Economy of the Nazis (3) Flashcards
Hitler’s plans for economic recovery (1933-36)
- Before coming into power, Hitler didn’t commit publicly to any kind of economic programme and this continued into the early years of Nazi govt.
- Hitler held no financial experience, leaving it to prominent bankers and civil servants.
- Role undertaken by Hjalmar Schact who introduced the Four Year Plans on 1 Jan 1933 (aimed to achieve autarky).
What is autarky?
Economic self-sufficiency w/o relying on imports.
Economic issues: Trade
- Depends heavily on its capacity to sell manufactured goods. In the slump of world trade, demands for German exports and its goods (steel, machinery and chemicals) declined rapidly and collapsed.
- Values of exports dropped from 13.5 billion RM in 1929 to 4.9 billion RM in 1933.
- Trade fell by 62%.
Economic attempts to solve the issue of trade?
- Focused on creating autarky by Schact’s ‘New Plan’.
- Cutting welfare spending.
- Developed arrangements with other developing areas of the world (Latin America + East Europe) to reduce reliance on imports (exchange industrial goods for raw materials, rather than pay for imports).
Effectiveness of trade
- Shift of German trade to southeast-Europe and his use for exchange goods meant initial improvement.
- But, in 1935, countries demanded cash rather than exchange of goods (Bulgaria’s oil).
- Didn’t achieve self-reliance yet = rearming and work creation still required importing raw materials.
- Exports went against policy but the alternative was to cut consumption, w/o introducing rationing, and press for higher rationing.
Economic issues: Unemployment
- Mass long-term unemployment, even before the Depression:
- Registered unemployment was 1.9 mil in 1929, rising to 5.6 mil in 1932.
- If including the unregistered, unemployment levels increase to 8 million.
Economic attempts to solve the issue of unemployment?
Businesses and changing the definition of the work force (bans)
- Businesses employed again after the reversal of the Great Depression.
- But, Nazis manipulated the statistics:
+ Jewish people banned from working in the civil service or other occupation.
+ Women discouraged from working - encouraged to be a home maker and/or a wife.
Economic attempts to solve the issue of unemployment
Job creation schemes
Reich Labour Service (RAD):
- Required men aged 18-25 to work for at least six months in a labour programme in manual work.
- Often paid less than unemployment pay and given poor food + accommodation.
Effectiveness of employment reforms
- Risky - increasing Govt spending by 70% but appeared to work as unemployment fell from 5.6 to 1.6 mil (1933-36).
- Efficent - road building schemes improved communications, by efficiently moving goods and raw materials.
- But: questionable for the Nazis manipulated the official figures.
Economic issues: Agriculture
- Agricultural prices fell as world demand fell.
- As agricultural depression deepened - led to widespread rural poverty as farmer’s wages and income fell sharply.
- Some were forced to sell farms owned for generations.
Economic attempts to solve the issue of agriculture
- Hugenburg (Reich Minister for Food and Agriculture) raised import tariffs, forcing consumers to shift their demand to domestically produced goods (cheaper).
- Hereditary Farm Law (1933) stopped banks repossessing debt-ridden farms - gave farming families greater security.
- Richard Darre set up the Reich Food Estate (Sept 1933) to regulate food production, distribution and set prices and farm wages.
- Work creation schemes send people (young women) to work on farms and building projects.
Effectiveness of agriculture reforms
- No, not all welcomed Govt control over what price to produce and sell it at.
- Helped move to autarky: increased production from 68% in 1928 to 80% in 1934.
- By 1937, agricultural prices had increased by 20% and wages rose quicker than those in industry.
Economic issues: Finance
- Because of war debts, reparations and inflation, German banking suffered serious financial problems prior to the Great Depression. The onset of the GD undermined the confidence even further.
- Foreign investment disappeared and German share prices collapsed. In 1931, five major banks collapsed.
Economic issues: Rearmanent (linked to finance)
- Opposed the Treaty of Versailles’s military restrictions - from 1933-39, the army increased 10x its number.
- Germany ceasing to attend the German Disarmament Conference w/ France + renounced the League of Nations = allowed military strength to speed up via the introduction of conscription in 1936.
- But = cost a large amount of money.
Economic attempts to solve the issue of rearmament (finance)
- MEFO was a private company to keep the rearmament effort a secret, for it was a direct violation of the TOV.
- MEFO would place orders for military goods, in return would pay via MEFO bills that delayed payment until the late 1930s.
- Bills worth 12 billion RM were issued to pay for rearmament + soldiers and workers were paid using it.
Effectiveness of the rearmament and Mefo Bills
- Tripled national debt from 1932-8 = 10 million to 32 million.
- When they had to pay in 1938 - was a cash shortage.
- Banks were forced to buy government bonds to pay + took money from savings accounts = ordinary citizens were responsible to fund the rearmament programme.
- Govt resorted to the printing press to mitigate shortage.
Attempts to deal with the economy (1936-39)
What is a Command Economy
Government controls economic decisions, usually made by independent business leaders and industrialists on a supply and demand basis.
What did the German government attempt to control via the Command economy?
Goal in his ‘four year plan’ to achieve an economy fit for war (self-reliant).
- How many workers hired for each industry.
- How much a certain industry must produce.
- What products should be imported or exported internationally.
Guns and butter debate (1936)
- Food shortages in 1934 forced Hitler to authorise more food imports to keep prices low and create a command economy.
- Debate = Govt must choose expenditure on military or social programmes: Goering argued resources should be devoted to the military, but Darre lobbied for greater food imports.
- Strains of production led to an economic crisis in 1939.
Attempts to deal with the economy (1936-39)
Why did Hitler replace Schacht with Goering?
- No longer needed because of the economic recovery + disagreed over Hitler’s plan to speed up the rearmament process (guns and butter) by suggesting to reduce arms expenditure to avoid damaging a balance of payments.
- Added Goering in 1935 (willing to enforce the Four-Year-Plans).
- Gave himself supreme eco authority, overriding Schacht’s influence - led to Schacht’s resignation as Minister of the Economy 1937.
What was Goering’s Four-Year-Plans?
1) Made Germany ready for war.
2) Increased expenditure on rearmament.
3) Built factories - prioritised those producing military goods (others suffered decreased living standards).
4) INDUSTRY: Strict control & must meet set targets.
5) AGRICULTURE: controlled and targets were set for it to achieve better harvests and better food production.
6) AUTARKY was introduced = make Germany self-sufficient in materials. Industries were encouraged to develop alternatives, for example coffee from acorns.
To what extent was there successes of the Four Year Plan?
- Gradual economic improvement and it decreased unemployment (no women, Jews and ethnic minorities).
- Tighter import controls and a radical, unsuccessful economic policy (G needed to start the war to be self-sufficient by invading territories to gain resources).
- To an extent true: only self-sufficient in 1942 because of the countries it conquered and increased its territory.
War-time Economy for Germany and how did economic power grow?
- Gained more territories via annexation and invasion for resources and labour (Operation Blue - invaded USSR for oil),
- Employed, foreign workers were employed to make up the labour deficit, treating them depending on their racial background (Polish worse than French).
- Women weren’t involved (unlike other states).
Limitations of the war-time economy for Germany
- Inefficent compared to the Allies and Hitler believed the war would end quickly, seeing no need to mobilise the economy.
- Conflicting plans within the German Economy meant it lacked clarity in the economic plan.
- Nazi Ideals = against women in the workforce despite a deficit - even if they’ve returned to the public sphere, the number was drastically less than in Weimar.
What caused Hitler and Goebbels to make a speech calling Germans to support a ‘Total War’ in February 1943?
The Operation Barborosssa + push from Russia was a concern - could lose the war.
- 1943: liberation of occupied territories meant the economy became weaker - economic growth dependent on other countries staying under Nazi control.
Who was Albert Speer and why was he appointed in 1942?
- minister of armaments to increase productivity.
- Dec 1941 = ‘rationalisation decree’ that aimed to eliminate waste of labour and materials
- Established a ‘Central Planning Board’ to coordinate economic activity and end institutional conflict.
- Encouraged employment of women, increased foreign prisoner of war numbers (2.8M from USSR) and forced labour in concentration camps.
Successes of Speer
- Turning point in April 1942.
- Speer used Hitler’s authority to cut through the mass of interests to implement a programme of ‘industrial self responsibility’ to provide pass production.
- The Central Planning Board gave industrialists their freedom but ensured Speer could maintain control of the wartime economy as director of the board.
- Improved production by introducing various personal initiatives, like employing women, using POW as workers, stopping skilled workers becoming conscripted.
Speer’s successes in stats
- First six months: ammunition production increased by 97% and tank production rose by 25%.
- By the second half of 1944, German war production had seen more than a three fold increase.
Overall limitations of Speer’s economy
- Despite Speer’s efforts - inevitable economic issues.
- Allied mass bombings became more frequent and effective after 1943, slowing industrial production.
- Plagued by oil problems.
- Harsh treatment of slave labour led to decreased productivity, so naturally the economy will slow down.
Did the Nazis fail to mobilise the economy during the war?
- Despite the intent of wholesale mobilisation = the low rearmament production.
- Increased number of submarines and aircraft (8,2900 in 1939 to 10,080 in 1941), but the British outperformed Nazis by trebling their air forces.
- Not possible if there was clear and authoritative control of the economy, especially due to the confusion between short and long term plans of leadership.
