The effectiveness of Nazi economic policy 1933-1945

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  • Nazi Economic Policy 1933-1945
    • Hitler's initial economic aims
      • Tackle the depression and restore Germany to full employment.
      • Economy recovery would enable more resources to be devoted to rebuilding and restoring Germany's military.
      • Hitler wished to create a Wehrwirtschaft or defence Germany
    • Recovery 1933-36
      • Conquering Unemployment- The Government increased public expenditure and investment, and it tried to stimulate consumer demand.
        • Hitler extended the public works schemes started in 1932
        • The Youth Labour Service (RAD) took 400,000 people off the unemployment register in 1934.
        • Conscription was introduced in 1935. All 18-25 year olds were required to do two years military service.
        • Massive public investment. Between 1933 ans 1936, government expenditure increased by nearly 70%
        • Pressure was applied to remove Jews and married women from the employment register
        • Subsidies were provided to employers if they hired more workers
      • Schacht's policies
        • Appointed Economics Minister in August 1934
        • Used a policy known as Deficit Finance to boost the economy
          • This involved spending more money that the government received in order to expand the economy
        • By 1934, the revival of the economy was creating a balance of payments problem. Germany was importing more than it was exporting.
        • Schacht pioneered the use of MEFO bills to finance increased public expenditure without causing inflation.
        • Schacht devised a New Plan in 1934
          • The Government was given power to regulate imports through controlling the allocation of foreign exchange.
          • Imports had to be approved by the Government.
          • A series of bilateral trade agreements were also made with some Balkan states where raw materials were exchanged for goods so the need to use foreign currency was eliminated.
          • The New Plan did deal with the immediate problem. However, increased demand still sucked in imports, especially as the pace of rearmament grew.
    • Rearmament 1936-39
      • 'Butter or Guns'- Schacht wanted to slow the increase in arms expenditure. Goering in particular wanted to speed up the pace of militarisation.
      • In October 1936 Hitler put Goering in charge of the Four Year Plan.
        • The aim of this plan was to make Germany ready for war within four years.
      • Priority was given to rearmament and to make Germany self-sufficient as possible in food and industrial production.
        • This policy was known as Autarky - economic self- sufficiency.
          • Total autarky is very difficult to achieve, and it was not planned that Germany would be entirely free from foreign imports.
          • It was hoped that it would lose its dependence on other countries for key commodities
            • This was initially to be achieved by: increasing Germany's own production of key commodities , such as iron ore, coal and food. Also, developing ersatz (substitute) products e.g. artificial rubber.
        • The main emphasis was placed on the production of raw materials and machinery in order to provide a base for arms production.
      • Schacht resigned in 1937 leaving Goering as the most important economic figure in Germany.

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