The Roles of Schacht and Goering

When Hitler was appointed chancellor in 1933, the Nazi party did not have a coherent and carefully thought-out economic policy. Hitler had clear aims, including economic recovery from the depression and the reduction of unemployment. He knew that achieving these aims would boost the regime’s popularity and help them consolidate power. To gear up for a future war, he would need a self-sufficient economy or economic autarky. To achieve this, he used the work of Schacht and Goering.

Recovery From the Depression

Schacht, president of the Reichsbank and Nazi economics minister, was the key figure in economic policy. He managed to stimulate economic recovery by pumping money into the economy to build homes and autobahns, giving subsidies to private firms to encourage them to take on more workers and therefore reduce unemployment, introducing the New Plan in 1934, and financing the expenditure on rearmament using mefo bills.

Rearmament and War Economy

Schacht’s measures succeeded in reviving the German economy and reducing unemployment, but they also came with new problems. Germany had a balance of payments problem, a shortage of foreign exchange, food shortages, and rising prices, which led to lower living standards for ordinary Germans. This led to growing disillusionment with the Nazi regime and a conflict of priorities. This was known as the guns or butter problem. Finding a solution to this problem was what started the New Plan given to Goering to oversee. In order to strive for self-sufficiency, Germany would have to expand home production of both food and raw materials, which would reduce their dependence on imports and foreign currency. The aim of the Four-Year Plan was to make Germany ready for war within four years. It was the first explicit indication that the regime was planning for war, even though it was implicit within the ideology. The result of the Four-Year Plan did not match the propaganda claims; German industry did not meet their targets, and Germany still imported one-third of its raw materials by 1939.

Nazi Policy of Management and Industrial Elites

Most of Germany’s business leaders welcomed the Nazi takeover of power. Hitler was careful to offer reassurance to business leaders that they need not be alarmed by the more socialist elements in their program. In fact, many of their policies were of benefit to businesses, for example, suppressing trade unions, political stability, and economic revival. In general, the Nazi regime was able to enlist the cooperation and expertise of big business and management in the implementation of its economic policies. Many businesses could make profits through the Four-Year Plan; for example, IG Farben tripled its profits. Many of the Ruhr iron and steel firms were reluctant to invest in new steelworks to produce steel from poor quality and expensive German iron rather than use cheap and superior imported ore. In response, the regime bypassed them altogether and established a large state-owned Steel Works.

Reduction of Unemployment

Official unemployment figures show a dramatic reduction in the number of unemployed by 1934, and a continuing fall after that. This was the basis of the claim that the battle for work had been won due to Nazi economic policies. This was not the case, however, as economic recovery had begun before the Nazis took power. The job creation schemes used by the regime to reduce unemployment were based on policies introduced in the 1930s. Married women were persuaded to give up their jobs and were not counted in the unemployment figures; this is similar to the re-introduction of conscription in 1935. Invisible unemployment would have doubled Germany’s unemployment figures, but labor shortages did appear by 1939 because of rearmament.

Living Standards

Nazi propaganda emphasized the duty of all German citizens to make sacrifices on behalf of the people’s community by working harder, for longer hours, and by accepting a squeeze on wages. At the same time, propaganda also stressed the benefits that the Nazi regime had bestowed on workers, such as improved working conditions, better social and welfare provision, and access to goods and services that had previously only been available to the privileged few. Wages did increase; some employers were prepared to pay bonuses and other benefits to get around the freeze on wage levels and attract more skilled workers. Living standards depend as much on prices as they do on incomes, and prices rose during the 1930s, and there were some shortages of key commodities. German consumers were able to buy enough food to feed their families but could afford few luxuries. However, the regime did succeed in persuading the population to shoulder the burden of the rearmament program without triggering a wages explosion or mass opposition.