The Economy-1933-39

Hitler's main priorities were

1) Tackling the unemployment question

2) Rearmament-preparation for War

3) Autarky-Self sufficient

Schact became the Presidentof the Reichsbank and Minister of Economics.

Firstly, the German banking system was weak so the statement had more control and responsponibilty. Interest rates were set at low levels as well as to reschedule large scale debts of local authorities.

Small businesses and farmers were given aid. This meant that there was more support for the Nazis in the elections.

Tariffs were set on imported food. A Reich Food Estate gave out subsidies and the Reich Entailed Fram Law reduced debts by tax concessions. Allowances were given as well as grants.

Perhaps the most significant though were the public work schemes. For example, the RAD was expanded to employ 16-25. Investment was directed towards work creation schemes such as reforestation, autobahn, motorisation.

There was a growth in jobs from 5.6 milion unemployed in 1932 to 2.6 million in 1936.

Schacht maintained taxes at a relatively high level and encouraged public spending.

However it is worth saying that all of this happened during the natural upturn of the business cycle.

The abolition of the trade unions in 1933 meant that the government could maintain more control.

However the problem of Germany importing more aw materials were that they could not increase its exports. Its gold and foreign currency were also low.

September 1934 saw the New Plan

There were different measures.

Bilateral trade treaties: Schact tried to promote trade and save foreign currency, Straightforward barter agreements meant that formal currency did not have to be exchanged.

Reichsmark currecny: Germany agreed to purchase raw materials from all countries that it traded with on the condition that only the Reichsmark could be used. The value of the Reichsmark changed depending on the country.

Mefo Bills: These were used to disguise government spending.

The Four Year Plan-1936

There was much debate over whether priority should be given to potential war preparations or rather ordinary industrial goods that could be exchaned. This was summed up in the 'Guns vs Butter debate'.

The Four Year Plan was implemented by Goring with the aim to make Gemrny ready for war.

This included making her self sufficient and develop ersatz or substitute products if need be, increase the production of raw materials, control key sectors of the labour force and regulate importnats and exports.

As a result, Nazi control became tighter.

The success of the Four Year plan varied. For example, some materials such as aluminium and exlosives had reached the rate needed. However, rubber and oil were below. The arms production never reached the desired levels. Germany was never able to fully become self sifficient-a third of their raw materials were imports.

Different historians have debated about whether Germay had a war economy in peacetime.

Klien said that the economic mobilisation was limited in the early years of the war. He said that their economic policy was linked to blitzkreig. It was only after the defeat at Stalingrad that 'total war economy' began in earnest.

Milward however said that yes the German ecnomy was dependent on Blitzkreig to avoid total war. Hwoever Germany had spent a lot of preparations for war. It was the failure to take Moscow which saw a turning point in the economy.

Mason: Mason said that the Nazi economy was under strain form 1937. He said that the economy was under pressure. He points out the shortages in areas such as raw materials and food, labour shortages, blanace of trade going into the red and the government expenditure and deficit expanding.

Strengths and Weaknesses

Strengths: Public spending were able to get people off the dole queues. For example the number decreased from 6 million (real total thought to be nearer 8 million) to 2.1 million in 1935.

Schacht had managed to create economic recovery without creating a huge government deficit.

By encouraging people to save money in state banks, the governent could invest.

Schacht had avoided inflation.

However, by 1939, Germany's production levels were more in comparison to the USA and Briain.

Weaknesses: Was it really due to Schaht or just the natural upturn of the business cycle?

Schacht could not stop the recurring problem of the balance of payments

Schacht did not want to allow valuable foreign exchange.

Schact foudn the idea of autarky a problem difficult to solve.

His bilateral trade deals were to be pushed aside in favour of rearmament.

Goering's idea of the gus v butter could have meant that the public were angered over shortages of goods.

A quarter of the workforce were invovle din the area of the conomy to do with guns v butter, meaning that the arms force wasnt even producing much.