11. Economic Recovery 1933-36 Flashcards
How serious were Germany’s economic problems in the Great Depression 1929-33 (5)
Trade -
Germany depended heavily on its capacity to sell manufactured goods. In the slump of world trade, the demand for German exports declined rapidly and its sale of manufactured goods e.g steel, machinery and chemicals, collapsed. The value of exports dropped from 13.5 billion Reichsmarks in 1929 to 4.9 billion in 1933 (decline of 62%)
Industry -
Despite being an industrial power, when it began to lose economic confidence from 1929, demand fell and businesses cut production, or worse, collapsed. 50,000 businesses went bankrupt
Employment -
Unemployment figure rose from 1.9 million in 1929 to 5.6 million in 1932. Adding the number of unregistered unemployed and the figure is about 8 million in 1932
Agriculture -
As world demand fell, agricultural prices, according to an index of 100 in 1913, collapsed from 138 in 1927 to 77 in 1932. As a result farmers’ wages and incomes fell sharply, which forced some to sell off farms that had been owned for generations
Finance -
As a result of war debts, reparations and inflation, German banking had faced serious financial problems in the years before the Depression. The Depression undermined the confidence of the financial sector even further
What did Schacht’s New Plan involve September 1934 (9)
- Greatest economic measure was the direct State spending on a range of investment projects. 1933 Law to Reduce Unemployment and RAD was expanded to compulsorily employ 19-25 year olds. Investment in the first 3 years was directed towards work creation schemes e.g in reforestation and motorisation
- Autarky - aimed to be ready for war and achieve economic self sufficiency within 4 years so as not to be a target of blockades
- Bilateral trade Treaties; Schacht tried to promote trade and save foreign exchange by signing bilateral trade treaties. In this way Germany began to exert a powerful economic influence over the Balkans long before it obtained military and political control
- Reichsmark currency: Germany agreed to purchase raw materials from all countries it traded with on the condition that Reichsmark could only be used to buy back German goods
- Mefo Bills: Mefo were Special government money bills (like a credit note) designed by Schacht. They were issued by the Reichsbank and guaranteed by the government as payment for goods and were then held up to 5 years earning 4% interest per annum. These successfully disguised government spending
- Particular financial benefits were given to groups such as farmers and small businesses to increase domestic production. This stimulated economic growth and rewarded sympathetic supporters of the Nazis in the 1930-3 elections. This included maintaining tariffs on imported produce in order to protect farmers.
- Suspended debt repayments and paid no reparations
- Ersatz goods created
- Controlled the flow of exports & imports and foreign currency in and out of Germany to progress into self-sufficiency
- Rearmament and conscription expanded. Once unemployment was reduced, Hitler could have the basics in place on which to build his new armed forces
Impact of Schacht’s 1934 New Plan (3)
- Germany began to recover and Hitler was able to begin to rearm
- 1936 Unemployment fell to 1.6 million
- Rearmament was low at first (1935 - military spending only 8% of Germany’s national product and most was spent on rebuilding military training schools, not weapons
Schacht knew high spending on military would threaten Germany’s economic recovery and Hitler was cautious of foreign intervention
How did Goering restructure the economy to deliver a total war economy ? (4)
- trained workers in skills transferable to war work and increased spending on rearmament
- built up the industry and raw materials needed for war (made as many products as possible within Germany, increased agricultural production, recycled waste production)
- paying for essential imports with ‘blocked marks’ only spent in Germany
- Developed substitutes for imported goods
Success of Goering’s Four Year Plan ? (6)
- 1936 military expenditure was 13% / 1938 military expenditure was 17%
- 1938-39 some 52% of government spending went on the military
- Iron ore supplies and Aluminium Production grew rapidly
- Full employment restored
- rebuilt economic strength
- rebuilt German armed forces
Lack of success in Goering’s 4 Year Plan (3)
- There was a serious shortage of consumer goods
- serious shortage of raw materials for industry
- Germany was not ready for anything except a short war
What was the role of rearmament in the First Four Year Plan 1934?
- Hitler made it clear from the outset of the regime that he wanted Germany to become a major military power again and that in the long run the economic revival of the country was vital to its military revival
