Nazi Economic Policy & Unemployment (Edexcel IGCSE History: Paper 1: Depth Studies): Revision Note

Summary

• The Nazis had come to power partly because the Weimar Republic failed to solve the economic issues caused by the Depression

  • Hitler needed to deliver quick, visible results

• Hjalmar Schacht and Hermann Goering pursued:

  • autarky

  • public works

  • rearmament

• Official unemployment fell from 6 million in 1933 to half a million by 1939

• The Nazis replaced trade unions with the German Labour Front

• They used schemes such as Strength Through Joy to keep workers productive and loyal while giving them little real bargaining power

• The official figures hid a great deal of "invisible unemployment"

  • Groups such as women, Jewish people and conscripted labourers were simply removed from the count

• Many working Germans saw their real wages fall

Policies to reduce unemployment

• Hitler appointed Dr Schacht as Minister of the Economy

  • He was a well-respected banker

  • He had helped to resolve the hyperinflation crisis in 1923

• Schacht resigned in 1937

  • Hitler replaced Schacht with Hermann Goering

    • Goering had no economic experience

    • Hitler wanted a more radical economic policy

Aims for the Nazi economy

• To achieve autarky

  • Autarky would mean a blockade would not destroy Germany’s economy or food supply

    • This happened during the First World War

• To increase farming output

• To increase rearmament

• To increase government control over industry

The Four Year Plan

• Began in 1936 and aimed to make Germany ready for war within four years, by 1940

• Promoted the Reich Food Estate to guarantee prices for farmers

• Increased ersatz goods. The Nazis used:

  • coal to make rubber

  • acorns to make coffee

• The government set production targets for industry 

  • The government controlled the production of iron ore, coal mining, steel and armament factories

• Used enslaved labour from people in concentration camps

How successful was the Four Year Plan?

• Many business leaders did not like the plan's controls

• Excessive rearmament decreased Germany’s standard of living

  • This was called the "guns before butter" approach, as the Nazis chose rearmament over consumer goods such as food

• Germany had not achieved autarky

  • By 1939, Germany still imported one-third of its raw materials

Other methods to reduce unemployment

• The Law to Reduce Unemployment (June 1933) funded public works and gave tax breaks to firms that took on workers

• Public works, such as the autobahns and the Berlin Olympic Stadium, created construction jobs

• Arms spending rose from around 2 billion Reichsmarks in 1933 to 17 billion by 1938

  • This created jobs in arms factories, coal mining and steel

• The army grew from 100,000 men to over 900,000 by 1938

  • Conscription into the army from 1935 also took young men off the unemployment register

The Labour Service and the Labour Front

National Labour Service (RAD) 

• Set up in 1933

• Provided paid work for the unemployed:

  • workers carried out public jobs such as repairing roads and planting trees

• From 1935, six months' service in the RAD was compulsory for all unemployed young men aged 18-25 years old

• The pay was poor and many workers complained about the food, having to wear uniforms and working conditions

• There were 422,000 members in 1935

The Labour Front (DAF)

• Hitler banned all trade unions in May 1933 using the powers of the Enabling Act

• In its place, the Labour Front (DAF) was created to control the rights, hours and pay levels of workers

• However, workers lost the right to strike or to negotiate their pay, and the working week grew longer

Strength Through Joy

• Strength Through Joy (KdF) was set up in November 1933 as a division of the DAF

  • By 1936, there were 35 million members of the KdF

• Strength Through Joy aimed to make work seem more enjoyable and prevent unrest

  • It provided cheap leisure activities, trips and holidays, and a savings scheme to buy a car

The Volkswagen Scheme

• The KdF ran a scheme so workers could purchase a new car:

  • the Volkswagen ("people's car") was a cheap, fuel-efficient car designed for the average German

  • workers in the KdF gave five marks per week from their wages so they could eventually receive a Volkswagen

• However, car factories switched to producing armaments after 1938

  • Workers never received their Volkswagens

How successful were Nazi policies to reduce unemployment?

Evidence of success

• Unemployment fell from 6 million in 1933 to only half a million by 1939

  • This reduction ended the political crisis of mass unemployment that had helped bring Hitler to power in the first place

Evidence of "invisible unemployment"

• These figures exclude what historians have called "invisible unemployment":

  • From 1933, many women were pushed out of professional jobs

    • Women who left work were not counted as unemployed

• Jewish people forced from their jobs were no longer counted as citizens, so they disappeared from the statistics

• men conscripted into the RAD after 1935 were removed from the unemployment count

• temporary and agricultural workers were counted as being in full employment

• Historians estimate that more than a million people who may still have wanted work were excluded from the figures in these ways

• Even workers who kept their jobs did not necessarily benefit

  • Working hours rose by six hours during the 1930s

  • The cost of living rose too

  • The average worker's pay bought less in 1939 than it had in 1933

Conclusions

• Judged by the headline statistics, Nazi economic policy looks a remarkable success

  • It did end the political crisis of mass unemployment that helped bring Hitler to power

• Judged more carefully, using invisible unemployment and falling real wages, the recovery looks considerably less complete

  • It came at a real cost to the workers it claimed to have rescued