The economic policy of Germany in 1933-1941 Essays

The economic policy of Germany in 1933-1941 Essays The economic policy of Germany in 1933-1941 Paper The economic policy of Germany in 1933-1941 Paper Essay Topic: Claim of Policy Cited in Mein Kampf and Zweites Buch are Hitlers four main aims concerning economic policy. First, Hitler aimed to create an autarkic system, which would enable Germany to sustain broader hegemony within Europe. Secondly, he intended to target above all the lands in the east. Third, since the latter inevitably involved expansion- and therefore conflict- the economic infrastructure would have to accommodate a considerable increase in military expenditure. But, fourth, he needed the support of the German people and could not therefore risk severely depressing their living standards in any quest for military supremacy. Thus the fundamental question is, did Hitler prioritise any of his aims? The incentive of this is essay is to analyse the Guns v butter debate over the priority of rearmament or the consumer- both expanded, but from 1936 onwards guns were the priority. Hitler came to power after the worst of the Depression. The 1929 Wall Street Crash affected German industry resulting in recession. Six million became unemployed where the employed suffered due to reduced hours and low earnings. Consumer demand fell, as a result of which there was a decline in small shops. Businesses and banks were heavily bankrupt and the Middle class had to rely on soup kitchens as welfare favoured factory workers. In addition they could not purchase overseas-the depressed economy had all the effects of a social catastrophe! To remedy the situation, Chancellor Bruning (1929-32) had introduced a series of deflationary measures, which were intended to promote early recovery even at the expense of accelerating short-term economic decline. There is evidence that his policies were beginning to work: unemployment was already on the downturn and Hitler was able to claim credit for recovery. The period 1933-6 was dominated by the Economics Minister, Hjalmar Schacht, whose New Plan of 1934 was intended to promote Germanys exports, reduce imports, strengthen the currency and establish a series of bilateral trade agreements with those less developed countries which were rich in raw materials. Additionally Germany refused to pay reparations, they directed scarce raw materials to key industries and more critically the control by government of all aspects of trade and currency exchange (growing role of state). For a while therefore there was economic equilibrium. Between 1935 to 1936, however, an economic crisis forced Hitler to make a decision about future priorities. He therefore introduced in 1936 the Four Year Plan, the intention of which was to develop substitutes for essential raw materials, which Germany lacked and to move to a war footing the result was an increase in the rate of rearmament. Military expenditure increased from 1. 9 billion marks in 1933 to 5. 8 billion at the start of the Four Year Plan, rising to 18. 4 billion in 1938 and 32. 3 billion in 1939. The overall aim of the Four Year Plan was to make the armed forces and the economy ready for war within four years. In addition there were another three priorities- one; increase in agricultural production, two; retraining of key sectors of the labour force and three; government regulation of imports and exports. Accompanying rearmament was a series of measures to create a more disciplined workforce. In place of the trade unions, the workforce had to accept membership of organisation such as Strength through Joy (KdF) and Beauty of Labour (SDA) while, at the same time, coming to terms with falling living standards. Two key issues arise from the above outline. One is Hitlers overall economic strategy, more precisely his schemes for territorial expansion and hence the pursuit for restored prestige. The second is the way in which this affected the German people in terms of economic stability and living standards. Historians have often debated the fact that Hitler via economic policy merely wanted to restore the prestige of Germany. Indeed this is true in that Hitler wanted to restore Germanys power to the former Bismarckian success of 1862-90. More crucially Hitler had to detach Germany from the terms of the embarrassing Treaty of Versailles. The Versailles Treaty had robbed Germany of the prestige it maintained in Europe before the First World War. The Treaty was a major setback for Germany, as it resulted in severe population loss and economic loss, primarily in the loss of Alsace and Lorraine and huge reparation payments. Other land lost was Eupen and Malmedy to Belgium, the controversial Polish Corridor and Poznania, Eastern Upper Silesia, Memel and Lithuania. The Rhineland was demilitarised and additional clauses of the treaty included disarmament and the humiliating War Guilt Clause. The overall effects on Germany were: loss of 13% of its territory, 12% of its population or figuratively 6. 5 million German people. The loss of 48% of its iron ore, 16% of its coal and 15% of its agricultural production. Hitler looked at these figures and realised that the Allied forces had ravaged Germany. Additionally he felt Bismarcks successes had been undermined, especially in the loss of Alsace and Lorraine to the French. Thus it was his duty to retrieve what Germany had lost, it was a personal fervent belief on Hitlers behalf to restore the devastated Germany to its former glory. Subsequently Hitler set out to quash the terms of the treaty through rearmament, autarky and pursuit of Lebensraum. All three aims were geared towards inevitable war in the east. Hence the economy needed to be concentrated on war and restoration of kudos rather than living conditions. In Zweite Buch he argued that Germany should abandon its former pursuit of economic power through colonies or attempts to dominate Western Europe and, instead, should be turning our eyes towards the land in the east. In this way Lebensraum could be fulfilled, large peasant communities would eventually be established in the future in Poland and Russia on land carved out of these countries by the German army. German domination would also ensure self-sufficiency in all raw materials and food as well as guaranteed outlets for manufactured goods. Autarky would underpin the future economy; Lebensraum would give autarky geographical cohesion; and rearmament would provide the means of achieving Lebensraum. Accordingly in 1934, Schacht introduced the New Plan promoting and heightening autarky. The Four Year Plan was aimed at making the armed forces and economy ready for war in four years. Hitler made this intention clear in the Hossbach Memorandum, as a result of which Goering, at the Four Year Plan Office, was instructed to place the German economy on a war footing by promoting autarky and developing substitutes for any essential materials which Germany had to import. From 1936 to 1939 rearmament dominated economic growth, exports fell and standards of living were held as growth in the economy was devoted to military spending. From 1936 to 39 two thirds of Germanys industrial investment was devoted to production of steel, iron ore and tools. The production of steel was three times greater than that in Britain and the production of coal was two times greater. From 1939 the German air force increased and was five times greater, including a vast battle fleet and army. Standards of living declined even though Hitler denied this. And by 1939 danger of the economy overheating due to labour/ raw material shortages and the rise in some prices rendered the economy unstable. Previous to 1939 Hitler realised that there just was not enough resources, this conflict with reality led the Nazis to assume a policy of expansionism into the east. Here Hitler was also fulfilling his ideological goal of Lebensraum. After invading Austria and Czechoslovakia Hitler received growing hostility from the elites, army and businessmen as invasion posed a grave risk to the economy. Germany was not ready for until the mid 1940s. However Hitlers miscalculations over the Polish crisis led to Britain and France declaring war on Germany before her plans were complete. Despite the fact that the economy was overheating Hitler achieved success with the Blitzkrieg 1939-1941. It was the only way in which Germany could grow from limited mobilisation by steadily expanding its economic base through a series of rapid and specifically targeted conquests. Blitzkrieg was as much an economic strategy as a military device. By 1941 Blitzkrieg seemed to have produced the required momentum for the achievement of the early stages of Lebensraum. Germany had gained military and economic control over Czechoslovakia, Poland, the Ukraine and a sizeable area of European Russia, as well as direct influence over Hungary, Romania and Bulgaria. With these victories, the economic dimension of Lebensraum became clearer. Then came total war, which wrecked the new economic order. Total war is often projected as the logical final step: the total mobilisation of the economy to enable it to achieve the final stage. Actually, it was a response to failure to achieve a rapid victory through Blitzkrieg. It was an admission that the previous delicate balance between consumer and military needs could no longer be maintained. Above all, it was a struggle for survival as, from 1942 onwards; the tide began to turn with the military recovery of the Soviet Union and the entry of the United States into the war. Despite the best efforts of Armaments Minister, Albert Speer, the German economy proved far less adaptable to total war than those of its three main rivals. It was massively out produced in terms of war material by the United States and the Soviet Union, while even Britain, with a smaller, economic base, managed to maintain a larger output of aircraft and artillery. It seems the total war was a desperate attempt to cling on to the Lebensraum already achieved rather than its logical completion. There is an open debate about the relationship between Blitzkrieg and total war. Either the Blitzkrieg economy was the initially successful step towards Lebensraum, which was then reversed by the disasters of total war. Or the drive for Lebensraum through total war was impeded by the intrusion of Blitzkrieg. Thus far, it seems from the analysis that Hitler was trying to restore prestige by retrieving lands lost due to the Versailles Treaty. He was also determined to achieve autarky and massive rearmament to assist the war effort. War itself was a means to restore Germany to the glorious days of the Bismarckian era, when there was unmitigated German hegemony. It was also fundamental to Hitlers belief concerning struggle, All nature is one great struggle between strength and weakness, an eternal victory of the strong over the weak The nation which would violate this elementary law would rot away. Hence, Hitlers economic policy was an attempt to create a war economy that fulfilled ideological beliefs and key foreign policy endeavours. Now, the question remains- during the years 1933 to 41, were the German people better off as a result of Hitlers economic policies? There seemed to be much to support the view that Germany was experiencing a return to prosperity after the trauma of the Depression- the time of recovery. For one thing, unemployment was in rapid decline. The figure had stood at 4. million in 1933, dropping thereafter to 2. 7 million in 1934, 2. 2 million in 1935, 1. 6 million in 1936, 0. 9 million in 1937, 0. 4 million in 1938 and a mere 0. 1 million by 1939. This was far more rapid than in the reduction of unemployment in comparable economies such as the United States and France, while Britain still had 1. 8 million on the dole in 1938. Corresponding with the decline in unemployment was an increase in wages. Falling to a low in 1933 of 70 per cent of their 1928 level, these had recovered to 75 per cent by 1934, 80 per cent by 1936 and 85 per cent by 1938. Thus by a decisive factor more and more people became better off during the six years after 1933. They were also part of a general increase in prosperity represented by a steady growth of Germanys national income from 44 billion marks in 1933 to 80 billion in 1938. This was particularly impressive since the 1938 figure was actually greater than the 72 billion of 1928, despite the fall in the value of the mark in the meantime. The workforce benefited at certain key outlets within the economy as the production of some consumer goods seemed to take off. Germans, for example, became the worlds largest owners of radio sets, while progress was also made in developing the comparatively cheap Volkswagen car. Added to these benefits was the vast range of activities provided in Strength through Joy: these included concerts, operas, theatres, cabaret, films, guided tours, sporting events and gymnastics, cruises and hikes. Meanwhile Beauty of Labour did much to improve working conditions, reduce problems such as noise levels and increase cooperation and solidarity in the workplace. Certainly the workforce as a whole was far better off than that in the Soviet Union. It was not, generally, in constant dread of being denounced to the Gestapo or being forced to reach unrealistic targets by being driven to breaking point. Overall it is easy to see why contemporaries should have seen Nazi Germany as a country undergoing a transformation in its economy to the ultimate benefit of its people. There are, however, fundamental problems with this line of reasoning. Its underlying assumption is that any improvements after 1933 were due directly and solely to Hitlers policies. But this flawed, on two accounts. First, there is more continuity between the early polices of the Third Reich and the later policies of the Weimar Republic than is often realised. Secondly, the policy of Bruning created a dynamic, which was of double benefit to Hitler. In ruthlessly taking control of the economy, Bruning intended to deal forcefully with the problems as quickly as possible in order to enable Germany to come through the other side of the economic crisis more quickly than any of the other leading industrial powers. This benefited Hitlers reputation by creating a huge peak of unemployment, which Hitler could not help but alleviate. And, by the time that Hitler had come to power, the worse was over as Brunings policies were beginning to have an admittedly belated impact. Hitler inherited a disastrous situation, which was just about on the mend. There was also reduced attention to consumer needs. Workers were producing proportionately more in terms of heavy industrial goods and armaments than they consumed. It can also be deduced from import and export figures that the general flow of trade was not in the consumers interest. The consumer suffered in two ways the imposition of tight import controls by Schacht and the huge drop in consumer goods from abroad. As to the new employee organisations, these may have had certain benefits and attractions, but they were very much in line with the aims of a totalitarian regime. The workforce was strictly regulated even down to its use of free time. This was done partly to break any desire to revive consumer habits, which would draw off resources from rearmament, and partly to keep open the channels of propaganda and indoctrination. The KdF and SDA were therefore no substitute for the trade unionism, which had been banned by Hitler in 1933. It has been discovered that the employment figures under the Nazi regime are artificial. Jews, some married women, political prisoners in concentration camps and so on- disappeared from the unemployment registers for ideological reasons. The Nazis claimed to have eliminated unemployment, but only because they had created a distorted economic system. Additionally workers had to pay their dues new employee organisations, and the organisations greatest scam, the Volkswagen, brought in tens of millions of marks- and not one car was delivered! In reality, the German workforce was putting in longer hours for a fractional notional increase in wages. In real terms wages were in decline compared to the increase in the standard of living. The input that workers had put into the economy was substantial but largely one-way: it fed into rearmament but received few consumables in exchange. Returning to the initial question the German people were not much better off and it seems that the standard of living was falling, not rising! Conclusively, it would seem from my analysis that the restoration of prestige was more important than the achievement of economic stability or the raising of the standard of living, in relation to economic policy of Germany in 1933-41. Indeed, Hitler forced the economy to execute his ideological beliefs, in particular, the quest for Lebensraum by means of conflict. To achieve his aspirations he had to discount the welfare of his workers- after all, Lebensraum would be the German nations long-term economic salvation. Hence, guns were more significant than butter. However, it would be ludicrous to claim that the German people did not benefit from the regime at all. If anything, success in foreign policy gave them hope of a better and united future, devoid of chaos.