economic developments

• 1933 - 1936 : main aim for Nazis = achieve economic recovery
• deficit financing - Nazis used loans to create jobs and stimulate demand. Economy grew , tax revenues increased , borrowing reduced and loans were repaid
• avoided inflation by setting wage and price controls
• Hitler's economic goals:

  • ensure standard of living = more support
  • autarky
  • provide resources for building projects , Germany fit for master race
  • provide resources for rearmament
• Hitler believed in 'primary of politics'
• 'primary of politics' - economic policy should serve political objectives e.g rearmament took priority over economic issues such as gov spending
• Nazis critical of communism and capitalism
• Nazis critical of communism because:

  -focused on good of working class rather than Aryans
• Nazis critical of capitalism because:

  • focused on profit rather than Aryan race
• economics HAD to serve Aryan race and ensure its survival in the future
• Jan 1933: Priority = job creation
• Hjalmar Schacht : ended hyperinflation crisis of mid 1920s , increased employment , devoted more money to rearmament via government borrowing
• Nazis two methods of stimulating the economy:

  • indirect stimulus
  • direct stimulus
• indirect stimulus:

  policies such as tax cuts , designed to boost spending , lead to greater employment
• direct stimulus:

  the government set up schemes that employed people to work on government projects
• Nazis cut tax in three key economic areas:

  • farming
  • small business
  • heavy industry
• Nazis cut taxes , assumed business would have more money to spend , thus could employe more workers to buy new goods , stimulating employment i other areas
• Nazis gave grants to:

  • businesses to allow them to repay debts, buy new machinery or employ new workers
  • newly married couples to spend on furtniture
  • home owners for home improvement , repairs etc
• Nazis financed construction and industrial development in order to create jobs e.g The Reinhardt Programme
• The Reinhardt Programme:

  • june 1933
  • RM 1,000 million to public work schemes e.g road building , bridge repairs, improvement of waterworks
• Gov spending on work creation:

  1932 - 1455 million Reichmarks

  1933 - 1985 million Reichmarks
• Nazis work creation programmes succeeded in reducing unmeployment
• 1933-34 - 2.8 million jobs created , 20% created through government schemes.
• business confidence increased following the appointment of Schact to position of president of the Reichsbank
• unemployment in Germany:

  1929 - 1.8 million

  1932 - 5.6 million

  1936 - 1.6 million
• fall in unemployment allowed the Nazis to claim they created an economic miracle
• RAD - voluntary labour service
• RAD compuslory by 1935
• RAD provided work for those between 19-25
• young people working on RAD schemes were not counted as unemployed , yet didn't have paid jobs - kept down unemployment figures
• why was rearmament difficult for Hitler?


  • banned by the Treaty of Versailles
  • too expensive - German gov still in debt
• Mefo GmbH - private company that would place orders for military goods. Pay for rearmament with Mefo Bills
• what did the Mefo GmbH do?


  place orders for military goods
• IOU - document that acknowledges debt
• Mefo bills were IOUs, allowed government to buy armaments and delay payments until late 1930s. Gov could hide what it was doing and delay payments
• Mefo bills were issued in fall 1933
• April 1934 - Germany's largest indsutrial companies e.g Krupp and Siemens produced armaments for Mefo GmbH
• Mefo bills financed for 1/5 of military spending from 1933-39 , around RM12 billion of military spending
• in order to rearm , Germany needed to import raw materials and high tech goods from abroad. Imports lead to trade deficit
• trade deficit - country buys more goods and services from other countries than what it sells , negative balance of trade