Did Nazi economic policies of the 1930s help or hinder the war effort?

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Jane Stiller U6ARD/U6P                History Coursework 2002

Did Nazi economic policies of the 1930s help or hinder the war effort?

The Nazis inherited a very tempestuous and poor economy. The high unemployment rates and consequences of the previous hyperinflation problems meant that Hitler needed to instigate a policy of recovery. He also wanted to begin preparing the economy for a subsequent war. However, Hitler dodged making definite decisions about the economic policy, stating that the government should “avoid all detailed statements” concerning it. This meant that policy of the 1930s was often vague, as not only did the party did not want to alienate economic groups, but they also had little idea of their plans themselves. This led to a generally pragmatic and responsive economic policy. This style of policy eventually benefited the economy and helped the war effort, as it enabled the government to transfer from the Four Year Plan to the War Economy quickly and effectively. Despite this, from the beginning of the decade the Nazi party realised that it would be problematic to improve the state of the economy drastically in such a short space of time. Therefore, Hitler decided to concentrate the economic policies of the time, to differing extents, on war. This can be seen through elements of both the New Plan and the Four Year Plan. However, it is important to consider whether the negative points of these plans outweigh their positive ones, if their actions helped or hindered the war effort, and whether a different economic policy throughout the 1930s would to led to a Nazi victory in World War II.

The appointment of Hjalmar Schacht in 1933 let to the New Plan of September 1934. This represented a radical extension of trade policy already begun before 1933.The systems of autarky, deficit spending and ‘wehrwirtschaft’ all clearly had elements which later helped the war effort. For example, the policy of autarky was a push for self-sufficiency within Germany. Germany no longer wanted to rely on loans and trade from other countries, as such reliance on other powers could lead to problems with their later war orientated foreign policy. Deficit spending increased government investment in projects such as the “Works Creation Scheme” or Arbeitdienst. Projects such as the autobahns would help the infrastructure of Germany and aid military mobility later. They also increased disposable income for consumers by using deficit spending to create jobs. The “Battle for Work,” as this became known, meant that if you were between 19-25 years of age, it was compulsory to be involved in one of these schemes. This also meant that the unemployment problem (Overy estimates that over eight million were unemployed in 1933) would be solved. This was important because as with an unstable economy it would be impossible to enter a war or initiate a holocaust. The Nazi party also realised that the only way to prevent German defeat in the future was to prepare in peacetime to mobilise the whole society and economy for war and create close links between the economic development of the state and its military requirements.

The policy of ‘wehrwirtschaft’ is most clearly reflected by a monetary scheme called Mefo Bills. The government increased its spending by 70%, and between 1932 and 1935, public investment tripled. This was financed The important consequence of such funding was that it increased the amount available for public expenditure in industries connected with rearmament from 0.7RM in 1932 to 10.2RM in 1936. Therefore, this policy clearly helped the war effort. However, these schemes also caused problems for Germany’s balance of payments account. The increase of demand from German consumers was not met by a corresponding increase in demand for German goods. This created a deficit of 284 million RM in 1934. Supervisory Offices and import permits, supplied by the government, were introduced to combat this problem. However, this led to certain industries suffering. For example, in 1934, the import of raw cotton and wool were substantially cut in order to satisfy the import demands of heavy industry. This was clearly a political decision, as Hitler realised heavy industry would benefit the country more during a war. Indeed, Bracher states that political goals were of primary importance in determining economic policy during this time. Another example of these political motivations was the introduction of bilateral trading to try and remedy the balance of payments problems. Germany traded with less politically influential countries such as the Balkans by terms of barter. This alleviated the balance of payments deficit and meant that with the onset of war, Hitler would not have to break down trade relationships with important countries he wanted to invade. The “Battle for Production” helped the war effort, as it meant that there was no need to import other food. Initially, these policies was introduced to benefit the economy. However, it became clear later that their work aided the economy in preparation for war. This can be seen through their successes.  

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The New Plan tackled most of the economic problems faced by the Nazi government at their accession. Germany decreased her dependency on international financial markets by a virtual default on her debts. This would be vital for the war effort later. The reduction of unemployment to just under one million in 1937 was extremely important to Hitler, as he saw it as an essential factor before his other military and foreign policy ambitions could be fulfilled. It also gained the Nazi regime admirers both home and abroad. They could later use this favour to their advantage when instigating an aggressive ...

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