Theme 3- Controlling the Economy 1933-1945

Question 1

What is the myth about the German economy after the Great Depression?

Answer 1

That the Nazis fixed the German economy (although people at the time believed this). Most recovery policies were already in place from Weimar Germany and the USA and Europe’s recovery also contributed to German recovery.

Question 2

What was the Nazi attitude to the economy?

Answer 2

They believed in leaving private business alone but socialising the German people into one collective group. They didn’t follow set rules or ideology.

Question 3

What was the Nazi understanding of economics?

Answer 3

Hitler had little interest in or understanding of economics. He believed that economic statistics, economic laws and forces were insignificant compared to decisive action guided by his genius. He also believed in primacy of politics meaning economic policy should serve political objectives. He also thought that economics should serve the good of the Aryan race by making them financially, politically and militarily stronger.

Question 4

What were the Nazis’ aims in relation to the economy?

Answer 4

• Ensure a reasonable standard of living to maintain public support
• Provide resources for rearmament to ensure German military might
• Move towards autarky to guarantee strength and independence
• Provide resources for major civic and architectural projects

Question 5

What indirect and direct stimulus policies did the Nazis have for economic recovery?

Answer 5

Indirect- Cut tax in farming, small business and heavy industry as well as giving grants to businesses to buy new machinery or hire new workers.
Direct- Financed construction and industrial development like Reinhardt Programme which committed RM 1000 million to public works schemes.

Question 6

How successful were indirect and direct stimulus policies?

Answer 6

2.8 million jobs were created between 1933 and 1934 and business confidence increased after the appointment of economist Schacht as President of the Reichsbank. However, these policies created massive amounts of debt and the balance of payments increased.

Question 7

What trade policies did the Nazis have for economic recovery?

Answer 7

The New Plan limited import quotas for consumer imports, excluding imports crucial to rearmament like steel. By August 1934, there were 25 departments to issue import licenses.
Also increased trade with developing countries like Brazil and Yugoslavia where Germany could get better trade deals than with the USA or Britain.

Question 8

How successful were trade policies?

Answer 8

German trade came back into balance by mid 1935 and the economy continued to rearm. However, prioritising rearmament meant living standards fell in the early 1930s. For example, the price of clothing rose significantly as imports had been limited on wool, cotton and leather. The textile industry suffered massively.

Question 9

What was the ‘guns or butter’ debate?

Answer 9

Poor harvests in 1934-35 led to food shortages and butter had to be rationed in 1935. This showed the problem that Germany was not strong enough to produce both guns and butter. Darre (agricultural minister) insisted that more money should be spent on agriculture whereas Goering argued that resources should be devoted to the military.

Question 10

What did Hitler do to settle the agricultural crisis in 1935?

Answer 10

He authorised more food imports in the short term to keep prices low and avoid having to ration bread. In the long term, he began the process of creating a command economy.

Question 11

How successful were the Nazis in their economic aims up until 1936?

Answer 11

Successful in rearmament as steel imports were never limited. Successful in architectural and civil projects- Autobahn, Olympic Stadium, construction of waterways. Partially successful in living standards as they created employment and cut taxes although there was inflation and food shortages. Partially successful in autarky as imports were limited although Hitler had to increase food imports in the agricultural crisis.

Question 12

What was the DAF?

Answer 12

The German Labour Front- an Nazi organisation that replaced trade unions. However, it had no right to negotiate with managers in order to win better pay or conditions for workers.

Question 13

What was the RAD?

Answer 13

National Labour Service which provided unpaid work for young people aged 19-25. It was effectively compulsory by 1935 and counted as employment in official statistics although it was unpaid.

Question 14

What was the KdF?

Answer 14

Strength Through Joy- an organisation that brought the benefits of culture and leisure to working people. By 1937, it had a budget of RM29 million and was responsible for half the theatre booking in Berlin and subsidised more than 1.7 million short holidays (although the facilities on them were VERY basic).

Question 15

What was the Four Year Plan designed to do?

Answer 15

-Ensure that Germany’s armed forces would be ready for war in 4 years
-Ensure Germany’s economy would achieve autarky in 4 years
Very difficult to do both simultaneously (needed to import steel for military development).

Question 16

What happened to leadership and control as a result of the Four Year Plan?

Answer 16

Schacht and Goering had disagreements over rearmament vs economy and Goering effectively took control of the economy even though he had limited economic knowledge. Goering nationalised the country’s biggest steel companies, creating Europe’s largest steel company- Reichswerke Hermann Goering.

Question 17

What happened to the production of raw materials as a result of the Four Year Plan?

Answer 17

Coal production increased from 319.7 million tonnes in 1936 to 380.9 million tonnes in 1938. Steel production went up from 19.2 million tonnes in 1936 to 22.6 million tonnes in 1938. Working with uneconomical iron ore deposits meant that the steel produced was more expensive than it would have been to import.

Question 18

What happened to the production of ersatz materials as a result of the Four Year Plan?

Answer 18

Germany only produced 20% of the artificial oil required in 1939 because of labour shortages in the coal industry- lacked 20,000 to 30,000 miners to produce extra coal to turn into ersatz oil. Production of ersatz rubber increased by 500% between 1936 and 1938 but it would have been more efficient to import natural rubber.

Question 19

What happened to rearmament as a result of the Four Year Plan?

Answer 19

Aircraft production declined in the first year of the plan and in 1937, military leaders requested 750,000 tonnes of steel per month. However they only received 300,000. They advised Hitler they wouldn’t be ready for major war until 1943.

Question 20

What was the impact of rearmament?

Answer 20

It caused inflation as the government pumped massive amounts of money into the economy but no new consumer goods were being produced.

Question 21

How did workers’ living standards change?

Answer 21

They lost out considerably because of the destruction of trade unions. They had little influence over their pay and working conditions and as a result, the average working week rose from 43 to 47 hours between 1933 and 1939 and wages were 2% lower in 1939 than 1932, despite inflation.

Question 22

How did womens’ living standards change?

Answer 22

Nazi policies led to increased employment opportunities for women and most women who had been unemployed between 1930 and 1932 found employment under the Nazis. Women in the workforce increased from 11.4 million in 1933 to 14.8 million in 1939 although this was mostly in clerical jobs so men could be released for munitions production. Their wages were also only around half that of men and they often had jobs with the lowest pay and status.

Question 23

How did the mittelstand’s living standards change?

Answer 23

Small businesses benefited from the destruction of trade unions and increase in employment. However, some small businesses like clothing firms suffered from the ban on textile imports and struggled to compete for labour with larger firms with government grants who could pay workers more.

Question 24

How did farmers’ living standards change?

Answer 24

Farmers also lost out because price controls on food reduced their profits and meant they struggled to attract workers. The Reich Food Estate also took a cut of profits, as high as 25% and new policies meant that women could no longer inherit farmland. As farmers could no longer sell their land because of the Reich Entail Farm Law, banks refused to give them loans based on the value of their land.

Question 25

How did industrialists’ living standards change?

Answer 25

Big businesses and industrialists benefited as they could keep wages low and increase the length of the working day. Some firms like IG Farben worked closely with the Nazis and as a result they had more than 200,000 employees by 1939 and were worth more than RM1.6 billion. However, some industrialists also complained about Nazi interference like Goering’s insistence on mining unprofitable steel and the nationalisation of large parts of the steel industry.

Question 26

How did the war cause economic administrative chaos?

Answer 26

There were 4 centres of economic power- The Four Year Plan Organisation, the Todt Organisation and Todt’s Ministry of Munitions, the Ministry of Economics and the SS. There was little effective coordination between them, meaning the war economy was chaotic and inefficient. There was also continuous infighting between senior Nazis, business owners and military leaders. For example, senior Nazis encouraged business owners to work in an uneconomical way and military leaders fought over scarce resources.

Question 27

How did Goering worsen the economic chaos during the war?

Answer 27

Goering was unwilling to delegate, even though he held multiple important roles and couldn’t pay enough attention to any of them. He also allocated resources to people who wouldn’t pose a threat to him rather than who could use them best. He was also addicted to morphine.

Question 28

What were Nazi economic plans like during the war?

Answer 28

Nazi plans in war were also unrealistic and unachievable but they made military plans on the basis that their economic plans would succeed, like the invasion of the SU in 1941. They hoped to extract oil but a shortage of skilled workers and machinery meant they were unable to extract significant amounts of Soviet oil. Hitler also wanted to increase the size of the air force to 21,000 planes but the weak economy and aircraft industry meant it never exceeded 5000 planes.

Question 29

How did Nazi priorities weaken the war effort?

Answer 29

Some Nazi policies diverted key resources from the main objective of fighting the war such as the Final Solution and propaganda like the film Kolberg which served no military purpose but required extensive labour and money. It diverted 100,000 soldiers from the front line. The economy also continued to produce non-essential items like cosmetics and weapon creation was focused on creating new expensive weapons like V1 and V2 weapons that had little impact rather than mass producing weapons.

Question 30

How many more weapons did Britain have than Germany as a result of prioritising new weapon development like the V1 and V2 weapons?

Answer 30

Germany spent $6 million on weapon production compared to Britain’s $3.5 million yet Britain produced 50% more aircraft and 12 times as many armoured cars as Germany.

Question 31

When was Speer appointed as Minister of Armaments and War?

Answer 31

1942

Question 32

How did Speer try and solve the problem of Gauleiters refusing to contribute to the war effort?

Answer 32

He took advantage of his closeness to Hitler and put pressure on them, including blackmailing them with no coal supplies if they didn’t help with food supplies.

Question 33

How did Speer try and solve the problem of inadequate standardisation of equipment?

Answer 33

He established the Armaments Commission to ensure standardisation of munitions.

Question 34

How did Speer try and solve the problem of scarce resources being devoted to non-essential goods and projects?

Answer 34

He campaigned against the allocation of resources to non-military uses including the use of a rubber stamp reading ‘Return to sender-irrelevant to the war effort’ on orders for non essential goods. He also placed a ban on all plans for post war construction.

Question 35

How did Speer try and solve the problem of inadequate mobilisation of labour?

Answer 35

Tried to prevent the conscription of skilled workers (although this failed to have the desired effect). He made greater use of concentration camp labour and pressed for an increased use of 3 shifts a day for workers. He also encouraged the employment of women and as a result, half a million women were taken out of domestic employment and put to more productive use. He made a comparison to the Allies who had high employment of women.

Question 36

How did Speer try and solve the problem of Allied bombing?

Answer 36

Set up special task forces to repair bombed factories and create temporary accommodation for workers that could go up in a day.

Question 37

How successful were Speer’s policies?

Answer 37

Within the first 6 months of his appointment, ammunition production increased by 97% and total arms production increased by 59%. Productivity in the munitions industry increased by 60% by 1944 although his efforts were sometimes hindered by Nazi infighting.

Question 38

Did the Nazi regime become more efficient during the war?

Answer 38

The economy became more efficient under Speer but the Nazi state continued its haphazard development with the growth of new organisations like the Armaments Ministry and the competition between senior Nazis. Formal state structures were becoming increasingly bypassed. Hitler also became increasingly remote during the war, spending most of his time at Berghof, Wolfsschanze or later, his Berlin bunker. This was problematic because Hitler had heavy control yet was very remote.

Question 39

What were the main reasons for economic downfall in 1945?

Answer 39

-From 1942, Germany started to retreat and as they lost conquered territory, this meant the Nazis had fewer and fewer resources with which to keep fighting and feed the German people.
-Allied bombing destroyed factories, synthetic oil plants, roads and canals making it more difficult to produce or transport goods.
-By the end of 1944, the economy could no longer produce enough armaments to replace those that were being captured or destroyed as the Allies advanced.
-Supplies of food, fuel and munitions dwindled as the war continued.
-There was a fuel crisis by late 1944.
-As the Red Army advanced from the east, refugees fled into Germany, putting a greater strain on resources.
-Scorched Earth policy meant some factories were destroyed to stop the Allies gaining them.

Question 40

How extreme was the economic downfall in 1945?

Answer 40

From December 1944 to January 1945, production fell by 60% and economic production finally collapsed in 1945.