One apparent success of Nazi rule was economic recovery. According to Hitler and his cohort, the Nazi economic recovery would end unemployment and restore German prosperity. Many of the economic successes of the Nazi regime were initiated by huge spending programs on public works and employment schemes, as well as expanding and rearming the military.
Fascist economics
Nazi economic theories were derived in large part from fascism. In fascist economics, resources and production are managed for the benefit of the state rather than to increase profit, wages or standards of living.
Fascist governments control production and manufacturing, dictating what is produced and for what purposes. There is also considerable government control over the allocation of resources, such as land and raw materials. Unlike socialism, fascism is not opposed to private ownership of capital, provided that business owners are co-operative and submit to state control or direction.
In fascist economic systems, such as Mussolini’s Italy, economics is considered a partnership between the state and private-owned corporations. Fascism is hostile to unions, contending that workers should put the interests of the state before their own petty needs. Fascists also tend to encourage autarky (economic self-sufficiency) rather than foreign trade.
Hitler’s views
Adolf Hitler himself was not particularly interested in economic theory. His speeches of the 1920s contained few references to economic policy, other than vague statements about halting reparations payments and restoring German industry.
Once in power, Hitler played little part in formulating economic policy or contributing to economic recovery. Instead, he relied on a group of close advisors to form policy in line with his broad goals. Some of these advisors were Nazis while others were sympathisers.
One significant advisor was Hjalmar Schacht, a former member of the German Democratic Party (DDP) and president of the Reichsbank during the late 1920s. Another was Robert Ley, who was put in charge of the Deutsche Arbeitsfront (the DAF, or ‘German Labour Front’) that co-ordinated Germany’s workforce. Together, these men implemented economic that achieved impressive results – at least on the surface.
Ending unemployment
At the core of the ‘German economic miracle’, as Hitler described it, were work programs and re-armament. The Nazis’ first priority was reducing or eliminating unemployment. They did this by initiating massive public works programs.
In July 1934, the government formed the Reichsarbeitsdienst (the RAD, or ‘National Labour Service’). The RAD attacked unemployment by conscripting out-of-work Germans into vast work teams. RAD workers were given an armband, a shovel and a bicycle then sent to wherever public works, construction, clearance or agricultural labour were needed.
One of the earliest RAD programs was the construction of massive autobahns: hundreds of miles of freeway connecting Germany’s major cities. The autobahns had flow-on benefits for the German car industry, which flourished from the mid-1930s. In 1937, Hitler established Volkswagen, a state-sponsored company to produce cheap cars for German families.
Public works
Huge public works schemes, particularly in construction, were organised by RAD and DAF. By 1936, two million Germans were working in construction industries, almost three times the number when Hitler became chancellor in 1933. These projects re-built or renovated many of Berlin’s public buildings.
By 1936, there was more or less full employment in Germany – though as might be expected, the Nazis manipulated these statistics to give the appearance of an improving economy.
Women and political opponents were not counted in the unemployment figures, for example. Nor were German Jews, many of whom had been banned from their occupations.
Rearmament
Another important factor in Germany’s economic growth was rearmament. After coming to power, Hitler initiated programs to rearm and expand the Reichswehr in defiance of the Treaty of Versailles. He commissioned new battleships and submarines and tasked Hermann Goering with building a new Luftwaffe (air force). In 1935, Hitler ordered the Reichswehr be re-formed as the Wehrmacht. He introduced compulsory military service and increased the size of the army to 550,000 men.
Rearmament became a national economic priority for the Nazi regime – but the goal was problematic because German industries were heavily reliant on imported raw materials.
In 1936, at the Nuremberg party conference, Hitler announced a new economic program called the Four-Year Plan. “Germany must reach full independence from abroad in all raw materials that can be produced by German skills, by our chemistry, by our mechanical industries and our mines”, Hitler told party delegates.
This Four-Year Plan was also a secret challenge to Nazi economic managers to initiate Aufrustung (the code-name for rearmament and war preparations). Deputy leader Herman Goering was appointed by Hitler to oversee this.
Innovations and alternatives
The German economy underwent significant changes during this period. Oil and coal refineries were constructed; so too were factories for the recycling, refining and smelting of steel and aluminium. Scientists devised synthetic or artificial substitutes for materials and goods Germany could not produce herself. One of the more successful of these was a technique for synthesising petrol from coal.
Alternatives were even created for the consumer market, in order to reduce imports. Known as ersatz goods, they included replacements for cotton, rubber and heating oil. Coffee was produced from ground roasted acorns; mint and raspberry leaves were used to make tea.
Despite these changes, the nation was still far from self-sufficient. By 1939, Germany was still importing 33 per cent of its raw materials and 20 per cent of its food. Still, enough had been done to facilitate the expansion of the German military and its partial re-armament. Spending on arms doubled in just one year as Goering ordered the retooling of factories to produce weapons, munitions, vehicles and other military equipment.
A historian’s view:
“Ideology played a secondary role in Hitler’s economic policies. For reasons of expediency, Hitler did not attempt to nazify the economy. Instead, he left the actual running of the economy to experts in business and industry, while instituting a large amount of control from above to force cooperation and compliance with his economic objectives. So long as they cooperated, big business and industry profited by this relationship. In essence, the German economy under Hitler was neither totally free nor totally controlled.”
Joseph Bendersky, historian
1. Hitler played only a minor role in the economic recovery of Germany. He had little interest in economic policy and instead relied on advisors and bureaucrats.
2. Employment and rearmament were the twin backbones of this economic recovery. The Nazis addressed the first by creating large public works programs, such as autobahns, to reduce unemployment.
3. Hitler also ordered the expansion and rearmament of the military, the construction of battleships and submarines and the creation of an air force, all in defiance of the Treaty of Versailles.
4. German industry remained reliant on imported raw materials. An attempt to make Germany self-sufficient and end its reliance on imports was only partly successful.
5. In 1936, Hitler ordered a Four-Year Plan, overseen by Herman Goering, in order to further militarise production and prepare for war.
Citation information
Title: “The Nazi economic recovery”
Authors: Jennifer Llewellyn, Jim Southey, Steve Thompson
Publisher: Alpha History
URL: https://alphahistory.com/nazigermany/nazi-economic-recovery/
Date published: July 16, 2020
Date accessed: March 02, 2023
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