To what extent did the Nazis achieve an economic miracle in Germany between 1933-1939?

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Sam Hassani – Personal Study – 16118

To what extent did the Nazis achieve an economic miracle in Germany between 1933-1939?

Prior to Hitler being appointed Führer of Germany in 1933, the economic climate had been one of instability given the effects of the 1930 Economic Depression. There is no doubt that the Nazis did improve the economy, but the extent to which it was a miracle will be examined in detail throughout this essay. Another important factor to consider in this study is whether the economic situation had begun to improve under the Weimar Republic or whether the Nazis were alone solely responsible for the revival.

In January 1933 Germany had all the features of a depressed economy. Foreign trade had declined, industrial production, and with it national income, had fallen by 40% and there was mass unemployment, with a third of the working population unemployed. Added to this, wages and real income had fallen with inevitable consequences for those who produced consumer goods. Only by the second quarter of  

1933 did it become clear that a more general improvement was taking place. By the end of that year the index of industrial production (1928=100) stood at 66, seven points higher than in 1932, and unemployment fell by over two million between March 1933 and March 1934. By the end of 1935, GNP in real terms had reached the level of 1928. This led to growing support for the Nazi party who, using force and terror, were keen to cement their position as Germany’s main political party.  Evans and Jenkins’ ‘Years of Weimar and the Third Reich’ claims that ‘Hitler wanted the continuation of pre-1932 modest attempts at the control of inflation and expansion of government spending and employment.’ In other words, Evans and Jenkins are implying that Hitler’s success or so-called ‘miracle’ in improving the economy was already under way before the Nazis came into power.


Debate circulates as to what plans Hitler had for the economy when he was announced as Fuhrer of Germany in 1933. One leading historian stated that ‘no single unified economic system prevailed throughout the entire period of the Nazi regime.’ Overy’s ‘The Economic Recovery 1932-38’ states that Hitler was opposed to reckless experiment and instead wished to continue with pre-1932 modest attempts to control inflation and the expansion of government spending and employment. In the years before 1933, Hitler had been careful not to become too tied down to a specific economic policy. Despite his resentment and hatred of capitalism, political necessitated a certain ambiguity in order to satisfy the different economic interest groups and gain the support needed to gain power by democratic means. However, Layton contradicts Overy’s view stating that in 1932 Hitler began to shift his approach towards the economy. Firstly, he tried to begin his implementation of the policy of autarky (self-sufficiency). He envisaged the creation of trading or economic community under the influence of Germany, which he believed would rival the other strong economic powers during this period. (Must develop idea of autarky and exactly what this involved). Secondly, he turned his attention to what was a growing idea around Europe-deficit financing. The British economist, John Maynard Keynes, proposed the theory that by spending money on public work schemes, this would create an increased number of jobs, which would in turn act as an artificial stimulus to demand within the economy. Government expenditure rose by 270% between 1933-1939, whilst total debt rose from 13.9 to 23.7 Billion Reichmarks. By 1934, the revival of the economy was causing concern because of a balance of trade deficit. Germany was importing more than it was exporting, and its gold and foreign currency reserves were beginning to run short. The New Plan in 1934 was devised by Schacht to tackle this problem. Schacht instructed Hitler to monitor all imports, which had to be approved by the government. Schacht made trade agreements, especially with the Balkan states, who supplied much of Germany’s strategic raw materials. The New Plan was successful in overcoming the immediate balance of trade in 1934, but the problem of increased demand sucking in imports still existed.  


This led Hitler to appoint Dr Hjalmar Schacht as President of the Reichsbank and in August 1934 as Minister of Economics. As well as being a very astute banker, Schacht also had very close links with the economic elite. Schacht, as President of the Reichsbank, implemented Keynes’ policy of deficit financing to boost the economy. Schacht introduced Mefo Bills on behalf of the government to help fund increased expenditure on rearmament by delaying real payment as well as increased public expenditure without causing inflation. Another hyperinflation crisis such as that experienced in 1923, when $1 = 4,200,000,000,000 marks, was also avoided through government controls on wages and prices.

As seen from the above table, in 1933 there were approximately 3.7 million of people who were unemployed and causing a strain on German finances by having to rely on state funding.  

Autarky, as already mentioned, means self-sufficiency. In other words, Hitler wanted Germany to be less dependant on imports. Hitler’s idea of autarky involved three key features. They were to expand domestic production, develop substitutes for certain raw materials and to expand abroad in countries such as Austria and Czechoslovakia. Hitler considered this vital for a country geared for war to avoid the damage inflicted by an economic blockade. Total autarky was possibly too unrealistic to achieve and Hitler had not envisaged Germany being totally self-sufficient. In 1928, the value of imports stood at 14 billion marks, but by 1938 that value stood at approximately 5.4 million. Exports, however, experienced the same trend as imports, which was not what Hitler did want to happen. In 1928 the value of exports was placed at 12.3 billion but by 1926 this value had been reduced by 250% to just under 5 billion marks. However, in 1932 Hitler managed to overturn the import-export deficit that had stood for over a decade by increasing the value of exports to more than the value of imports therefore going into the black. This trend continued up to 1938 before the two values began to level off. Nevertheless Hitler had managed something remarkable given the worldwide atrocity of the 1929 Economic Depression.

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Hitler succeeded where the Weimar Government had failed, in tackling the effects of the Depression. Many historians argue that had Gustav Streseman still been alive in 1929 then Hitler may never have come to power. Unfortunately for the Weimar Republic, events did not turn out the way they had hoped and were unprepared for such a sudden and devastating attack on worldwide economies. In many respects, the Depression was very fortuitous for the Nazi party, given that the Weimar Republic was forced out of power paving the way for the more extremist parties such as the Nazis and the ...

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