THE NATIONAL SOCIALIST ECONOMY

AN ECONOMIC MIRACLE?

A WORLD-WIDE CRISIS…

• The Wall St Crash in October 1929 shocked the developed world.

• Businesses everywhere suffered either because they depended on US investments or because they needed the trade that growing unemployment simply prevented.

Queues of unemployed in 1930

…NOT JUST A GERMAN ONE

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1933

UKGERMANY

USA

• 6 million Germans [a third of the total workforce] became unemployed.

• Millions more ate sub-standard diets.

• In the UK socialists became popular, in Germany & Balkan states fascists came to power.

Unemployment in millions in 1933

HITLER’S ELECTION PROMISES

• “History will judge us according to whether we have succeeded in providing work.”

• He did it by:1. A 4-year plan that broke

the Treaty of Versailles.2. Forcing women & Jews

out of jobs but not registering them as unemployed.

THE 1ST 4-YEAR PLAN

• Led by the banker, Hjalmar Schacht.

• Aim: to reduce unemployment.

• Methods: expanding the public works schemes already begun by Bruning and von Papen.

Chancellor Heinrich Bruning

WHAT WERE PUBLIC WORKS?

• Jobs paid for by the government, not private businesses.

• The main purpose was to provide work &, at the same time, build up Germany’s armed forces again.

• “Lebensraum,” Hitler’s aim, would require force to invade other countries.

Mass tank production, despite Versailles

HOW WAS IT DONE?

• Railways, roads & ports were improved, & the autobahn were built.

• The armed forces & munitions factories employed millions, eg. Army grew from 100,000 to 1,400,000 in 2 years (1936).

How one of Schacht’s schemes looks today

HOW IT WAS DONE contd.

• 2 year conscription was introduced.

• Reich Labour Service Act: “Arbeitsdienst.”

• Trade Unions were abolished (kept wages low – never above 1932 levels).

• Kraft Durch Freude gave poor workers incentives and bonuses to raise morale.

AUTARKY

• To prepare for war & stop foreign trade sanctions preventing expansion, Germany needed:

• Autarky (economic independence).

• This was the aim of the 2nd 4-Year Plan.Hermann Goering, leader of the 2nd 4-Year Plan

THE 2ND 4-YEAR PLAN

• Was led by Hermann Goering.

• Aim: to increase at any cost production of scarce & strategic materials, eg:

1. Iron ore

2. Fuels

3. Fats

AN ECONOMIC MIRACLE?

• Employment: 5 million jobs were created & virtually full employment was reached in 2 years. By 1939 there was a labour deficit.

• But the jobs were public-funded & did not create wealth by manufacturing goods for sale & export; they actually cost money!

• Balance of trade deficit was huge: 432M marks in 1938 alone, meaning that Germany was really bankrupt!

• Autarky: always failed to reach targets, so they anticipated annexing resources from conquered enemies.