German Economy

Gonzor

Firstly I wasnt even sure where to put this... either history, or economy.. I guess you need perspective of both.

Secondly, I do enjoy and read quite a lot of history just not German history.


So from what I remember from secondary school, Hitler came into power after ww1 which was a broken nation. THe country was in ruins from all the bombing that had gone on. Unemployment was through the roof. Inflation was killing the economy and they now had a huge bill in the form of war reparations.

Hitler came along and rolled out this 5 year plan, that from my understanding, got the economy working right, rebuilt the cities, built a fantastic infrastructure/roads/ etc and got the majority of the people back into employment. Now obviously he did do a couple of things we might frown upon..... but how was he able take his country from the ground to being a superpower in just a few short years.

What did he do?

ANd please lets not get bogged down on, he was corrupt, he was a criminal, he did this, he did that... theres a time and place for that.

Peregrinus

Hitler came to power in 1933, by which time the Depression had passed its worst and a general - if slow - recovery was under way worldwide. In that sense he was fortunate in his timing.

But he did institute policies which aided and accelerated the recovery; e.g. investment in public works, like the autobahn network, and of course investment in rearmament. To be more accurate, though, these were the policies of his Economics Minister at the time, Hjalmar Schacht. Schacht was not a Nazi but a technocrat; he had been President of the Reichsbank under the Weimar Republic. Hitler himself took little interest in economic policy, preferring to believe that the Triumph of the Will could solve all problems.

The five-year plan ran until 1938, by which time Schacht had been forced out of government by his disagreements with Hitler and the Nazis. (He later joined the German Resistance to Hitler, and narrowly escaped execution after the July Plot.) Without Schacht, the Nazi government essentially followed unsustainable economic policies, in which the German economy was fuelled by seizing and consuming plant, material, resources and even labour from other countries.
This enabled war to be waged, and domestic standards of living to be maintained, for a surprisingly long time. The Nazis were good at organising, so they made good use of the captured assets, but continuing this indefinitely would have required an infinite supply of countries to conquer and plunder. And once the tide of the war turned against them, the economic house of cards collapsed fairly quickly.

And, on edit, I'd add that Hitler didn't "rebuild the cities". First, the country wasn't "in ruins from all the bombing that had gone on". The fighting in the Great War was at the front line, and neither to the East nor to the West did the front line ever move into German soil. Physically, Germany was untouched by the war. Secondly, Hitler didn't come to power until 15 years after the end of the Great War; any reconstruction that was necessary (e.g. replacement of railway rolling stock destroyed at the front) had long since been done.

He didn't conquer inflation either. The period of postwar hyperinflation in Germany lasted from 1920 to 1923, and ended with the introduction of a new currency in 1924, nine years before Hitler came to power. The memory of that period persisted for a long time - it still persists today in Germany - and undoubtedly contributed to Hitler's rise to power, but the problem itself had been resolved long before he came along.

ejmaztec

My understanding is that the Nazis borrowed heavily, internally and internationally, through government bond issues, and there was a strong possibility that the lenders wouldn't get their investment back when the bonds matured.

They may have employed many people in labour-intensive work, but at the same time it was costing significant amounts to re-arm and build up its military capability.

When it was all over of course, the bond-holders got burned anyway, because there was nothing left in the kitty to pay anyone, let alone them.

dubhthach

Well there wasn't any serious aerial bombing during WWI so Germany was most certantity not in ruins. However it had sustained a ruinous trade embargo which caused all sorts of issues with regards to food supply etc.

The period 1919-21 was one of civil tumult in Germany with strikes/workers "soviets", fear of communist revolution as well as "undeclared war" on the eastern boundary due to change of border. The Freikorps of course were heavily involved in both and many members of the Freikorp would later form the backbone of the SA/SS and the general Nazi party.

Gonzor

So the just of it is that he got money for Germany by either robbing/thieving/plundering or getting a "do you honestly expect this back" type of loan.

Such a simple answer. I really should have guessed that one shouldnt I

WHat about this. A broken country cant just make massive armys and invade other countries for wealth. SO how did he build up his initial stockpile to fund the army to go plundering?

And after ww2 germany would have once again being a country on its knees, and once again it was able to get back up there with the big boys in just a few short years. How do they keep doing that? Is there something in the water

Pablo Sanchez

Gonzor wrote: »

So the just of it is that he got money for Germany by either robbing/thieving/plundering or getting a "do you honestly expect this back" type of loan.

Such a simple answer. I really should have guessed that one shouldnt I

WHat about this. A broken country cant just make massive armys and invade other countries for wealth. SO how did he build up his initial stockpile to fund the army to go plundering?

And after ww2 germany would have once again being a country on its knees, and once again it was able to get back up there with the big boys in just a few short years. How do they keep doing that? Is there something in the water

The redevelopment loans from the USA didnt hurt after the war. They wanted to have (West) Germany strong as a good buffer to the Soviets.

jonniebgood1

Gonzor wrote: »

WHat about this. A broken country cant just make massive armys and invade other countries for wealth. SO how did he build up his initial stockpile to fund the army to go plundering?

With alot of international funding. Many large banking organisations and international funders invested in Germany. Allied to this were large industrial companies within Germany that stood to gain from arms production and general prosperity. They put their full weight behind Hitler as the alternative to him was the German Communist party and they had seen what happened to indivisual wealth in communist Russia.
Some of his alleged financiers are listed here

Hitler’s financiers

Many industrials bankrolled the Nazis, including allegedly:

· Hjalmar Schacht, Head of the Reichsbank, organised fund-raising parties for Hitler.

· Fritz von Thyssen, the German steel businessman

· Alfred Krupp, the owner of Krupp steel firm

· Emil Kirdorf, the coal businessman

· IG Faben, the German chemicals firm, gave half the funds for the 1933 elections

· The German car firm Opel (a subsidiary of General Motors)

· Schroeder Bank – on Jan. 3, 1933, Reinhard Schroeder met Hitler and asked him to form a government.



And many foreign firms including:

· Henry Ford of Ford Motors. Hitler borrowed passages from Ford's book The International Jew to use in Mein Kampf and had a picture of Ford on the wall of his office.

· Union Banking Corporation, New York (George Bush’s great-grandfather was president of the Corporation)

· WA Harriman and Co., the American shipping and railway company (George Bush’s grandfather was vice-president)

· Irenee du Pont, head of the American firm General Motors; he advocated the creation of a super-race by spinal injections to enhance children of ‘pure’ blood. http://www.johndclare.net/Weimar7.htm

dubhthach

Pablo Sanchez wrote: »

The redevelopment loans from the USA didnt hurt after the war. They wanted to have (West) Germany strong as a good buffer to the Soviets.

That and it was agreed that Germany wouldn't have to pay back it's outstanding debts for Versailles until reunification. This gave them close on 40 years of inflation and massive growth, by time it came to start paying back debt in 1991 it's value had shrunk massively in real terms (they finished paying it off last year), for all purposes they were allowed to "default" by deferring repayments by 40 years.

Peregrinus

Gonzor wrote: »

WHat about this. A broken country cant just make massive armys and invade other countries for wealth. SO how did he build up his initial stockpile to fund the army to go plundering?

Germany in 1933 wasn't "a broken country". It had suffered a series of setbacks - defeat in the war, political instability, hyperinflation, the Great Depression - but it was still one of the leading industrial powers in Europe. Its immediate problem was not lack of wealth or lack of productive capacity, but high unemployment and high interest rates. Furthermore it lacked the substantial overseas colonial commitments that the UK and France had, and was able to concentrate all its resources on domestic concerns.

In the early years the Nazis borrowed and spent heavily, but not to the extent that lenders feared that they would not be repaid. They kept prices down through price controls, and wages down through a combination of formal wage controls and informal repression of trade unions. In an attempt to promote economic self-sufficiency they offered subsidies to (otherwise unviable) German industries.

The short-term result was a large decline in unemployment, which was the desired outcome. But of course over time price controls tended to make production unprofitable, and wage controls tended to make working unattractive, and neither of these policies could have been maintained indefinitely. Real wages, for instance, dropped by 25% between 1933 and 1938.

But what actually caused the crunch was falling German exports, which left Germany with insufficient foreign reserves to buy things like lead and copper (neither of which Germany produced itself) which were needed for rearmament.

This crisis was reached in 1936, and there was a debate within the Nazi leadership over whether to relax wage and price controls, free up the economy, concentrate less on self-sufficiency and more on manufacturing for export, and defer rearmament until the country had sufficient export earnings to pay for it. On the other side were those who argued for greater state control of the economy, a concentration on rearmament as the first priority, and the making of whatever other sacrifices were necessary to acheive this.

Hitler, unsurprisingly, favoured the latter view, and it prevailed. Hitler appointed Goering with a brief to have the economy war-ready within four years. Germany stopped nearly all civilian imports in order to concentrate its remaining foreign earnings on the purchase of military necessities, and this lead to sharp price rises, and the unavailability of basic commodities like coffee. As workers became increasingly dissatisfied with falling wages and rising prices, the labour movement was repressed even further. Trade unions were completely abolished, and the government introduced "labour direction". Workers lost the right to leave their jobs and take other, more attractive jobs; you couldn't get a new job without the consent of your previous employer. Taxes rose sharply and, as economic activity became less and less profitable, investment became less and less attractive. Soon nearly all investment was undertaken by the state, for political rather than economic reasons.

None of this was sustainable, and some historians argue that it was economic necessity which drove Hitler to risk war with France and the UK sooner than he had intended. Partly, he needed a major war to distract an increasingly dissatisfied population. And, partly, he needed to start invading and seizing resources to fuel the increasingly top-heavy German economy.