The Nazi Economy 1933-1939

Question 1

What was the role of Schacht?

Answer 1

• He was respected due to his leading role in creating a new currency during the 1923 hyperinflation
• He enforced tariffs on imported foods and produce top protect German farmers and allocated grants for house repairs
• In June 1933 the ‘Law to Reduce Unemployment’ was renewed and expanded
• RAD was introduced when in 1935 military conscription was started however, even though it employed young men it was compulsory unpaid work
• In the first three years of Nazi rule, work creation schemes such as reforestation, land reclamation, building autobahns were funded
• These policies tripled public spending between 1933-6 and increased government expenditure by 70% over the same period

Question 2

What was the balance of payments problem?

Answer 2

• This was a consequence of Germany importing more raw materials whilst failing to increase its exports
• Its gold and foreign currency reserves were also low

Question 3

What was Schacht’s new plan (1934)?

Answer 3

• In July 1934, Schacht was given dictatorial powers over the economy which he used to introduce the ‘New Plan’ in September
• This provided the government with comprehensive control of all aspects of trade, tariffs, capital and currency exchange in attempt to lessen excessive imports
• From then, the government decided which imports would be permitted, with imports of raw wool and cotton being cut and metals being permitted in order to satisfy the needs of heavy industry

Question 4

What were bilateral trade treaties?

Answer 4

• Schacht tried to promote trade and save foreign exchange by signing bilateral trade treaties, especially with South-East European countries
• These were often straight forward, barter (exchanging without using money) agreements
• In this way, Germany gained powerful economic influence over the Balkans

Question 5

What did Germany agree with its Reichmark?

Answer 5

-Germany agreed to purchase raw materials from all countries it traded with on the condition that the Reichmark could only be used to buy back German goods

Question 6

What were Mefo Bills?

Answer 6

• Mefo were special government money bills designed by Schacht
• They were issued by the Reichbank and guaranteed by the government as payment for goods
• They were then held for up to five years making 4% interest a year
• The main purpose of the bills was to disguise government spending

Question 7

What did Schacht think of the Four Year Plan (1936)?

Answer 7

• In early 1936, it became clear to Schacht that as the import demand for rearmament and consumption of goods increased, the German balance of payments would go deeply into the red
• Schacht tried to suggest a reduction in arms expenditure but it was met with hostility by the armed forces and the Nazis
• This argument was popularly summed up as ‘guns or butter’

Question 8

What was the Four Year Plan (1936)?

Answer 8

-Hitler expressed his position in a secret memorandum presented to Göring in August 1936
In this he set two tasks:
-The German armed forces must be operational within four years
-The German economy must be fit for war within four years
In October 1936, Göring was appointed as ‘Director of the Four Year Plan’

Question 9

What were further objectives the Four Year Plan (1936) highlighted?

Answer 9

• Continue regulating imports and exports, such as prioritising chemical and metal imports over agricultural ones
• Increase agricultural production within Germany to reduce the need for food imports, this included grants for fertilisers, machinery
• To develop ersatz (substitute products)

Question 10

What were the effects of the Four Year Plan?

Answer 10

• Production of rubber and oil fell very short of their targets
• Production of key materials such as aluminium and explosives and increased greatly
• Arms production never met levels desired by Hitler and the armed forces
• All in all, the plan succeeded somewhat in the fact Germany’s reliance on imports did not increase
• Still, when war broke out in 1939, Germany still relied on foreign imports for one-third of their raw materials

Question 11

What were the effects of Rearmament?

Answer 11

• Two-thirds of German investments were directed towards rearmament
• Rearmament employed one quarter of the work force
• However, it caused food shortages, consumer goods and raw materials
• Also labour shortages elsewhere pushed up wages

Question 12

What was the German Labour Front (DAF)?

Answer 12

• Independent trade unions were replaced by the DAF in November 1933 which was mandatory for all workers
• Working hours increased from 43 hours a week in 1933 to 47 by 1939
• The DAF did not provide good working conditions and unrest was dealt with harshly
• There was some attempt for improvement with campaigns for ‘good ventilation’ and ‘hot meals’

Question 13

What was ‘Strength through Joy’?

Answer 13

• This was a state welfare organisation to try and improve the morale of workers in order to increase production rates
• It offered sports facilities, holidays and cultural visits
• However, these opportunities were reserved for ‘loyal workers’ and so were limited in their impact
• Many people paid into the ‘Volkswagen’ scheme but ultimately no cars were delivered