Assess the impact of foreign policy on the economy in Nazi Germany in the period
1933-39. [30]
Nazi foreign policy during 1933-39 was overwhelmingly centred on territorial expansion to
create promised Lebensraum for the German people, and the Nazi leadership anticipated
and wanted war to begin around 1940-42. Hence, Nazi foreign policy was the greatest
influence on the economy and Nazi economic policies in 1933-39. We can see this through
the attempts by the economy to encourage rearmament, create a Wehrwirtschaft, and to
increase the influence of big businesses to stimulate the production of war materials.
Nazi attempts at rearmament in 1933-39 served as the primary pathway to achieve their
foreign policy and was a top target for German economic policy, putting most spending in
this department. Expansionism in Nazi foreign policy placed manpower at its forefront, and
Nazi economic policy throughout 1933-39 served to reverse the 100k men restriction
imposed by the Treaty of Versailles on the Reichswehr. To gain manpower, the DAF
introduced schemes such as the Reichsarbeitsdienst (RAD) in 1935, which appeared to be a
labour force recruitment effort, but in reality, concealed a nationwide conscription scheme
that called up workers to serve for four to six years in the Wehrmacht. To generate military
upkeep for these new reservists, the government issued credit bills such as Mefo bills, which
could be redeemed after a number of years at a 6.5% interest. Although Economics Minister
Hjalmar Schacht issued these bills primarily to generate funds for public expenditure, over
half of the income yielded from Mefo bills went towards rearmament and military upkeep,
with over 12 billion Mefo bills issued by 1938. As a result, the German Wehrmacht was
significantly strengthened in terms of manpower, rising to 1.2 million men by 1938 from the
100k limit in 1928. Hence, Nazi foreign policies of territorial expansion, which required a
large army, impacted the German economy in that spending and government measures
were geared towards expanding the Wehrmacht.
Territorial expansion, as espoused by Nazi foreign policy, had to be supported by the
creation of a Wehrwirtschaft, which served as the backbone of foreign policy. Under this
defence economy, the creation of which was the main objective of Goering’s Four-Year Plan,
imports and exports were heavily regulated. For example, focus was placed on the
production of agricultural goods on German soil, with the production of food products like
grain increasing by 30% from 1928 to 1938 while budget for the imports of agricultural goods
was diverted to importing more raw materials rare in Germany such as oil and chemicals. To
further prevent the impacts of another Allied blockade which made the German people suffer
in WW1, ersatz products such as Buna rubber and acetylene were developed as substitutes
for products like oil and textiles. Importantly, the production of heavy industry, such as steel,
was prioritised for weapons and armaments such as tanks, with the production of steel
doubling from 1932 to 1936. Hence, because Nazi foreign policies of expansion required a
strong home economy, Nazi economic policies focused on the creation of a Wehrwirtschaft
to support their foreign policies.
The influence of big businesses was also strengthened as a result of the Nazi foreign policy
of expansion, as such businesses provided vital war materials. Corporations like IG Farben,
which focused on the production of chemicals necessary for motor fuel as well as poison gas
for the extermination camp system, received over 50% of government investment out of all
