3.2.2
Creating a Command Economy
Schacht
Schacht
Hjalmar Schacht was the minister of Economics for the Nazis between 1934 and 1937. He was concerned about the long term sustainability of Nazi economic policies.
Schacht's aims
Schacht's aims
- Schacht's economic aims included:
- Maintain economic growth.
- Develop the Wehrwirtschaft (defence economy) to prepare Germany for war in four years and as part of this establish autarky (self sufficient economy).
- Avoid inflation.
Autarky
Autarky
- Autarky required Germany producing its own important commodities, necessary for war, so that it was not reliant on imports.
- Autarky also required the development or ersatz (substitute) products that Germany could not easily produce.
Problems with the New Plan
Problems with the New Plan
- Despite the New Plan, Germany was sucking in imports at an alarming rate. The balance of trade deficit was increasing.
- Continued high levels of government spending on rearmament was causing the government’s debt to increase too. Other sectors of the economy were being ignored – e.g. consumer goods, investment in non-military industry.
Schacht's clash with Hitler
Schacht's clash with Hitler
- Schacht was worried that rearmament was distorting the economy as there was too much emphasis on rearmament and not enough on consumer spending.
- Government expenditure on rearmament was also fuelling imports.
- Rather than listen to Schacht, Hitler set up the Office of the Four Year Plan and put Goering in charge.
Goering and the Four Year Plan
Goering and the Four Year Plan
The Nazi's political aims of expansion drove Germany's economic agenda. This is seen in Goering's Four Year Plan.
Being war ready
Being war ready
- The main aim of the Four Year Plan was to make Germany ready for war:
- The top priorities were rearmament and autarky in food and industrial production.
- The emphasis was on developing raw materials and machinery to increase armaments ready for war.
Autarky
Autarky
- Difficulties of autarky:
- Germany would not be totally self-sufficient but would not rely on imports for key commodities e.g. food, iron, oil, explosives, steel, rubber, coal.
- Resources focused on developing ersatz goods e.g. making oil from coal.
The Office of the Four Year Plan
The Office of the Four Year Plan
- The Office of the Four Year Plan issued regulations controlling:
- Foreign exchange (and therefore imports); raw materials, labour etc. It also set targets for specific industries.
Economic targets
Economic targets
- 1939:
- Germany imported one third of its raw materials.
- Germany was self-sufficient in grain and potatoes; it was almost self-sufficient in vegetables and meat.
- However, it imported 43% of fats.
- 1942:
- Only the brown coal target had been met.
- Oil was at 45% of its target.
- Hard coal was at 79% of its target.
- Steel was at 85% of its target.
Impact on consumers
Impact on consumers
- Channelling all resources into Wehrwirtschaft was not possible. Maintaining some level of consumer demand was necessary for morale. Nevertheless this was a source of tension.
- Schacht, some industrialists and many in the military wanted more stress on consumer goods, increasing German exports.
- Mason (1993):
- The Nazi party was unable to focus completely on Wehrwirtschaft because of fear of popular unrest.
- Overy (1994):
- There were problems but no crisis as the government controlled wages and prices and production and investment were growing.
Degree of Recovery by 1939
Degree of Recovery by 1939
The Nazis had delivered on many of their promises. However, whilst many benefitted, the undesirable (in the eyes of the Nazis) members of society lost out. Overall, Germany was not a fully fledged wehrwirschaft by 1939.
1939 key statistics
1939 key statistics
- Unemployment was less than 0.2 million.
- Real wages 7% higher than in 1936.
- Industrial production up 25% on 1928.
- Military expenditure was 38% of GNP.
- In 1928 German imports were 14 billion reichsmarks. In 1938 German imports were 5.4 billion reichsmarks.
- In 1928, prices in Germany were 40% higher than they had been in 1913. In 1938, prices in Germany were only 5.8% higher than they had been in 1913.
- Government expenditure was up from 18.4 billion reichsmarks in 1933 to 37.1 billion reichsmarks in 1938.
Winners
Winners
- People who benefitted from Nazi economic policies included:
- The unemployed.
- The armed forces.
- Families (marriage loans, payments for having two or more children).
- Large and heavy industry e.g. IG Farben, Daimler-Benz and armaments factories.
- Large, arable farms.
- Overall, people were more optimistic about the economy by 1939 than in 1933.
Losers
Losers
- People who lost out from Nazi economic policies included:
- 300,000 small businesses had gone bankrupt.
- Working class families’ consumption of all foodstuffs except rye bread, cheese and potatoes had fallen.
- Livestock farmers faced shortages and economic hardship, unlike arable farmers.
- Small farmers could not get loans to improve their farms.
- Private steel companies were squeezed by RWHG.
- Women who lost jobs in professional services.
Historical assessment
Historical assessment
- Hite and Hinton (2000): ‘Hitler’s priorities meant that the mass of the German people failed to benefit greatly from economic growth.’
- Overy (1982): ‘Even by 1937 the economy was only just above the level reached some years before. From 1936 onwards… growth began to slow down.’
- Noakes (1984):‘The cracks in an economy that was operating beyond its capacity were beginning to show.’
1Political & Governmental Change, 1918-1989
1.1Creation & Collapse of Weimar, 1918-1932
1.2Nazi Dictatorship, 1933-1945
1.3Return to Democratic Government, 1945-1989
2Opposition, Control & Consent 1918-1989
2.1Opposition to Government, 1918-1989
2.2Controlling the People, 1918-1989
3Economic Developments & Policies, 1918-1989
3.1Reacting to Economic Challenges, 1918-1932
3.2Controlling the Economy, 1933-1945
3.3Creating the Social Market Economy, 1945-1989
4Aspects of Life, 1918-1989
4.1Attitudes Towards Women, 1918-1989
4.2Education & Cultural Developments, 1918-1989
5Historical Interpretations
5.1Influence of German History
5.2Hitler & Foreign Policy
5.3Contribution of Other Nations to WW2
5.4Reasons for Invading Poland
Jump to other topics
1Political & Governmental Change, 1918-1989
1.1Creation & Collapse of Weimar, 1918-1932
1.2Nazi Dictatorship, 1933-1945
1.3Return to Democratic Government, 1945-1989
2Opposition, Control & Consent 1918-1989
2.1Opposition to Government, 1918-1989
2.2Controlling the People, 1918-1989
3Economic Developments & Policies, 1918-1989
3.1Reacting to Economic Challenges, 1918-1932
3.2Controlling the Economy, 1933-1945
3.3Creating the Social Market Economy, 1945-1989
4Aspects of Life, 1918-1989
4.1Attitudes Towards Women, 1918-1989
4.2Education & Cultural Developments, 1918-1989
5Historical Interpretations
5.1Influence of German History
5.2Hitler & Foreign Policy
5.3Contribution of Other Nations to WW2
5.4Reasons for Invading Poland
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