Chapter 15 Flashcards
Overview of scale of unemployment throughout 30s
In January 1933, the German economy was in the depths of depression, with nearly 6 million people out of work. Previous regimes had failed to make any significant impact on the unemployment problem and many people had voted for the Nazis during the depression years of 1930-32 because Hitler promised decisive action to get people back to work. By 1935, the official figures showed that unemployment had fallen to 2 million, while by 1939 there were labour shortages in key industries.
Nazi economic aims in 1933
When Hitler was appointed Chancellor on 30 January 1933, the Nazi Party did not have a coherent and carefully thought-out economic policy. Nevertheless, Hitler had some clear aims. In the short term, the priority was economic recovery from the Depression and the reduction of unemployment. Achieving these aims would boost the regimes popularity and help the Nazis to consolidate their power. In the longer term, the Nazis aimed to create an economy capable of sustaining a major rearmament programme and geared to the needs of a future war. Such an economy would need to be self-sufficient in the production of food and vital raw materials - something the Nazis referred to as economic autarky.
Who was key in recovery from the depression?
Hjalmar Schacht, President of the Reichsbank and, from August 1934, Economics Minister.
Under the direction of Schact, the regime stimulated the economy by…?
• pumping money into the economy to build homes and Autobahns
•stimulating consumer demand by giving tax concessions and grants to particular groups
•giving subsidies to private firms to encourage them to take on more workers
• putting controls on wages and prices to control inflation
Info on autobahns
Richard Evans has described the Autobahns as one of the most durable propaganda exercises mounted by the Third Reich Photographs from the start of the construction of the first Autobahn showed thousands of workers employed on the project. Posters showed strikingly modern bridges and viaducts. They were a visible sign of economic revival and national renewal. achieved by Hitler’s government. In reality, the construction of the Autobahns employed relatively few people. At the peak of construction only 125,000 people were directly employed. Construction slowed after 1938 and stopped altogether in 1942, by which time some 3870 km of road had been constructed. Since few Germans owned cars, the Autobahns were underused.
Stages of Nazi economic policy
Recovery from depression
Battle for work
New Plan 1934
Mefo bills
Four year plan and autarky
How did the Nazis tackle the ‘battle for work’?
•Large sums of money were spent on the building of roads and public buildings and increased industrial production was stimulated through loans and tax relief to private companies.
•In 1935, a Reich Labour Service was introduced under which unemployed young men were compelled to do six months’ labour in farming or construction.
•Later that same year, military conscription was reintroduced for young men.
They were fortunate that, when they came to power, the economy was already beginning to revive but their measures undoubtedly helped to reduce unemployment faster than might otherwise have been the case.
Why was there need for the New Plan of 1934?
As the economy began to revive in 1933 and 1934, foreign trade increased and this led to imports growing faster than exports. This in turn led to a shortage of foreign currencies, which were needed to purchase imported goods.
What happened under the New Plan of 1934?
•Schacht placed controls on imports and on access to foreign currency.
•He initiated a series of trade agreements with foreign countries, especially states in the Balkans and South America, whereby Germany was supplied with food and raw materials, which were paid for in German Reichsmarks. The supplying countries could then only use this money to buy German goods.
Why was there need for Mefo Bills and why were they a success?
In order to finance rearmament, the Nazis needed to borrow money whilst at the same time avoid the dangers of runaway inflation, which were still fresh in the memories of the German people.
In this way, the rearmament programme could be started in 1935 without the government having the funds to finance it. It also had the advantage that the rearmament programme could be kept secret since the expenditure did not appear in the government’s accounts.
What were Mefo Bills?
A scheme devised by Schact whereby the government paid for its military equipment using credit notes, or Mefo bills. These bills could be exchanged for cash at the Reichsbank, thereby ensuring that private companies had confidence they would get their money. However, the companies were given an incentive to defer asking for payment by the offer of 4 per cent per annum (p.a.) interest on the bills if they kept them for the full five-year term.
Problems 1935-36
Schacht’s measures succeeded in reviving the German economy and reducing unemployment but the revival created a new set of problems.
In addition to the balance of payments problems and shortage of foreign exchange, there were also food shortages, rising prices and lower living standards for ordinary Germans in 1935-36. Reports from around Germany at this time spoke of growing disillusionment with the regime. This raised important questions about the regime’s priorities. The food shortages could be resolved through imports, but this would use up valuable reserves offoreign currency also needed for the import of raw materials for the armaments industry, thus damaging the rearmament programme.
How was the conflict of priorities (Guns v Butter) going to be solved?
This conflict of priorities, sometimes referred to as a choice between guns or butter, was finally resolved by the decision to strive for economic self. sufficiency. Expanding home production of both food and raw materials would, in theory, reduce the dependence on imports and the need for orge reserves of foreign currency. This policy, referred to by the Nazis as economic autarky, was the basis of a new Four Year Plan, which was introduced in 1936.
Who was in charge of the Four Year Plan?
Schacht, who had opposed the move towards autarky, was marginalised and responsibility for the Four Year Plan was given to Hermann Goering.
What was the Four Year Plan aiming to do?
The aim of this plan was to make Germany ready for war within four years.
Although a future war was always implicit in the Nazi quest for Lebensraum (living space) in the east, the gearing of the German economy to war in the Four Year Plan was the first explicit indication that the regime was planning for war.
The priorities of this plan were rearmament and economic autarky.
How was the Four Year Plan going to achieve its goals? (5)
• creating a managed economy with controls on labour supply, prices, raw materials and foreign exchange
• setting production targets for private companies
• establishing new State-owned industrial plants such as the Hermann
Goering Steelworks
• increasing production of key commodities such as iron, steel and chemicals
• encouraging research and investment in the production of substitute products such as artificial rubber and extracting oil from coal, thereby reducing Germany’s dependence on imports.
How was economic autarky presented and attempted through propaganda?
The Four Year Plan aimed to achieve autarky (self-sufficiency) in food
Production and vital raw materials in order to prepare the German economy or war. Autarky, with its links to national sovereignty and its embodiment Ofnational pride and independence, fitted well with the Nazis’ ideological aims. It would, according to the Nazi Party programme, ‘free Germany from the chains of international capital: The effort to increase production has presented as a battle in which the whole peoples community had to Participate. Propaganda campaigns to persuade people to buy only German sods, eat only German food and use only German raw materials in their work presented these targets as the patriotic duty of all German citizens. There werealso propaganda campaigns to persuade Germans to save more, since were al wound help to fund investment in new production facilities. In 1937, savingime launched a campaign to collect scrap metal from peoples homes and gardens and from public spaces, such as parks, to make up for serious shortages in raw materials. Garden fences, park railings and iron lampposts were removed to be melted down. Pots and pans were collected from peoples homes by the Hitler Youth and local committees were set up to coordinate collections.
How successful was the Four Year Plan?
The results of the Four Year Plan did not match the propaganda claims.
German industry, despite massive investment, did not meet the targets set by the regime and, in 1939, Germany still imported one third of its raw materials. In food production, there were similar failings. The reality was that the German economy did not have the resources to achieve all of the regime’s aims. In order to maintain the levels of consumption and avoid the risk of alienating the people, labour and capital had to be diverted from war industries. By 1939, the German economy was under severe
strain.
Why did some elites support the changes and how did they benefit?
Many, but not all, of Germany’s business leaders welcomed the Nazi takeover of power in 1933. Fritz Thyssen and Alfred Hugenberg had helped Hitler in his bid to take power and Hitler was careful to offer reassurance to business leaders that they need not be alarmed by the more socialist elements in the Nazi Party programme. In the earl months of the Nazi regime, many of their policies were of benefit to businesses: the suppression of free trade unions, the establishment of political stability and the revival of the economy all helped to create an environment favourable to business.
In general, the Nazi regime was able to enlist the cooperation and expertise of big business and management in the implementation of its conomic policies. When the Four Year Plan was launched, there were many opportunities for businesses to make profits through involvement in the sarmament programme.
Example of company that benefitted from Four Year Plan
One firm that benefitted enormously was the large chemicals company, I.G. Farben, which was heavily involved in the research nd production of synthetic materials. One of the directors of 1.G. Farben, Er example, held a key post in the administration of the Four Year Plan, and between 1935 and 1939, the profits of I.G. Farben increased from 71 million to 240 million Reichsmarks.
Why did some business elites and companies not support some of the changes?
As Nazi economic policies began to develop, there were many business leaders who did not welcome the greater state intervention in the economy with its controls on the supply of labour and raw materials and price controls.
Some companies were sceptical about the Four Year Plan. Many of the Ruhr iron and steel firms were reluctant to invest in new steelworks to produce steel from poor-quality and expensive German fron ore, rather than use cheaper and superior imported ore.
How did the Nazis react to unwillingness to invest in Four Year Plan by Ruhr iron and steel firms?
The regimes response was to bypass them altogether by establishing a very large state-owned steelworks: the Hermann Goering Steelworks.
Info about the Hermann Goering Steelworks
This was an enormous enterprise established and owned by the State but partly financed by private companies, which were forced to invest in it. The company was given priority over private companies in the allocation of materials and labour.
By 1939, it had become the largest industrial enterprise in Europe and was of obvious value for the regimes propaganda. It expanded its operations into coal mining and the manufacture of heavy machinery and synthetic fuels. As Germany began to expand its territory after 1938, so the Hermann Goering Steelworks expanded into Austria, Poland and France.
Overall how much had the country recovered economically by 1939?
Goebbels and the Nazi propaganda machine used all their resources and skills to project an image of the success of Nazi economic policies. Speeches and radio broadcasts by Hitler repeatedly claimed that the battle for work’ had been won by 1936. Indeed, the battle for work was not even mentioned after 1936, reflecting the success of propaganda in convincing people that unemployment was no longer a problem. Advertising campaigns for products such as the ‘people’s receiver’, the people’s car’ and for cruise ship holidays gave the impression that Germans were experiencing an unprecedented rise in their living standards as a result of the regime’s policies. Military parades showing off the latest equipment and patriotic campaigns to persuade Germans to buy only German goods were designed to show that Germany was achieving autarky and was ready for war. In each case, there was an element of truth in the claims, but propaganda exaggerated the successes and covered up the failures in Nazi economic policies.
