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Nazi Economy (pre-war)- Essay
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JUNE 2010 12 mark: Explain the economic achievements of the Nazis in Germany in the period1933-39.
There are two distinct periods of the Nazi economy in the period of 1933 to 1939. The first period is
that of economic recovery under Hjalmar Schacht and the second period is the period of
rearmament under Goering and the Four Year plan.
In the early years of the regime, Nazi economic policy was under the control of Hjalmar Schacht,
President of the Reichsbank and Minister of Economics. This reflected the need of the Nazi
leadership to work in cohesion with the powerful forces of big business. The heart of economic
recovery lay in the major revival of public investment which was led mostly by the state itself. The
state embarked on a large scale increase in its own spending in an effort to stimulate demand and
raise national income. Under Schacht’s guidance, the Nazis adopted the policy of deficit financing.
The greatest significance of the policy of deficit financing was the direct spending by the state on a
range of investment projects. The most important challenge facing the Nazis was to reduce
unemployment which stood at approximately 6 million in 1933. Within the first year of the regime,
legislation and initiatives were introduced to deal with the substantial numbers of unemployed
Germans. The work schemes first used in the Papen and Schleicher governments in 1932 and 1933
were extended by the Law to Reduce Unemployment of June 1933. Over one billion Reichsmarks
were ploughed into public work schemes. These work schemes were part of an overall job creation
plan which included the building of new Autobahns and the expansion of the housing sector and
public buildings. These schemes also gave the Nazis perfect propaganda opportunities,
demonstrating how the Nazis were improving the lives of the German people. In 1935, the RAD was
introduced, making it compulsory for all men between the ages of 18 and 25 to work in areas such as
farming or public work schemes for 6 months. This removed them from the unemployment figures.
Together with the introduction of conscription in the same year and the gradual removal of women
and Jews from the workplace, these policies led to a dramatic fall in unemployment, with
unemployment figures standing at 1.5 million in 1936.
Particular financial benefits were given to groups like farmers and small businesses. This stimulated
economic growth and rewarded some of the most sympathetic supporters of the Nazis. Tariffs were
maintained on imported produce in order to protect German farmers. The Reich Food estate gave
subsidies as part of a nationally planned agricultural system and the Reich Entailed Farm Law
reduced debts by tax concessions and lower interest rates in an attempt to offer more security of
land ownerships to small farmers.
After his appointment, Schacht introduced the ‘New Plan’ in September 1934 which provided for a
comprehensive control by the government of all aspects of trade capital and currency exchange in
an attempt to prevent excessive imports. The government decided what imports were to be allowed
or disapproved. Only vital foodstuffs and materials required by heavy industry, largely for
rearmament were imported in bulk. Schacht tried to promote trade and save foreign exchange by
signing bilateral trade treaties, particularly with countries like Romania and Yugoslavia. This meant
that the money gained from selling raw materials to Germany had to be spent buying back German
goods as they were paid using German Reichsmarks. Schacht also created a policy aimed at
encouraging the growth in demand in the economy. This was done by the introduction of Mefo Bills.
These were credit notes issued by the Reichsbank and guaranteed by the government and they were
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