The Foundations of the Nazi Economy

As the National Socialist Party (Nazi Party) rose to power in the early 1930’s, the German economy was in shambles due to the world wide Great Depression. The German unemployment was approximately 30% and the government under Heinrich Bruening had a large budget deficit. Additionally, the German currency was in crisis, as the government ended dependence on the gold standard (“a monetary standard under which the basic unit of currency is defined by a stated quantity of gold”, from Merriem-Webster.com.) The downturn of the German economy directly caused the rise of the Nazis, whose programs for economic development focused on employment through public works, rearmament and military spending.

The introduction of Fascism brought major changes the German economy. First, the free market system was replaced by a system of government intervention. Second, the political democracy, which was the previous system for governmental control of the economy, was replaced by the ruthless dictatorship of Adolf Hitler. And third, labor organizations, such as unions, were abolished. Essentially, Hitler was priming Germany for a wartime economy.

The new economic policies’ effects on the common German citizen were quickly felt, as public works (i.e. the autobahn) and military rearmament employed millions. In fact, the German unemployment rate declined the fastest of any country during the Great Depression. The Nazi Finance Ministry created programs that aimed to make Germany self-sufficient to fight a war, such as programs to construct rubber, steel and textile plants. Under Finance Minister Hermann Goering imports were severely limited, wages and prices were controlled and industrial dividends were restricted. The German people were satisfied with Nazi economic policies, as they had ended the Great Depression, however, these policies actually weakened the German economy’s ability to support the military later on, contributing to the Nazis’ eventual defeat.

Sources:

DeLong, J. Bradford. “Slouching Towards Utopia?: The Economic History of the Twentieth Century. XV. Nazis and Soviets” 1997. University of California at Berkeley. Sept. 21, 2009. http://econ161.berkeley.edu/TCEH/Slouch_Purge15.html

Nathan, Otto. The Nazi Economic System: Germany’s Mobilization for War. Duke University Press. 1944.