Hitler’s economic policy

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Economic problems- January 1933

● Came into power during The Great Depression in Germany (and all over the world)

○ Unemployment was high: 7 million people

● Hitler’s immediate priority is to secure economic recovery and reduce the unemployment

● If the Nazi regime was going to be credible they needed to fix the economy

● After WWI the collapse of the economy in Germany caused distress across the country

● There was a collapse in the living standards which weakened the Weimar Republic

○ Hitler realizes he needs to produce a stable and satisfactory living space for the German

people in order for the Nazi regime to be successful

Schacht’s plan

● Who was Hjalmar Schacht?○ A conservative nationalist who shared Hitler’s vision of a military strong, dominant and

prosperous Germany

● Hitler wished to rebuild the heart of Germany’s industrial economy○ His plans were not revolutionary and it was actually shared by many German politicians○ In the short term, Hitler was okay with letting the traditional business establishment, under

Schacht, direct the economy○ Schacht is appointed the President of the Reichstag Bank in 1933 and in 1934 the Minister for

Economics

● The New Plan 1934○ Continued to follow the von Papen policy which provided state investment to reduce

unemployment○ Between 1932 and 1935 the government invested 5 billion Reichsmark in Arbeitdienst (labor

works projects)

schacht cont..

● Schacht realized a sense of confidence in the economy was needed in order for it to thrive, so he instituted a stricter hold on wages and prices of products

● The New Plan was starting to turn Germany into a state of self reliance ○ Regulated the moving of capital, trade in currency and protecting tariffs

● Schacht introduced the Mefo Bill in order to provide capital for government investment without having to raise the taxes on the citizens or creating inflation

○ This was highly popular among the people● Schacht ended up having a growth of public investment from 2.2 billion in 1932 to 8.1 billion in 1936● Unemployment also fell from 25.9% in 1933 to 7.6% in 1936

Hitler’s plan

● The Four Year Plan 1936-1940○ Germany lacked supplies such as iron, coal, and oil which were all needed for a war effort○ Saw the need to secure the supplies of raw materials which were needed to build an economy

capable of sustaining war (more self sufficiency)○ April 1936- Hermann Göring is appointed as Commissoner of Raw Materials

● The Krauch Plan○ Carl Krauch, and Göring were dedicated to work towards the Fuhrer○ Concerted effort to achieve self sufficiency in the the war related industries such as rubber and

oil○ Schacht was cautious of the policy of autarky, the means of solving the problem of germany’s

raw materials shortage, and therefore resigned in 1937○ He was replaced by Walter Funk who supported the Four Year Plan

Hitler following Schacht’s dismissal

● Nazi state was directly involved with industrial production from 1936 and on○ The Reichswerke-Hermann-Göring steel works opens in 1937○ Aim was to boost the rearmament but Germany lacked high grade iron

■ Reichswerke tries to develop use of low grade ore■ Could not meet the military demands making Germany self sufficient on Swedish imports

(failure for this so called self sufficiency)

● 1938 Germany’s trade deficit had risen to 432 million Reichsmarks ○ trade deficit-the amount by which the cost of a country's imports exceeds the value of its exports.

● Göring’s policies ended up failing to create an economy that was able to sustain a war by 1939

Explain the nature of Nazi economic decision

making between 1933-39

Overview of 1933-36

● Hjalmar Schacht, the Reich finance minister from 1933 – 1936, based the recovery of the German economy in Keynesian economic theory, part of which theorizes that consistently high government spending could act as a stimulant to the economy when unemployment is similarly high and business confidence/optimism is low, especially in areas such as physical infrastructure and long-lasting projects.

● Nazi economic policy at this time aimed to make Germany economically self-sufficient in order to make the country a superpower (autarky), primarily through cutting German imports and devoting research into the making of synthetic materials (such as rubber, petroleum and textiles).

● Germany also adopted the policy of Wehrwirtschaft; the preparation of the German economy for total war in the long term by increasing industrial production and prior autarky measures of production of synthetic materials.

Explain the nature of Nazi economic decision

making between 1933-39

Overview of 1936-39

● Most economic decisions were driven by the trade deficit crisis; German export prices dropped by 9%, while import prices increased by 9%, leading to a major financial crisis by 1936

● In response to this new crisis, the Nazi party envisioned a ‘Four Year Plan’, a series of economic reforms which would theoretically continue Germany’s path to becoming a superpower

○ It was intended to put Germany on a war course; self sufficiency for war, building of military fortifications, military skills training and rearmament.

○ This is in stark contrast to the New Plan, which emphasised stability, peace and the betterment of the German people as a whole.

Evaluate the economic strategy of the Nazi

gov’t between 1933-39

● There was no genuine planning or theory guiding it. By Nazi viewpoint, the economy was not as pressing an issue as genetics or militarism

● Hitler was firmly rooted in his ‘herrenvolk’ ideas, believing that the Aryan people would triumph no matter what, and himself often proclaimed that “the economy is something of secondary importance”.

● Many economic ideas were influenced by Hitler’s vision of Lebensraum● Generally, in the first few years, the quality of people’s lives improved, which

wasn’t difficult due to the fact that the people had been previously exposed to an extremely low standard of living.

Evaluate the economic strategy of the Nazi

gov’t between 1933-39

The Four Year Plan Objectives

1. Reduction of unemployment – this had been successful earlier with Schacht’s New Plan (German unemployment was reduced to one million by 1937), it still had to be prioritised.

2. Increased synthetic fibre production – (nylon and rubber). The purpose of this was to improve Germany’s technology to be on par with other great powers and to pursue the ideal of autarky, as well as to ensure that Germany would not have to suffer from the effects of blockade of resources as had happened in World War One by the Royal Navy.

3. Continue public works projects – the Autobahn was still in development at the time; the necessary number of workers were drafted into service, as all unemployed men from the ages of 16 – 25 were made to work on the Autobahn. Side projects included various sports stadiums scattered around the country, flak towers (military fortifications) and statues and monuments dedicated to Hitler and the Nazi state.

Evaluate the economic strategy of the Nazi

gov’t between 1933-39

The Four Year Plan Objectives

4. Increase automobile production – Hitler loved cars, even though he could not drive himself. While the official reason was for the ‘betterment of the people’, the real driving force behind this was the hope that more men would learn how to drive and therefore enter the military with basic vehicular skills, thus cutting down training time when it came to driving trucks and the like.

5. Begin open rearmament- While military production had been de facto beginning ever since Hitler came to power in 1933, the Four Year Plan increased production drastically and made it ‘official’ government policy, in defiance of the Treaty of Versailles and the Allies.

To What Extent Was Nazi Economic Policy

Totally Subordinated to the need to Prepare For

War?

● Hitler’s view revolved around the war and Lebensraum in the east. Therefore, he treated economic policy as the means by which a war economy could be built. However, there were other priorities that had an impact on his economic policies like the collapse of the domestic economy, the collapse in living standards and the weakened Weimar Republic.

● At the beginning, though, when Hitler was coming into power the regime had come to power on the back of a crippling economic depression and its immediate priority was to secure economic recovery and reduction in unemployment. Rapid recovery was crucial to the credibility of the regime.

To What Extent Was Nazi Economic Policy

Totally Subordinated to the need to Prepare For

War?

● Later on, properties of economic policy during the Nazi era were contradictory like wanting to build an economy capable of sustaining war contradicted with the political necessity of ensuring confidence and prosperity in Germany

● The Nazi regime did not have a clear economic policy because it had a confusion of aims which allowed a wide range of groups to be involved in the shaping of the economic policy

● The balance of power between groups, like the conservative Schacht or the radical Speer, and their relative influence over economic policy shifted Hitler's demand for a more radical economic policy

● This resulted in Germany not being completely ready for war in 1939