The remaining unemployed citizens were sent to the SA, SS, other Nazi organisations, Gestapo, Army, Navy or shipbuilding. This helped to reduce unemployment to just one million by 1936, and to negligible levels by 1938. Aryanisation of the economy was also achieved in 1938, when all Jews were removed from the economy and this helped additionally to increase Aryan employment. This outlines Hitler’s ideological belief that by removing Jews from the economy, thus creating jobs for Aryans as well as excluding the 'aliens'.
Between 1933 and 1936, Jews remained in the economy. This was because Jewish businesses were too valuable to the German economy to be destroyed. Hitler waited until the economy was stabilised and thriving until he began to exclude Jews. The Berlin Olympics further delayed this aim because Hitler didn't want other nations to witness his blatant anti-Semitic actions. However, by 1938 Aryanisation of the economy had been achieved and all Jewish businesses removed. The unemployed Jews were not counted in unemployment figures because they were not considered citizens after the Nuremberg Laws of 1935. Hitler was, therefore, successful in this aim because no Jew had a job in Germany and this created more jobs for Aryans and forced Jews into submission.
Hitler was very successful in reducing unemployment. Therefore it is true to say that economic planning was effective in bringing about stability in 1933 and progressing onwards. As High employment meant a boost in the economy. The whole of Germany being employed meant that the economy could grow because people had money to spend on luxury items. This in turn meant that industrial production could be boosted and the economy improved. Hitler also created his own added advantages to high levels of employment because of the fields in which he created jobs. He managed to build roads which would be useful for transporting armies, and also increase the size of Nazi organisations, secret services, and the army. Many of the unemployed people would have been the working class and by giving them jobs in the Nazi party they would have been forced to work for Hitler and, therefore, give him support; thus making the Nazis even more powerful.
However high unemployment did lead to problems and thus hindered the economic progress. An economy progresses due to the people working, how can an economy work efficiently if the workers are unsatisfied? The problem was that because of the high unemployment, employers had lots of people wanting jobs, so they could offer low wages and people would have to accept them. This lead to the working class not having a very high standard of life. Hitler's solution was to get rid of local and national wage rates and introduce performance principle. This scheme meant that the more work a person did the more money they earned. The effect was that the real value of take home pay increased and longer working days let people gain more money. The positive result of Hitler's solutions was that the quality of life got a little bit better for a majority of the working class. The negative results of Hitler's solution were it didn't suit older people and less fit people, as they could not work as long as others. The destruction of independent trade unions and making strikes illegal, boosted manufacturers' confidence to expand and employ more workers. For the workers, though, it meant that there was no way of complaining about conditions or pay, and nothing to use as a threat to inhumane employers. Sickness and absenteeism increased meaning people didn't earn money. Longer working days and hours meant people do not have much energy to work and trade unions were taken away, which gave the people little rights.
The German working class was key in helping the German economy progress. Improved welfare and conditions for workers was something that the Nazis had promised before they won power, and on the surface they appeared to stick to their promises. Money was spent on improving the superficial living and working conditions of many workers, with benefits such as more paid holidays, a minimum wage, and the Strength Through Joy program that enabled poorer workers to be part of holiday and car schemes. At the same time there was a general increase in wages, up from 70% in 1933 of wages in 1928, to 85% in 1939 of wages in 1928. However, wages were still significantly lower than they were in 1928, while the price of consumer goods rose to 90% of its 1928 level in 1939. The new minimum wage also had its problems, as many workers had their wages cut to the lowest level now provided, even though the average working week had been increased by seven hours. The abolition of the unions and banning of strikes meant that there was no legal way of complaining about pay or conditions should they worsen. The Nazis were keen to keep good relations with businesses and industrialists and these measures were welcomed by them. They did not, however, benefit the workers. W
The period 1933-6 was dominated by the Economics Minister, Hjalmar Schacht, whose New Plan of 1934 was intended to promote Germany's exports, reduce imports, strengthen the currency and establishes a series of bilateral trade agreements with those less developed countries which were rich in raw materials. This helped to tackle the balance of trade balance. Additionally Germany refused to pay reparations; they directed scarce raw materials to key industries and more critically the control by government of all aspects of trade and currency exchange (growing role of state). For a while therefore there was economic equilibrium.
Tight exchange control was applied in foreign trade and Germany established foreign trade with other countries by signing bilateral clearing agreements. Gradually, Hitler had created an economic around Germany, which consisted of a number of friendly or neutral states - mainly, Southern and Eastern Europe, to be made dependent on Germany. Once again the idea of bilateral trade agreements shows the progression the German economy was making.
The appointment of Schact was an economic progression in Germany as he was able to use Deficit financing to boost the economy. The measures introduced by Schact was very effective, for example the introduction of Mefo Bills helped to finance increased public expenditure without causing inflation this helped unemployment figures and was widely welcomed. Mefo Bills, which were given to companies instead of money, with the promise that they would be repaid with interest after five years. The introduction of Mefo bills meant that many more contracts were given to companies that otherwise would not have had the funding to complete projects or pay their workers. This meant that many more people were employed, resulting in greater tax revenue. These measures also helped to induce a rapid rise in production levels, with the renewed confidence in the economy. Mefo bills meant that investment could be made without any real money being spent, which prevented inflation. The introduction of Mefo bills caused Germany to progress economically as it also helped in increase production levels and helped to stabilise the economy by lowering unemployment levels. However on the other hand, progression of the German economy must be questioned because the New Plan didn’t solve the trade problem. There was still the problem of increased demand sucking in imports, especially as the pace of rearmament grew. This economic ‘plan’ therefore couldn’t create long term solutions only short term as In 1939 Germany was still dependent on foreign imports for a third of its raw materials. The Nazis realised that the only way Germany could become completely self-sufficient would be to conquer countries that could provide the raw materials they needed.
Not only were there economic recovery and reorganization taking place in the cities, but there were also two important measures performed in the rural areas of Germany as well. Hitler and his ministers were successful in creating a progressive German economy in the agricultural field, by implementing new plans and rules. The first one was the emergence of "Reich Food Estate" (Reichsnahrstand) in the summer of 1933. Under this policy, every agricultural sector was reorganized in this Estate, which is a self-administrative statutory corporation comprising all individuals and organization concerned in the distribution as well as the production of agricultural commodities. In other words, this was served to stabilize food prices and control the amount of production. While the second measure was the Hereditary Farm Law (Erbhofgesetz) carried out in the fall of 1933. As it was written in the moral doctrine of Nazis economic principle, that public interest before self-interest, this law had the effect of protecting large and medium-sized farms at the expense of the small peasantry. Under this act, the "hereditary farms" so-called were not to be mortgaged, could not be sold, were indivisible and passed from father to eldest son. It was hoped that farms were large enough to be self-sustaining. Hence, it sowed the seed for agricultural self-sufficiency and it further stabilized the quantity, prices and marketing of agricultural produce. To summarize, under these two schemes, all the farms were cartel zed and nationalized, and all the agricultural activities were put under the government control and taken out of the free economy and direct capital supply.
1936 was a major turning point in both Foreign Policy and Economic policy. Economic confidence was restored and Germany troops marched into the demilitarised Rhineland. By 1936 the recovery from the depression had been sufficiently rapid to allow an acceleration of the rearmament policy. It was in late 1936, when the success of the First Four-Year Plan was no longer in doubt- the unemployment declined from 3.7 million in 1933 to 1.6 million in 1936; and the total production surpassed the pre-depression level, did Hitler embark on a program of self-sufficiency and independence from outside markets - the Second Four-Year Plan.
In 1936 Hermann Goering became Economics Minister, and there was a shift in emphasis from tackling domestic problems to preparing for global ones. The Government was determined to reverse the effects that the Treaty of Versailles had had on the German military, and Goering was put in charge of the Four Year Plan, a massive rearmament program which aimed to make Germany ready for war within four years. Under this plan military expenditure more than doubled between 1936 and 1938, with 14% of Germany's GNP being pumped into the military in 1938, compared with 6% in 1946. The government imposed wage increase restriction to control public consumption and alternatively, granted tariff, loans and subsidies to promote production. For some scarce materials, like steel, the government even initiated an allocation system to channel them into war output. The Four Year Plan was a progression in making Germany ready for war. It was a progressive step in creating an autarkic state.
The Second Four-Year Plan had a number of objectives. In the first place it was to make German independent of all essential foodstuffs and raw materials (i.e. Autarky). Secondly, it was to control and distribute foreign exchange so that German economy would soon be isolated from all the external economic fluctuations. Lastly, it was to mobilize labour and raw materials in favour of military progress and rearmament. The Four Year Plan allowed the government to increase wage restriction to control public consumption and alternatively, granted tariff, loans and subsidies to promote production. For some scarce materials, like steel, the government even initiated an allocation system to channel them into war output.
Evidently, this Second Four-Year Plan had a clear military purpose, as Hitler had stated his aim to his supervisors very clearly that, within four years the German economy must be ready for war. Thus priority was given to rearmament, and emphasis was placed on the development of raw materials and machinery production. From 1936, with the Four Year Plan, rearmament became the main focus of the German economy. However, Hitler was unable to subordinate all other areas to the rearmament drive as the tension between ‘guns and butter’ grew.
Despite the policy of rearmament creating almost full employment and a more stable economy at first, it also resulted in major food and fuel shortages. With such a large proportion of Germany's GNP being pumped into the rearmament program, the remainder was spread very thinly across essentials such as food and health. Between 1933 and1938 the amount of industrial goods produced increased by 389% - during the same period consumer goods rose by just 69%. Responding to the calls from the public for an increase in food production, Goering said at one point that "guns make us powerful; butter only makes us fat” and so the food shortages continued.
‘Guns or Butter’ dominated economic planning, particularly at the start when increased popularity for the regime was a political necessity. ‘Ore has always made an empire strong, butter and lard have only served to make its people fat’. Words of Goering in which he believes ‘guns’ is the way forward. Hitler made the choice to continue reducing unemployment and to re-arm at full pace and solve the guns or butter debate by making Germany self-sufficient in the goods she was currently importing. However the period from 1936 to 1939 rearmament, (guns) dominated economic growth, exports fell and standards of living were held as growth in the economy was devoted to military spending. Hitler forced the economy to execute his ideological beliefs, in particular, the quest for Lebensraum by means of conflict. To achieve his aspirations he had to discount the welfare of his workers- after all, Lebensraum would be the German nations 'long-term' economic salvation. Hence, 'guns' were more significant than 'butter'.
From 1936 to 39 two thirds of Germany's industrial investment was devoted to production of steel, iron ore and tools. The production of steel was three times greater than that in Britain and the production of coal was two times greater. From 1939 the German air force increased and was five times greater, including a vast battle fleet and army. Standards of living declined even though Hitler denied this. And by 1939 danger of the economy overheating due to labour/ raw material shortages and the rise in some prices rendered the economy unstable. There is clear evidence here that the German economy was progressing well in reaching its aim of autarky even though the economy was overheating.
Previous to 1939 Hitler realised that there just was not enough resources, this conflict with reality led the Nazi's to assume a policy of expansionism into the east. Here Hitler was also fulfilling his ideological goal of Lebensraum. After invading Austria and Czechoslovakia Hitler received growing hostility from the elites, army and businessmen as invasion posed a grave risk to the economy. Hitler forced the economy to execute his ideological beliefs, in particular, the quest for Lebensraum by means of conflict. To achieve his aspirations he had to discount the welfare of his workers- after all, Lebensraum would be the German nations 'long-term' economic salvation. Hence, 'guns' were more significant than 'butter'. The need to try to supply both ‘guns and butter’ hindered the economic progression and more importantly made Germany less prepared for war than it otherwise would have been. This is the view of the Marxist historian, Mason. He believed by 1939 the economy was unstable and overheating and thus there was a widespread discontent. His view was that the German economy was under great strain due to rearmament. However Richard Overy has a different view he believed there was an economic problem looking at the statistics however not a crisis. Production and investment were growing, and the regime was using a variety of controls to direct the economy.
Overy commented that ‘recovery did occur at a faster rate until at a higher level than almost anywhere in Europe'. Therefore, Hitler was successful in increasing industrial activity in Germany. This meant confidence in the Nazi party grew because citizens were aware of the economic boom. Germany began to thrive and become rich from industry and this meant Hitler could spend more money on developing the armies and making his country powerful. He believed that the context of the international situation and Hitler’s aims were the crucial factors in the decision for war in September 1939. Mason believes that war was inevitable, as it was the only way out to gain extra material and human resources. Hitler’s solution was to gain vital economic resources via short wars, known as Blitzkrieg. This would enable them to exploit economically the countries they wish to conquer.
Despite the fact that the economy was overheating Hitler achieved success with the Blitzkrieg 1939-1941. It was the only way in which Germany could grow from limited mobilisation by steadily expanding its economic base through a series of rapid and specifically targeted conquests. Blitzkrieg was as much an economic strategy as a military device. By 1941 Blitzkrieg seemed to have produced the required momentum for the achievement of the early stages of Lebensraum. Germany had gained military and economic control over Czechoslovakia, Poland, the Ukraine and a sizeable area of European Russia, as well as direct influence over Hungary, Romania and Bulgaria. With these victories, the economic dimension of Lebensraum became clearer.
The Historian Hardach makes a point which is agreeable that Hitler was intended rather on a rapid program, a ‘Blitzkrieg’. The German Historian Klein believes that Hitler only "planned to solve Germany's living-space problem in piecemeal fashion - by a series of small wars". Therefore, Hitler did accomplish his economic goal - he made Germany strong enough for a chain of short wars with rapid victory, though apparently he called for total Autarky for propaganda purpose. Also, many historians believed that Hitler was supportive of "Blitzkrieg". Hardach said that Hitler "had no desire to engage in a protracted war of attrition with strategic bombing and a sea blockade. Making a realistic assessment of his country's limited economic resources, he was intended rather on a rapid campaign’. Also the historian Stolper agreed with the point that ‘Hitler never contemplated a long drawn-out war’. Hence Hitler was very successful with economic planning of ‘Blitzkrieg’ as it enabled the German economy to progress. Even though for two years the German economy failed to meet Hitler’s military requirements, the ‘Blitzkrieg’ was an effective economic campaign.
Economic planning during 1933-1941 was effective in brining about stability and progress. Unemployment was tackled, which paved the way for Germany to build up its economic strength which allowed him to dominate Europe by 1941. However due to Hitler’s ideological beliefs such as ‘Rearmament’ and ‘Lebensraum’ his priorities hindered the German economy’s progress. If he had paid more attention to consumer and export markets, the economy would have progressed further. On the other hand he was successful in the recovery from depression and was the driving force in stabilising the economy, through the appointment of key ministers such as Schacht who was able to stabilise the economy through his expertise knowledge. Hitler was unsuccessful in achieving full autarky. Some historians argued that Hitler was unsuccessful because of his personality cult, that he was "untrained in economics, unsophisticated in its technicalities, and completely impatient of its administrative problems". This was a major reason which hindered the progress of the German economy towards the end from 1939-1941. Hardach critically pointed out that, "Germany was still painfully dependent on essential imports in 1939". In the end the Nazi economy was geared towards total wars which effectively hampered Germany’s economic progress.
