The Nazi Economy - summary

3 periods:

  • Recovery – Schacht dominant (1933-36)
  • Rearmament – Goering dominant (1936-1942)
  • War – Speer dominant (1942-45)

4 aims:

  • Create employment (reverse depression)
  • Create self-sufficiency (to avoid repeat of WW1 blockade stunting military success!)
  • Preparation for war – Wehrwirtschaft (defence economy)
  • Gain/Maintain popularity

5 methods:

  • 1933 Government spending (deficit financing), e.g public works
  • 1934 New Plan
  • 1936 Four-Year Plan- turning point (not an expectation of war in 1940 but one in series of plans for eventual war, not really expected until 1942!!!)
  • 1939 War
  • 1942 Total War Economy

Schacht

  • Had helped curb inflation in Weimar by introducing Rentenmark
  • 1933 President of Reichsbank
  • 1934 Economics Minister (August)
  • Suspended international debt repayments
  • Introduced MEFO Bills
  • Devised the New Plan
  • Successful but cautious!
  • Resigned as Economics Minister in 1937
  • Resigned as Reichsbank President in 1939
  • Made some contact with anti-Nazi resistance during the war

Why was Hitler able to achieve what the Weimar government couldn’t?

  • By 1932 World Slump levelled
  • Hitler was more interventionist than Liberal Weimar politicians
  • Weimar constitution made direct intervention difficult, whereas Enabling Act gave Hitler full power to intervene
  • Businesses were prepared to tolerate intervention as they benefited from Hitler’s crushing of the labour movement and the expansion of the economy for rearmament
  • Initial Nazi policies generated confidence in consumer and businessman

[the ending of reparations payments was probably only of psychological value and had little practical impact]

Goering

  • 1923 Wounded during Munich Putsch – part of Nazi ‘old guard’
  • 1933-34 Critical in consolidation of power – organised Night of Long Knives
  • 1935 Commander in chief of the Luftwaffe
  • 1936 put in charge of NEW organisation – office of the 4 Year Plan – overlapped Economics Ministry. G=most important economic figure.
  • Emphasis on autarky and rearmament. (evidence of increasing radicalisation of regime, also encouraged growth of huge industries such as IG Farben)
  • 1937 Economics Minister
  • 1937 founded Hermann Goering Steelworks (RHWG).
  • 1939 named as Hitler’s successor, but influence faded after his Luftwaffe failed to defeat the RAF
  • 1941 influence waned and Fritz Todt took over
  • 1945 tried and convicted at Nuremberg but committed suicide before execution

How ready was Germany for war in 1939?

  • Didn’t expect war over Poland
  • Constant tension over priorities for guns or butter
  • Mason argues that rearmament was hindered by attempts to consumer needs for fear of alienating masses
  • RJ Overy argues that attempts to orientate the economy towards war actually slowed down economic progress, as some cartelised industries objected to Hitler’s attempts at autarky over export-driven growth
  • See H&H p222 (attached)

Speer

  • Took over from Fritz Todt after Todt’s death in 1942
  • Relaxed constraints on industry – established central planning board with committees made up of representatives from key industries.
  • Rationalised the industries responsible for rearmament, which had previously suffered from confusion and competing organisational structures (what a shock!)

Summary points:

  1. Hitler had an INSTRUMENTAL view of the economy –recovery was necessary preparation for war
  2. The state intervened to end unemployment, but figures disguise real measure of success
  3. Schacht’s New Plan helped the economy 1934-6
  4. From 1934-1936 there was growing tension between demands for guns (war) and butter (popularity at home)
  5. Goering’s 4-yr plan (1936) stressed autarky and rearmament (guns won!)
  6. The state intervened to control the economy but businesses remained private corporations – there was no ‘national economy’
  7. Industrialists benefited from Nazi economics more than the mittelstand or workers, despite propaganda

Grunberger has described the attitude of German business to the Nazi regime as “conductor of a runaway bus who has no control over the actions of the driver but keeps collecting the passengers’ fares right up to the final crash”

  1. The economy did recover from the depression under the Nazis, but growth made to appear more dramatic than it was by preparations for war and war itself
  2. Germany only established a full war economy in 1942

Also refer to:

Copy p.73 H&H – glossary of economic terms

Copy p.222 H&H – summary of debate between Mason & Overy

Copy of p.213 Hite & Hinton – flow chart summary

Copy of H&H p.239 summary document

AJordan

Nazi Economy- 1 -

Success / Not so successful
Economic recovery had begun before 1933, so it is hard to attribute recovery between 33-39 to Nazi policy
Unemployment decreased from 6m in 1933 to 1.6m in 1936. Public works such as building homes & motorways. / Unemployment figures were reduced artificially:
-excluding jews, women and politically ‘unsound’ from employment.
-conscription from 1935 removed 18-25 yr old males
-400,000 youths under control of RAD
Increased confidence
a)of industrialists by crushing trade unions
b)of ordinary people by increased employment and tax breaks, e.g tax concessions for married couples encouraged housebuying
In 1933 the Law to Protect Retail Trade placed special taxes on large stores and banned new department stores. This protected the Mittelstand from big business. / The slowness of official payments and price fixing meant that small businesses struggled to compete with larger businesses, particularly once large businesses formed cartels. The number of skilled craftsmen fell from 1.65m to 1.5m 1936-9
The Reich Entailed Farm Law of 1933 protected small farmers by ensuring that their farms could not be sold or mortgaged. This prevented the larger estates from pressuring small farmers to sell up. / Small farmers found it impossible to innovate, as they could not mortgage their farms to raise the capital needed.
In 1934, Schacht devised the New Plan to balance Germany’s trade deficit. Germany was importing more than she was exporting, owing to industry demand for raw materials. Therefore was running out of money. The New Plan gave government control over imports. It also created bi-lateral trade agreements with Balkan states and South American nations, which used barter rather than payment for raw materials. / Didn’t solve all problems as demand continued to grow with rearmament.
Schacht introduced MEFO bills. These were government credit notes, used to acquire supplies and services from industry for the government. Payment was to be made 5years ahead, with interest. These bills cleverly avoided inflation and paid for government spending e.g on rearmament (they also disguised the amount being spent on rearmament!)
Industrial production was higher, by 1936, than it was in 1928, before the Wall Street Crash.
By 1936 the average wage for a worker was 35 marks a week, ten times more than the dole money 6 million had been receiving in 1932. / Grunberger has argued that real hourly wages only increased by 1% during the Nazi Regime. Real incomes were also depressed by the compulsory fees taken for membership of the German Labour Front (DAF). Deductions from pay are estimated at 18%, up from 15% under Weimar.
The Reich Food Estate regulated production, distribution, wages and prices in agricultural sphere. It also gave subsidies where appropriate. By 1938 production was up 20% and imports of foreign food were down.
The Four Year Plan also increased agricultural production by reducing fertiliser prices and granting subsidies for mechanisation and for newly cultivated land. / Nazi agricultural policy only favoured huge estates who could contribute towards autarky. Smaller farmers suffered as government control kept prices below market levels. All farmers suffered to some extent from the drift of workers into industry. Production shortfall had to be made up from conquered territories after 1939.
Goering’s Four Year Plan aimed to make Germany more self-sufficient. There was some marginal increase in production of food and key commodities such as iron. In addition, some progress was made towards the production of ersatz (substitute) products such as artificial rubber from acetylene and using home-mined coal to produce oil. This reduced dependence on foreign imports. / Autarky was never really achieved. It took 6 tons of coal to produce 1 ton of oil. By 1939 Germany was still dependent on foreign imports for one third of its raw materials.
Goering limited the power of private companies to control the economy through measures such as the Hermann Goering Steelworks (RHWG). G insisted that industrialists pay towards this national industry – cheeky! By 1939 RHWG largest industrial firm in Europe, producing coal, machinery and synthetic fuels. / Companies such as IG Farben cooperated with the Nazis, for example, offering expertise in synthetic fuel production in return for approximately 50% of government investment! During the war Farben produced gas for extermination camps, demonstrating the extent to which big business and the Nazis enjoyed a symbiotic relationship.
Industry was brought under state supervision. All firms were members of the Reichsgruppe for Industry, part of the Reich Economic Chamber. Large firms joined to form cartels and many expanded to meet government requirements. / Approximately 300,000 small companies went bust, despite Nazi propaganda in praise of the small businessman over the huge corporation, because they were inconsequential to the major rearmament effort.
Germany was unable to replace planes lost in the Battle of Britain (1940)
One third of German troops still had inadequate equipment when they attacked Russia (1941).
The Nazis were forced into a war of acquisition in 1939 in order to secure more raw materials.
It was only the initial period of Blitzkreig war (1939-41) that shored up the Nazi economy by generating supplies of necessary raw materials
There was a huge increase in output from 1942, despite the huge allied bombing campaign targeted at German industry. Overy argues that, had it not been for the bombing, the German economy might well have outproduced the USSR and UK together.
Todt’s Supreme Reich Authority created 2000 miles of road by 1938. This infrastructure was not only a huge prestige boost, but also was of great value for industry and military transportation.
Average paid holidays for workers rose from 3 days per year in 1933 to between six and 12 days per year in 1939.
It was only in 1945 when the military situation deteriorated that the German economy became unable to meet the demands of the war effort.

TASKS

1. Sort cards into 2 arguments – that the Nazi economy was a success and the opposite!

2. Divide into the 3 periods, matching argument and counter-arguments where possible

Which period most effective?

3. Decide where on the following spectrum you would put Schacht, Goering and Speer

Very
successful / Moderately
successful / Unsuccessful

4. Then plot these 3 characters on the following graph:

Incompetant
Restrained by circumstance
Competant
Very
successful / Moderately
successful / Unsuccessful

5. Now re-order your cards/pairs into a themed structure – i.e dealing with different groups within the economy one at a time – agriculture, workers, big business etc

6. What are the inherent contradictions in Nazi policy? (i.e what are the differences between propaganda and reality?)

7. What impact did the war have on the economy? 10 bullet points

8. List the following under the correct heading in the table below:

1)Economic recovery

2)Control of wages

3)Weak labour force

4)Government contracts

5)State control of imports

6)Autarkic policies

7)Danger of being taken over if not conforming to government requirements

8)Improved profits

9)Control of prices

10)Wartime use of slave labour

11)High taxes

12)Limits on profits

Industrialists’ Balance Sheet
Benefits to industrialists of Nazi Rule / Disadvantages to Industrialists of Nazi Rule

9. Create a similar balance sheet for the Mittlestand and then for the Workers

10. Who do you think benefited most? Least? (justify your answer!)

AJordan

Nazi Economy- 1 -

Flow chart of Nazi Economic

Policy

AJordan

Nazi Economy- 1 -