HOW SUCCESSFUL WAS THE NAZI ECONOMIC POLICY?
1)Economic Aims- Recovery, Rearmament and War
The economy and problems before 1933:
1. Deficit Financing – based on the ideas of Keynes – started by Papen and Schleicher –
expensive but provided jobs
2. Wehrwirtschaft – Defence Economy: Peacetime economy geared towards war to prepare
Germany for war + wanted Germany not to rely on imports but it was difficult to achieve
autarky without invasion
The idea of the Defence Economy appealed to Hitler since it suited both his political and
military ambitions.
There was no coherent plan before 1933 because Hitler was not very educated
economically. There was not one unified economic system that prevailed throughout the
whole period of the Nazi regime.
3. Trade – depended on ability to sell manufactured goods which was kept back by the global
economic slump caused by the Great Depression.
4. Industry – From 1929 demand fell, production cut and many collapsed.
5. Unemployment – 6 million by 1932
Including unregistered it may have reached 8 million
6. Agricultural depression deepened – Rural poverty because of low incomes caused by low
prices because of the lack of global demand
Recovery:
Schact – President of the Reichsbank and Economics Minister
Used deficit financing to help the economy to recover by boosting demand, but since
Germany had no savings and he could not just print money he came up with the idea of
Mefo Bills to avoid inflation
A credit note issued by the Reichsbank that helped to fund increased
expenditure on rearmament by delaying real payment. Schacht set up a
company that gave out credit notes to companies providing supplies and services
for the government.
By 1927 12 billion RM in Mefo bills paid out by the govt.
They funded about half of Germany`s rearmament programme during 1933-38.
This also helped to disguise military expenditure
The government spent on building houses and motorways
Orders from the government gave private companies work, thus they hired more workers
This new atmosphere helped to create confidence
Some groups were pressured out of employment – married women/Jews
Some were no longer eligible to register for unemployment relief – agricultural workers –
this incentivised work
1
, Conscription was reintroduced – all men 18-25 years old had to join the army – armed
forces grew from 100,000 in 1933 to 1,400,000 in 1939
Schacht also introduced the New Plan to reduce imports into Germany and make it more
self-sufficient, however he promoted bilateral trade agreements with other countries –
traded manufactured goods for cheap raw materials
He was against spending out too much on rearmament before the German economy was
strong enough – this caused his clash with Hitler and therefore, he was replaced by
Hermann Goering in 1938
In some aspects, Hitler was lucky because by the time he came to power the depression
almost ended. However, the reason for Germany`s recovery was Hitler`s decision to break
with orthodoxies of economic liberalism and adopt greater state intervention and deficit
financing.
It was also due to the context in which the governments were operating
Under the Weimar Constitution it was difficult for the government to act – coalition
governments
Enabling Act – enabled Hitler with power to change economic policy
The Four-Year Plan 1936-39 – Rearmament and War
Schacht was becoming increasingly concerned at the distortion of the economy due to rearmament
Problems were occurring because of budget deficit and balance of payments issues – Total
national debt increased from 14 Billion RM in 1933 to almost 42 Billion RM in 1938/9
He wanted to increase German exports and slow down the increase in rearmament
Because of their disagreement Hitler replaced Goering with Schacht and made him head of
the Office of the Four-Year Plan
Aimed to prepare Germany for war by prioritising rearmament
The Office intervened throughout the economy
Issuing regulations controlling foreign exchange, labour, raw materials, prices, thus creating a
managed economy
The German economy was under great strain from the pressure of rearmament.
Some historians believe that the only way out of a social crisis was war, to gain extra material
and human resources.
However, other historians disagree with this statement and argue that the Nazi leadership
was unaware of the strain on the economy. Economic statistics and aspects of rearmament
show some problems, however they were to minor compared to the economic growth
experienced by the regime. These historians also suggest that it was the decision to go to
war that caused social crisis, rather than the crisis causing war. The regime was economically
not ready for a major, long-term war and thus, it could not adjust for its needs.
2.) How successful was autarky
Economic self-sufficiency. Not relying on imports.
Partly successful: - Developed ersatz (substitute) products such as Buna (artificial rubber) from
acetylene and used coal to produce rubber
However: impossible to become completely self-sufficient: - it took 6 tons of coal to produce 1 ton of
oil + by 1939 one-third of raw materials were still imports.
- Germany wanted to conquer other countries such as Austria to use their resources.
4) Guns or Butter
2
1)Economic Aims- Recovery, Rearmament and War
The economy and problems before 1933:
1. Deficit Financing – based on the ideas of Keynes – started by Papen and Schleicher –
expensive but provided jobs
2. Wehrwirtschaft – Defence Economy: Peacetime economy geared towards war to prepare
Germany for war + wanted Germany not to rely on imports but it was difficult to achieve
autarky without invasion
The idea of the Defence Economy appealed to Hitler since it suited both his political and
military ambitions.
There was no coherent plan before 1933 because Hitler was not very educated
economically. There was not one unified economic system that prevailed throughout the
whole period of the Nazi regime.
3. Trade – depended on ability to sell manufactured goods which was kept back by the global
economic slump caused by the Great Depression.
4. Industry – From 1929 demand fell, production cut and many collapsed.
5. Unemployment – 6 million by 1932
Including unregistered it may have reached 8 million
6. Agricultural depression deepened – Rural poverty because of low incomes caused by low
prices because of the lack of global demand
Recovery:
Schact – President of the Reichsbank and Economics Minister
Used deficit financing to help the economy to recover by boosting demand, but since
Germany had no savings and he could not just print money he came up with the idea of
Mefo Bills to avoid inflation
A credit note issued by the Reichsbank that helped to fund increased
expenditure on rearmament by delaying real payment. Schacht set up a
company that gave out credit notes to companies providing supplies and services
for the government.
By 1927 12 billion RM in Mefo bills paid out by the govt.
They funded about half of Germany`s rearmament programme during 1933-38.
This also helped to disguise military expenditure
The government spent on building houses and motorways
Orders from the government gave private companies work, thus they hired more workers
This new atmosphere helped to create confidence
Some groups were pressured out of employment – married women/Jews
Some were no longer eligible to register for unemployment relief – agricultural workers –
this incentivised work
1
, Conscription was reintroduced – all men 18-25 years old had to join the army – armed
forces grew from 100,000 in 1933 to 1,400,000 in 1939
Schacht also introduced the New Plan to reduce imports into Germany and make it more
self-sufficient, however he promoted bilateral trade agreements with other countries –
traded manufactured goods for cheap raw materials
He was against spending out too much on rearmament before the German economy was
strong enough – this caused his clash with Hitler and therefore, he was replaced by
Hermann Goering in 1938
In some aspects, Hitler was lucky because by the time he came to power the depression
almost ended. However, the reason for Germany`s recovery was Hitler`s decision to break
with orthodoxies of economic liberalism and adopt greater state intervention and deficit
financing.
It was also due to the context in which the governments were operating
Under the Weimar Constitution it was difficult for the government to act – coalition
governments
Enabling Act – enabled Hitler with power to change economic policy
The Four-Year Plan 1936-39 – Rearmament and War
Schacht was becoming increasingly concerned at the distortion of the economy due to rearmament
Problems were occurring because of budget deficit and balance of payments issues – Total
national debt increased from 14 Billion RM in 1933 to almost 42 Billion RM in 1938/9
He wanted to increase German exports and slow down the increase in rearmament
Because of their disagreement Hitler replaced Goering with Schacht and made him head of
the Office of the Four-Year Plan
Aimed to prepare Germany for war by prioritising rearmament
The Office intervened throughout the economy
Issuing regulations controlling foreign exchange, labour, raw materials, prices, thus creating a
managed economy
The German economy was under great strain from the pressure of rearmament.
Some historians believe that the only way out of a social crisis was war, to gain extra material
and human resources.
However, other historians disagree with this statement and argue that the Nazi leadership
was unaware of the strain on the economy. Economic statistics and aspects of rearmament
show some problems, however they were to minor compared to the economic growth
experienced by the regime. These historians also suggest that it was the decision to go to
war that caused social crisis, rather than the crisis causing war. The regime was economically
not ready for a major, long-term war and thus, it could not adjust for its needs.
2.) How successful was autarky
Economic self-sufficiency. Not relying on imports.
Partly successful: - Developed ersatz (substitute) products such as Buna (artificial rubber) from
acetylene and used coal to produce rubber
However: impossible to become completely self-sufficient: - it took 6 tons of coal to produce 1 ton of
oil + by 1939 one-third of raw materials were still imports.
- Germany wanted to conquer other countries such as Austria to use their resources.
4) Guns or Butter
2
