2.3: The Nazi Economy: 1933 - 1939 PUBLIC WORKS/JOB CREATION SCHACHT’S NEW PLAN (Sept 1934)
Aims: Solve unemployment problem within 4 yrs. Increase industrial
Aims: Rectify problems generated by deficit financing policy, including
BACKGROUND production. Boost agricultural sector. Kick-start the economy by deficit
balance of trade deficit. Prevent excess imports through control of trade,
financing tariffs, capitol and currency exchange: promote autarky (self-sufficiency).
Aims: Recover from the Great Depression. Build up G Imports restricted/reduced (i.e. cotton + wool) - permitted imports for
What/Measures Taken: Public investment: tax concessions for key
Military/Prepare for War. Maintain support from civilians heavy industries for rearmament.
industries – encourage production of certain things. Law for the Reduction
of Unemployment (took women out of the list by offering loans if gave up
Stages: Recovery: 1933-1936. Rearmament 1936-1939. Total War: their job). Voluntary Labour Service 1931: little choice over Economic Priorities: (1) Bilateral Trade Treaties: promoted trade with
1939-1945 pay/job/location (removed young people from labour market). Reich SE Europe. Barter Agreements - swap goods locally. Saves G foreign
Labour Service (RAD): job creation plus it militarised the workforce. currency: no debt/low spending. Powerful economic influence (2)
Reichsmark currency: Buy raw materials abroad in Reichsmark ONLY -
Recovery (1933 – 1936) Conscription reintroduced in 1935. Heavy state spending (encouraged by
encourage buying back from G. Calmed Reichsmark value - more stable
Schacht)
currency. (3) Mefo Bills: IoUs/Credit Notes, issued by Reichsbanks +
Policies: re-inflate economy via Govt. spending, i.e. public guaranteed via the Govt. 4% interest for 5 years: helped disguise Govt.
Successful: 1bn Reichsmarks invested. Huge road-building
works, subsidies for private firms + rearmament orders spending for rearmament.
programme: Autobahn provides 80,000 jobs + canals & houses.
40% increase in production of cars. Reduction in
Problems: Balance of payment deficits: economic unemployment figures – 1932: 6m, 1936: 1.6m. 1935: RAD Successful: Raised funds for rearmament. Significantly
recovery led to rising demand for consumer goods. created (Reich Labour Service) - 6 months unpaid work + reduced unemployment to 1.5 million. 1933-36 – Industrial
Rearmament left to increased demand for raw materials - compulsory military service for 18-24yr olds. 1934: 400,000 production increased by 60%. 1933-36 – GNP increased by
danger of inflation employed. Investments tripled 1933-36: Govt. expenditure 70% 40%.
higher than in 1933.
Hjalmer Schacht: President of the Reichsbank 1933-39. Minister of Unsuccessful: Created demand for imports - balance of
Economics 1934-37. Respected economist - created the 'New Plan' Unsuccessful: Unemployment figures deceptive: RAD took payments problem was worsening by 1936. ‘Guns or butter’
in 1934, using deficit spending as a major policy. young men (18-25) out of the list of unemployed – poorly paid, debate (Schacht argued that arms expenditure should be
hard labour, poor conditions. Voluntary Labour Service had reduced and the production of industrial goods increased so
already enrolled 300,000 men by 1932 under Bruning. Balance that there was more to sell). H would not face up to the
Deficit Financing: Managed by Schacht: spend more than of trade deficit (importing more raw materials; failing to increase problems caused by focusing on rearmament, and instead
income: Financial benefits given to specific groups. Set low appointed Göring as Commissioner for Raw Materials and
its export market). Economy rebounding BUT aided by World-
interest rates encouraging people to borrow + tariffed Currency.
Wide economic progress
imported produce (protected farmers + increased
business). Subsidies offered from Reich Food estate to
Evaluation/Judgement Evaluation/Judgement
farmers. Reich Entailed Farm Law secured small farmer
land ownership with reduced debts/lower interest rates. The eradication of unemployment was undoubtedly important, and was
Grants for house repairs + allowances to encourage re- Schacht’s total control over the economy during 1933-36 gave him ability
one of Hitler’s promises. But it was only achieved because a quarter of
hiring of domestic servants to control deficit financing/effectively stabilise + grow economy. Effective
the workforce was employed in rearmament.
policy but hindered by the polycratic nature of the Nazi State. Once
GORING’S FOUR YEAR PLAN (1936) Goring’s Four Year Plan was introduced, impact of Schacht’s New Plan
reduced. Battle between improving the economy versus rearmament was
Successful: Industrial production rose at considerable rate in some won by rearmament and the desire for war.
Aims: (1) Expand Rearmament: also conscription.
(2) Achieve Autarky: self-sufficiency in production of industries: aluminium. Certain companies did very well – Daimler-Benz, I G HITLERS SECRET WAR MEMORANDUM (Aug 1936)
food/raw materials. Cut need for imports Farben, Krupps. Arguably - econ was ready to fight short blitzkrieg wars
BUT not full-scale war.
What/Measures Taken: Regulate imports/exports to Sent letter to Goring demonstrating H war aims, saying within 4 Years:
prioritise strategic sectors. Control key sections of Unsuccessful: Schacht resigned 1937: undermined economic credibility.
labour force: prevent price inflation/increase DAF Production bottlenecks, competition for scarce resources, labour shortages, Wants Armed forces to by operational by 1940
influence to direct industry. Increase raw material lack of foreign exchange to pay for imports + growing danger of inflation. Wants German Economy to be fit for war by 1940
production + reduce imports. Develop Ersatz Most targets were not met, esp oil & rubber demands of the armed services
(substitute) products, i.e. oil from coal + artificial were not met. i.e. in 1938: 2340/13,830 Oil + 5/120 rubber. Not self-sufficient
rubber (bura). Increase agriculture production in vegetables, eggs, meat or fat. 1939: Germany still relied on foreign Evaluation/Judgement
supplies for 1/3 of its raw materials. NOT ready for total war
DAF (GERMAN LABOUR FRONT) ECONOMIC IMPACTS ON DIFFERENT GROUPS OVERALL ECONOMIC JUDGEMENT
Mason argues that the economy was expanding too quickly. Large-scale rearmament had created a number of problems: Growing shortages in many areas – food, consumer goods and raw materials. Balance of trade was
Aim: End demands
bad; difficult of workers
to finance. Labour +shortages
strip them– of
esptheir rightsskilled workers -> pushed up wages.
among Landowners:
ExpenditureLived
and thecomfortably:
deficit hadkept land
grown + easily
and acquired
the govt was finding it difficult to finance the debt. Mason argues that the discontent of the
How successful was the German Economy?
more
workers pushed Hitler into war as a way out of the econ cheap
crisis. land.to prepare for the war they found themselves in (had planned to be ready in 1943).
Failed
What/Measures Taken: 1933: Replaces TUs - W/C 46.3% of society
(largest) - Nazis aimed to end demands + strip right of collective Mittelstand (Lower Middle Class): Biggest group to vote Nazi. Successful
bargaining. Compulsory, Nazi Run. Responsible for pay + working Benefits: Nazis implement measures to protect small
conditions: no longer independent. Handled obedience/strikes/absence - businesses from large departmental stores. Drawbacks: Group
(1) 1936 more successful than 1929: public works
Aims: Solve unemployment problem within 4 yrs. Increase industrial
Aims: Rectify problems generated by deficit financing policy, including
BACKGROUND production. Boost agricultural sector. Kick-start the economy by deficit
balance of trade deficit. Prevent excess imports through control of trade,
financing tariffs, capitol and currency exchange: promote autarky (self-sufficiency).
Aims: Recover from the Great Depression. Build up G Imports restricted/reduced (i.e. cotton + wool) - permitted imports for
What/Measures Taken: Public investment: tax concessions for key
Military/Prepare for War. Maintain support from civilians heavy industries for rearmament.
industries – encourage production of certain things. Law for the Reduction
of Unemployment (took women out of the list by offering loans if gave up
Stages: Recovery: 1933-1936. Rearmament 1936-1939. Total War: their job). Voluntary Labour Service 1931: little choice over Economic Priorities: (1) Bilateral Trade Treaties: promoted trade with
1939-1945 pay/job/location (removed young people from labour market). Reich SE Europe. Barter Agreements - swap goods locally. Saves G foreign
Labour Service (RAD): job creation plus it militarised the workforce. currency: no debt/low spending. Powerful economic influence (2)
Reichsmark currency: Buy raw materials abroad in Reichsmark ONLY -
Recovery (1933 – 1936) Conscription reintroduced in 1935. Heavy state spending (encouraged by
encourage buying back from G. Calmed Reichsmark value - more stable
Schacht)
currency. (3) Mefo Bills: IoUs/Credit Notes, issued by Reichsbanks +
Policies: re-inflate economy via Govt. spending, i.e. public guaranteed via the Govt. 4% interest for 5 years: helped disguise Govt.
Successful: 1bn Reichsmarks invested. Huge road-building
works, subsidies for private firms + rearmament orders spending for rearmament.
programme: Autobahn provides 80,000 jobs + canals & houses.
40% increase in production of cars. Reduction in
Problems: Balance of payment deficits: economic unemployment figures – 1932: 6m, 1936: 1.6m. 1935: RAD Successful: Raised funds for rearmament. Significantly
recovery led to rising demand for consumer goods. created (Reich Labour Service) - 6 months unpaid work + reduced unemployment to 1.5 million. 1933-36 – Industrial
Rearmament left to increased demand for raw materials - compulsory military service for 18-24yr olds. 1934: 400,000 production increased by 60%. 1933-36 – GNP increased by
danger of inflation employed. Investments tripled 1933-36: Govt. expenditure 70% 40%.
higher than in 1933.
Hjalmer Schacht: President of the Reichsbank 1933-39. Minister of Unsuccessful: Created demand for imports - balance of
Economics 1934-37. Respected economist - created the 'New Plan' Unsuccessful: Unemployment figures deceptive: RAD took payments problem was worsening by 1936. ‘Guns or butter’
in 1934, using deficit spending as a major policy. young men (18-25) out of the list of unemployed – poorly paid, debate (Schacht argued that arms expenditure should be
hard labour, poor conditions. Voluntary Labour Service had reduced and the production of industrial goods increased so
already enrolled 300,000 men by 1932 under Bruning. Balance that there was more to sell). H would not face up to the
Deficit Financing: Managed by Schacht: spend more than of trade deficit (importing more raw materials; failing to increase problems caused by focusing on rearmament, and instead
income: Financial benefits given to specific groups. Set low appointed Göring as Commissioner for Raw Materials and
its export market). Economy rebounding BUT aided by World-
interest rates encouraging people to borrow + tariffed Currency.
Wide economic progress
imported produce (protected farmers + increased
business). Subsidies offered from Reich Food estate to
Evaluation/Judgement Evaluation/Judgement
farmers. Reich Entailed Farm Law secured small farmer
land ownership with reduced debts/lower interest rates. The eradication of unemployment was undoubtedly important, and was
Grants for house repairs + allowances to encourage re- Schacht’s total control over the economy during 1933-36 gave him ability
one of Hitler’s promises. But it was only achieved because a quarter of
hiring of domestic servants to control deficit financing/effectively stabilise + grow economy. Effective
the workforce was employed in rearmament.
policy but hindered by the polycratic nature of the Nazi State. Once
GORING’S FOUR YEAR PLAN (1936) Goring’s Four Year Plan was introduced, impact of Schacht’s New Plan
reduced. Battle between improving the economy versus rearmament was
Successful: Industrial production rose at considerable rate in some won by rearmament and the desire for war.
Aims: (1) Expand Rearmament: also conscription.
(2) Achieve Autarky: self-sufficiency in production of industries: aluminium. Certain companies did very well – Daimler-Benz, I G HITLERS SECRET WAR MEMORANDUM (Aug 1936)
food/raw materials. Cut need for imports Farben, Krupps. Arguably - econ was ready to fight short blitzkrieg wars
BUT not full-scale war.
What/Measures Taken: Regulate imports/exports to Sent letter to Goring demonstrating H war aims, saying within 4 Years:
prioritise strategic sectors. Control key sections of Unsuccessful: Schacht resigned 1937: undermined economic credibility.
labour force: prevent price inflation/increase DAF Production bottlenecks, competition for scarce resources, labour shortages, Wants Armed forces to by operational by 1940
influence to direct industry. Increase raw material lack of foreign exchange to pay for imports + growing danger of inflation. Wants German Economy to be fit for war by 1940
production + reduce imports. Develop Ersatz Most targets were not met, esp oil & rubber demands of the armed services
(substitute) products, i.e. oil from coal + artificial were not met. i.e. in 1938: 2340/13,830 Oil + 5/120 rubber. Not self-sufficient
rubber (bura). Increase agriculture production in vegetables, eggs, meat or fat. 1939: Germany still relied on foreign Evaluation/Judgement
supplies for 1/3 of its raw materials. NOT ready for total war
DAF (GERMAN LABOUR FRONT) ECONOMIC IMPACTS ON DIFFERENT GROUPS OVERALL ECONOMIC JUDGEMENT
Mason argues that the economy was expanding too quickly. Large-scale rearmament had created a number of problems: Growing shortages in many areas – food, consumer goods and raw materials. Balance of trade was
Aim: End demands
bad; difficult of workers
to finance. Labour +shortages
strip them– of
esptheir rightsskilled workers -> pushed up wages.
among Landowners:
ExpenditureLived
and thecomfortably:
deficit hadkept land
grown + easily
and acquired
the govt was finding it difficult to finance the debt. Mason argues that the discontent of the
How successful was the German Economy?
more
workers pushed Hitler into war as a way out of the econ cheap
crisis. land.to prepare for the war they found themselves in (had planned to be ready in 1943).
Failed
What/Measures Taken: 1933: Replaces TUs - W/C 46.3% of society
(largest) - Nazis aimed to end demands + strip right of collective Mittelstand (Lower Middle Class): Biggest group to vote Nazi. Successful
bargaining. Compulsory, Nazi Run. Responsible for pay + working Benefits: Nazis implement measures to protect small
conditions: no longer independent. Handled obedience/strikes/absence - businesses from large departmental stores. Drawbacks: Group
(1) 1936 more successful than 1929: public works
