hitler economics Flashcards
Albert Speer
. Minister of Economics in 1942 Problems he had to deal with: - invading USSR - arms production - lack of workers due to conscription
Four Year Plan
. Introduced in 1936
. By Hermann Goering
. Main aim to make German armed forces + economy ready for war in 4 years
. Marked major turning point in Nazi regime - industry under much tighter control
Four key priorities: Four Year Plan
. increase in agricultural production
. retrain key sectors of labour force
. govt regulation of imports and exports
. most important - self sufficiency
- Goering in control of economy - economic dictator
- big business now had to work within framework by Nazis
Outcome of Four Year Plan: success
. by end of 1938: industrial prod increased by 105% since 1933
Outcome of Four Year Plan: failure
. overall, not self-sufficient
. production of synthetic substitutes proved costly
. 1939: still imported 1/3 all raw materials
. insufficient foreign exchange for necessary imports
. conflict between guns and butter (Mason) forced Hitler to go to war before he was ready
Outcome of Four Year Plan: failure 2
. Plan impeded by bureaucratic inefficiency + internal rivalry, while the need to maintain prod. of consumer goods meant economic investment was sometimes diverted elsewhere
. Hitler failed to concentrate on rearmament due to 30% rise in consumer goods prod. 1936-39
Outcome of Four Year Plan: failure 3
. Hitler intended a short war of blitzkrieg rather than long conflict, for which economy was unprepared
. Problems following Hitler’s decision to invade USSR in June 1941 put pressure on the economy
Rearmament programmes
. Incomplete by war breakout: compounded by poor management in early months of war
. e.g. army could conscript workers, regardless of skills, while women were encouraged to remain home and prisoners of war were set to work
. 40% of workers were pow by 1942
Fritz Todt
. Made Minister of Munitions in March 1940 to support the prospect of a longer war
. He set up a series of committees with chairmen from industry to rationalise production
. Died in air crash in Feb 1942, replaced by Albert Speer
Economics of the Third Reich
. Policy of autarky in 1933
. Emerging idea of deficit spending - create jobs to stimulate economy
. Peacetime economy geared towards potential war
Economics of the Third Reich 2
. Economic policy tended to evolve from various situations, rather than be carefully planned out
. Mid 1935: unemployment at 1.7bil - improvement!
. Balance of payments problem Summer 1934
. Carried w it large scale military + political problems
Dr Hjalmar Schacht
. Wanted increase in public consumption to reduce unemployment
. Big business + military feared it’d reduce imports
. Economic Minister 1934, President of Reichsbank 1933
. 3 July: given dictatorial powers over economy
New Plan
. Introduced September 1934
. Imports of raw cotton cut to prioritise industry imports
. Germany agreed to purchase raw materials on the base that their marks could only be used to buy German goods
Balance of Payments Problem
1936: Schacht hid it, didn’t solve it
Early 1936: Schacht knew that as Germans demanded more rearmament, debt would worsen
. He suggested rearmament reduction, Nazis declined
. Crisis resolved by Four Year Plan
. He resigned in Nov 1937
How successful were the Nazis in recovering the peacetime economy?
. Deficit spending: spending of public funds raised by borrowing rather than taxation
. Lebensraum (living space): one of Hitler’s key goals - territory in the East needed for economic exploitation and German settlement
. Bond: contract accompanying a loan, the creditor is promised they’ll be paid back at some point, in the meantime, an annual interest is paid
Economic Aims
. Priority: major expansion of public work creation schemes, directed by the state + paid for by a policy of deficit spending to solve unemployment + revive economy by boosting domestic demand
. Autarky and lebensraum
. Wehrwirtschaft (defense economy): a conclusion abt WWI was they’d failed to organise economy effectively for war
Ways that Nazis revived German economy
. “Work and bread”
. Large scale work programmes: autobahns
. German Labour Front - everyone had to work
. Work camps for the youth
. “Work will set you free” - induce pride in work
. Forced national unity
Hitler’s ‘socialist’ economic policies
. Hitler didn’t have a concrete economic plan
. He introduced some ‘socialist’ economic policies to address needs of smaller urban traders and peasant farmers (29% of working population)
. March 1933: all peasant debts (1.2bil Reichsmark) suspended
‘Law for the protection of retail trade’
. One of Hitler’s policies
. May 1933
. Forbade setting up new department stores
Reich Food Estate
. Established July 1933 under Richard Darre (Minister of Food and Agriculture)
. Laid down guaranteed prices for farm produce
. High tariffs put on many important foodstuffs to ‘protect’ farmers
‘Reich Entailed Farm Law’
. One of Hitler’s policies
. October 1933
. Prohibited sale, confiscation, division or mortgaging of any farm between 7.5 and 10 hectares owned by Aryans
Wehrwirschaft
. Most important to Hitler
. Demanded rapid recovery and rearmament
Reducing Unemployment
. Law passed in June 1933:
- govt spending on public works schemes : Arbeitsdienst (Reich Labour Service)
- subsidies for private construction and renovation
- income tax rebates + loans to encourage industrial activity
Other introductions to reduce unemployment - 1933
. emergency relief schemes
. development of armaments factories + discouragement of female labour
. Sep: law for construction of the Autobahn; no machinery allowed so more labour available
Other introductions to reduce unemployment - 1935
. March: reintroduced conscription
. June: recruitment into Reich Labour Service (RAD). Through this, 18-25yr olds sent to work on various civil, military + agricultural projects for 6 months before military service
Voluntary Labour Service
. Created June 1931 by Chancellor Bruning
. Aug 1933: renamed as the National Socialist Labour Service under Hitler
. July 1934: NSAD renamed to RAD - the State Labour Service, becoming an officially Nazi institution
. On joining, each rank-and-file member was assigned to a work ‘battalion’ in one of 40 districts + was given a spade and a bike
Stimulating Economic Growth
. Tax concessions offered to businesses
. ‘mefo bills’ raised money for investment - credit notes issued by the Reichsbank and guaranteed by the govt
. They were a means of ‘deficit financing’
. They were paid back w interest after 5yrs from increased govt tax rev they helped to generate
Mefo Bills
. Repayments on them amounted for 50% of govt expenditure 1934-5
. Mefo bills permitted subsidies + agreements, such as that to match private investment in the car industry
. Helped to stimulate housing and road construction and a variety of industries, e.g. rearmament
Addressing the balance of payments
. 1933: controls intro’d to limit the draining of Germany’s foreign exchange by paying foreign debts in Reichsmarks
. July 1934: debt repayment stopped altogether + creditors were given bonds instead
. Although creditor countries opposed, they failed to co-operate to put pressure on Germany
Schacht’s New Plan
. Increased govt regulation of imports
. Development of trade (using Reichsmarks) with less developed countries
. Development of German trade with central and southeast Europe
What did the New Plan lead to?
- a series of trade agreements, particularly w Balkan and South American states was concluded
- these provided for the import of vital raw materials and, since imports were paid for in Reichsmarks, they encouraged trading partners to buy German goods in return
Other influences that helped address the balance of payments included:
- avoidance of labour troubles with the suppression of the unions
- banning of strikes and creation of the DAF
- Nazis continued use of propaganda to increase illusion of success + prosperity, maintain confidence
- seizure of Jewish property + of Austrian assets following the Anschluss (union) w Austria of 1938
Economic Failures
. Reserves of foreign currency remained low + the balance of payments continued to be in deficit - grew worse after 1936 when Schacht’s influence declined
. Rearmament put a strain on the economy
. Although real wages increased overall, the price of food also rose, to the detriment of the poorer peasants and urban workers
