Nazi Economics 1933-1939
This section aims to provide IBDP students with a concise and complete understanding of Nazi economics from 1933-1939. Though this section focuses primarily on the four-year plan, it includes events that predated it as well.
Subsequent to the Wall Street crash of 1929, the German economy, similar to that of neighboring western nations, suffered calamitous consequences: unemployment spiraled, wages precipitously plummeted and disgruntlement amongst the denizens escalated once again. The economic debacle created a propitious condition, which the Nazi Party availed itself to upon Hitler’s assumption to power in 1933. The party did not wait to introduce reforms and hyperbolize the extent to which the new efforts alleviated the economy. By 1940, unemployment reduced dramatically, wages increased by 10% and the National Socialist Party received a remarkable growth in support. Though many eminent historians - including Sebastian Haffner, John Lukacs, and A.J.P. Taylor - credited the Nazis for creating widespread prosperity following the Depression, it is worth acknowledging that evidently, the general recovery of the world economy played a role in statistics. In addition, of the 200 million spent on the new reforms by the end of 1934, over half were already given consent by Hitler’s predecessors.
MEFO bills
Hitler sought for Germany to become a major power militarily and economically on the global stage, reviving the ante-1914 glory. Ergo, the concept of German rearmament often dovetails with the economic recovery. In 1934, Reich Minister of Economics Hjalmar Schacht, introduced MEFO bills, which would be used in lieu of the hyperinflated Reichmarks to finance rearmament. The industry would switch to trading MEFO bills in order to maneuver around the Treaty of Versailles. World War I peace terms made illegal German rearmament and MEFO bills funded rearming without leaving a trail. Yet, at this juncture, military expenditure still remained humble. Even by 1936, German forces would’ve found it hard to fight any neighboring state.
MEFO bills
Hitler sought for Germany to become a major power militarily and economically on the global stage, reviving the ante-1914 glory. Ergo, the concept of German rearmament often dovetails with the economic recovery. In 1934, Reich Minister of Economics Hjalmar Schacht, introduced MEFO bills, which would be used in lieu of the hyperinflated Reichmarks to finance rearmament. The industry would switch to trading MEFO bills in order to maneuver around the Treaty of Versailles. World War I peace terms made illegal German rearmament and MEFO bills funded rearming without leaving a trail. Yet, at this juncture, military expenditure still remained humble. Even by 1936, German forces would’ve found it hard to fight any neighboring state.
Remilitarization of the Rhineland
On March 7 1936, the German Army remilitarized the Rhineland. Though conventional wisdom holds that this decision was Hitler’s way of repudiating the Treaty of Versailles in the name of Germany, historian Ian Kershaw suggests that the economic quagmire in Germany, heightened by food shortages was the real reason behind Hitler’s risky initiative. The Rhineland provided a diversion from the NSDAP’s inadequacy in resolving domestic difficulties.
On March 7 1936, the German Army remilitarized the Rhineland. Though conventional wisdom holds that this decision was Hitler’s way of repudiating the Treaty of Versailles in the name of Germany, historian Ian Kershaw suggests that the economic quagmire in Germany, heightened by food shortages was the real reason behind Hitler’s risky initiative. The Rhineland provided a diversion from the NSDAP’s inadequacy in resolving domestic difficulties.
Four-Year-Plan
The apogee in economic and military development was when the second four-year-plan was implemented in October 1936. The second four-year-plan was the first economic program in post-war Germany to be clearly defined and closely followed; the previously adopted “Twenty-Five Point Program” contained several economic demands, but the extent to which these demands were enforced or supported was questionable.
Hermann Goering was appointed the plenipotentiary of the four-year-plan. The foremost aim of the plan was to achieve German autarky in preparation for the next World War in a grand period of 4 years. More specifically, the plan sought to reduce unemployment, while expanding the synthetic fibre and automobile industries. It also involved undertaking public works projects, thus further developing the autobahn system. In a different vein, the plan aimed towards strengthening military defenses through disregarding constrictions from Versailles. Hitler argued that Germany required “economic rearmament” and “military rearmament... in the same tempo.” He was aware that the British blockade in 1914-1918 was an instrumental factor in Germany’s defeat. In WWII, he would only rely on domestic production of war materials, trading within the continent at most.
Autarky
Within the category of autarky laid Goering’s objective to replace under-supplied goods in the economy with synthetics - large quantities of rubber, oil and petrol were manufactured and stored to be used in the imminent war. The aim of autarky as aforementioned was to reduce Germany’s reliance on imports, hence preventing yet another 1918-styled defeat. Iron ore was domestically supplied to curtail dependence on Swedish imports, likewise, coal was produced in Ruhr factories to eliminate dependency on France and Britain. By the late 1930s, the party took it a step further and strived to not only achieve autarky, but also increase the reliance of Southern Europe and the Balkans on Germany. By 1938 in Yugoslavia, Hungary, Romania, Bulgaria and Greece, half of all foreign transactions were conducted with Germany. However, Production targets were also never met, despite Hitler’s “Lebensraum” policies (1936-39) that yielded large amounts of raw materials and minerals from conquered territories.
Privatization
Seemingly uncharacteristic of the Nazis, Goering initiated the privatization of major commercial banks, railways, steal companies, and shipbuilding companies that were previously subsumed under public ownership. However, like practically every other nazi decision, there were intentions behind this. Strong financial restrictions still existed, while privatization was used as a propaganda tool to bolster the support for the party. The private banks were exploited to entirely fund government expenditure. In occasional cases, banks were allowed to finance new investments, though the volume and composition was constricted by the government. Top nazi government officials joined the private banks and companies to make certain that their practices conform to National Socialist ideals while still operating outwardly on the concept of privatization. The nazis also had to set themselves apart from communism, and privatization was one of their ways of doing so. Appeasement of big business cooperations was also important, as fighting unemployment was one of the Nazi’s major economic goals.
The apogee in economic and military development was when the second four-year-plan was implemented in October 1936. The second four-year-plan was the first economic program in post-war Germany to be clearly defined and closely followed; the previously adopted “Twenty-Five Point Program” contained several economic demands, but the extent to which these demands were enforced or supported was questionable.
Hermann Goering was appointed the plenipotentiary of the four-year-plan. The foremost aim of the plan was to achieve German autarky in preparation for the next World War in a grand period of 4 years. More specifically, the plan sought to reduce unemployment, while expanding the synthetic fibre and automobile industries. It also involved undertaking public works projects, thus further developing the autobahn system. In a different vein, the plan aimed towards strengthening military defenses through disregarding constrictions from Versailles. Hitler argued that Germany required “economic rearmament” and “military rearmament... in the same tempo.” He was aware that the British blockade in 1914-1918 was an instrumental factor in Germany’s defeat. In WWII, he would only rely on domestic production of war materials, trading within the continent at most.
Autarky
Within the category of autarky laid Goering’s objective to replace under-supplied goods in the economy with synthetics - large quantities of rubber, oil and petrol were manufactured and stored to be used in the imminent war. The aim of autarky as aforementioned was to reduce Germany’s reliance on imports, hence preventing yet another 1918-styled defeat. Iron ore was domestically supplied to curtail dependence on Swedish imports, likewise, coal was produced in Ruhr factories to eliminate dependency on France and Britain. By the late 1930s, the party took it a step further and strived to not only achieve autarky, but also increase the reliance of Southern Europe and the Balkans on Germany. By 1938 in Yugoslavia, Hungary, Romania, Bulgaria and Greece, half of all foreign transactions were conducted with Germany. However, Production targets were also never met, despite Hitler’s “Lebensraum” policies (1936-39) that yielded large amounts of raw materials and minerals from conquered territories.
Privatization
Seemingly uncharacteristic of the Nazis, Goering initiated the privatization of major commercial banks, railways, steal companies, and shipbuilding companies that were previously subsumed under public ownership. However, like practically every other nazi decision, there were intentions behind this. Strong financial restrictions still existed, while privatization was used as a propaganda tool to bolster the support for the party. The private banks were exploited to entirely fund government expenditure. In occasional cases, banks were allowed to finance new investments, though the volume and composition was constricted by the government. Top nazi government officials joined the private banks and companies to make certain that their practices conform to National Socialist ideals while still operating outwardly on the concept of privatization. The nazis also had to set themselves apart from communism, and privatization was one of their ways of doing so. Appeasement of big business cooperations was also important, as fighting unemployment was one of the Nazi’s major economic goals.
Public Works
Public works was another vital component of the Four-Year-plan - they aided economic recovery, improved infrastructure, and needless to say, increased the NSDAP’s popularity. The Nazis embarked on several public works programs and built schools, hospitals, the 1936 Olympic Stadium and most famously the autobahn. The autobahn is the world’s first motorway and its construction first began in Berlin, 1913. Following Hitler’s assumption to power, the propaganda, military and employment value of the Autobahn was recognized by the party, which thus introduced a scheme, under chief Nazi engineer Dr. Fritz Todt, to expand the autobahn. By the end of World War II, the Autobahn stretched across 2,128km.
Public works was another vital component of the Four-Year-plan - they aided economic recovery, improved infrastructure, and needless to say, increased the NSDAP’s popularity. The Nazis embarked on several public works programs and built schools, hospitals, the 1936 Olympic Stadium and most famously the autobahn. The autobahn is the world’s first motorway and its construction first began in Berlin, 1913. Following Hitler’s assumption to power, the propaganda, military and employment value of the Autobahn was recognized by the party, which thus introduced a scheme, under chief Nazi engineer Dr. Fritz Todt, to expand the autobahn. By the end of World War II, the Autobahn stretched across 2,128km.
Rearmament
Since the beginning, Hitler was lucid in “Mein Kampf” and several speeches that he intended for Germany to reclaim its position as a major military power on the global stage without consideration for any of the “unjust” Versailles terms. Hitler saw economic recovery as imperative to “political stabilization and social peace after the chaos of the slump” (An Economy Geared For War). He wanted to provide the Germany military an economical head start, increasing her probabilities on the impending battlefield. However, remilitarization was not a top priority until the late 1930s, for prior to that, the nation was locked in an economic impasse whereby “an impoverished rural sector, declining trade, balance-of-payments difficulties and a credit system on the brink of collapse” added to the German quandary (An Economy Geared for War). The Nazi arms focused thus chiefly on research, development, and capital investment. German remilitarization was only publicly promulgated in May 1935. High levels of rearmament commenced in 1936, and even then, the economy, albeit recovered, still experienced severe strains. Former Chief of Military Economic Staff in the Reich War Ministry, General George Thomas reported in a lecture that by 1939, Germany had:
"The mightiest armament industry now existing in the world. It has attained the performances which in part equal the German wartime performances and in part even surpasses them... The output of our rifle machine gun, and artillery factories is at present larger than that of any other state."
The level of output was unprecedented in German history for a peacetime economy. Steel and aluminum production as well as munitions factories created job vacancies for the masses. Hitler approved a new military productions program in 1938-1939, giving rearmament its momentum. Explosives were mass produced, the size of the air force was expanded fivefold, and naval fleet and its technologies became more elaborate.
As a whole, Hitler’s economic and military “miracle” was attainted at through profligate exploitation of the nation’s gold reserves. When Hitler first took office, the Reichbank reserves equalled to about 937 million Marks; that figure fell steeply just over the next 4 years to 72 million. The government had a debt that was virtually impossible to liquidate. Roberts summarizes Germany’s condition: she, “is going round and round. She can get nowhere until she returns to normal economic conditions, but she is afraid to try and get back to those, because she fears economic collapse and social upheaval if she does so."
Problems
The Four-Year Plan faced a myriad of problems in addition to the few expounded above. Many in the Nazi hierarchy were dubious as to whether Goering was competent to engineer an economic scheme on such a grand scale. Yet Hitler was obdurate, refusing to respond to the inputs of underlings, believing that any change of mind would taint his reputation as an unfaltering Führer. Ergo from the beginning, the stalwarts within the party were already hostile and predisposed to vacillate in their commitment toward the plan. Correspondingly, business leaders were not entirely convinced of the plan as well - remilitarization was a predominant point of conflict that thinned the already tenuous thread between the NSDAP and business leaders. Business leaders were willing to tolerate some rearmament but did not want it to be achieved at the expense of living standards. Hitler, in an attempt to conciliate, claimed that he would accomplish both the former and the latter simultaneously, but many were not credulous enough to believe him. Animosity aggravated when business leaders subsequently realized it was virtually impossible to convey their perspectives to Goering, as by 1937, he was practically an echo of Hitler. However, the most salient problem of the Four Year Plan was it extended into the second World War when it originally set out to prepare for it. On top of that, Goering resorted to slave labor, which was heavily censured by the allies at the Nuremberg Trials.
Further Reading: Hitler, 1889-1936: Hubris by Ian Kershaw
Remilitarization of the Rhineland
On March 7 1936, the German Army remilitarized the Rhineland. Though conventional wisdom holds that this decision was Hitler’s way of repudiating the Treaty of Versailles in the name of Germany, historian Ian Kershaw suggests that the economic quagmire in Germany, heightened by food shortages was the real reason behind Hitler’s risky initiative. The Rhineland provided a diversion from the NSDAP’s inadequacy in resolving domestic difficulties.
Four-Year-Plan
The apogee in economic and military development was when the second four-year-plan was implemented in October 1936. The second four-year-plan was the first economic program in post-war Germany to be clearly defined and closely followed; The previously adopted “Twenty-Five Point Program” contained several economic demands, but the extent to which these demands were enforced or supported was questionable.
Hermann Goering was appointed the plenipotentiary of the four-year-plan. The foremost aim of the plan was to achieve German autarky in preparation for the next World War in a grand period of 4 years. More specifically, the plan sought to reduce unemployment, while expanding the synthetic fibre and automobile industries. The plan also involved undertaking public works projects, thus further developing the autobahn system. In a different vein, the plan aimed towards strengthening military defenses through disregarding constrictions from Versailles. Hitler argued that Germany required “economic rearmament” and “military rearmament... in the same tempo.” He was aware that the British blockade in 1914-1918 was an instrumental factor in Germany’s defeat. In WWII, he would only rely on domestic production of war materials, trading within the continent at most.
Autarky
Within the category of autarky laid Goering’s objective to replace under-supplied goods in the economy with synthetics - Large quantities of rubber, oil and petrol were manufactured and stored to be used in the imminent war. The aim of autarky as aforementioned was to reduce Germany’s reliance on imports, hence preventing yet another 1918-styled defeat. Iron ore was domestically supplied to curtail dependence on Swedish imports, likewise, coal was produced in Ruhr factories to eliminate dependency on France and Britain. By the late 1930s, the party took it a step further and strived to not only achieve autarky, but also increase the reliance of Southern Europe and the Balkans on Germany. By 1938 in Yugoslavia, Hungary, Romania, Bulgaria and Greece, half of all foreign transactions were conducted with Germany. However, it is worth noting that while the economy under the four-year-plan was favorable for war, it was pernicious in other respects - it diverted man power and resources needed elsewhere, creating labor shortages in other sectors not directly related to war. Production targets were also never met, despite Hitler’s “Lebensraum” policies (1936-39) that yielded large amounts of raw materials and minerals from conquered territories.
Privatization
Seemingly uncharacteristic of the Nazis, Goering initiated the privatization of major commercial banks, railways, steal companies, and shipbuilding companies that were previously subsumed under public ownership. However, like practically every other nazi decision, there were intentions behind this. Strong financial restrictions still existed, while privatization was used as a propaganda tool to bolster the support for the party. The private banks were exploited to entirely fund government expenditure. In occasional cases, banks were allowed to finance new investments, though the volume and composition was constricted by the government. Top nazi government officials joined the private banks and companies to make certain that their practices conform to National Socialist ideals while still operating outwardly on the concept of privatization. The nazis also had to set themselves part from communism, and privatization was one of their ways of doing so. Appeasement of big business cooperations was also important, as fighting unemployment was one of the Nazi’s major economic goals.
Public Works
Public works was another vital component of the Four-Year-plan - they aided economic recovery, improved infrastructure, and needless to say, increased the NSDAP’s popularity. The nazis embarked on several public works programs and built schools, hospitals, the 1936 Olympic Stadium and most famously the autobahn. The autobahn is the world’s first motorway and its construction first began in Berlin, 1913. Following Hitler’s assumption to power, the propaganda, military and employment value of the Autobahn was recognized by the party, which thus introduced a scheme, under chief Nazi engineer Dr. Fritz Todt, to expand the autobahn. By the end of World War II, the Autobahn stretched across 2,128km. It is important to note that while the Autobahn is often associated with Hitler, only a quarter of it was built during the Third Reich and most of the planning and design work was completed prior to 1933. Hitler, as formerly mentioned, exploited the propaganda benefits from the Autobahn. With the party’s already strong support base, and it was not hard for the Nazis to take credit for the highway’s entire construction. In addition, while employment was a common justification for public works during the Nazi regime, it is questionable as to whether the construction of the Autobahn contributed to lowering unemployment figures. The autobahn construction employed only 80,000 men, and in fact, it was the Russian prisoners of war that finished it in WWI.
The "official statistics naturally tell only part of the story," said Stephen Roberts, an economic historian at Australia's University of Sydney. Official Nazi statistics of unemployment do not take into account a great number of factors - Marxians, Socialists, Jews and pacifists whose jobs have been replaced by persons of the superior “German Race.” The army, as well as labor-service camps, and Nazi organizations had enlisted over a million people, and half a million women no longer faced the need to work as they were granted marriage allowance by the government. Roberts continues, “What they have done has been to introduce a series of emergency steps which have drastically reduced the number of unemployed; but such steps, by their very nature, are in many cases temporary. On the other hand, the reduction [in unemployment], however artificially it may have been achieved, has had a tremendous propaganda value for the Government, and there is the fixed belief of most Germans today that Hitler has achieved wonders in providing employment."
Rearmament
Since the beginning, Hitler was lucid in “Mein Kampf” and several speeches that he intended for Germany to reclaim its position as a major military power on the global stage without consideration for any of the “unjust” Versailles terms. Hitler saw economic recovery as imperative to “political stabilization and social peace after the chaos of the slump” (An Economy Geared For War). He wanted to provide the Germany military an economical head start, increasing her probabilities on the impending battlefield. However, remilitarization was not a top priority until the late 1930s, for prior to that the nation was locked in an economic impasse whereby “an impoverished rural sector, declining trade, balance-of-payments difficulties and a credit system on the brink of collapse” added to the German quandary (An Economy Geared for War). The Nazi arms focused thus chiefly on research, development, and capital investment. German remilitarization was only publicly promulgated in May 1935. High levels of rearmament commenced in 1936, and even then, the economy, albeit recovered, still experienced severe strains. Former Chief of Military Economic Staff in the Reich War Ministry, General George Thomas reported in a lecture that by 1939, Germany had:
"The mightiest armament industry now existing in the world. It has attained the performances which in part equal the German wartime performances and in part even surpasses them... The output of our rifle machine gun, and artillery factories is at present larger than that of any other state."
The level of output was unprecedented in German history for a peacetime economy. Steal and aluminum production as well as munitions factories created job vacancies for the masses. Hitler approved a new military productions program in 1938-1939, giving rearmament its momentum. Explosives were mass produced, the size of the air force was expanded fivefold, and naval fleet and its technologies became more elaborate.
Germany was considerably successful at meeting rearmament targets. However, this was accomplished at the expense of the production of agriculture and consumer goods which stagnated, barely surpassing 1913 levels. The standards of living for the average laymen declined significantly as support for the Nazis ebbed. In other words, the “total war” concept Hitler employed created a powerful, bellicose army that acted as a facade to conceal (though not very successfully) the dismal reality of “grotesque consequences for the everyday life of ordinary Germans" (Professor Richard Evans).
As a whole, Hitler’s economic and military “miracle” was attainted at through profligate exploitation of the nation’s gold reserves. When Hitler first took office, the Reichbank reserves equalled to about 937 million Marks; that figure fell steeply just over the next 4 years to 72 million. The government had a debt that was virtually impossible to liquidate. Roberts summarizes Germany’s condition: she, “is going round and round. She can get nowhere until she returns to normal economic conditions, but she is afraid to try and get back to those, because she fears economic collapse and social upheaval if she does so."
Problems
The Four-Year Plan faced a myriad of problems in addition to the few expounded above:
Many in the Nazi hierarchy were dubious as to whether Goering was competent to engineer an economic scheme on such a grand scale. Yet Hitler was obdurate, refusing to respond to the inputs of underlings, believing that any change of mind would taint his reputation as an unfaltering Führer. Ergo from the beginning, the stalwarts within the party were already hostile and predisposed to vacillate in their commitment toward the plan. Correspondingly, business leaders were not entirely convinced of the plan as well - remilitarization was a predominant point of conflict that thinned the already tenuous thread between the NSDAP and business leaders. Business leaders were willing to tolerate some rearmament but did not want it to be achieved at the expense of living standards. Hitler, in an attempt to conciliate, claimed that he would accomplish both the former and the latter simultaneously, but many were not credulous enough to believe him. Animosity aggravated when business leaders subsequently realized it was virtually impossible to convey their perspectives to Goering, as by 1937, he was practically an echo of Hitler. However, the most salient problem of the Four Year Plan was it extended into the second World War when it originally set out to prepare for it. On top of that, Goering resorted to slave labor, which was heavily censured by the allies at the Nuremberg Trials.
As a whole, Hitler’s economic and military “miracle” was attainted at through profligate exploitation of the nation’s gold reserves. When Hitler first took office, the Reichbank reserves equalled to about 937 million Marks; that figure fell steeply just over the next 4 years to 72 million. The government had a debt that was virtually impossible to liquidate. Roberts summarizes Germany’s condition: she, “is going round and round. She can get nowhere until she returns to normal economic conditions, but she is afraid to try and get back to those, because she fears economic collapse and social upheaval if she does so."
Problems
The Four-Year Plan faced a myriad of problems in addition to the few expounded above. Many in the Nazi hierarchy were dubious as to whether Goering was competent to engineer an economic scheme on such a grand scale. Yet Hitler was obdurate, refusing to respond to the inputs of underlings, believing that any change of mind would taint his reputation as an unfaltering Führer. Ergo from the beginning, the stalwarts within the party were already hostile and predisposed to vacillate in their commitment toward the plan. Correspondingly, business leaders were not entirely convinced of the plan as well - remilitarization was a predominant point of conflict that thinned the already tenuous thread between the NSDAP and business leaders. Business leaders were willing to tolerate some rearmament but did not want it to be achieved at the expense of living standards. Hitler, in an attempt to conciliate, claimed that he would accomplish both the former and the latter simultaneously, but many were not credulous enough to believe him. Animosity aggravated when business leaders subsequently realized it was virtually impossible to convey their perspectives to Goering, as by 1937, he was practically an echo of Hitler. However, the most salient problem of the Four Year Plan was it extended into the second World War when it originally set out to prepare for it. On top of that, Goering resorted to slave labor, which was heavily censured by the allies at the Nuremberg Trials.
Further Reading: Hitler, 1889-1936: Hubris by Ian Kershaw
Since the beginning, Hitler was lucid in “Mein Kampf” and several speeches that he intended for Germany to reclaim its position as a major military power on the global stage without consideration for any of the “unjust” Versailles terms. Hitler saw economic recovery as imperative to “political stabilization and social peace after the chaos of the slump” (An Economy Geared For War). He wanted to provide the Germany military an economical head start, increasing her probabilities on the impending battlefield. However, remilitarization was not a top priority until the late 1930s, for prior to that, the nation was locked in an economic impasse whereby “an impoverished rural sector, declining trade, balance-of-payments difficulties and a credit system on the brink of collapse” added to the German quandary (An Economy Geared for War). The Nazi arms focused thus chiefly on research, development, and capital investment. German remilitarization was only publicly promulgated in May 1935. High levels of rearmament commenced in 1936, and even then, the economy, albeit recovered, still experienced severe strains. Former Chief of Military Economic Staff in the Reich War Ministry, General George Thomas reported in a lecture that by 1939, Germany had:
"The mightiest armament industry now existing in the world. It has attained the performances which in part equal the German wartime performances and in part even surpasses them... The output of our rifle machine gun, and artillery factories is at present larger than that of any other state."
The level of output was unprecedented in German history for a peacetime economy. Steel and aluminum production as well as munitions factories created job vacancies for the masses. Hitler approved a new military productions program in 1938-1939, giving rearmament its momentum. Explosives were mass produced, the size of the air force was expanded fivefold, and naval fleet and its technologies became more elaborate.
As a whole, Hitler’s economic and military “miracle” was attainted at through profligate exploitation of the nation’s gold reserves. When Hitler first took office, the Reichbank reserves equalled to about 937 million Marks; that figure fell steeply just over the next 4 years to 72 million. The government had a debt that was virtually impossible to liquidate. Roberts summarizes Germany’s condition: she, “is going round and round. She can get nowhere until she returns to normal economic conditions, but she is afraid to try and get back to those, because she fears economic collapse and social upheaval if she does so."
Problems
The Four-Year Plan faced a myriad of problems in addition to the few expounded above. Many in the Nazi hierarchy were dubious as to whether Goering was competent to engineer an economic scheme on such a grand scale. Yet Hitler was obdurate, refusing to respond to the inputs of underlings, believing that any change of mind would taint his reputation as an unfaltering Führer. Ergo from the beginning, the stalwarts within the party were already hostile and predisposed to vacillate in their commitment toward the plan. Correspondingly, business leaders were not entirely convinced of the plan as well - remilitarization was a predominant point of conflict that thinned the already tenuous thread between the NSDAP and business leaders. Business leaders were willing to tolerate some rearmament but did not want it to be achieved at the expense of living standards. Hitler, in an attempt to conciliate, claimed that he would accomplish both the former and the latter simultaneously, but many were not credulous enough to believe him. Animosity aggravated when business leaders subsequently realized it was virtually impossible to convey their perspectives to Goering, as by 1937, he was practically an echo of Hitler. However, the most salient problem of the Four Year Plan was it extended into the second World War when it originally set out to prepare for it. On top of that, Goering resorted to slave labor, which was heavily censured by the allies at the Nuremberg Trials.
Further Reading: Hitler, 1889-1936: Hubris by Ian Kershaw
Remilitarization of the Rhineland
On March 7 1936, the German Army remilitarized the Rhineland. Though conventional wisdom holds that this decision was Hitler’s way of repudiating the Treaty of Versailles in the name of Germany, historian Ian Kershaw suggests that the economic quagmire in Germany, heightened by food shortages was the real reason behind Hitler’s risky initiative. The Rhineland provided a diversion from the NSDAP’s inadequacy in resolving domestic difficulties.
Four-Year-Plan
The apogee in economic and military development was when the second four-year-plan was implemented in October 1936. The second four-year-plan was the first economic program in post-war Germany to be clearly defined and closely followed; The previously adopted “Twenty-Five Point Program” contained several economic demands, but the extent to which these demands were enforced or supported was questionable.
Hermann Goering was appointed the plenipotentiary of the four-year-plan. The foremost aim of the plan was to achieve German autarky in preparation for the next World War in a grand period of 4 years. More specifically, the plan sought to reduce unemployment, while expanding the synthetic fibre and automobile industries. The plan also involved undertaking public works projects, thus further developing the autobahn system. In a different vein, the plan aimed towards strengthening military defenses through disregarding constrictions from Versailles. Hitler argued that Germany required “economic rearmament” and “military rearmament... in the same tempo.” He was aware that the British blockade in 1914-1918 was an instrumental factor in Germany’s defeat. In WWII, he would only rely on domestic production of war materials, trading within the continent at most.
Autarky
Within the category of autarky laid Goering’s objective to replace under-supplied goods in the economy with synthetics - Large quantities of rubber, oil and petrol were manufactured and stored to be used in the imminent war. The aim of autarky as aforementioned was to reduce Germany’s reliance on imports, hence preventing yet another 1918-styled defeat. Iron ore was domestically supplied to curtail dependence on Swedish imports, likewise, coal was produced in Ruhr factories to eliminate dependency on France and Britain. By the late 1930s, the party took it a step further and strived to not only achieve autarky, but also increase the reliance of Southern Europe and the Balkans on Germany. By 1938 in Yugoslavia, Hungary, Romania, Bulgaria and Greece, half of all foreign transactions were conducted with Germany. However, it is worth noting that while the economy under the four-year-plan was favorable for war, it was pernicious in other respects - it diverted man power and resources needed elsewhere, creating labor shortages in other sectors not directly related to war. Production targets were also never met, despite Hitler’s “Lebensraum” policies (1936-39) that yielded large amounts of raw materials and minerals from conquered territories.
Privatization
Seemingly uncharacteristic of the Nazis, Goering initiated the privatization of major commercial banks, railways, steal companies, and shipbuilding companies that were previously subsumed under public ownership. However, like practically every other nazi decision, there were intentions behind this. Strong financial restrictions still existed, while privatization was used as a propaganda tool to bolster the support for the party. The private banks were exploited to entirely fund government expenditure. In occasional cases, banks were allowed to finance new investments, though the volume and composition was constricted by the government. Top nazi government officials joined the private banks and companies to make certain that their practices conform to National Socialist ideals while still operating outwardly on the concept of privatization. The nazis also had to set themselves part from communism, and privatization was one of their ways of doing so. Appeasement of big business cooperations was also important, as fighting unemployment was one of the Nazi’s major economic goals.
Public Works
Public works was another vital component of the Four-Year-plan - they aided economic recovery, improved infrastructure, and needless to say, increased the NSDAP’s popularity. The nazis embarked on several public works programs and built schools, hospitals, the 1936 Olympic Stadium and most famously the autobahn. The autobahn is the world’s first motorway and its construction first began in Berlin, 1913. Following Hitler’s assumption to power, the propaganda, military and employment value of the Autobahn was recognized by the party, which thus introduced a scheme, under chief Nazi engineer Dr. Fritz Todt, to expand the autobahn. By the end of World War II, the Autobahn stretched across 2,128km. It is important to note that while the Autobahn is often associated with Hitler, only a quarter of it was built during the Third Reich and most of the planning and design work was completed prior to 1933. Hitler, as formerly mentioned, exploited the propaganda benefits from the Autobahn. With the party’s already strong support base, and it was not hard for the Nazis to take credit for the highway’s entire construction. In addition, while employment was a common justification for public works during the Nazi regime, it is questionable as to whether the construction of the Autobahn contributed to lowering unemployment figures. The autobahn construction employed only 80,000 men, and in fact, it was the Russian prisoners of war that finished it in WWI.
The "official statistics naturally tell only part of the story," said Stephen Roberts, an economic historian at Australia's University of Sydney. Official Nazi statistics of unemployment do not take into account a great number of factors - Marxians, Socialists, Jews and pacifists whose jobs have been replaced by persons of the superior “German Race.” The army, as well as labor-service camps, and Nazi organizations had enlisted over a million people, and half a million women no longer faced the need to work as they were granted marriage allowance by the government. Roberts continues, “What they have done has been to introduce a series of emergency steps which have drastically reduced the number of unemployed; but such steps, by their very nature, are in many cases temporary. On the other hand, the reduction [in unemployment], however artificially it may have been achieved, has had a tremendous propaganda value for the Government, and there is the fixed belief of most Germans today that Hitler has achieved wonders in providing employment."
Rearmament
Since the beginning, Hitler was lucid in “Mein Kampf” and several speeches that he intended for Germany to reclaim its position as a major military power on the global stage without consideration for any of the “unjust” Versailles terms. Hitler saw economic recovery as imperative to “political stabilization and social peace after the chaos of the slump” (An Economy Geared For War). He wanted to provide the Germany military an economical head start, increasing her probabilities on the impending battlefield. However, remilitarization was not a top priority until the late 1930s, for prior to that the nation was locked in an economic impasse whereby “an impoverished rural sector, declining trade, balance-of-payments difficulties and a credit system on the brink of collapse” added to the German quandary (An Economy Geared for War). The Nazi arms focused thus chiefly on research, development, and capital investment. German remilitarization was only publicly promulgated in May 1935. High levels of rearmament commenced in 1936, and even then, the economy, albeit recovered, still experienced severe strains. Former Chief of Military Economic Staff in the Reich War Ministry, General George Thomas reported in a lecture that by 1939, Germany had:
"The mightiest armament industry now existing in the world. It has attained the performances which in part equal the German wartime performances and in part even surpasses them... The output of our rifle machine gun, and artillery factories is at present larger than that of any other state."
The level of output was unprecedented in German history for a peacetime economy. Steal and aluminum production as well as munitions factories created job vacancies for the masses. Hitler approved a new military productions program in 1938-1939, giving rearmament its momentum. Explosives were mass produced, the size of the air force was expanded fivefold, and naval fleet and its technologies became more elaborate.
Germany was considerably successful at meeting rearmament targets. However, this was accomplished at the expense of the production of agriculture and consumer goods which stagnated, barely surpassing 1913 levels. The standards of living for the average laymen declined significantly as support for the Nazis ebbed. In other words, the “total war” concept Hitler employed created a powerful, bellicose army that acted as a facade to conceal (though not very successfully) the dismal reality of “grotesque consequences for the everyday life of ordinary Germans" (Professor Richard Evans).
As a whole, Hitler’s economic and military “miracle” was attainted at through profligate exploitation of the nation’s gold reserves. When Hitler first took office, the Reichbank reserves equalled to about 937 million Marks; that figure fell steeply just over the next 4 years to 72 million. The government had a debt that was virtually impossible to liquidate. Roberts summarizes Germany’s condition: she, “is going round and round. She can get nowhere until she returns to normal economic conditions, but she is afraid to try and get back to those, because she fears economic collapse and social upheaval if she does so."
Problems
The Four-Year Plan faced a myriad of problems in addition to the few expounded above:
Many in the Nazi hierarchy were dubious as to whether Goering was competent to engineer an economic scheme on such a grand scale. Yet Hitler was obdurate, refusing to respond to the inputs of underlings, believing that any change of mind would taint his reputation as an unfaltering Führer. Ergo from the beginning, the stalwarts within the party were already hostile and predisposed to vacillate in their commitment toward the plan. Correspondingly, business leaders were not entirely convinced of the plan as well - remilitarization was a predominant point of conflict that thinned the already tenuous thread between the NSDAP and business leaders. Business leaders were willing to tolerate some rearmament but did not want it to be achieved at the expense of living standards. Hitler, in an attempt to conciliate, claimed that he would accomplish both the former and the latter simultaneously, but many were not credulous enough to believe him. Animosity aggravated when business leaders subsequently realized it was virtually impossible to convey their perspectives to Goering, as by 1937, he was practically an echo of Hitler. However, the most salient problem of the Four Year Plan was it extended into the second World War when it originally set out to prepare for it. On top of that, Goering resorted to slave labor, which was heavily censured by the allies at the Nuremberg Trials.
As a whole, Hitler’s economic and military “miracle” was attainted at through profligate exploitation of the nation’s gold reserves. When Hitler first took office, the Reichbank reserves equalled to about 937 million Marks; that figure fell steeply just over the next 4 years to 72 million. The government had a debt that was virtually impossible to liquidate. Roberts summarizes Germany’s condition: she, “is going round and round. She can get nowhere until she returns to normal economic conditions, but she is afraid to try and get back to those, because she fears economic collapse and social upheaval if she does so."
Problems
The Four-Year Plan faced a myriad of problems in addition to the few expounded above. Many in the Nazi hierarchy were dubious as to whether Goering was competent to engineer an economic scheme on such a grand scale. Yet Hitler was obdurate, refusing to respond to the inputs of underlings, believing that any change of mind would taint his reputation as an unfaltering Führer. Ergo from the beginning, the stalwarts within the party were already hostile and predisposed to vacillate in their commitment toward the plan. Correspondingly, business leaders were not entirely convinced of the plan as well - remilitarization was a predominant point of conflict that thinned the already tenuous thread between the NSDAP and business leaders. Business leaders were willing to tolerate some rearmament but did not want it to be achieved at the expense of living standards. Hitler, in an attempt to conciliate, claimed that he would accomplish both the former and the latter simultaneously, but many were not credulous enough to believe him. Animosity aggravated when business leaders subsequently realized it was virtually impossible to convey their perspectives to Goering, as by 1937, he was practically an echo of Hitler. However, the most salient problem of the Four Year Plan was it extended into the second World War when it originally set out to prepare for it. On top of that, Goering resorted to slave labor, which was heavily censured by the allies at the Nuremberg Trials.
Further Reading: Hitler, 1889-1936: Hubris by Ian Kershaw
Written by Claudia Quek, edited by Emily Li and Jianhe Tao
Works Consulted
"Auf Der Jagd Nach Görings Verschollenem Schatz." DIE WELT. Digital image. Web. 08 Jan. 2015.
"Autobahn History." Autobahn History. German-Autobahn.eu. Web. 6 Jan. 2015.
Bel, Germa. "Against the Mainstream: Nazi Privatization in 1930s Germany." University of Barcelona. Web. 6 Jan. 2015.
"Breaking the Treaty of Versailles – Remilitarization of the Rhineland."History Follower. History Follower, 6 Mar. 2013. Web. 09 Jan. 2015.
"Economic Policies and Benefits." BBC News. BBC. Web. 6 Jan. 2015.
"German Myth 8." Hitler's Autobahn? About. Web. 6 Jan. 2015.
"Group 6." The Great Depression. Web. 08 Jan. 2015.
"Herman Goering and the 4 Year Plan: 1936-40." Herman Goering and the 4 Year Plan: 1936-40. Web. 6 Jan. 2015.
"HISTORY IN IMAGES: Pictures Of War, History , WW2." : AMAZING PICTURES : Nazi Germany: A Pictorial History. Web. 08 Jan. 2015.
Kershaw, Ian. Hitler, 1889-1936: Hubris. New York: W.W. Norton, 1999. Print.
Richard Bessel - Journal of Contemporary History 2004; 39; 169
Richard Overy. History Today. London: Nov 2001. Vol 51, Iss. 11; pg. S27, 3pgs
Roberts, Stephen H. The House That Hitler Built. New York: Harper & Brothers, 1938. Print.
"Shofar FTP Archives: Imt/nca/nca-01//nca-01-08-economic-mobilization." Shofar FTP Archives: Imt/nca/nca-01//nca-01-08-economic- mobilization. The Nizkor Project. Web. 6 Jan. 2015.
"The Current Economic Depression." The Current Economic Depression. Press.com, 2010. Web. 09 Jan. 2015.
Works Consulted
"Auf Der Jagd Nach Görings Verschollenem Schatz." DIE WELT. Digital image. Web. 08 Jan. 2015.
"Autobahn History." Autobahn History. German-Autobahn.eu. Web. 6 Jan. 2015.
Bel, Germa. "Against the Mainstream: Nazi Privatization in 1930s Germany." University of Barcelona. Web. 6 Jan. 2015.
"Breaking the Treaty of Versailles – Remilitarization of the Rhineland."History Follower. History Follower, 6 Mar. 2013. Web. 09 Jan. 2015.
"Economic Policies and Benefits." BBC News. BBC. Web. 6 Jan. 2015.
"German Myth 8." Hitler's Autobahn? About. Web. 6 Jan. 2015.
"Group 6." The Great Depression. Web. 08 Jan. 2015.
"Herman Goering and the 4 Year Plan: 1936-40." Herman Goering and the 4 Year Plan: 1936-40. Web. 6 Jan. 2015.
"HISTORY IN IMAGES: Pictures Of War, History , WW2." : AMAZING PICTURES : Nazi Germany: A Pictorial History. Web. 08 Jan. 2015.
Kershaw, Ian. Hitler, 1889-1936: Hubris. New York: W.W. Norton, 1999. Print.
Richard Bessel - Journal of Contemporary History 2004; 39; 169
Richard Overy. History Today. London: Nov 2001. Vol 51, Iss. 11; pg. S27, 3pgs
Roberts, Stephen H. The House That Hitler Built. New York: Harper & Brothers, 1938. Print.
"Shofar FTP Archives: Imt/nca/nca-01//nca-01-08-economic-mobilization." Shofar FTP Archives: Imt/nca/nca-01//nca-01-08-economic- mobilization. The Nizkor Project. Web. 6 Jan. 2015.
"The Current Economic Depression." The Current Economic Depression. Press.com, 2010. Web. 09 Jan. 2015.