economic policies Flashcards
What short-term economic aims did the Nazi party have when coming to power?
Economic recovery from the Depression and to reduce unemployment.
What would achieving the short-term economic aims do for the Nazi regime?
Make them more popular and consolidate their power.
What were the long-term economic aims of the Nazi Party when they came to power?
To create an economy capable of sustaining a major rearmament programme, as well as gear it for a future war.
What does the term ‘economic autarky’ mean?
An economy that is self-sufficient in the production of food and vital raw materials.
Who was the key figure in Nazi economic policy?
Hjalmar Schacht, who was President of the Reichsbank form 1933-36 and Economics Minister from August 1934.
How did Schacht stimulate economic recovery?
- Pumping money in to build homes and Autobahns
- Stimulating consumer demand by giving tax concessions and grants
- Subsidies to private firms so they could employ more workers
- Placing controls on wages and prices to control inflation
- ‘New Plan’ in 1934 to control Germany’s foreign trade and improve balance of payments
- First steps towards rearmament, financing expenditure through the Mefo bill
What did the building of the first Autobahn imply?
That the German economy was reviving and that there were thousand of workers employed on the project?
How many people were actually working on the Autobahn building?
At its peak, only 125,000.
What happened to the construction of the Autobahn over time?
It had slowed after 1938 and completely stopped in 1942.
How effective was the Autobahn?
Not very since so little Germans actually owned cars, making it underused.
What was the name for the Nazi’s aim to reduce unemployment?
The ‘battle for work’.
How were the building of roads, public buildings and increased industrial production funded?
Through loans and tax relief to private companies.
What was the Reich Labour Service and when was it introduced?
It was a scheme in which unemployed young men were required to do 6 months’ labour in farming or construction.
It was introduced in 1935.
When was military conscription reintroduced?
In 1936 for young men.
What happened to foreign trade as the economy began to revive in 1933-34? What did this lead to?
It increased, leading to imports growing faster than exports, further leading to a shortage of foreign currencies.
Why did Germany need foreign currencies?
In order to purchase imported goods.
What did Schacht do in order to help the issue of the shortage of foreign currencies?
He placed controls on imports and on access to foreign currency.
He also initiated trade agreements with foreign countries whereby Germany bought food and raw materials with the German Reichsmarks, which meant those countries could only use back on German goods.
What did the Nazis have to do in order to fund rearmament and what was the problem with his?
Borrow money, but also avoid the danger of inflation which many Germans had negative memories of.
What scheme did Schacht devise in order to fund rearmament?
The government would pay for its military equipment using credit notes, known as Mefo bills.
What could businesses do with the Mefo bill?
They could be exchanged for cash at the Reichsbank, ensuring confidence that they could get their money if they wished.
What incentive was placed upon the Mefo bill?
There was an incentive to defer payments by offering 4% interest per year if they kept them for 5 years.
Why had Mefo bills given the government an advantage?
They could fund rearmament without actually having the funds to finance it, and it also could be kept secret as the expenditure did not appear in government accounts.
What problems did the revival of the German economy cause?
In addition to problems with balance of payments and shortage in foreign exchange, there were also food shortages, rising prices and lower living standards for ordinary Germans in 1935-36.
