One of Hitler’s top priorities was to solve unemployment. He achieved this to some extent by creating jobs for workers in Public Works Schemes, building Autobahns and working in arms factories. This helped the economy because the government didn’t have to pay unemployment benefits to people; instead they were working and spending the salary on goods which stimulated economic growth and confidence. Hitler increased public expenditure and investment in industry and industrial research; this also boosted the economy because more was being produced to export. Hitler also made businesses employ more people by giving workers a lower salary which enabled employers to hire more people for the same price. Some groups, such as Jews and Women, were pushed out of jobs to make room for unemployed people, and other groups, such as farmers and agricultural workers, were no longer eligible for unemployment benefits. This decreased public and government expenditure which could then be spent on other things, hence improving the economy. Compulsory military service for 18-25 year olds was introduced which removed them from the unemployment register and also helped rearmament, the armed forces grew from 100,000 in 1933 to 1,400,000 in 1939. All these aspects of the economic policy were fairly successful.
The idea of Mefo Bills was introduced in 1934. Schacht formed the company Metallurgische Forschungsgesellschaft, m.b.H., or "MEFO" for short. The company's "mefo bills" served as bills of exchange, convertible into Reichsmark upon demand. MEFO had no actual existence or operations and was solely based on trust. The bills were mainly issued as payment to armament manufacturers. Mefo bills were issued to last for six months initially, but with the provision for indefinite three-month extensions. The total amount of mefo bills issued was kept secret. Essentially, mefo bills enabled the government to run a greater deficit than it would normally have done. By 1939, there were 12 billion Reichsmark of mefo bills, compared to 19 billion of normal government bonds. This strengthened the German economy by providing the government with various goods and services which it was then able to reinvest in the economy, fuelling its growth, and preparing it for Hitler's plans for war. Not only did the bills serve the above functions, they also concealed the military expenditure forbidden by the Treaty of Versailles.
Germany had started to re arm slowly in 1933. This meant that few raw materials could be exported as they were being used in rearmament. They were importing more than they were exporting which created a trade deficit. Schacht tried to solve this problem in 1934 with the ‘New Plan’. This plan had the government control all the exports and imports into Germany. It stopped Germany paying reparations from WWI, and tried to solve the imbalance by making agreements with South American countries and the Balkan states where they would buy goods from these countries if, in return, they would only import from Germany. This meant Germany could increase its exports while keeping a steady supply of imports. The New Plan was successful in balancing the import-export problem but it never achieved the figures envisaged by Schacht and Hitler.
Eventually, Schacht realised that Hitler could not keep the economy going with the deficit financing strategy and told Hitler that he had to reduce the rearmament industry in order to avoid the economy collapsing again. Hitler did not want to do this and so in 1936 he hired Hermann Göring as his Economics advisor instead of Schacht. Göring was a Nazi that didn’t have much experience in Economics but always agreed with Hitler which was important to him.
Göring set up the Four Year Plan which was similar to the New Plan in that it wanted to reduce imports and make the country autarkic which was a self sufficient defence economy but it had a larger emphasis on rearmament. The idea of the plan was to make the country ready for war within four years, hence the name. The government regulated the imports and exports again so that only goods essential for rearmament were imported and everything else was sourced from inside Germany. The Plan aimed to increase agricultural output so there would be enough food for Germans in a war as they wouldn’t be able to import food. Hitler cancelled all of the farmers’ debts and gave them tax allowances and subsidies to produce more. Again this plan wasn’t entirely successful and Germany was not fully self sufficient by 1939 except potato farming.
The Economic Policy of the Nazi Party was always geared towards war. Schacht was able to improve the economy significantly; however, when he said things that Hitler didn’t like, he was not listened to. This was a mistake by Hitler because Göring was not good at economics and did not do a better job than Schacht and the economy was never successfully stabilised. However, Hitler’s aim was never really to solve all Germany’s economic problems, he wanted to get the country fit for war, so in that aspect he was mostly successful in achieving his aims.
