The Economy in Nazi Germany (AQA GCSE History)

What problems did the German economy have by 1933? - Summary

By 1933, Germany’s economy was facing severe problems, especially due to high unemployment. The Great Depression had a huge impact on Germany. Millions of Germans lost their jobs as businesses shut down and factories stopped production. Many families struggled to afford basic needs, and poverty was widespread. The lack of jobs and poor living conditions created a lot of anger and frustration, with people feeling like the government wasn’t able to help them or improve their lives.

Another major issue was Germany’s lack of autarky (self-sufficiency). Germany relied on imports for a lot of its food and raw materials, making it vulnerable to problems in the global economy. When the Depression hit, trade decreased. Germany struggled to get the resources it needed. This reliance on other countries made Germany feel weak and less independent. Many Germans believed that the country needed to become more self-sufficient to avoid future economic problems and be stronger on its own.

The Nazi economic policy

• Hitler appointed Dr Schacht as Minister of the Economy

  • He was a well-respected banker

  • He had helped to resolve the hyperinflation crisis in 1923

• Hitler fired Schacht in 1936, despite his policies improving the economy

  • He replaced Schacht with Hermann Goering

    • Goering had no economic experience

    • Hitler wanted a more radical economic policy

Aims for the Nazi economy

• To achieve autarky

  • Autarky would mean a blockade would not destroy Germany’s economy or food supply

    • This happened during the First World War

• To increase farming output

• To increase rearmament

• To implement more government control on the industry

The Four Year Plan

• Began in 1936 and lasted until 1939

• Established the Reich Food Estate to guarantee prices for farmers

• Increased ersatz goods. The Nazis used:

  • coal to make rubber

  • acorns to make coffee

• The government set production targets for the industry 

  • The government controlled the production of iron ore, coal mining, steel and armament factories

• Used enslaved labour from

  • People in concentration camps

  • People from newly-occupied German territories

How successful were the Four Year Plan?

• Business leaders did not support the plan

  • Excessive rearmament decreased Germany’s standard of living

    • This is called a ‘guns, not butter’ economic approach as the Nazis choose rearmament over social welfare

• Germany had not achieved autarky

  • By 1939, Germany still imported one-third of its raw materials

Did unemployment fall in Nazi Germany?

• Reducing unemployment was a key focus for the Nazi Party:

  • unemployed workers could support other groups such as the communists if not properly helped by the Nazis

  • people not in work were not contributing to society or the economy

• By 1939, unemployment in Germany had been reduced to around half a million people

National Labour Service (RAD) 

• Set up in 1933

• Provided paid work for the unemployed:

  • workers carried out public jobs such as repairing roads and planting trees

• From 1935, it was made compulsory for unemployed young men (18-25 years old) to join for six months

• The pay was poor and many workers complained about the food, having to wear uniforms and working conditions

• There were 422,000 members in 1935

Autobahns 

• The Nazis wanted to create a 7,000-mile autobahn (motorway) system to improve transport around Germany:

  • Hitler personally started the project in September 1933

  • by 1935, 125,000 men had been employed to build the motorways

  • around 3,500 km had been completed by 1938

• The Nazis financed other public work schemes in Germany:

  • buildings, roads, bridges and sports facilities such as the Berlin Olympic Stadium were built

  • spending on public works more than doubled from 18 billion marks in 1933 to 38 billion marks in 1938

Rearmament 

• Increasing the size of the military would make Germany stronger and provide more jobs

• The terms of the Treaty of Versailles limited the army to 100,000 soldiers:

  • Hitler ignored this and announced conscription in 1935

  • by 1939, there were around 1.4 million men in the German armed forces

• The Nazis also needed to produce more weapons and armaments to supply their larger army, which produced more jobs:

  • spending on armaments increased from 3.5 billion marks in 1933 to 26 billion marks by 1939

  • employment in aircraft construction increased from 4,000 people in 1933 to 72,000 people by 1935

Invisible unemployment

• Many groups of people were not included in Nazi unemployment figures

  • As a result, they were ‘invisible’ in Nazi society

• Many of the policies intended to reduce unemployment were simply:

  • too expensive

  • not sustainable in the long term

• While rearmament did provide jobs in the military and armaments industry, these jobs would not be required if Germany was not preparing for war

Who was excluded from Nazi Germany's employment figures?

Worker organisations in Nazi Germany

• Hitler closed down trade unions and other worker organisations in 1933

• He decided to establish Nazi worker organisations to:

  • ensure high support for the Nazi Party from the workers

  • keep control of worker disputes such as pay and conditions

The Labour Front (DAF)

• Hitler banned all trade unions in May 1933 using the powers of the Enabling Act

• In its place, the Labour Front (DAF) was created to control the rights, hours and pay levels of workers

• However, the DAF made employment difficult for many workers

Strength Through Joy (KdF)

• Set up in 1933 as a division of the DAF

• By 1936, there were 35 million members of the KdF

• Strength Through Joy aimed to make work seem more enjoyable and prevent unrest

  • It provided out-of-work leisure activities, trips, holidays and even free cars to workers

The Volkswagen Scheme

• The KdF ran a scheme so workers could purchase a new car:

  • the Volkswagen - ‘people’s car’ - was an affordable and fuel-efficient car that the average German could afford

  • workers in the KdF gave five marks per week from their wages so they could eventually receive a Volkswagen

• However, car factories switched to producing armaments after 1938

  • Workers never received their Volkswagens

Beauty of Labour (SdA)

• The Beauty of Labour (SdA) programme was set up in 1934 as a division of the KdF

• The SdA aimed to provide better facilities for workers to improve their working environment

  • It provided facilities such as toilets, changing rooms, showers and canteens

• By 1938, around 34,000 companies had improved their facilities

• Many workers were expected to build and decorate the new facilities themselves, for no extra pay and outside of their typical working hours

Were workers 'better off' in Nazi Germany?

• Historians continue to debate if workers were 'better off' under Nazi rule