Economy: Controlling the economy Flashcards
Nazi Economy
What was the nature of Nazi economic policy? - N
- Reasonable standard of living in order to guarantee support
- Rearmament resources
- Autarky
- Sufficient resources for major architectural projects in order to remake Germany into a country fit for the master race.
What was the aim of Nazi economic policy? - N
To serve destiny of the Aryan race and lead to German dominance in Central Europe.
What did the ‘primacy of politics’ mean in regards to Nazi economic policy? - N
Meant that economic policy should serve political objectives.
- Saw that economics should serve the good of the race, making Aryans stronger financially, politically and militarily.
- Hitler believed that his political goal of rearmament took priority over economic issues such as the level of government spending or Germany’s balance of payments.
How did Germany’s defeat during WW1 influence the Nazis’ economic policy? - N
Hitler believed that the economic factors had played a big role in Germany’s defeat (e.g striking unions, Naval Blockade).
- He saw it as important to break up Germany’s unions and create a decent living standard in order to preserve morale.
- He saw that economic self-sufficiency would mean that Germany could never again be starved into submission by a blockade.
How did Hitler overcome his lack of knowledge in regards for economics? - N
He delegated economic policy to experts and civil servants like Hjalmar Schacht.
How did Schacht increase employment and devote more money to rearmament? - N
By increasing government borrowing.
Why did Schacht help attract support from German businesses? - N
He was appointed President of the Reichsbank and became widely represented by business leaders who trusted him to implement policies that helped business.
- Businesses were willing to accept tax breaks, grants and employ more workers as a result of their confidence in him.
What was Mefo GmbtH? - N
A private company that would place orders for military production. They paid for the armaments with Mefo Bills.
What were Mefo Bills? - N
IOUs that allowed the government to buy the armaments and delay payment until the late 1930s.
What fraction represents how much Mefo Bills financed military spending between 1933-39? - N
1/5
(Around RM 12 billion)
How did Mefo Bills improve employment rates? - N
It created jobs as many of Germany’s industrial companies were producing armaments for Mefo GmbtH.
What trade agreements were made through the ‘New Plan’? - N
Trade with developing countries in Eastern Europe and Latin America - Peru, Brazil, Latvia, Estonia, etc.
What was the advantages of these trade agreements? - N
Germany had more powerful economy than its new trading partners which meant more favourable deals than with Britain and the USA.
It also meant they were able to negotiate barter deals with these countries → trade without money leaving Germany.
What direct measures were made to improve the economy? - N
- Schemes that employed people to work on government projects.
- Financed construction and industrial development to create jobs.
- Reinhardt program (1933): one of the biggest new economic initiatives which committed RM1,000 million to public works schemes such as road building, bridge repairs and construction improvement of waterways.
- Employment of unskilled, semi-skilled workers in railway and postal service.
How many jobs were created from 1933-34? - N
2.8 million jobs (20% through government schemes)
What did the ‘New Plan’ import quotas entail? - N
Consumer imports were limited in order to ensure there were sufficient funds to continue importing goods crucial for rearmament.
This involved: wool, cotton, leather, fur, precious metals.
How did Schacht enforce import quotas in 1934? - N
He made 25 new departments in the Ministry of Economics to issue import licenses (illegal without one) which prioritised arms industry imports.
How effective were import quotas? - N
Trade came back into balance by mid 1935 but it didn’t solve the issue of money to trade freely with Britain and the USA.
What policies were introduced to boost government spending and increase employment? - N
Tax cuts in: farming, small businesses, heavy industry
Grants given to:
- Businesses to allow them to repay debts and buy new machinery and employ more workers.
- Home-owners to finance home improvement, repairs or the employment of domestic servants.
- Newly married couples.
By 1936, how many Germans were unemployed in comparison to 1933? - N
1936 - Unemployment of 1.6 million.
1933 - 4.8 million
Why was rearmament problematic for the German economy? - N
It was prohibited by the Treaty of Versailles and was very expensive, something that Schacht had acknowledged from the beginning as something that the economy couldn’t fully support.
The government was already in debt and now was funding an expensive work creation scheme.
What was the crisis of 1935-36? - N
Poor harvests which led to a change in the availability of food.
What did the economic crisis of 1935-36 expose about the Nazi economy? - N
It exposed that it wasn’t strong enough to produce for arms and food produce.
Why didn’t the government just raise food prices in order to import food? - N
Schacht didn’t want to increase government spending.
What happened to butter in 1935? - N
It was rationed.
By what percentage did the price of pork and ham rise to from 1934-36? - N
30%
What does the term ‘guns and butter’ refer to? - N
It was a phrase used by Nazis to discuss economic priorities in speeches or propaganda campaigns.
Goering famously argued that as the German people couldn’t have both arms and food, they should choose guns as guns make a strong nation whereas butter makes the nation fat.
What was Hitler’s short-term solution to the food crisis? - N
To authorise more food imports in order to keep prices low and avoid rationing.
What was Hitler’s long-term solution to the food crisis? - N
To create a command economy.
What was the success of the ‘New Plan’ mostly reliant on? - N
The recovery of global economy → greater demand for German goods in Britain and the USA.
What else could be argued to have contributed to the success of the ‘New Plan’? - N
Neither the British nor Americans responded to the import controls by limiting their trade with Germany.
What was unsuccessful about the ‘New Plan’? - N
Standard of living dropped due to prioritising rearmament in early the 1930s.
Furthermore, limiting imports meant the German textiles industry (which employed 20% of industrial workers) failed to recover after the Depression.
- The price of clothing rose much faster than other goods.
To what extent can the Nazi’s economy be seen as an ‘economic miracle’? - N
- The Nazis were just building on policies between 1930-32 so can’t take full credit for the governments at the time who lay down the foundations to recovery.
- General global recovery during the period.
- Expansion of RAD, and it being compulsory in 1935, provided many young people with work but did not count them as unemployed despite not having paid jobs.
- False unemployment figures not including part-time workers or Jews.
What is a command economy? - N
An economy that responds to the commands of the government.
Why did the crisis of 1935-36 lead to a radicalisation of Nazi economic policy? - N
Hitler’s policy of Lebensraum required greater spending on rearmament. However, it threatened to lower the living standards of the German people.
In order to ensure that the German economy could rearm and that living standards remained reasonable, Hitler authorised the 4-Year Plan.
Which ambitions led Hitler to create a command economy and subsequently a 4-Year Plan? - N
Conquering Czechoslovakia, Poland and subjugating their ‘racially inferior’ populations.
What was the 4-Year Plan designed to ensure? - N
- The German armed forces would be ready for war in approximately 4 years.
- The German economy would achieve autarky in a similar period.
What was Hitler’s rationale behind the 4-Year Plan? - N
He argued that Europe was being menaced by the Soviet Union.
He viewed war in Europe as inevitable and believed Soviet victory over Germany would lead to a complete annihilation of the German people.
What is autarky and how did Germany hope to achieve it? - N
Autarky is economic self-sufficiency.
It would require:
- a greater exploitation of Germany’s existing resources, including greater coal mining and greater iron and steel production
- replacing imports of oil, gas, wool and cotton with synthesised materials
How did the Nazi government replace imports of oil, gas, wool and cotton? - N
They invested in Ersatz rubber, fabrics and fertilisers and processes to turn coal into gas and oil.
What is the significance of Hermann Goering being appointed plenipotentiary of the 4-Year Plan? - N
It made him the new head of the organisation, giving him supreme economic authority.
