Controlling The Economy 1933-1945 Flashcards
What was the myth about the nazi economy?
That the nazis fixed the german economy
What was Hitler’s attitude to the economy?
No clue how it works and don’t care. Don’t know what they will do
What were Hitler’s 4 key aims in relation to the economy?
-ensure reasonable standard of living in order to maintain public support
-provide resources for rearmament
-move towards autarky to guarantee strength and independence
-provide resources for architectural projects
What was the Nazi understanding of economics?
-determination could solve everything
-supply and demand was insignificant
-hitler willing to use capitalist policies and methods based on Stalin’s economic plans to achieve his goals
Who was Schact?
Played a key part in ending 1923 hyperinflation crisis: genuine economic expert
-made president of reichsbank in march 1933
-minister of economy in 1934
-employments reassured elites so had benefits for hitler
What was Schact’s first economic problem?
Lack of economic growth and spending
What was Schact’s solution to his first problem?
Tax cuts no grants : the nazis cut taxes in farming, small businesses and industry. They also gave grants to business so they could repay debts + employ more workers, newly married couples to spend on furniture, home owners for home improvement / repairs
What was the outcome to Schact’s solution on problem 1?
The economy was growing due to increased public spending and demand
What was Schact’s second problem?
Unemployment : this peaked at 5.6 million in 1932, 1933 = 4.8 million. Without jobs, people could not spend money which meant that the economy could not grow
What was the solution to Schact’s second problem?
Job creation : between 1933 and 1934, 2.8 million jobs were created. E.g Reinhardt Scheme (June 1933) committed RM 1,000 million to public works schemes.
What was the outcome to Schact’s second problem?
By 1936, unemployment was 1.6 million, however some people were not unemployed but they were also not earning money. RAD schemes such as Voluntary Labour Service in 1935 provided work for 19-25 year olds but were not paid. This kept unemployment figures down without increasing the number of jobs
What was Schact’s third problem?
Rearmament: one of Hitler’s priorities but it was so expensive and the government was already sending money on job creation
What was Schact’s solution to his third problem?
Mefo Bills : a private company that would place orders for military goods and pay for armaments. This allowed the government to buy armaments and delay the payment (IOU)
What was the outcome to Schact’s third problem?
Began issuing mefo bills in 1933, April 1934 = many of Germany’s largest industrial companies (Siemens) were producing armaments. In total financed 1/5 of all military spending between 1933 and 1939, around RM12 billion of military spending - rearmament drive = contribution to creation of jobs
What did Schact’s reforms lead to?
Balance of trade crisis as people tended to buy foreign goods but the public works schemes created no additional goods to export = New Plan
What was Schact’s first problem with his new plan?
Balance of trade : Germany was importing more than it was exporting. Rearmament added to the problem as they need to import raw materials and technology from aboard to rearm.
What was Schact’s solution to the first problem of his new plan?
Import quotas : summer 1934 =
-import restrictions on wool, cotton, leather etc
-goods that were not restricted included steel + others for military
-new departments created to control goods
What was Schact’s second problem with his new plan?
Trade with economically stronger countries - quota helped the deficit but Germany did not have the money to trade freely with Britain and the USA which had much stronger economies
What was Schact’s solution to his second problem of the new plan?
Trade agreements with countries e.g Peru and Brazil
What was the outcome of Schact’s solution to his second problem of the new plan?
Germany had a more powerful and developed economy than its new trading patterns = Germany gets better trade deals than with Britain and USA. Schact could negotiated deals and trade without money leaving Germany
Successes of New Plan
-allowed german economy to grow
-solved balance of payment problems = economy continue to rearm
Limitations of new plan
-standard of living dropped in early 1930s
-limiting imports of raw materials = employed around 20% of country’s industrial workers and was dependent on imports. Failed to recover to pre-depression levels of growth = price of clothing rose faster than any other goods in 1930s
What was the Guns or Butter debate?
-problems in agriculture led to economic crisis = change in policy
-poor harvests led to a shortage of food (1934-1935)
-Walther Darre (Nazi agricultural minister) wanted greater imports of grain in order to keep food prices down = said rising food prices would lead to fall in popularity of regime = essential to import food
-situation so bad = butter rationed in 1935 and price of ham and pork rose by 30% from 1934-1936
-bread rationing also considered but seniors knew this would be unpopular so avoided
-crisis exposed reality of economy as it was not strong enough to produce guns and butter
Darre said more money should be spent on agriculture whereas Goering said it should be spent on military
How did Hitler respond to the guns or butter debate?
Short term and long term solution = he authorised more food imports in order to keep prices low and avoid rationing. Long term = began process of creating a common economy
Autarky
Solves balance of payments by achieving economic self-sufficiency. = requires greater exploitation of Germany’s resources (greater coal mining, iron, steel) replace imports of oil, gas, wool. = government interested in new process to turn coal into gas and oil
Command economy
Economy responds to commands from government : everything about economy is directed from above
Ersatz
Substitutes : government invested in new processes to turn coal into gas and oil and to make synthetic, rubber, fabrics (e.g margarine created in ww1)
DAF
Replaced trade unions in May 1933
Part of consolidation of Nazi power, merged all of germanys independent trade unions into one government controlled organisation
Genuinely represented workers
RAD
Designed to provide work for 19-25 year olds
Young people working were not counted as unemployed but did not have paid jobs = kept down unemployment without increasing jobs
KdF
Leisure organisation for working class people : e.g sports training, gymnastics, sailing lessons
Often had basic facilities with little to no privacy or poor sanitation.
When was Germany on the brink of an inflation crisis?
1939
What did Schact say to the government about the possible inflation crisis?
Stop rearmament and reduce spending
How was Germany table to rearm?
By keeping living standards low
Industrial workers
-46% of the population
-lost out due to destruction of union movements = little influence over pay and conditions
-wanted to ensure workers were under strict government and unable to organise themselves
-average hourly wages in 1933 = 3% lower than 1932
Women workers
-believed they should play domestic role but were tolerant of them entering the workforce. Encouraged them to take clerical jobs
-number of women in workforce increased from 11.4 million in 1933 to 14.8 million in 1939
-average woman’ wage = half of a man. Some so low = women forced into prostitution
Middle class
Partially benefitted but some aspects of Nazi policy led to conflict with the German bourgeoise
Mittelstand
-small businesses benefited from destruction of unions and increase in employment
-clothing firms hit hard by ban on import of textiles
-end of 1930s = small firms found it hard to compete with big firms for labour as they could afford to pay higher wages
Farmers
-made up around 29% of total workforce in 1933
-price controls on food and powers were used to create reforms for farms
-Reich Entail Farm Law = illegal to sell large and medium sized farms = disadvantage for farmers as their profit is reduced and sale of food supervised. + banks refused to offer loans
Industrialists
-destruction of trade unions meant that big firms kept wages low and put greater demands on workers such as increasing length of working day
-major firms benefited from government contracts to produce munitions, military uniforms and synthetic goods
What was the Four Year Plan?
-Germany’s armed forces would be ready for war in 4 years
-Germany’s economy would achieve autarky in a similar period
Successes relating to the Four Year Plan
-coal production increased from 319.7 million tonnes in 1936 to 380.9 million tonnes in 1938
-self sufficient in terms of bread, sugar and potatoes
-successfully increased ersatz rubber but very expensive
Failures relating to the Four Year Plan
-military leaders unable to acquire the steel, oil and workers they needed
-only produced 20% of artificial oil required in 1939
-massive amount of money spent on rearmament = on the brink of another inflation crisis
Impact of war on Germany - administrative chaos
-polycratic nature of economy economy and government + tension = undermined economic efficiency
-conflict between senior nazis, business leaders and military leaders
-organisations such as Four Year Plan and Ministry of Economics had little effective coordination between organisations
Impact of war on Germany - impossible plans
-went ahead with invasion of soviets in 1941 as they thought economy would succeed
-overestimated ease of extracting foreign resources
-Hitler’s aims = impossible : wanting to increase the size of Luftwaffe to 21,000 planes (only America capable of this)
Impact of war - priorities
-favoured factories underground as they were secretive and protected from bombing.
-continually updating weaponry = made extremely well but expensive (1940 = $6 billion)
What was the problem with production of non-essential goods?
-factories were still producing some consumer goods in order to keep up morale at home
How did Speer try to tackle the issue of the production of non-essential goods?
Return to sender as it was irrelevant to the war effort which he used on orders for non-essential products
What was the problem with women workers?
Nazi ideology dictated that women should look after the home and not work in industry
How did Speer tackle the problem of women workers?
Half a million were taken out of domestic employment and put to more productive use
What was the problem with allied bombing?
Escalation of allied bombing from mid 1944 led to more damage being done to german factories and industrial facilities
How did Speer deal with the problem of allied bombing?
He set up special task forces to repair bombed factories
Why was there a total collapse of Germany’s economy by 1945?
-Speer efforts helped Germany but did not change direction of war. German soldiers had fewer wear resources and appalling exploitation of slave labour saved economy from complete collapse.
-1944 fuel crisis
