The German economy preceding and during World War II reflected the strong Nazi ideology and confidence about the war. Primarily following the blitzkrieg strategy, the Germans launched the war with prominent victories, but their momentum could not be sustained as the Allied powers began to mobilize. Ultimately, a combination of poor initial economic planning and Allied strategic bombing of industrial centers and cities led to the demise of the German war machine, despite the enduring character of the German people.
While the war effort was the driving force behind each country’s economy during World War II, Germany, Japan, Britain, the United States, and the Soviet Union approached economic policy in ways that reflected their differing national characters. Germany and Japan, the leading Axis powers, lacked the immense resources and population of the combined Allies, but they balanced this out with higher quality economies. Prior to the war, the Allies had more population and territory, but Germany and Japan had a greater GDP per capita of $2,900 compared to the Allied $1,500.[1] Germany and Japan’s superior production quality allowed them to stay ahead of the greater numbers of mass-produced Allied armaments, an example being the German submarines. Although all the countries produced some high quality weapons, especially tanks and aircraft, only Germany was able to do so consistently.[2] However, as the war dragged on, economic endurance became the most significant factor in victory, not economic quality.
Leading up to the war, Germany had the strongest economic advantage due to its focus on rearmament in preparation for its military ambitions. By the end of the 1930s, Germany experienced full employment, and war expenditure was higher than any other country involved in World War II.[3] In 1938, German armaments expenditure was five times that of Britain’s.[4] However, although Hitler realized the importance of sound economic planning, he was hesitant to control too much of the economy as this would clash with Nazism’s ‘neo-feudal’ ideology, and accordingly he planned that war expenditure would not exceed the levels already existing in 1938.[5] Outsiders believed that Hitler had accelerated German armament production to incredible levels, but in reality he was only ‘restoring German industrial production from the depression level to full capacity’.[6] Furthermore, Hitler was unable to unite Germany under one economic goal before the war since the Nazi party never had majority support, only plurality, so he had to count on success on the battlefield to win the people’s consent for any drastic changes to the economy.[7]
In accordance with the importance of early successes to Hitler’s popular appeal, the Nazis applied blitzkrieg to economic strategy. Blitzkrieg economic planning was preparing Germany’s resources and production for a series of short, directed campaigns against selected areas, instead of the extended war that actually unfolded. On a practical level, the Treaty of Versailles had caused the German economy to weaken in terms of raw materials and labour due to territorial losses and reparations, so the country had to focus on stockpiling and producing synthetics.[8] Hitler planned a backlog of armaments instead of expanding industrial infrastructure, and he expected to recoup losses from each campaign by taking resources from the fallen enemy. This strategy worked for the first two years of the war from fall 1939 until fall 1941, and Hitler could even continue work on the resource-intensive Autobahnen.[9]
In contrast, the Western Allies lacked Germany’s focused rearmament. They had to expand their industrial production at a more rapid pace in order to match the existing German power, but they realized that time was on their side due to their greater resources, as was the case during the Great War.[10] Britain and France were slow to mobilize in the beginning of the war, but Hitler’s western blitz shocked them into rapid economic mobilization. Britain’s economic strategy prioritized long term planning and research, which contrasted with the Germans who believed would long term research would be useless in a short war with adequate armament and resource stockpiles.[11] Although low-income and less-developed than many other of the combatants, the Soviet Union held together during the war due to central planning and strong leadership.[12] In fact, the Soviet state-controlled economy allowed for the easiest economic transition from peacetime to wartime since the government could order rapid mobilization and movement of people and goods.[13] Also contributing to the Allies production advantage, America produced a bigger share of most natural resources, including important ores for armaments, than any other country, and it also had an abundance of labour since it was still recovering from the Depression.[14] The United States further helped the Allies when it enacted the lend-lease policy, which allowed America to produce armaments for the Allies without immediate payment or any other restrictions.[15]
Compared to the Allies, one serious flaw of the German economy was its lack of mass production of armaments, the hallmark of the burgeoning American economy. The Allies, particularly the United States, Britain, and the Soviet Union, adopted the system of mass production while the Germans and Japanese continued to use a traditional craft system that was less efficient during wartime.[16] Due to the vast array of projects, Hitler had to force simplification of designs through a decree in 1941 in order to match Allied production strength.[17] Albert Speer, the new Minister of Armaments in beginning in 1942, carried through Hitler’s plans, leading to increased efficiency. He tripled armaments production in just two years by reducing the number of aircraft, gun, and lorry designs, but this only highlights how inefficient the previous blitzkrieg system had been.[18]
Ultimately, the downfall of the German economy came at the hands of Allied bombers. In the beginning of the war, the British were hesitant to engage in indiscriminate bombing, which they viewed as immoral, and they preferred precision bombing of strategic oil and aircraft industrial centers. Unfortunately, precision bombing proved to be too difficult due to the presence German fighters in the daytime and lack of accuracy in the nighttime, so support surged for ‘area bombing’, the new, more politically correct name for indiscriminate bombing.[19] Charles Portal, Chief of Air Staff in 1941, proposed to Churchill the idea that bombing German cities would destroy morale and not necessarily entail ‘pure killing’.[20]
The German Blitz against British cities had proven to be unproductive and even strengthened British morale against the Germans. However, when it was their turn to bomb the Germans, the British believed that the German morale would disintegrate under area bombing. The Hamburg attacks in July-August 1943 tested this theory as the devastating British air raids ‘killed two-thirds as many people as did all German air raids over Britain during the entire war’.[21] However, a few months later, workers still showed up to work ‘with an enthusiasm and determination that left Speer speechless’, and most factories returned to 80% of pre-bombing production levels.[22] The British miscalculated the strength of German character and the nature of the German economy, which was not as strained as the British believed, but as discussed previously, was actually under-capacity. The 35% of the workforce that did not return to work and left Hamburg might have indicated dire economic problems, but in reality, they found work in other cities.[23]
Later in the war, better technology increased the efficiency of precision bombing in daytime, making a stronger impact on German production than area bombing did. On June 7, 1944, an intercepted Luftwaffe memo revealed that the Germans had to start dipping into oil reserves, so Britain decided to bomb Germany’s synthetic oil plants to deal further damage. The Allies reduced the German aviation oil stock by 90%, and Germany had to reduce flying to economize oil reserves.[24] Germany then had to stay on the defensive, keeping the Luftwaffe away from the Russian front to protect cities at home and building fighters instead of bombers. In May 1944, British and American daylight bombing of Germany’s oil supply shut down the Luftwaffe for the rest of the war.[25] As a result of Allied bombing, by January 1945 Germany had produced 35% fewer tanks, 31% fewer aircraft, and 42% fewer lorries than planned.[26] The Germans also had to divert armaments production into defense against bombing, and the bombing disrupted transportation of coal, manufactured goods, and troops, all undermining Speer’s planned economy.[27]
Despite the obvious success of bombing oil and industry, the allure of targeting German morale reappeared at the end of the war. On July 1, 1944, Churchill proposed area bombing lesser German cities ‘of 20,000 inhabitants or fewer, well known for historical or other associations, and not particularly connected to the war effort’.[28] In choosing between bombing Berlin or these lesser cities, Douglass Evill, Vice-Chief of Air Staff, disagreed with the effectiveness of bombing lesser cities. He commissioned a report that concluded that bombing the lesser cities would be ‘unlikely to impinge upon the confidence of German High Command’ and would only reduce the morale of 1.9% of the German population.[29] Britain’s moral and legal policy insisted that civilian casualties should only be ‘incidental to [the] attack on the German war machine’.[30] Area bombing would also reinforce Nazi propaganda on the home front. The Nazis used the lack of instability after air raids as evidence of the success of their domestic policy, and they even twisted the escalating violence into a story about Jewish antagonism against the Aryan race.[31] The air raids lowered individual civilian morale, as evidenced by the one out of three Germans interviewed after the war who said they experienced a decline in morale due to the bombs.[32]
Although the Germans would have slowly run out of resources on their own, the Allied destruction of stockpiles and factories ensured that they could not recover in the short term despite Speer’s improving economic policies. The success of precision bombing later in the war compensated for Britain’s misguided attempts in destroying German morale, which had negligible effects. The choice to bomb German industrial centers thus gave the Allies a hefty advantage and accelerated the end of the war.
Bibliography
Arnold, Jörg. ‘Reconstructing the “night of Horror”: Local Histories of Allied Bombing, 1940–1970.’ The Allied Air War and Urban Memory: The Legacy of Strategic Bombing in Germany. (Cambridge University Press, 2011), pp. 253-282.
Hansen, Randall. Fire and Fury: The Allied Bombing of Germany 1942-1945. (Toronto: Doubleday Canada, 2008).
Harrison, Mark. ‘The Economics of World War II: An Overview.’ The Economics of World War II:Six Great Powers in International Comparison. ed. Mark Harrison. (Cambridge University Press, 2000).
Milward, Alan S. War, Economy, and Society, 1939-1945. (University of California Press, 1979).
Overy, R. J. Why the Allies Won. (Random House, 2006).
Wright, Gordon. The Ordeal of Total War, 1939-1945. (Harper & Row, 1968).
1
[1] Mark Harrison. ‘The Economics of World War II: An Overview’, in The Economics of World War II:Six Great Powers in International Comparison. Ed. Mark Harrison. (Cambridge University Press, 2000), p. 5.
[2] Ibid., p. 26.
[3] Alan S. Milward. War, Economy, and Society, 1939-1945. (University of California Press, 1979), p. 24.
[4] Gordon Wright. The Ordeal of Total War, 1939-1945. (Harper & Row, 1968), p. 45.
[5] Ibid., p. 45, Milward, War, Economy, and Society, p. 26.
[6] Wright, The Ordeal of Total War, p. 45.
[7] Milward, War, Economy, and Society, p. 28.
[8] Ibid., p. 28-29.
[9] Wright, The Ordeal of Total War, p. 46-47.
[10] Ibid., p. 47.
[11] Milward, War, Economy, and Society, p. 40.
[12] Harrison, ‘The Economics of World War II’, p. 24.
[13] Ibid., p. 56.
[14] Milward, War, Economy, and Society, p. 48
[15] Ibid., p. 50
[16] Harrison, ‘The Economics of World War II’, p. 39.
[17] R. J. Overy, Why the Allies Won. (Random House, 2006), pp. 247, 250.
[18] Wright, The Ordeal of Total War, p. 62.
[19] Ibid., p. 176.
[20] Randall Hansen, Fire and Fury: The Allied Bombing of Germany 1942-1945. (Doubleday Canada, 2008) p. 23.
[21] Wright, The Ordeal of Total War, p. 179.
[22] Hansen, Fire and Fury, p. 124.
[23] Ibid., p. 281.
[24] Ibid., p. 189-191.
[25] Wright, The Ordeal of Total War, p. 180-181.
[26] Overy, Why the Allies Won, p. 160.
[27] Hansen, Fire and Fury, p. 286, 291.
[28] Hansen, Fire and Fury, p. 197.
[29] Ibid., p. 198.
[30] Ibid., p. 199.
[31] Jörg Arnold. ‘Reconstructing the “night of Horror”: Local Histories of Allied Bombing, 1940–1970’ in The Allied Air War and Urban Memory: The Legacy of Strategic Bombing in Germany. (Cambridge University Press, 2011), p. 258.
[32] Overy, Why the Allies Won, p. 162.