian consumption was comfortable and it wasnt until 1943 that full economic mobilization began
Suggested that the german failure to take moscow was the real economic turning point
Overy
Agruged that Hitler saw a great world conflict for power and that meant the transofrmation of the economy to the demands of total war was necessary
However he wasnt going to start the war until 1943
The war with Poland in 1939 was supposed to be local and not involve larger powers
German economy from 1936 was directed towards war
⅔ of all german investments went into war-related projects
Full employment was achieved but ¼ with rearanment
Last full year of peace: 17% of GNP went to military expenditure
German economy in 1939 was an economy preparing for war
But the war was thought to be in 1943-45 not 1939
Belived that Germany found its way into war in 1939 due to political miscalculations
1939-41 - Failure to mobilize
String of military successes up until Dec 1941 with Blitzkrieg strategy - won much support for Nazis
German military expenditure doubled between 1939 &41
Food rationing was introduced and the German labor force was quickly mobilized
Summer 1941 - 55% of the work force was in war related projects/jobs
1944 - 61%
Despite this, the production of arms was very limited
Germany airforce only increased from 8290 in 1939 to 10,780 in 1941
Britian had went up to 20,100 in the same time period
Only around 3,500 tanks
Seemed that the image had failed due to inefficiency and poor coordination
Pressures from early outbreak of war had meant many projects were not supposed to be ready until 1942-3
Confusion between short and ling term plans
Many different agencies working individuall; Ministry of Armaments, Economics, Finance, Labour, Office of the Four Year Plan, many military and SS people
Total war:
End of 1941 - at war with many and production of arms very low
Albert Speer took over - Feb 1942
Used hitkers authroirity to take charge of situation and control it
April 1942 - Central Planning Board - supported by different committees representing important parts of the economy
Helped arms production raise by 59% in first 6 months
1944 - second half - German Production peaked (threefold since 1942)
Germany had an even larger capacity to produce on levels like the USA or the USSR but was limited due to not full control as well as the Anglo-American bombing
Bombing help prevent Germany from reaching a higher production of arms
Due to the destruction, breakdown of communication, and need of immediate resources to anti-aircraft installations and underground sites
German arms production peaked in 1944 at a level signifcanty below its full potential
Nazi economy could not rise to what was needed of a total war and collapsed in 1945