To you, who have stood beside me, I owe more than my own life. I owe you the future. You have been strong and have not faltered even in my darkest of nights. You have held my hand tight, not allowing me to fall, you have pulled me along and together we have arrived at a better end. The First World War imparted two crucial lessons on future warmongers. Firstly, that it is crucial to have access to or possess enough raw materials needed to support all needs throughout the duration of the war. Secondly, the countries waging war should be prepared to devote all of the national income towards the war effort.
From the first day that he seized control of Germany, January 30, 1933, Adolf Hitler knew that only sudden death awaited him if he failed to restore pride and empire to post Versailles Germany. In his statement to his general counsel, Adolf Hitler proclaimed that “the next five years in Germany must be devoted to the rearmament of the German people. Every publicly sponsored work creation measure must be considered from the point of view of whether it is necessary in terms of the rearmament of the German people …
For the next four to five years the guiding principal must be everything for the Wehrmacht. ” (Silverman, 6) Since the end of WWII, Hitler’s rearmament program has been the subject of continual controversy. Some economists and historians argue that rearmament was not the crucial factor in Germany’s economic recovery while others contend that Hitler’s priority to the rearmament of Germany directly resulted in Germany’s remarkable economic recovery. In his article on German war preparations, economist Burton Klein attempts to demolish the myth of massive German rearmament.
He asserts that Nazi economic policy was ultraconservative and shied away from rearmament because of the repercussions of inflation. (Klein, 8) Klein argues that the military effort was modest in the 1930s, and continued to be so during the first two years of war as the regime attempted to provide both guns and butter. Historian A. J. P. Taylor emphasizes that Hitler made no serious efforts to rearm and only wanted to wage a series of small scale opportunistic wars in an effort liberate Germany from the militaristic limitations imposed by the treaty of Versailles.
Klein and Taylor both conclude that with the combined problems facing the German economy in 1933 – an impoverished rural sector, a stagnant export industry, a massive balance-of-payments deficit and a credit system on the brink of collapse – the economy would have been exacerbated by high levels of military spending. Klein notes that when rearmament spending was at a record level high in 1936, it began to impose irreversible strains on the recovering German economy. R. J Overy (1982) takes a different perspective in evaluating the key factors responsible for the German economic miracle.
He asserts that the problematic situation the government undertook in 1933 was increasing both production and employment without stimulating a rise in prices. A rise in prices would have made it exceedingly difficult for the government to raise the funds necessary to prevent an unbalanced budget. He takes the stance that Germany’s economic focus between 1932 – 1933 and 1934 -1935 was directed towards achieving full employment rather than developing the infrastructure for large scale rearmament because “rearmament represented some 17 percent of total government expenditure and only 1.
3 percent of GNP over the period. ” (Overy, 65) Kenyon Poole backs Overy’s economic timeline and cites that expenditures on non-military employment projects exceeded rearmament expenses from 1932-1935. During the first stages of the Nazi regime, economic priority was accorded to restoring full employment; rearmament as a political objective surfaced later. Aimed at the elimination of unemployment, the Third Reich undertook a serious of ambitious work creation projects. Theses public works projects were a method used by the regime to stimulate industrial activity and inject life into the economy.
Every unemployed German male was considered an asset to be brought into active use. Some economists believe that the contribution of public works in the restoration of the German economic revival is overstated. Harold James argues that Germany’s economic recovery wasn’t a house of mirror constructed by the Nazi propaganda machine. Rather, economic recovery was “real and resulted from a dramatic revival of economic activity” unaided by “statistical manipulation,” a “statistical conjuring trick” or “jiggery pokery with numbers. ” (James, 371)
Germany’s sub-standard transportation system, according to R. J Overy (1975), led to the construction of state of the art superhighways and Germany’s economic recovery. A national network of highways spread throughout Germany that served to increase commerce and communication throughout the Reich. Moreover, the revitalized German highways also served to jumpstart the automobile industry and increase automobile production. On the other hand, G. F Spencley downplays the role of highway construction and believes that the revival of construction activity dominated the German economy.
Timothy W.Mason supports Spencley’s premise: “the economic key to recovery and to the decline in unemployment lay in the building industry, which was highly labour intensive. ” (Mason, 117) In his book Nazi Work Creation Programs, Dan Silverman focuses solely on Nazi public works programs and methodically argues that both the construction of the autobahn and the growth of the housing industry were the main switches activating economic recovery. Lastly, Silverman arrives at the conclusion that the Germany recovery (1933-1936) was not due to the stimulus of rearmament, which is a theory that many scholars actively defend.
Rather, Silverman believes that Nazi work creation programs played the most significant role in the German economic revival. While Overy, Spenceley, Mason and Silverman broadly agree that public works projects were fundamental in economic recovery, Avraham Barkai assumes a counter position elucidates that preparation for total war was Hitler’s primary objective from day one. According to Barkai, job creation was allocated for the sole purpose of expediting rearmament.
He states that Nazi polices were guided by the need for Lebensraum and economic autarky rather than the reduction of unemployment; reduction of unemployment was simply a by-product of the former. In Barkai’s opinion, public works financed by deficit spending merely camouflaged the actions of rearmament. Quoting Adolf Hitler, he maintains that the first years of Nazi policy were dominated by war preparations “I can achieve just as much by rearmament as by the construction of houses and by settlement. ” (Baraki, 161) Before we delve into the essence of Nazi economic policy it is important to highlight the German data limitations.
One particularly important study crucial to the validity of Nazi economic data was written by Adam Tooze, who exposes the relationship between fantasy and reality in the collection and analysis of economic statistics in the Third Reich. He shows how economic censuses were designed to sustain a romantic image of the economy. Furthermore, Tooze describes the interplay between the Nazi political agenda and the professional obligations of German statisticians. He concludes that crooked financial analysis should stimulate further rethinking of the role big business played in the Nazi regime.
His account of how government statistical bureaus improved their numbers during pre-war period by enlisting German big business as their ally diminishes faith is the accuracy and validity of Nazi statistical techniques. When the Nazis assumed power in 1932, the Great Depression had destroyed the Germany economy. After it left its aftermath in the wake of the German economy, financial investors with available capital lacked confidence in the Reichsmark, they worried about Germany’s ability to make reparations payments and they were especially apprehensive about the chaotic political instability within Germany.
In a nutshell, Germany was a country in dire straits. As a country deficient in essential raw materials, the Reich government did not have enough foreign currency in its coffers to pay for the raw and manufactured materials needed to fuel a war economy. The Third Reich’s gold and foreign exchange reserves had virtually disappeared. (Crump, 171) In his article “Schachtian Mercantilism,” N. I Momtchiloff explains that the Great Depression had transformed Germany into a nation economically crippled by debt and unemployment.
Instead of the government alleviating the people’s misery, they amplified the already disparaging situation due to the government’s inherent instability: it was impossible for them to pursue any kind of recovery plan for more than a year or two. Germany was teetering on the edge of disaster “in just a few years there had been 224,000 suicides – a horrifying figure, bespeaking a state misery even more horrifying. “(Degrelle, 300) To exacerbate this unfavorable situation, Germany’s exports grinded to a halt after the Great Depression.
Within a year, her trade surplus had plummeted from 2. 8 billion RM in 1931 to a mere 667 million RM in 1932; about a 75 percent decline in German international trade. (Degrelle, 301) Faced with the economic obstacles of stagnate of international commerce and lack of income from foreign investments, Germany was confronted with a ‘guns or butter’ crisis: either Germany could buy butter, or it could buy the raw materials to make armaments, but not both. (Klein, 63)