However, in 1942, Albert Speer was appointed as Todt’s successor in the post of Minister for Weapons and Munitions. The appointment of Speer marked a turning point in terms of improving the performance of the economy. Speer implemented his programme of ‘industrial self-responsibility’ to provide mass production and included relaxing controls on businesses that previously had demanded the need to fit in with Nazi wishes. In their place a Central Planning Board was established in April 1942, which was in turn supported by a number of committees, each representing one vital sector of the economy. Speer was able to co-ordinate and rationalise the process of war production and more effectively exploited the potential of Germany’s resources and labour force. Speer also took a whole range of other initiatives in order to improve production such as employing more women in the arms factories, making effective use of concentration camp prisoners as well as preventing skilled workers from being lost to military conscription. Thus, it can be seen that in terms of co-ordination, Speer made a significant improvement in both productivity and this was supported by a leap in military expenditure. It can therefore be argued that it was down to other factors such as the Allied bombing raids, the shortage of raw materials and Hitler’s ideological contradictions that proved more critical to the German war effort. .
Crucially, it is argued that Speer’s initiatives were too late and that despite his economic success, Germany probably had the capacity to produce more and could have achieved a level of output close to that of the USSR or the USA. Furthermore, Speer was not always able to counter the power of the Gauleiters at a local level and the SS remained a law unto themselves, especially in the conquered lands. Crucially, the effects of the Allied bombings from 1943 had a detrimental effect on the economy. Germany peaked in the production of weapons in the summer of 1944 due to Speer’s initiatives but the German armed forces could not fully benefit from this because of the effect of Allied air raids. The bombing prevented Germany from further increasing its levels of arms production and caused industrial destruction and the breakdown in communications. Thus, despite Speers reorganisation and rationalisation process, the allied bombing reduced the capacity of the German economy to expand further: industry was targeted and the Germans had to divert crucial resources towards defensive measures. This demonstrates that, since Speer improved co-ordination yet German war production was still poor, poor co-ordination cannot solely account for the weaknesses.
Germany also suffered from a shortage of raw materials. Perhaps above all else, Germany lacked reserves of high-quality iron ore. Goring therefore attempted to develop the production of low grade ore for manufacturing purposes. Yet this could never meet the demands of the expanding military needs, thereby making Germany in part dependent on imports. Furthermore, German access to oil supplies was limited, the main supplier being Romania, which exported nearly 3 million tons to its ally in 1943. However, this was not enough to supply an economy that from 1942 was engaged in total war. Even conquest did not ensure increased supply of needed materials. In addition to this, despite the increase in ore and the acquisition of the steel industries of the Low Countries and France, there was a chronic shortage of steel throughout the war and particularly before 1942. In 1941 it was calculated that demand for steel exceeded supply by 30 per cent. Thus, the shortage of raw materials, which had played a part in the rationale for invasion, seriously hampered the German economy’s capacity to meet the needs of fighting a major, total war. Thus, even Speer’s rationalisation programme could not compensate for this.
Finally, German war production was also hindered by the shortages of labour. There was a heavy reliance on foreign workers (of whom there were 6.4 million by 1942). These were often little more than badly treated and underfed slave labourers. As a result their productivity was 60-80 per cent lower than that of the average German worker. Further, ironically the genocide of the Jews not only concentrated efforts on annihilation rather than military requirements and economic demands but also reduced the potential labour force. At home, Speer had wanted to conscript women into the workplace but was prevented from doing so by Hitler who wished to retain the traditional roles of women due to the constraints of Nazi ideology. The demands of motherhood limited the pool of labour and as many women were already employed in agriculture (and were needed to remain in this sector due to male conscription) there were further limitations on fully exploiting the female labour market. Subsequently, the shortage of labour remained throughout the war and this was not something that even Speer could rectify.
In conclusion, it is evident that the German economy did not expand sufficiently to meet the demands of ‘total war’ and thus war production was weak during the years 1939-45. It is true that the handling of the economy was poorly co-ordinated, particularly during 1939-42, as the chaotic nature of the Nazi state meant that there were a number of rival agencies. However, whilst from 1942 the regime underwent a rationalisation process, fronted by Speer, the underlying problems remained thus limiting the possibilities for economic expansionism. Thus, the fundamental problem which accounts for the weakness in German war production in the years 1939-45 was the both the lack of raw materials and labour. This problem was exacerbated by the fact that conquest did not make up the shortfall in these two essential components of any economy. Finally, there was a conflict between the impulses of an ideologically destructive regime and one in need of economic growth. It is the greatest irony of the Second World War that whilst the Nazi regime scoured Europe looking for labour, it was in the process of murdering six million Jews.