Nazi economy 1933-1939 Flashcards
Schacht’s economy: banking and control of capital
The banking system had been fundamentally weakened, so the state increasingly assumed greater control of capital. It then lowered interest rates and rescheduled large scale debts.
Schacht’s economy: assistance for farming and small business
Financial benefits were given to those such as farmers and small businesses. This stimulated growth and awarded sympathetic supporters. Some measures included: 1) Maintained tariffs on imports, 2) subsidies by the Reich Food Estate, 3) Reich entailed farm law offered more security to small farmers, 4) allowances to encourage rehiring of domestic servants, 5) allocation of grants for house repairs.
Schacht’s economy: state investment - public works:
There was direct spending on a range of projects. In June 1933, the law to reduce unemployment was renewed and expanded and the Reich labour service was expanded to employ 19-25 year olds. The cumulative effect of these projects was to triple public investment between 1933 and 1939 and increase government expenditure by 70%. There was a dramatic rise in jobs - unemployment declined to just 2.1 million in 1936.
Schacht’s economy: the balance of payments problem:
Despite Germany’s recovery, there were still two underlying worries: 1) fear that rapid demand would rekindle inflation, 2) fear that rapid increases in demand would lead to the emergence of a balance trade deficit.
Schacht’s new plan:
By 3 July he was given dictatorial powers over the economy which he used to introduce his new plan in 1934 - the government controlled all aspects of trade, tariffs, capital and currency exchange to prevent excessive imports The economic priorities were set in a series of measures…
Schacht’s new plan: bilateral trade treaties:
Through this, Schacht tried to save foreign exchange and promote trade. In this way Germany began to exert powerful economic influence over the Balkans.
Schacht’s new plan: The Reichsmark currency
Germany agreed to purchase raw materials from all the countries it traded with on the condition that Reichsmarks could only be used to buy back German goods.
Schacht’s economic strategy
After the winter of 1932-33, depression hit a low-point and the trade cycle began to improve - this worked to the advantage of the Nazis. The heart of economic recovery lay in the major revival of public investment led by the state which embarked on large-scale spending to stimulate demand. Under Schacht, deficit financing was adopted through a range of measures….
Schacht’s new plan: Mefo bills
Special government money bills designed by Schacht. They were issued by the Reichsbank and guaranteed as payment for goods for up to 5 years earning 4% interest per annum.
Achievements of 1936
By mid-1936 unemployment had fallen to 1.5 million, Industrial production had increased by 60% since 1933, GNP had grown over the same period by 40%
Aims of the Four-Year Plan, 1936:
Introduced under the control of Goring, who in Oct 1936 was appointed ‘Plenitary of the Four-Year Plan’. Its aims were: expand rearmament and autarky to make Germany self-sufficient. To achieve this the plan highlighted a number of goals: 1) Regulate imports and exports, 2) control key sectors of the labour force 3) increase raw materials production to develop ersatz and increase agricultural production.
Effects of the Four-Year plans
They marked an important turning point in the regime - Nazi control over the economy became much tighter. Goring ignored Schacht’s expertise and Schacht resigned in 1937. He was replaced with the weaker Walther Funk - but Goring replaced himself as the real economic dictator.
Successes of the FYP?
Success was mixed…on the one hand production of a number of key materials such as aluminium and explosives expanded greatly, but they did fall a long way short of their targets in the vital commodities such as oil and rubber and arms never reached the levels Hitler intended.
The role of Big business
Helped by the upturn of world trade and encouraged by the Nazi destruction of free trade unions and by its economic programme, a commercial recovery occurred. The financial gains were impressive…
Financial gains of the commercial recovery:
1) share price index increased from 41 points in 1932 to 106 in 1940.
2) salary improvements - average RM3700 in 1934 to RM5420 in 1938.
3) annexations of land from 1938 provided enormous opportunities for taking over foreign property.
