Key facts and dates

Nazi economic policies between 1933 and 1939 focused on recovery from the Great Depression, rearmament, and achieving self-sufficiency, fundamentally reshaping Germany's economy. The following timeline captures the pivotal moments and policies that defined this transformation.

Timeline of key events:

• 1933 – Nazis come to power; military spending starts at 4% of GNP; public works projects like autobahn construction begin.
• 1934–1937 – Hjalmar Schacht serves as Economics Minister, implementing deficit financing and trade agreements.
• 1936 – Four-Year Plan introduced under Hermann Göring, prioritising rearmament and autarky.
• 1937 – Unemployment effectively eliminated through various Nazi schemes and policies.
• 1939 – Military spending rises to 23% of GNP, reflecting a 'guns before butter' economy.

Initial economic recovery measures under the Nazis

When the Nazis came to power in 1933, Germany was still reeling from the economic devastation of the Great Depression. Their early policies aimed to reduce unemployment and stimulate growth, while also serving propaganda purposes to consolidate power and public support.

Key recovery initiatives:

• Public works projects - Large-scale infrastructure projects, such as the construction of the autobahns (motorways), created thousands of jobs while showcasing Nazi efficiency and vision through propaganda.
• Work creation schemes - Various programmes were introduced to provide employment, including reforestation and land reclamation, targeting the millions of unemployed workers.
• Claiming credit for existing trends - Some recovery was already underway before 1933 due to global economic improvements and policies of previous governments, but the Nazis took full credit through effective propaganda, presenting themselves as economic saviours.

Hjalmar Schacht's role in stimulating economic growth

Hjalmar Schacht, as Economics Minister from 1934 to 1937, played a crucial role in stabilising and reviving the German economy. His policies focused on innovative financial strategies and international trade to drive growth during the early years of Nazi rule.

Schacht's economic strategies:

• Deficit financing - Schacht used government borrowing to fund public works and job creation, effectively pumping money into the economy to boost demand and reduce unemployment.
• Trade agreements - He negotiated bilateral trade deals, particularly with Balkan and South American countries, to secure essential raw materials in exchange for German goods, bypassing currency restrictions and reducing reliance on hostile markets.
• Impact on recovery - These measures helped restore economic confidence, increased industrial production, and laid the groundwork for further expansion, though they also created long-term financial risks due to mounting debt.

The Four-Year Plan and the push for autarky and rearmament

Introduced in 1936 under Hermann Göring, the Four-Year Plan marked a significant shift in Nazi economic policy. It prioritised preparation for war over civilian needs, aiming for economic self-sufficiency and military strength.

Objectives and methods of the Four-Year Plan:

• Focus on autarky - Autarky, meaning economic self-sufficiency, was a key goal to reduce Germany's dependence on imported goods, especially raw materials critical for war, such as oil and rubber.
• Development of synthetic substitutes - Industries were directed to produce synthetic alternatives, like artificial rubber and fuel, to compensate for scarce imports, even if these were less efficient or more costly.
• Prioritising rearmament - Economic resources were redirected towards military production, subordinating consumer needs and economic efficiency to political and military objectives, setting the stage for a war economy.

The scale and impact of rearmament on the economy

Rearmament became the cornerstone of Nazi economic policy by the late 1930s, transforming Germany into a militarised state. This focus had profound effects on resource allocation and economic priorities, often at the expense of civilian welfare.

Extent of militarisation:

• Rising military expenditure - Military spending surged from 4% of Gross National Product (GNP) in 1933 to 23% by 1939, reflecting a massive redirection of funds towards weapons, infrastructure, and armed forces.
• 'Guns before butter' economy - This phrase encapsulated the policy of prioritising military needs over consumer goods, leading to shortages of everyday items and a focus on war preparation rather than improving living standards.

Economic consequences:

• Resource diversion - Factories and labour were increasingly allocated to military production, limiting the availability of goods for civilian use and straining other sectors of the economy.
• Pressure on workforce - The demand for labour in military industries contributed to emerging shortages, as workers were pulled from other areas, creating imbalances in the economy.

Apparent successes and underlying economic problems

On the surface, Nazi economic policies appeared highly successful in the mid-1930s, with dramatic improvements in employment and production. However, a closer examination reveals significant weaknesses that threatened long-term stability.

Visible achievements:

• Elimination of unemployment by 1937 - Through public works, rearmament, compulsory labour service, and removing women from the workforce, the Nazis achieved near-full employment, a stark contrast to the mass joblessness of the early 1930s.
• Rising industrial production - Output in key sectors increased, driven by state investment and rearmament, restoring economic confidence among Germans and projecting an image of strength.
• Boosted national morale - The apparent economic recovery, heavily publicised through propaganda, reinforced support for the regime, as many felt a sense of renewed purpose and stability.

Hidden economic flaws:

• Unsustainable deficit spending - Heavy borrowing to fund recovery and rearmament created a growing national debt, which could not be maintained indefinitely without economic collapse or aggressive expansion to seize resources.
• Labour shortages - By the late 1930s, the intense focus on military industries led to a lack of workers in other sectors, hampering overall economic balance.
• Depressed agriculture - Despite the regime's rhetoric about rural life, agricultural investment lagged, leaving the sector weak and unable to meet food demands, increasing reliance on imports.
• Stagnating living standards - Although employment was high, wages remained low, and consumer goods were scarce due to the focus on military production, meaning most Germans saw little improvement in their quality of life.

Collaboration of big business with Nazi policies

The relationship between the Nazi regime and German industry was complex, with major corporations playing a key role in the economic policies of recovery and rearmament. This collaboration was mutually beneficial but came at the cost of autonomy for businesses.

Role of industrial giants:

• Support for rearmament - Companies like Krupp (steel and weapons) and IG Farben (chemicals) profited immensely from military contracts, producing tanks, artillery, and synthetic materials essential for the war effort.
• Acceptance of Nazi control - In exchange for lucrative deals, businesses accepted state interference, including forced labour policies and production quotas, aligning their operations with Nazi political goals.
• Mutual benefits and tensions - While industrialists gained wealth and influence, they lost independence as the regime dictated economic priorities, creating a partnership rooted in necessity rather than ideological unity.

Evaluation of the overall success of Nazi economic policies

Assessing the success of Nazi economic policies requires balancing short-term achievements against long-term consequences. While the regime achieved notable gains, these often masked structural weaknesses that contributed to later crises.

Short-term gains:

• Economic recovery - The rapid reduction of unemployment and growth in production appeared to validate Nazi policies, stabilising the economy after years of depression.
• Political consolidation - Economic improvements bolstered Hitler's popularity, as many credited the regime with restoring national pride and strength, enhancing its grip on power.

Long-term weaknesses:

• Unsustainable model - The reliance on deficit spending and a war-focused economy created pressures that could only be alleviated through territorial expansion and resource acquisition, pushing Germany towards conflict.
• Fundamental flaws concealed - The apparent prosperity hid issues like stagnating living standards, agricultural neglect, and labour imbalances, which undermined the economy's resilience.
• Drive towards war - Policies geared towards rearmament and autarky left Germany with little choice but to pursue aggressive expansion to sustain growth, as internal resources were insufficient, ultimately contributing to the outbreak of the Second World War in 1939.