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How Successful Was Nazi Economic Policy?

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How Successful was Nazi Economic Policy? When the Nazi Party came to power in 1933 it had two main aims - to solve unemployment, and to make Germany as strong an economic and military power as possible, so that the humiliating and devastating defeat of the First World War could never happen again. In order to do this, several areas had to be tackled. Firstly, unemployment was huge and rising steadily - in 1933 six million people were unemployed. Secondly, the party had promised better conditions for workers, and this had to be balanced with continuing the good relationship that the Nazis had with businesses. In order to build up Germany's military strength after the under-funding and downsizing that Versailles imposed, large amounts of funding were needed for the armaments industry and the armed forces. Lastly, the Nazis wanted to create autarky - making Germany self-sufficient, so that if another war came it would not be dependent on outside goods. By 1938 it appeared that, due to the policies that the Nazis followed, Germany had solved most of her economic problems. In reality, however, Germany had begun to plunge into yet another economic crisis. Unemployment was tackled first, in a variety of different ways. Public expenditure and investments were increased in order to renew an industrial and business confidence in the economy, and propaganda campaigns were set up to stimulate consumer demand - both of which increased production, thereby creating jobs. ...read more.


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. Hjalmar Schacht was made economics minister in 1934, and he came up the ingenious idea of using credit notes, or 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. By using Mefo bills, the Government was effectively paying wages without actually spending any real money. These measures also helped to induce a rapid rise in production levels, with the renewed confidence in the economy. Schacht suspended debt repayments and reparations, leaving more money to be put into industry. By 1938 production had risen by 100% from 1933, and by 1935 exports exceeded imports. ...read more.


Although on the surface the figures for levels of unemployment look very impressive, in reality they were fiddled and changed and came nowhere near representing the actual number of unemployed people in Germany. The policy of rearmament, although successful in that it resulted in a hugely funded and expanded army, resulted in food and fuel shortages, and thus the average worker in Germany suffered. Autarky was also never established, despite again a large proportion of Germany's GNP being siphoned off to help. Many policies to help the economy also backfired - Mefo bills worked extremely well as a way of boosting GNP without spending money, but when business began to cash them in in 1939 they found that there was no real capital behind them, plunging the Government and businesses into debt. Although figures for wage and production increases look impressive when compared to 1933, they were nowhere near those of the 1920s, and there is an argument that the economy had already begun to recover before the Nazis' rise to power. Hitler had appeared to inherit a difficult situation, not least because the results of the depression of 1929 were seen to have destroyed Weimar. This gave Hitler the opportunity to make an impact economically, and in terms of what the German people believed, he did so. Behind the cover of manipulated figures, however, the Nazi economic policies failed to create the secure, stable economic environment that was so badly needed ...read more.

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