Hitler's Economic Policies

Aims of Hitler's Economic Policies for Nazi Germany and Initial Policies

After their election, the aims of the Nazi Government was to achieve economic growth in order to build up Germany’s military strength and gain further support from the German public. In order to do so, policies were put in place to reflate the economy with government spending. Public works were carried out, creating jobs for unemployed Germans, subsidies were given out to private firms and the Nazi Government placed large rearmament orders, sparking German industry.

Initial problems encountered by the Nazis

Despite their best efforts and some improvements, this policy led to two main problems. 

Firstly, there was a deficit in the balance of payments as the economic recovery resulted in the rising demand for consumer goods and rearmament led to an increasing demand for raw materials which required large amounts of capital to obtain; from importing and mining within Germany itself.

Secondly, there was a danger of inflation as there was an increased demand for goods and the supply of money increased. Remember what happened to the Weimar Government when they had to print more notes from 1923 to 1925? Hyperinflation of the economy!

Schact's New Plan

In order to solve the emerging problems, the Government began to implement controls on wages and prices, whilst Hjalmar Schacht, a German economist and banker, began to implement his 1934 New Plan. Schact had previously assisted in bringing the Weimar Republic out of their hyperinflation crisis in 1923 and held the roles of Reich Minister of Economics from 3 Aug 1934 – 26 Nov 1937 and President of the Reichsbank from 17 Mar 1933 – 20 Jan 1939.

His New Plan focused on getting Germany out of economic depression, cutting spending on welfare and focusing government resources on industry in order to work towards Autarky. It also introduced vigorously controlled bilateral trade agreements, such as the one with Hungary.

The Nazis put large amounts of state investment into industries with large employment numbers, namely agriculture, and also into small businesses to promote a sense of community and enhance the economy.

The Nazis also acted upon their campaign promises to significantly reduce unemployment, which had been at 6 million people in 1933. In doing so, they invested in public works, such as education, healthcare and transportation systems, such as the Autobahn, which both directly and indirect, contributed to the employment of up to 250,000 people, peaking at just over 120,000 people at one time. Although this policy did help to reduce the number of unemployed people, the workers had little control over where they worked, what they worked on and how much they received as wages. 

The New Plan also incorporated the aim of achieving economic self-sufficiency, under the concept known as Autarky. This was linked to being generally stable, but also for Germany being able to sustain themselves in the event of War.

The Four Year Plan

Despite the successes in Schact’s New Plan, which favoured increasing exports, while sacrificing the rate of rearmament, Goering and Hitler disagreed as they wanted Germany to undergo a rapid rearmament. 

As a result, Hermann Goering, who served as President of the Reichstag from the 30 August 1932 to 23 April 1945, was appointed to lead a “Four Year Plan” and was put in charge of implementing a War Economy. 

Hitler began to plan for his key goal of Lebensraum as he issued a secret memorandum in August 1936 to senior Nazi officials. It essentially told officials to focus on rearmament, and achieving autarky for military development and advancing the industrial capabilities of the labour force. Essentially, he told them to be ready for War by the end of 1940. 

It is clear that rearmament was Hitler’s top priority as from 1936 to 1939, 6.4 billion Reichsmarks were invested into industrial development for War preparation, allowing for the steep (and almost total decline) in unemployment, although Jews and other persecuted minorities were not included in this figure. It even resulted in them working against their own ideology with over 37% of the German workforce being women by 1939. 

Outcome and failures of the Nazi party

Despite being able to prepare for war and reviving the German economy by 1939, the Nazis were unsuccessful in certain areas of their economic plan.

Importantly, they were never able to achieve their policy of Autarky, with the issue of the shortage of raw materials being exacerbated by a shortage of labour from 1938 onwards.

Also, the promises of the ‘Strength Through Joy’ programme were never met as conditions for workers did not improve under the Nazis, with their overall income never recovering to that of the years prior to the Wall Street Crash.

Furthermore, depending on the industry, workers experiences varied, with many being forced to work very long hours to support the War Effort, with low pay.

Historians often attribute these economic policy failings to the fact that the Four Year Plan did not have as long as intended, as it was only implemented in August 1936, which was just three years before the Second World War commenced. 

In order to improve the situation, alongside the Blitzkrieg tactics (meaning Lightning Victory), the Blitzkrieg economy involved Germany seizing the resources of foreign countries which they invaded (and seizing property of minority groups, such as the Jews, within Germany), and investing them into the War effort. 

After they had failed in the ‘Lightning Victory’ with the Soviet Union, the economy was further ramped up to focus on and support the War effort, although by the end of the War, the country’s people and economy were suffering heavily from shortages in food, housing (as much had been damaged in the War), energy, and more.