Economic Developments Flashcards
Bruning after Wall Street Crash
. Budget deficit 1700mil marks by end of 1929
. Deflation/austerity policy: cut gov spending + tried to balance outgoings against income from taxation
. Demands for unemployment benefit grew, forcing him to cut salaries of public workers + decreasing unemployment benefits (unpopular)
Agriculture after Wall Street Crash
. Continued to be protected by gov subsidies + taxes on import of foreign foodstuffs, which kept food prices artificially high
. Protected bc of powerful agricultural interests
July 1931 Banking Crisis
. March: Weimar gov announced customs union w Austrians
. British + French weren’t consulted, French angry + withdrew currency from Austrian banks
. May: Austria’s largest bank Kreditanstalt collapsed
. Withdrawals of foreign currency from German banks
. July: Germany’s largest priv bank collapsed
Successes of Bruning
. Negotiated end to reparations
. July 1931: President Hoover agreed to a moratorium on payment of reparations
June 1932: reparations abandoned under Papen
Schleicher and Papen
. Intro measures halting unemployment: 6mil in 1932
. Papen issued emergency decree Sep 1932:
- tax rebates given to employers that took on new staff
- end of compulsory arbitration
- relaxation of system of wage agreements
. approved by employers, opposed by trade unions + left wing parties
Hitler and Economy
. worst of depression already over before he became Chancellor bc of some revival of world trade
. ‘socialist’ policies to address needs of peasant farmers (29% of work pop) + smaller urban traders
Hitler’s Policies
- March 1933: all peasant debts (12bilRM) suspended
- May: ‘Law for Protection of Retail Trade’ forbade setting up of new department stores
- July: Reich Food Estate set up under Minister of Food + Agr Richard Darre: guaranteed prices for farm prod
- Oct: ‘Reich Entailed Farm Law’ prohibited sale, confiscation, division or mortgaging of any farm between 7.5 + 10 hectares owned by Aryan farmers
. gave small farmers security of tenure
Wehrwirtschaft
. Economy geared towards war
. Most important thing to Hitler
. He hired Hjalmar Schacht as President of Reichsbank in 1933 and Minister of Economics in 1934 to gear economy to war
Schacht’s Law to Reduce Unemployment
. June 1933:
- gov spend on public works schemes: Arbeitsdienst
- subsidies for private construction + renovation
- income tax rebates + loans to encourage industrial activity
Other Unemployment Measures 1933
. Emergency relief schemes
. Development of armaments factories + discouragement of female labour, eg marriage loans to remove women from labour market
. Sep: law for construction of Autobahn (7000km), no machinery used when surplus labour available
Other Unemployment Measures 1935
. March: conscription re-introduced
. June: Reich Labour Service (RAD) - 18-25yr olds sent to work on various civil, military + agricultural projects for 6 months before military service
Mefo bills
. Credit notes issued by Reichsbank + guaranteed by gov
. A means of ‘deficit financing’
. Tax concessions offered to businesses + Schacht raised money through them to stimulate economy
Use of mefo bills
. Paid back w interest after 5yrs from increased gov tax rev they helped to generate
. Repayments on them accounted for 50% of gov expenditure 1934-5
. Permitted subsidies + agreements
. Helped to stimulate housing + road construction + a variety of industry eg rearmament: main growth area before 1936
Addressing balance of payments
. 1933: controls intro’d to limit draining of Germany’s foreign exchange by paying foreign debts in Reichsmarks
. July 1934: debt repayment stopped altogether, creditors given bonds instead - creditor countries opposed this but failed to put pressure on Germany
Schacht’s New Plan
. Sep 1934
- increased gov regulation of imports
- development of trade using Reichsmarks w less developed countries
- development of German trade w Balken + South American states: provided for import of vital raw materials. Imports paid for in RM so trading partners encouraged to buy German goods in return
Other influences helping to revive economy
. avoidance of Labour troubles w suppression of unions
. banning of strikes + creation of DAF
. propaganda to increase illusion of success + prosperity which led to confidence
. seizure of Jewish property + Austrian assets following union w Austria 1938
Various other factors helping economy
. reparations ended
. work creation schemes established before 1933
. unemployment began to fall after June 1932
. general world economic recovery
Failures of Nazi economic policies
. reserves of foreign currency low + balance of payments still in deficit: worse after Schacht’s dismissal
. rearmament put strain on economy
. real wages did increase but so did food prices
Hermann Goering
. Replaced Schacht in 1936 after Hitler grew impatient w Schacht’s insistence on slowing down pace of rearmament
. 1936-42
Four Year Plan
. August 1936
- autarky (self-sufficiency): plants built for production of ersatz synthetic materials, eg artificial rubber
- promotion of chemical industry + development of synthetic fuels
- development of steelworks that could use lower grade ores available within Germany
- production of heavy machinery
Things done as a result of Four Year Plan
. Special office set up to issue regulations controlling foreign exchange, labour + raw material distribution
. Prices + targets established for private industry
- created a ‘merged economy’ working w big business
. Private industry continued but failure to meet expectations could result in business being taken over
Failures of Four Year Plan
. Failure to meet expectations could result in business being taken over
. Overall targets, eg for synthetic fuel, rubber, fats + light materials weren’t met
. Prod of synthetic substitutes costly: by 1939 still imported 1/3 of its raw materials
. Insufficient foreign exchange to buy needed imports
. Need to maintain consumer goods meant investment sometimes diverted elsewhere
Wartime
. When war broke out, rearmament incomplete
. Poor management in early months: army conscripted workers regardless of skill, women still told to stay home + few POW (40% by 1942) set to work
. Invading USSR in June 1941 made it worse
Fritz Todt
. Made Minister of Armaments + Munition March 1940 to support longer war
. He set up committees with industry chairmen to rationalise production
. Died Feb 1942 and replaced by Albert Speer
