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Economy- from 1936- new plan - Coggle Diagram
Economy- from 1936- new plan
By 1936…- registered unemployed decreased from 5.6 mil to 1.6 mil 1933-36- caused many to welcome Nazi economic policy - by 1936 gov public deficit had not run out of control-
Balance of payments issue- by 1936 still 2 underlying worries- fear rapid increase in demand would rekindle inflation/ fear rapid increase in demand would lead to emergence of balance of trade deficit (if value of imports is more than exports)- inflation issue didn’t really happen- lack of demand in economy/ regime had strict controls over prices and wages- also helped no trade unions from May 1933- but balance of payments issue first occurred summer 1934 as Germany imported more materials while failing to increase exports/ gold and foreign currency reserves=low
Balance of payments issue p2- Balance of payment was also political issue- if Germany short in foreign currency who was to have priority in spending money- - Early economics minister Schmitt wanted to further reduce unemployment by manufacturing more consumer goods for public consumption eg textiles yet powerful voices in armed forces/ big businesses already wanting more resources for programmes- couldn’t ignore pressure- intensified as economic issue was at same time as SA issue- Schmitt policy rejected, allowing Schacht to combine offices of Minister of Economics and President of Reichsbank- July 1934
Schacht new plans
Schacht’s ‘new plan’- introduced ‘new plan of September 1934- at this point now had control by gov of all aspects of trade , tariffs, capital and currency exchange to try and prevent excessive imports- gov decided which imports allowed eg imports of raw cotton/ wool= harshly cut whereas metals permitted to meet demands of heavy industry
New plan- bilateral trade treaties- Schacht tried to promote trade/ save foreign exchange by signing bilateral trade treaties- especially w/ countries of south east Europe - often through barter agreements to avoid necessity of formal currency exchange- Germany began to exert powerful economic influence over Balkans long before military/ political control
New plan- The Reichsmark currency- Germany agreed to purchase raw materials from all countries it traded with on condition that RM could only be used to buy back German goods- at 1 time estimated German RM had 237 different values depending on country and circumstances
New plan Mefo bills- Special gov money bills- issued by Reichsbank and guaranteed gov payment for goods and were then held up for 5 years earning 4%% interest per year- successfully disguised gov spending
4 year plan in action
Implementation of 4 year plan 1936- initial issues- Schacht very aware he had only hidden balance of payments issue via series of clever financial tricks- despite previous focus on deficit financing he believed combo of budget deficit and a balance of payments deficit couldn’t be maintained - as demands for rearmament/ consumption of goods increased balance of payments would go deeply into red
Guns or butter- Schacht therefore suggested reduction in arms expenditure to increase production of industrial goods that could be exported to earn foreign exchange - especially supported by industries geared to exporting eg electrics, tools but unacceptable to armed forces- caused issue later called guns or butter- economic choice between rearmament and consumer goods.
Overall aims of 4 year plan- Hitlers rearmament aims seen in secret memorandum in August 1936- states- ‘The German armed forces must be operational within 4 years’, ‘The German economy must be fit for war within 4 years’- Goring appointed ‘Plenipotentiary Of 4 year plan’ Oct 1936- expand rearmament/ autarky to make Germany as self sufficient as possible-
Objectives of 4 year plan: regulate imports/ exports to prioritise strategic sectors eg chemicals, metals- less agricultural imports, control key sectors of labour force to prevent price inflation eg creation of a Reich Price Commissioner, to increase production of raw materials to reduce financial cost of importing vital goods eg steel/ iron, to develop ersatz (substitute products) eg oil from coal, to increase agricultural production to avoid imported food)
4 year plan- outcome
4 year plan effects- Nazi control of German economy got much tighter- seen Dec 17th 1936- Goring informed meeting of big industrialists that it ‘was no longer question of producing economically, but simply of producing’- Schacht's book- - Schacht had no real respect for Goring who had no economic expertise and ignored Schacht's advice- November 1937 resigned- aware his influence was reduced
4 year plan- how much of a success? Success mixed over the years- on 1 hand production of various key materials expanded greatly- but fell a long way short of its targets in essentials of rubber and oil, while arms production never reached levels desired by armed forces and Hitler- Germany’s reliance on imports had not increased but still dependent on foreign countries for ⅓ of raw materials
Statistics- 4 year plan success- (in thousands of tons) oil 4 year plan target 13830 actual output 1936-1790, 1938-2340, 1942-6260
Rubber- four year plan target 120- 1936-0.7, 1938-5, 1942-96
4 year plan- limits
Expansion of Nazi economy- series of war decrees issued by Hitler in Dec 1939- outline vast programmes for every possible aspect of war production- suggests Nazis went well beyond demands of Blitzkrieg and a limited war- expenditure doubled between 1939-41
Limits of economic mobilisation- despite focus on mobilisation armaments production remained disappointingly low- airforce only increased from 8290 aircraft in 1939 to 10780 in 1941 while Britain over same period no. aircraft trebled to 20,100 - mobilisation of war economy marred by inefficiency/ poor coordination - pressures of premature outbreak created issues as major problems not due to be ready until 1942-43- so at first confusion between short term needs/ long term plans of Nazi leadership.
Disarray of economy- mobilisation- Should not have been an impossible barrier if only a clear authoritative central control established over economy instead different agencies functioned in own way- so even though ministry of armaments- it existed alongside 3 other interested governmental industries- Economics, Finance and labour - also political infighting between Nazi leaders eg Gauleiters tried to control local areas at expense of plans of state/ party and also was financial corruption
Disarray of economy mobilisation p2- Number of groups responsible for armaments: the Office of the Four Year Plan, the SS bodies and the different branches of the armed forces- Wehrmacht, Luftwaffe and navy- armed forces especially wanted own way w/ munitions developments w/ best specifications possible- caused drive for quality at expense of quantity- so after 2 years of war when advancing to USSR- Germany’s economic mobilisation not at expected levels of armaments production