Chapter 15 - Economic Policies Flashcards
How did Hjalmar Schacht stimulate the economic recovery
- 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
- introducing the new plan in 1934 to control Germany’s foreign trade and improve the country’s balance of payments
- taking the first step towards rearmament using the mefo bill
How did the Nazis reduce the unemployment
They setup a project called “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. They were fortunate that when they came into power the economy was already starting to revive. In 1935 a Reich labour service was introduced under which unemployed young men were compelled to do six months labour in farming or construction
What was the new plan
As the economy began to revive 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. Under the new plan Schacht placed controls on imports and on access to foreign currency. He also initiated a series of trade agreements with foreign countries especially in 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
What were the mefo bills
The Nazis needed to borrow money whilst at the same time avoid the dangers of runaway inflation in order to finance rearmament. Schacht devised a scheme whereby the gov 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 there money. However the companies were given an incentive to defer asking for payment by the offer of 4% per annum interest on the bills if they kept them for the full five years. This kept the rearmament programme a secret since the expenditure didn’t appear in the gov accounts.
What new set of problems were created after the revival of the German recovery
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. There was growing disillusionment with the regime.
What was guns and butter
When the food shortages could be resolved through imports but this would use up valuable reserves of foreign currency also needed for the import of raw materials for the armaments industry this was a conflict of priorities.
What was the 4 year plan
A plan aimed to make Germany ready for war within 4 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 4 year plan was the first explicit indication that the regime was planning for war. The priorities of this plan were rearmament and economic autarky which would be achieved by:
- 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 Herman’s 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
What was economic autarky
Economic autarky is self sufficiency and with its links to national pride and independence it fitted well with the Nazis ideological aims. The effort to increase production was presented as a battle in which the whole peoples community had to participate. Propaganda campaigns convinced people to buy only German goods and use German raw materials.
What was the Nazi policy towards the industrial elites
In early months of the Nazi programme many of their policies were of benefit to businesses. As Nazi economic policies began to develop there were many business leaders who didn’t welcome the greater state intervention in the economy with its controls on the supply of labour and raw materials and price controls. When the 4 year plan was launched there were many opportunities for businesses to make profits through involvement in the rearmament programme.
What happened to employment under the Nazis
Official unemployment figures showed a dramatic reduction in the number of unemployed by 1934 and a continuing fall after that. This was the basis of the claim that the battle for work had been won due to Nazi economic policies there were several flaws to these claims. Economic recovery began before the Nazis took power. 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 for young men took a large proportion of young males out of the labour market. There was various statistical devices to inflate the figures.
What were the living standards like under the Nazis
Nazi propaganda emphasised the duty of all German citizens to make sacrifices on behalf of the peoples community by working harder and for longer hours and by accepting a squeeze in wages. At the same time propaganda also stressed the benefits that the Nazi regime had bestowed on workers through improved working conditions, better social welfare etc. Despite attempts to lower wages incomes for many workers did increase during the years 1933-39. Pay increased due to the longer hours being worked but on the other hand workers wages were subject to increased deductions because of the compulsory contributions they had to make to the German labour front. 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 expensive foods declined and the consumption of cheap foods inclined.
Were the targets of the 4 year plan achieved
The targets weren’t achieved by 1939
