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Nazi Economic Policies (S) - Coggle Diagram
Nazi Economic Policies (S)
Economic Policies and Recovery Between 1933 and 1936:
between 1933 and 1936, the main aim for the Nazis was to achieve economic recovery
The Nazi's economic aims included:
cut unemployment
increase demand
avoid inflation
reduce Germany's balance of trade deficit (Germany was importing more than it was exporting and so was paying out more currency than it was bringing in)
Key Economic Indicators
industrial production rose from roughly 66% of the 1928 total to 107%
unemployment fell from 5.6 million to 1.6 million. Not all of this was due to job creation, some groups were removed from the statistics
real wages rose by about 7.5%
public expenditure rose from 18.4 billion Reichsmarks to 23.6 billion Reichsmarks. The greatest increase was in rearmament spending, which was up by over 5 times
investment in the economy was up. By far the largest increase was rearmament
Increasing Demand
state intervention was used to create jobs and stimulate consumer demand
public works created jobs. Hitler extended the existing programmes of motorway and house building
there were subsidies for private sector firms hiring workers
tax concessions and government grants (e.g. for newly-weds) encouraged consumer spending
Reducing Unemployment
job creation in public works and incentives for the private sector for hiring labour
some married women and Jews in the public sector were made to leave work
the armed forces grew from 100,000 in 1933 to 1,400,000 in 1939
invisible unemployment
groups such as married women and young men in the RAD were not included in unemployment statistics
from 1935 conscription took men aged 18-25 out of the unemployment statistics for 2 years
Economic Methods
deficit financing
the Nazis used loans to create jobs and stimulate demand. As the economy grew, tax revenues increased, borrowing reduced and loans were repaid
they avoided inflation by setting wage and price controls
restored confidence to encourage spending and investment
independent trade unions were banned and Hjalmar Schacht's appointment reassured big businesses
the New Plan 1934
The New Plan 1934
what it did
as demand grew, imports were sucked in to meet it. To pay for imports, German gold and foreign currency reserves were being used up
the New Plan meant imports had to be approved by the government before importers could buy foreign currency
the government prioritised producers of armaments and raw materials for firms
the New Plan also established bilateral treaties between Germany and Balkan countries. The Balkan states were an important source of raw materials
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
continually 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
: Hjalmar Schacht was the Minister of Economics for the Nazis between 1934 and 1937. He was concerned about the long term sustainability of Nazi policies
Schacht's Aims
maintain economic growth
develop the Wehrwirtschaft (defence economy) to prepare Germany for war in 4 years and, as part of this, establish autarky (self sufficient economy)
autarky required Germany to produce its own important commodities necessary for war, so that it was not reliant on imports
autarky also required the development of ersatz (substitute) products that Germany could not easily produce
avoid inflation
Schacht's clash with Hitler
Schacht was worries 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
: the Nazi's political aims of expansion drove Germany's economic agenda. This is seen in Goering's Four Year Plan
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
difficulties of autarky: Germany would not be totally self-sufficient but would 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 issued regulations controlling foreign exchange and therefore imports of: raw materials, labour etc.
it also set targets for specific industries
economic targets
1939:
Germany was importing 1/3 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:
oil was at 45% of its target
hard coal was at 79% of its target
only the brown coal target had been met
impact of 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
historians' views
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
Business, Trade and Agriculture
: the Nazis used major manufacturers and agricultural producers to support Goering's Four Year Plan and establish autarky. This came at the expense of many small scale businesses and farmers
Gleichschaltung
the Reichsgruppe for industry
businesses faced controlled trade, foreign exchange, prices, wages and raw materials, although most remained privately owned
trade unions had been abolished and replaced with DAF
1933: Law to Protect Retail Trade. This taxed large stores and banned new department stores
large firms were made to join cartels and were helped to grow in order to meet Wehrwirtschaft aims
part of the Reich Economic Chamber
Reich Food Estate
as the 1930s wore on, the government controlled the price of food, keeping it below market value so as to control German wages
the Four Year Plan increased production by:
giving grants for new cultivated land
subsidies of technology and arable farmers
reducing fertiliser prices
anyone involved in agriculture had to join. It allocated subsidies and imports, regulated wages and prices, and organised distribution and foreign labout
impact of Nazi policies on businesses
government policy favoured large-scale manufacturing in industries connected to Wehrwirtschaft rather than consumer goods e.g. Daimler-Benz, IG Farben
over 300,000 small businesses went bankrupt
even important steel firms suffered if they did not follow Nazi policy e.g. RWHG
manufacturing businesses: independent artisans' value of trade doubled, yet 145,000 went bankrupt between 1936-1939
small businesses benefitted from economic recovery. However, overall they lost out due to inability to compete with larger businesses
Foreign Trade
however, Germany still imported a lot of raw materials and food. This was difficult because of a foreign exchange shortage
firms contributing to Wehrwirtschaft were prioritised in the allocation of foreign exchange. The government controlled imports as well
no major growth in foreign trade during the 1930s. As autarky was a government policy this could be seen as evidence of success
from 1934 a series of bilateral trade deals were struck to meet German import requirements
impact of Nazi policy on agriculture
agricultural growth was limited by the labour shortages and by a lack of investment as industry and rearmament were prioritised by the government
livestock farmers suffered because of high fodder prices. Subsidies were only for arable farmers
the Reich Entailed Farm Law: small farms (18-30 acres) could not be sold or mortgaged and had to be handed on to 1 person
the rural population fell from 21% to 18% as people left the countryside for factories
by 1938 food imports were down 20%