Schacht also introduced work schemes through the direct spending by the state on a range of investment projects. The main aim and focus behind this economic strategy is evident in the spread public expenditure in rearmament, construction and transportation. These work schemes were in reforestation, land reclamation, motorization and building. Subsequently through this there was a dramatic growth in jobs and decline in unemployment. By early 1939 the economic recovery was advanced and the focus then turned to rearmament orders. However, this economic recovery happened during the recovery of the world economy and so it was aided through the natural upturn in the business cycle. Therefore the extent of the actual recovery in terms of Schacht’s aims and the policy’s individual effects is undermined somewhat by this. But the results were very successful, and that degree of success clearly could not have achieved without the Nazi economic policy.
Germany had endured an impressive economic recovery within the years 1933-1936; however, two underlying worries remained. These were the fear that rapid increase in demand would rekindle inflation and the fear that a rapid increase in demand would lead to the emergence of a balance of trade deficit. The problem of inflation never materialized as there was a lack of demand within the economy and the regime established strict controls over wages and prices. However, the balance of payments deficit was a recurring concern as economic recovery led to rising demand for consumer goods, rearmament led to increase demand for raw materials and the high value of the mark made it hard to increase exports. Therefore the extent of which the inflammation fear became a reality is remote, as political and economic policy of strict control over wages and prices made it so. So to an extent the inflammation fear was debilitated by economic aims, which was successful. However the problem of the balance of payments was still existent.
The problem of the balance of payments was tackled by the introduction of Schacht’s 'New Plan', which was ideally Germany's attempt to achieve economic autarky in September 1934. Germany had accrued a massive foreign currency deficit during the Great Depression, which continued into the early years of the Third Reich. The economic priorities were set by a series of measures. Bilateral trade treaties, The Reichsmark currency and mefo bills. Schacht negotiated several trade treaties with countries in South America and southeastern Europe, under which Germany would continue to receive raw materials, but would pay in Reichsmarks; these agreements were the bilateral trade treaties. This ensured that the deficit would not get any worse, while allowing the German government to deal with the gap which had already developed. Schacht also found an innovative solution to the problem of the government deficit by using mefo bills, the main purpose of these were to disguise government spending. Through Schacht’s new plan and past economic ideas, he had laid the foundations for economic recovery by mid-1936. This was therefore assumingly a very successful policy in regards to it’s results.
However, there were disagreements over priorities. As Schacht favored boosting exports this would resort in slower rearmaments, whilst the armed forces were already demanding more resources for rearmaments. Hitler therefore favored rapid rearmament. Also, Schacht had only questionably hidden the balance of payment by a series of financial tricks and as the demands for rearmament and consumption for goods increased, the balance of payment would actually go deeply into red. There was therefore a divide between the governments expenditure into arms production over the production of industrial goods, leading to the question: should the economy concentrate on producing “guns or butter?”. The Nazi leaderships economic policy here was therefore criticized for it’s over-interest in re-armament and it’s priority taken over trade, peace and consumer goods. Therefore the Economic policies by Schacht were questionably deceptive in terms of ensuring economic stability long term, but the Nazi primary aim of rearmament disregarded the needs of German people. So therefore the extent of these policies successes are subjective to their results, which in regards to everyday Germans, the rearmament policy would not have been seen upon favorably.
Hitler made it clear that his two economic aims in regards to policy were that the German armed forces must be operational within four years, and that the German economy must be fit for war within four years. This was to be implemented through a four year plan. The aims of the four year plan were to prepare for war and establish autarky by expanding domestic production, developing substitutes and expanding abroad. They also extended government controls and expanded armament. The success over the years of the four year plan was mixed. The production of key materials had expanded to a reasonable rate, or greatly. However, the production of other materials never reached the levels desired by the armed forces and Hitler. It was successful in the way in which Germany’s imports had not increased, however this still meant that Germany was dependant on foreign supplies for on foreign supplies for one third of it’s raw materials when war broke out. The economy was far from being mobilized when war had begun, but it was more so than Britain or France. Therefore the four year plan was successful to an extent in regards to imports and the production of some materials; however it was unable to completely mobilize and prepare Germany’s economy for war. And so the extent of Nazi economic Policy success here is limited, the aim’s were incompatible to it’s results.
Hitler issued a series of war decrees in December 1939 outlining vast programmes for every possible aspect of war production; this meant that German military expenditure doubled between 1939 and 1941. Food rationing was also introduced and the German labor force was rapidly mobilized for war through the majority being involved in war-related projects. However, despite the intent of wholesale mobilization the actual results, in terms of armaments production, remained disappointingly low. Germany was outnumbered by rival countries in all areas of armaments. The low levels of armament production was closely tied with the inefficiency and poor co-ordination carried out in the mobilization, mostly due to the premature war breakout. Therefore the planning of the short and long term needs of the Nazi leadership was confused and disorientated. This would have been a problem if only Germany had established a single, clear and authoritative central control over the economy, for which it lacked. It was also limited by poor standardization. These economic limitations during the early war period showed weaknesses within the conduct of Nazi economic policies in co-ordination, planning and standardization.
When total war broke out in 1941 Hitler appointed Speer as the director of central planning, which enabled him complete control over the war economy. Speer took a range of initiatives in arms production which subsequently resulted in a dramatic rise in ammunition production, tank production and total arms production. Therefore in regards to production, Speer had some very large successes within his economic policies. Despite this, Germany had the capacity to produce more and the occupied territories of the Third Reich were not exploited with real economic efficiency. Also, allies blanket bombing prevented Germany from increasing it’s levels of arms production even further. Speer therefore had some major early successes, but these are shadowed by the later fundamental problems and failures evident in the later years of the war. In the end, the Nazi economy had proved incapable of rising to the demands of total war and the cost of the failure was a major factor in the ruins and economic collapse of 1945.
In conclusion, the condition of Germany’s economy was not static and was fairly inconsistent throughout. There were some large successes in regards to it’s economic recovery at the hands of Schacht, whose success benefitted firstly sympathetic supporters of the Nazi party, followed by the major decline in unemployment and economic stiunulation brought about through his reforms and work schemes. However, his method of the balance of payments could be seen as a series of financial tricks that would not be beneficial long term. The four year plan increased arms production but through it’s limitations, did not prepare or mobilize Germany for war. Speer had some notable successes in the early total war period, but the Nazi war economy could not provide for the demands of a total war economy. So therefore, after the recovery, the condition of Germany’s economy got progressively worse, and even through there were some successes, the extent of failure in the later total war years shadowed these.
