The economic recovery Flashcards
Hitler was careful not to become tied down to the details of what policies?
Economic policy
In February 1933, what did Hitler tell his cabinet in reference to economic policy?
‘avoid all detailed statements concerning an economic programme of the government’
Hitler was politically astute enough to realise that the survival of the dictatorship depended on what ?
Bringing Germany out of depression
At first, the Nazi economic policy was under the control of who?
Hjalmar Schacht
Why was the Nazi economic policy at first under Schacht?
The Nazi leadership still needed to work with the economic elites
Schacht was already what?
A respected international financier because of his leading role in the creation of the Rentenmark
Was there a single, easy quick fix solution to the economic problems?
No
The heart of recovery lay in the what and led by who?
In the major revival of public investment led, by the most part, by the state itself
What did the state embark on?
A large-scale increase in its own spending in an effort to stimulate demand and raise national income
Under Schacht’s guidance and influence, what was adopted through a range of economic measures?
Deficit financing
Initially, why did the state increasingly assume greater responsibility for the control of capital within the economy?
Because the German banking system had been so fundamentally weakened
What did the state proceed to do to interest rates and debts of local authorities?
Set interest rates at a lower level
Reschedule the large-scale debts of local authorities
Why were particular financial benefits given to businesses?
To stimulate economic growth and also to reward some of the most sympathetic supporters of the Nazis in the election
What were some of the measures given for assistance for farming and small businesses?
Maintenance of tariffs on imported produce to protect German farmers
Subsidies from Reich Food Estate in a nationally planned agricultural system
Reich Entailed Farm Law, tried to offer more security of land ownership to small farmers: debts reduced by tax concessions and lower interest rates
Allowances to encourage the rehiring of domestic servants
Allocation of grants for house repairs
What was renewed in June 1933?
Law to Reduce Unemployment
Law to Reduce Unemployment was a scheme originally started by who, and when?
Papen in 1932
The RAD was extended to what?
To employ 19-25 year olds
Give examples of the state and their range of investment projects.
RAD extended employment
Renewal and expansion of the Law to Reduce Unemployment
For a long time most historians believed what was the main focus of investment?
Rearmament
Figures for public expenditure show that the main focus of investment was initially spread between what?
Rearmament
Construction
Transportation
Investment in the first three years was directed towards what? And give examples
Work creation schemes
e.g.
Reforestation
Land reclamation
Road improvement
(e.g. motorways)
Expansion of the housing sector and public buildings
The cumulative effect of these policies was to what ?
Triple public investment between 1933 to 1936 and to increase government expenditure by nearly 70%
How was the economic recovery by 1936?
Well advanced
After 1936, the emphasis began to turn towards what?
Rearmament
How many people were unemployed in January 1932?
6 million
How many people were unemployed in 1936?
2.1 million
Why, even by 1936,did government public deficit not run out of control?
Schacht maintained taxes at a relatively high level and encouraged private savings in state savings banks
What foreign factors positively effected the German economy?
All of it took place as the world economy began to recover
Aided by the natural upturn from the low point of winter 1932
What two underlying worries were there despite the impressive economic recovery?
Rapid increase in demand would rekindle inflation
Lead to a balance of trade deficit
Why did the problem of inflation never materialise?
Lack of demand in the economy
Regime established strict controls over prices and wages
What helped the regime establish strict controls over prices and wages?
Abolition of the trade unions
Explain the recurring problem with the balance of payments which first appeared in the summer of 1934
Consequence of Germany’s importing more raw materials while failing to increase exports
Gold and foreign currency reserves = low
The early economics minister, Schmitt, wanted to reduce unemployment further by what?
By manufacturing more consumer goods
But powerful voices in armed forces and big businesses were already demanding more resources for major programmes, e.g. rearmament
Why was Schmitt’s policy consequently rejected and he removed?
Hitler couldn’t ignore such pressure, esp. as economic problem coincided w/ pol. dilemma over SA
What did Schmitt’s removal allow Schacht to do?
Combine the offices of minister of economics and president of the Reichsbank
By the law of 3rd of July Schacht was given what?
Dictatorial powers over the economy
Schacht used his new powers over the economy to introduce what?
The ‘New Plan’ of September 1934
What did the ‘New Plan’ of September 1934 provide?
A comprehensive gov. control of all aspects of trade, tariffs, capital and currency exchange in attempt to prevent excessive imports.
Gov. decided which imports were allowed or prohibited
The economic priorities were set by what series of measures?
Trade treaties
Reichsmark currency
Mefo Bills
Explain trade treaties
Tried to promote trade & save foreign exchange by signing bilateral trade treaties, esp. w/ south-east Europe
Took form of straightforward barter agreements
In this way, Germany exerted eco. influence over the Balkans long before it obtained military and pol. control
Explain the Reichsmark currency
Germany purchased raw materials from countries it traded w/ on condition that Reichsmarchs could only be used to buy back German goods
(at 1 time = est. Reichsmarch had 238 diff. values depending on country and circumstances)
Explain Mefo bills
Mefo = special gov. bills designed by Schacht
Issued by Reichsbank and guaranteed by gov. as payment for goods, deferred for up to 5 years, earning 4% interest per annum
Main purpose was that they successfully disguised gov. spending
Was Schacht an official member of the Nazi party?
No
By mid 1936 what happened to unemployment, industrial production and GNP
Unemployment fallen to 1.5 million
Industrial production increased by 60% since 1933
Gross National Product grown over the same period by 40%
