Controlling The Economy 1933-1945

Question 1

What was the myth about the nazi economy?

Answer 1

That the nazis fixed the german economy

Question 2

What was Hitler’s attitude to the economy?

Answer 2

No clue how it works and don’t care. Don’t know what they will do

Question 3

What were Hitler’s 4 key aims in relation to the economy?

Answer 3

-ensure reasonable standard of living in order to maintain public support
-provide resources for rearmament
-move towards autarky to guarantee strength and independence
-provide resources for architectural projects

Question 4

What was the Nazi understanding of economics?

Answer 4

-determination could solve everything
-supply and demand was insignificant
-hitler willing to use capitalist policies and methods based on Stalin’s economic plans to achieve his goals

Question 5

Who was Schact?

Answer 5

Played a key part in ending 1923 hyperinflation crisis: genuine economic expert
-made president of reichsbank in march 1933
-minister of economy in 1934
-employments reassured elites so had benefits for hitler

Question 6

What was Schact’s first economic problem?

Answer 6

Lack of economic growth and spending

Question 7

What was Schact’s solution to his first problem?

Answer 7

Tax cuts no grants : the nazis cut taxes in farming, small businesses and industry. They also gave grants to business so they could repay debts + employ more workers, newly married couples to spend on furniture, home owners for home improvement / repairs

Question 8

What was the outcome to Schact’s solution on problem 1?

Answer 8

The economy was growing due to increased public spending and demand

Question 9

What was Schact’s second problem?

Answer 9

Unemployment : this peaked at 5.6 million in 1932, 1933 = 4.8 million. Without jobs, people could not spend money which meant that the economy could not grow

Question 10

What was the solution to Schact’s second problem?

Answer 10

Job creation : between 1933 and 1934, 2.8 million jobs were created. E.g Reinhardt Scheme (June 1933) committed RM 1,000 million to public works schemes.

Question 11

What was the outcome to Schact’s second problem?

Answer 11

By 1936, unemployment was 1.6 million, however some people were not unemployed but they were also not earning money. RAD schemes such as Voluntary Labour Service in 1935 provided work for 19-25 year olds but were not paid. This kept unemployment figures down without increasing the number of jobs

Question 12

What was Schact’s third problem?

Answer 12

Rearmament: one of Hitler’s priorities but it was so expensive and the government was already sending money on job creation

Question 13

What was Schact’s solution to his third problem?

Answer 13

Mefo Bills : a private company that would place orders for military goods and pay for armaments. This allowed the government to buy armaments and delay the payment (IOU)

Question 14

What was the outcome to Schact’s third problem?

Answer 14

Began issuing mefo bills in 1933, April 1934 = many of Germany’s largest industrial companies (Siemens) were producing armaments. In total financed 1/5 of all military spending between 1933 and 1939, around RM12 billion of military spending - rearmament drive = contribution to creation of jobs

Question 15

What did Schact’s reforms lead to?

Answer 15

Balance of trade crisis as people tended to buy foreign goods but the public works schemes created no additional goods to export = New Plan

Question 16

What was Schact’s first problem with his new plan?

Answer 16

Balance of trade : Germany was importing more than it was exporting. Rearmament added to the problem as they need to import raw materials and technology from aboard to rearm.

Question 17

What was Schact’s solution to the first problem of his new plan?

Answer 17

Import quotas : summer 1934 =

-import restrictions on wool, cotton, leather etc
-goods that were not restricted included steel + others for military
-new departments created to control goods

Question 18

What was Schact’s second problem with his new plan?

Answer 18

Trade with economically stronger countries - quota helped the deficit but Germany did not have the money to trade freely with Britain and the USA which had much stronger economies

Question 19

What was Schact’s solution to his second problem of the new plan?

Answer 19

Trade agreements with countries e.g Peru and Brazil

Question 20

What was the outcome of Schact’s solution to his second problem of the new plan?

Answer 20

Germany had a more powerful and developed economy than its new trading patterns = Germany gets better trade deals than with Britain and USA. Schact could negotiated deals and trade without money leaving Germany

Question 21

Successes of New Plan

Answer 21

-allowed german economy to grow
-solved balance of payment problems = economy continue to rearm

Question 22

Limitations of new plan

Answer 22

-standard of living dropped in early 1930s
-limiting imports of raw materials = employed around 20% of country’s industrial workers and was dependent on imports. Failed to recover to pre-depression levels of growth = price of clothing rose faster than any other goods in 1930s

Question 23

What was the Guns or Butter debate?

Answer 23

-problems in agriculture led to economic crisis = change in policy
-poor harvests led to a shortage of food (1934-1935)
-Walther Darre (Nazi agricultural minister) wanted greater imports of grain in order to keep food prices down = said rising food prices would lead to fall in popularity of regime = essential to import food
-situation so bad = butter rationed in 1935 and price of ham and pork rose by 30% from 1934-1936
-bread rationing also considered but seniors knew this would be unpopular so avoided
-crisis exposed reality of economy as it was not strong enough to produce guns and butter
Darre said more money should be spent on agriculture whereas Goering said it should be spent on military

Question 24

How did Hitler respond to the guns or butter debate?

Answer 24

Short term and long term solution = he authorised more food imports in order to keep prices low and avoid rationing. Long term = began process of creating a common economy

Question 25

Autarky

Answer 25

Solves balance of payments by achieving economic self-sufficiency. = requires greater exploitation of Germany’s resources (greater coal mining, iron, steel) replace imports of oil, gas, wool. = government interested in new process to turn coal into gas and oil

Question 26

Command economy

Answer 26

Economy responds to commands from government : everything about economy is directed from above

Question 27

Ersatz

Answer 27

Substitutes : government invested in new processes to turn coal into gas and oil and to make synthetic, rubber, fabrics (e.g margarine created in ww1)

Question 28

DAF

Answer 28

Replaced trade unions in May 1933
Part of consolidation of Nazi power, merged all of germanys independent trade unions into one government controlled organisation
Genuinely represented workers

Question 29

RAD

Answer 29

Designed to provide work for 19-25 year olds
Young people working were not counted as unemployed but did not have paid jobs = kept down unemployment without increasing jobs

Question 30

KdF

Answer 30

Leisure organisation for working class people : e.g sports training, gymnastics, sailing lessons
Often had basic facilities with little to no privacy or poor sanitation.

Question 31

When was Germany on the brink of an inflation crisis?

Answer 31

1939

Question 32

What did Schact say to the government about the possible inflation crisis?

Answer 32

Stop rearmament and reduce spending

Question 33

How was Germany table to rearm?

Answer 33

By keeping living standards low

Question 34

Industrial workers

Answer 34

-46% of the population
-lost out due to destruction of union movements = little influence over pay and conditions
-wanted to ensure workers were under strict government and unable to organise themselves
-average hourly wages in 1933 = 3% lower than 1932

Question 35

Women workers

Answer 35

-believed they should play domestic role but were tolerant of them entering the workforce. Encouraged them to take clerical jobs
-number of women in workforce increased from 11.4 million in 1933 to 14.8 million in 1939
-average woman’ wage = half of a man. Some so low = women forced into prostitution

Question 36

Middle class

Answer 36

Partially benefitted but some aspects of Nazi policy led to conflict with the German bourgeoise

Question 37

Mittelstand

Answer 37

-small businesses benefited from destruction of unions and increase in employment
-clothing firms hit hard by ban on import of textiles
-end of 1930s = small firms found it hard to compete with big firms for labour as they could afford to pay higher wages

Question 38

Farmers

Answer 38

-made up around 29% of total workforce in 1933
-price controls on food and powers were used to create reforms for farms
-Reich Entail Farm Law = illegal to sell large and medium sized farms = disadvantage for farmers as their profit is reduced and sale of food supervised. + banks refused to offer loans

Question 39

Industrialists

Answer 39

-destruction of trade unions meant that big firms kept wages low and put greater demands on workers such as increasing length of working day
-major firms benefited from government contracts to produce munitions, military uniforms and synthetic goods

Question 40

What was the Four Year Plan?

Answer 40

-Germany’s armed forces would be ready for war in 4 years
-Germany’s economy would achieve autarky in a similar period

Question 41

Successes relating to the Four Year Plan

Answer 41

-coal production increased from 319.7 million tonnes in 1936 to 380.9 million tonnes in 1938
-self sufficient in terms of bread, sugar and potatoes
-successfully increased ersatz rubber but very expensive

Question 42

Failures relating to the Four Year Plan

Answer 42

-military leaders unable to acquire the steel, oil and workers they needed
-only produced 20% of artificial oil required in 1939
-massive amount of money spent on rearmament = on the brink of another inflation crisis

Question 43

Impact of war on Germany - administrative chaos

Answer 43

-polycratic nature of economy economy and government + tension = undermined economic efficiency
-conflict between senior nazis, business leaders and military leaders
-organisations such as Four Year Plan and Ministry of Economics had little effective coordination between organisations

Question 44

Impact of war on Germany - impossible plans

Answer 44

-went ahead with invasion of soviets in 1941 as they thought economy would succeed
-overestimated ease of extracting foreign resources
-Hitler’s aims = impossible : wanting to increase the size of Luftwaffe to 21,000 planes (only America capable of this)

Question 45

Impact of war - priorities

Answer 45

-favoured factories underground as they were secretive and protected from bombing.
-continually updating weaponry = made extremely well but expensive (1940 = $6 billion)

Question 46

What was the problem with production of non-essential goods?

Answer 46

-factories were still producing some consumer goods in order to keep up morale at home

Question 47

How did Speer try to tackle the issue of the production of non-essential goods?

Answer 47

Return to sender as it was irrelevant to the war effort which he used on orders for non-essential products

Question 48

What was the problem with women workers?

Answer 48

Nazi ideology dictated that women should look after the home and not work in industry

Question 49

How did Speer tackle the problem of women workers?

Answer 49

Half a million were taken out of domestic employment and put to more productive use

Question 50

What was the problem with allied bombing?

Answer 50

Escalation of allied bombing from mid 1944 led to more damage being done to german factories and industrial facilities

Question 51

How did Speer deal with the problem of allied bombing?

Answer 51

He set up special task forces to repair bombed factories

Question 52

Why was there a total collapse of Germany’s economy by 1945?

Answer 52

-Speer efforts helped Germany but did not change direction of war. German soldiers had fewer wear resources and appalling exploitation of slave labour saved economy from complete collapse.
-1944 fuel crisis