It is unquestionable that the Nazi regime achieved what they set out to achieve within the German economy. National pride had been non-existent since their defeat in WWI and the weakness of the economy had a great deal to do with this. Even before the Wall Street crash and resulting Great Depression in 1929 had sent Germany spiralling back into similar depths of despair they had been in after the Treaty of Versailles, they had struggled to recapture anything like the same sorts of economic prosperity they had achieved before WWI began.
It has been suggested that Germany may not have needed the Wall Street crash to send the economy into depression but this merely sped up and heightened the severity of the depression. It would be unfair to lay the blame of economic difficulties during the 1920's solely on the shoulders of the Weimar Republic, as the situation they inherited was one of sheer hopelessness. The reparations that were forced upon them at the Treaty of Versailles placed a huge burden upon the economy, one which would prevent any sort of recovery until a period of small growth began in 1925.
The loss of industrial areas such as Silesia, Lorraine and the Saar caused even greater problems, as an economic resurgence would be dependent on the creation of new and the continuance of old industries to produce goods for exporting. This would encourage foreign investment into the country which would create jobs and more importantly increase aggregate demand within Germany itself. Between the years 1890-1913, German GNP doubled; it trebled between 1950-70, but from 1913-29, it increased by just four percent. During the Nazi regime, GNP increased every year and in 1938 had almost doubled from what it had been in 1932.
As D. P Silverman writes, " Hitler's rapid conquest of unemployment, a feat more brilliant than any of his later Blitzkrieg victories on the battlefield, constituted National Socialism's claim to legitimacy. 1" This shows us what is definitely the Nazi regime's greatest achievement. It was the one economic problem that Hitler aimed to solve above all others and his success in achieving this aim should not be underestimated. When Hitler came to power on January 30th, 1933, about thirty four percent of the German labour force were unemployed.
After just eighteen months of Hitler's governance, unemployment had been cut by sixty percent and by 1938, there were just four hundred thousand workers recorded as being unemployed. One huge problem that occurred during the 1920's was the massive inflation that occurred. This inflation was a direct result of the mass printing of reparations money undertaken in the early 1920's. This sort of inflation was known as 'hyper inflation' and even led to extraordinary scenes of people taking wheel barrel loads of money with them just to buy a loaf of bread.
What was hugely concerning as a consequence of hyper inflation was the loss of savings due to the devaluation of the Deutsche Mark, and this was especially concerning amongst the middle classes and elderly. This was probably one of the reasons why Hitler came to power. The middle classes and elderly were so disheartened by their losses that they questioned the abilities of the Weimar Republic to govern Germany and were moreover, swayed towards voting for the Nazis with their promises of economic recovery and the regaining of national pride.
There was a large agricultural problem in Germany during the 1920's. As R. J Overy writes, " German agriculture was unable to compete with more efficient farmers in Europe and elsewhere, was small in scale, and was concentrated, in some areas, on the wrong crops. 2" Prices declined and the agricultural debts increased from 4. 6 billion marks in 1924 to 11. 5 billion in 1929. Whereas the level of industrial manufactured goods increased by fifty seven percent from 1913-29, the level of agriculturally produced goods increased by just thirty percent.
The farmers were mostly peasants and their subsequent support of the Nazi party was also a factor in the Nazi rise to power. The Nazis had made promises of changes to be made to the agricultural sector and these promises were indeed kept. Hitler realised that agriculture and moreover, the provision of food for his nation was hugely important. He realised that the success of his expansionist policies, that were to be implemented in the late 1930's, depended on a good structure of the main industries.
Agriculture was certainly one of his main priorities as he wanted to develop a self sufficient nation who did not have to rely on imports. Many historians have argued that Hitler's economic aims were designed for the provision of war. This argument is almost certainly valid, as all of his economic policies suggest a clear intention that he was readying the nation for war. However, this point does not make the achievements of the Nazis any less prevalent, as the resolving of the economic problems they faced in 1933 should be measured in what they had achieved by 1939, and not what occurred during the war and as a consequence of it.
During the initial stages of the Nazi regime, controls were imposed on some areas of the economy to bring them under tighter supervision of the government, but it was during the later stages of the 1930's, with the inevitability of a war looming, that the economy was virtually completely taken under state control. The four areas that Hitler aimed to bring under state control was the control of money and banking, the control of production, the control of labour and the control of prices.
As Overy writes, " the central feature of Nazi policy was, nevertheless, a programme of government spending and public investment designed to stimulate demand and expand income. 3" In 1929, public investment was thirty five percent of gross investment but by 1935, it was up to fifty five percent. Between the years 1933-38, total government expenditure increased in real terms by almost three hundred percent, rising from eighteen to thirty three percent of GNP.
These figures show not only the Nazi designs for war but also their abilities to govern the German economy with some skill. In 1932, economists in Germany called for the increase in government intervention and moreover, expenditure. They were calling for this in the promotion of Keynesian policies which were designed to increase government spending to subsidise the economy which would henceforth increase aggregate demand in the country. However, this policy was undertaken to fulfil different aims by the Nazi regime.
They kept taxation at high levels throughout this period to try to keep the propensity to consume low so that growth could be kept at a controllable level. Keynes had concentrated on the need for growth in his economic policies but did not worry as much about the effects of this. Effects such as high inflation and a large debt in the balance of payments would have caused the German nation with similar problems to those experienced during the 1920's. Hitler did not want a massive surge in the importing of foreign goods which would have been the case with ever increasing growth rates.
Therefore, the policy of high taxation to curb consumer spending can be seen as protectionalist, but was probably extremely sensible as the last thing that this generation of Germans needed was another period of economic instability. The Nazis had come to power on the back of promises of economic stability and their policies certainly showed that this was their aim. They controlled the economy to such an extent that it would be almost impossible for the economy to fall into the same kind of depression that hit Germany in early 1920's and from 1929-33.
As I have mentioned, one of, if not the main concern of the Nazi government was the problem of unemployment. Their promise of 'bread and work' which had helped bring them to power, had to be carried out to gain them any credibility. Work creation projects emerged in 1933 and expanded throughout the rule of the Nazis until they believed unemployment had fallen to a sufficient level. The most important area for increasing employment was in agriculture and the building industry. Unemployment in the building industry was reduced from four hundred and ninety three thousand in March 1933 to one hundred and seven thousand a year later.
In the agricultural sector, during the same period of time, unemployment decreased from two hundred and thirty eight thousand to just sixty six thousand. The Nazis have taken a great deal of credit for the huge reduction in unemployment through work creation projects, but these schemes were actually initiated by Von Papen and Von Schleicher in 1932. " The purpose of the programmes was to create direct employment through government expenditure on labour-intensive schemes of repair, maintenance and construction.
Total expenditure on the schemes from 1932 to the end of 1935 was just over five billion marks, or slightly under one percent of GNP. 4" Kohler argued that, " whereas the old system had sought in vain to create work indirectly by reviving the economy, the Nazis were reviving the economy by creating work. Not the free economy, but only the political leadership.... is in a position to eliminate unemployment. 5" Rural work creation schemes were set up to provide work for both the rural and urban unemployed.
Koch's program involved the creation of a land helper system. It involved the placing of unemployed on rural emergency relief projects, called Notstandsarbeiten. The East Prussian program was called the East Prussian Landdienst and was generally successful in fulfilling it's quota of men. However, this scheme was not as successful in the Reich Landhilfe program, as Koch's ideas were considered inhumane and brutal and the industrialised areas of Germany such as the Rhineland and Berlin did not take too kindly to his ideas.
East Prussian unemployment though, did certainly decrease and the men were either put to work aiding farmers to farm their land or in 'fellowship camps'. It is assumed all to often that work creation schemes were the only reason for the reduction in unemployment. However, it should be noted that these emergency relief works " fell off greatly after 1934. 6" Also, it has been exaggerated in the past as to the amount that conscription to the labour service and the army had decreased unemployment levels.
As Guillebaud writes, " during the three years, from the middle of 1936, about 80 percent of the total increase of employment took place within the capital goods industries, 48 percent falling within the building trades with their subsidaries. 7" This shows us that the unemployment problem was solved in the building and metal trades rather than both the consumption goods industry and the work creation projects. However, it is necessary to mention that these national projects such as the building of the autobahns and the creation of a great automobile industry were a great influence in the market for heavy goods.
The reason for this was that the materials needed to undertake such projects were demanded from the heavy industries. This was also the case in the rearmament of Germany. All the materials were being domestically produced rather than imported and therefore, there were huge profits to be made for the big industry owners. These incentives would cause industrialists to create more factories and moreover, more jobs. Therefore, this circle can be seen to be profiting everyone involved, with obvious exception of the government who were subsidising these schemes.
The Nazi regime increased government expenditure in the early years of the recovery to subsidise the unemployment problem and continued to spend on rearmament in the later years of the 1930's when the economy was considered to be stabilised and there was full employment. This was why the government's expenditure increased by three hundred percent between 1933-38. The agricultural development of Germany was extremely crucial to Hitler's future ambitions and the Nazis undertook methods to try to improve the situation readying themselves for the time when they could not rely on foreign imports of food.
They raised the prices for those products in which they did not produce enough of. This would have the effect of encouraging farmers to produce these products because greater profits could be made from them. The farmers were not only given human aid, as was seen in the rural land help schemes, but were given the use of extra machinery and fertilisers which they hoped would lead to improved farming methods. However, this did not result in the desired effect and the volume of food stuffs produced from farming increased just seven percent from 1933-36.
This was the result of the first four year plan and was probably the only area where it can be honestly suggested that the Nazis had failed in. The second four year plan, which was definitely geared more towards the preparation for war, placed a greater importance therefore, on the agriculture industry. One milliard marks were allocated to the reclamation and improvements of waste lands. Prices of manure was cheapened to improve the quality of the soil, a vigorous campaign was started to put pressure on the farmers to match the standards of other, more profitable farmers.
Price policies were introduced to manipulate what the farmers would grow, and the preservation of foods was treated far more seriously to avoid any wastage. The success of these measures is shown by Guillebaud, where he writes, " after allowing for imported feeding stuffs, Germany's domestic production of food, measured in terms of calories, was 82 percent of her total requirements.... as compared with 80 percent for the average of the years 1909 and 1913. 8" He compares the Nazis success with that of Wilhelm's Germany because that was the last time that Germany were seen to be in a state of economic prosperity.
Germany's Balance of Payments had always been favourable and had only begun to show signs of weakness with the advent of economic recovery. Woolston explains that, " in 1934 the government faced a situation in which the former export surplus had already been changed to an import surplus. 9" Foreign exchange and gold reserves had started to dwindle and it was clear that they would either have to devaluate the Deutsche Mark or come up with another way to solve the foreign exchange problem. On July 20th, 1934, Dr Schacht announced the new system and halted any ideas of a devaluation.
This new system ASKI, allowed German exporters to maintain their prices at previous levels the importers could effectively import German goods at prices they could afford through the system of Aski marks and the discounts these marks offered to the importer. In practice, this system would allow trade to continue freely without anyone losing out, but in practice, the system was complex and most certainly reduced the volume of German trade for some years.
As Woolston comments, " after an unsatisfactory period of hand-to-mouth administration, Schacht announced his 'New Plan,'..... he New Plan abolished the system of foreign exchange allotment and substituted for it a system whereby every import transaction was subject to the proper supervisory office. 10" This highlights the rigidity and cautious nature of the new system and the reason why trade was poor until the revitalisation of international trade by 1937. Guillebaud writes that, " by the autumn of 1936 the success of the first Four Year Plan was no longer in doubt. Unemployment had ceased to be a serious problem and there was practically full employment in the building and engineering industries.
The national income was rising steadily, and, allowing for the fall in prices, had reached the level of the boom year of 1928; industry and the banking system were fully liquid, and savings were coming forward increasingly in the capital market. 11" However, the relative failure of the Weimar Republic, to not only bring stability to the economy but also to make a sufficient recovery to the levels of the pre-war period, made the Nazi regime look even greater in economic terms than it actually was.
The undoubted success of the Nazi government was the achievement of full employment within five years of coming into power. Steady if not spectacular trade was achieved under the rule of the Nazis, although it should be mentioned that Hitler was not too bothered about foreign trade, so long as imports did not exceed exports by vast amounts, as he was more concerned with readying the German nation for a war. His agricultural policies would certainly suggest this, as his primary aim was to redevelop the industry into one which could provide the entire nations needs without the reliance upon foreign imports.
This was not fully realised, but the position of German agriculture was far better in 1939 than in 1933. Fluctuating growth rates were solidified by the Nazi regime and their stringent controls. Moreover, the inflation problems experienced in the 1920's free market system of governance were nullified, and savings were slowly recovering, even though people's confidence in savings had been shattered in Weimar Republic's Germany.
When the Nazi party came to power in 1933, Germany's economic problems were huge. Growth, inflation and unemployment rates were a massive concern and it should certainly be recognised that these important goals of government were dealt with quickly and efficiently by Hitler's government. However much free market economists would argue against their restrictive methods, it seems clear that the Nazi regime had all but resolved the problems it faced in 1933.