Chapter 15

Question 1

Overview of scale of unemployment throughout 30s

Answer 1

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.

Question 2

Nazi economic aims in 1933

Answer 2

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.

Question 3

Who was key in recovery from the depression?

Answer 3

Hjalmar Schacht, President of the Reichsbank and, from August 1934, Economics Minister.

Question 4

Under the direction of Schact, the regime stimulated the economy by…?

Answer 4

• 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

Question 5

Info on autobahns

Answer 5

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.

Question 6

Stages of Nazi economic policy

Answer 6

Recovery from depression
Battle for work
New Plan 1934
Mefo bills
Four year plan and autarky

Question 7

How did the Nazis tackle the ‘battle for work’?

Answer 7

•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.

Question 8

Why was there need for the New Plan of 1934?

Answer 8

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.

Question 9

What happened under the New Plan of 1934?

Answer 9

•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.

Question 10

Why was there need for Mefo Bills and why were they a success?

Answer 10

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.

Question 11

What were Mefo Bills?

Answer 11

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.

Question 12

Problems 1935-36

Answer 12

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.

Question 13

How was the conflict of priorities (Guns v Butter) going to be solved?

Answer 13

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.

Question 14

Who was in charge of the Four Year Plan?

Answer 14

Schacht, who had opposed the move towards autarky, was marginalised and responsibility for the Four Year Plan was given to Hermann Goering.

Question 15

What was the Four Year Plan aiming to do?

Answer 15

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.

Question 16

How was the Four Year Plan going to achieve its goals? (5)

Answer 16

• 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.

Question 17

How was economic autarky presented and attempted through propaganda?

Answer 17

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.

Question 18

How successful was the Four Year Plan?

Answer 18

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.

Question 19

Why did some elites support the changes and how did they benefit?

Answer 19

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.

Question 20

Example of company that benefitted from Four Year Plan

Answer 20

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.

Question 21

Why did some business elites and companies not support some of the changes?

Answer 21

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.

Question 22

How did the Nazis react to unwillingness to invest in Four Year Plan by Ruhr iron and steel firms?

Answer 22

The regimes response was to bypass them altogether by establishing a very large state-owned steelworks: the Hermann Goering Steelworks.

Question 23

Info about the Hermann Goering Steelworks

Answer 23

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.

Question 24

Overall how much had the country recovered economically by 1939?

Answer 24

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.

Question 25

What were flaws surrounding Nazi claims about the reduction in unemployment? (4)

Answer 25

•Economic recovery had actually begun before the Nazis took power in January 1933. Many of the job creation schemes used by the regime to reduce unemployment were actually based on policies introduced by Chancellor Heinrich Brüning in the early 1930s.
• Part of the reduction in the unemployment figures was achieved by persuading married women to give up their employment, through granting them marriage loans, thereby releasing jobs for unemployed male workers.
• The reintroduction of conscription in 1935, for young men aged 18-25, took a large proportion of young males out of the labour market.
• Official figures also showed a dramatic increase in the numbers of Germans in employment. This was partly achieved through various statistical devices to inflate the figures. Those who only had occasional employment, for example, were counted as permanently employed while those drafted into unpaid work in agriculture were also counted as employed.

Question 26

Real unemployment figures

Answer 26

Historian Richard Evans has estimated that ‘invisible unemployment (those who were out of work but were not counted in the official figures) was as high as 1.5 million workers. By this estimate, the official figure of 1.6 million People out of work in 1936 should in fact be increased to over 3 million, far too many to support the claim that the ‘battle for work had been won. After 1936, however, rearmament led to a rapid expansion of employment and resulted in labour shortages appearing by 1939.

Question 27

How were living standards linked to propaganda?

Answer 27

Nazi propaganda emphasised the duty of all German citizens to make sacrifices on behalf of the ‘people’s community, by working harder and for longer hours and by accepting a squeeze on wages. At the same time, propaganda also stressed the benefits that the Nazi regime had bestowed on workers through improved working conditions, better social and welfare provision, and access to goods and services that had previously only been available to the privileged few.

Question 28

What happened to wages?

Answer 28

•Despite official attempts to hold down money wages, incomes for many workers did increase during the years 1933-39. Some employers were prepared to pay bonuses and other benefits to get round the freeze on wage levels and so attract more skilled workers.
•Pay increased due to the longer hours being worked
•Workers in key industries such as armaments were undoubtedly better off than before

•Those producing consumer goods were not
•Workers’ wages were subject to increased deductions because of the compulsory contributions they had to make to the German Labour Front and to welfare organisations. It is, therefore, difficult to generalise about what happened to the standard of living of the majority of German workers in these years.

Question 29

What happened to prices and goods?

Answer 29

Living standards depend as much on prices as they do on incomes. Prices rose during the 1930s and there were shortages of some key commodities.
German consumers were able to buy enough food to feed their families but could afford few luxuries. The consumption of higher value foods such as meat, fruit and eggs declined while the consumption of cheaper foods such as potatoes and rye bread increased.

The drive for rearmament and the target of achieving economic autarky placed considerable strains on the German people, including longer working hours, higher prices and growing shortages. From time to time, there were serious hortages of eggs and meat, as well as wheat and rye for making bread. Price controls and the introduction of rationing on some key commodities in the he 1930s helped to alleviate the pressure.

Question 30

Was there discontent due to dropping living standards?

Answer 30

Gestapo and Spade reports occasionally show some discontent with the regime. On the other hand, the fact that the regime succeeded in persuading the population to shoulder the burden of the rearmament programme, without triggering a wages explosion or mass opposition, indicates the success of propaganda campaigns such as the ‘battle for production.

Question 31

Info about the ‘people’s car’

Answer 31

The Volkswagen (the people’s car’) was a pet project of Hitler’s. The car was promoted by Strength Through Joy with a huge campaign advertising a car for everyone. This successfully persuaded workers to pay into a savings scheme to purchase one. The Volkswagen car was one of the great successes of Nazi propaganda, the more so since cars never went into full production during the Nazi regime and only the Nazi elite were able to acquire the few models that were actually made.

Question 32

Chapter Summary

Answer 32

The success of Nazi economic policy was mixed. Unemployment was reduced and, by 1939, there were labour shortages in some key sectors of the economy.
The demands of the Four Year Plan placed the economy under severe strain and its targets were not achieved. In 1939, there were shortages of food and other basic necessities. Moreover, the progress that was achieved came at the cost of holding down the living standards of the majority of the German Population.

Question 33

Increase in industrial production

Answer 33

By 39 Up 40% since 33 and 10% since 36