To what extent was Nazi Germany's economic development form 1933 onward "unsustainable"? And what effect did it have, if any, on their decision to go to war when they did? (self.AskHistorians)

16 ups - 1 downs = 15 votes

Forgive me, I searched the FAQs and found questions relating to the idea of the German economic miracle in general, but I couldn't find any threads dealing with this specific question. Also, if this is too much of a "what if" type of question, I apologize and can take it to a different subreddit.

I just happened after random Wikipedia browsing to end up reading a lot about the lead-up to WWII, and I'm wondering what the historical consensus is regarding Germany's economic development after the Nazis came into power.

Did their use of the state to basically direct the development of Germany's industries for the purpose of preparing for war have the inadvertent effect of making their economy unstable such that eventually they would have had to start a war over economic concerns? I know that Hitler had always had the goal of starting a war of expansion eventually, but is it possible the economic instability forced the regime's hand and made them pursue that war earlier? In the absence of the German initiation of WWII, what would have continued to happen to their economy, given the policies they were pursuing?

I'm not a historian by any means, but I took a bunch of history classes in college, and I recall in a Western Civ course that my professor said that in his opinion, the Nazi economy's outer appearance was a flimsy facade, and that the only way it functioned as long as it did was because the Nazis looted the treasuries of the countries they conquered in order to sustain the homeland's economy a bit longer.

9 comments submitted at 17:40:51 on May 9, 2013 by Jazz-Cigarettes

  • [-]
  • Volksgrenadier
  • 18 Points
  • 18:46:32, 9 May

Read Adam Tooze's Wages of Destruction: The Making and Breaking of the Nazi Economy. It's an excellent overview of all things having to do with the German economy before and during the war.

Tooze makes the claim that basically every aspect of German economic policy starting in 1933 was completely unsustainable. In an effort to develop the country's military forces and military infrastructure, Hitler basically sacrificed the entirety of the German economy, especially its hard currency reserves. By 1938, the foreign exchange of Germany was basically nonexistant, and it was fortuitous (or planned) that in the next year and a half, sizable amounts of gold and currency were seized from Austria and Czechoslovakia.

Hitler's decision to go to War over Poland was also calculated in large part by the fact that the Nazi economic machine was basically on the brink of burning itself out. It was only by taking the measures that wartime conditions alone could justify, and by (again) seizing much of Poland's wealth, that Germany could ensure it's (still ongoing) military buildup would proceed apace; the trade agreement signed with the USSR also helped matters.

Knowledge of the instability of Germany's economy wasn't a very well-kept secret either; Allied leaders during the winter of 1939-40 believed that Germany's economy would simply collapse on its own accord. Chamberlain famously said that Hitler had "missed the bus" by not attacking France after the fall of Poland. Of course, the Western Allies were proven completely wrong when Germany launched its ambitious (mildly crazy) attack through the Sedan to overrun the Allied Armies, but it was a fairly safe assumption that Germany's economy would otherwise have been completely unprepared for the sort of WWI-style attrition battle that everyone was expecting.

In short, German economic growth between 1933 was completely immaterial. All of the employment gains came at the expense of actual, substantial economy improvements. All of the state's effort and investment was sunk into the improvement of the military machine. Any credit that Hitler gets for saving the German economy, or reducing unemployment, must be tempered by the fact that, had World War II not started when it did, and had Germany not enjoyed such early successes, the economy would have completely collapsed for want of currency. German economic "growth", therefore, was indeed completely unsustainable without the sort of plundering of other countries that late 1930s Nazi foreign policy entailed.

Sources:

Wages of Destruction by Adam Tooze, particularly the first few chapters which detail German economic decision-making during the interwar years, along with the relationship of those economic decisions with German foreign policy, were my primary sources of information for this post. An alternative view, which argues that the German economic recovery was real, can be found in Dan Silverman's Hitler's Economy, though this might be difficult to track down outside of the libraries of academic institutions. Personally, I side with Tooze basically 100 percent; I think that the Nazi economic miracle was a bunch of smoke and mirrors.

  • [-]
  • siecle
  • 6 Points
  • 23:59:05, 9 May

Against this we should remember that the traditional view is that Germany's economic growth under the Nazi party was a result of the Hjalmar Schacht's moderately competent monetary policy (as opposed to the intentionally deflationary policies pursued by many other government in developed countries), which allowed Germany to resume the growth path of the late '20s while others were reeling from the Great Depression.

  • [-]
  • ared38
  • 2 Points
  • 21:40:56, 9 May

What was the wealth Germany was able to steal? Fertile agricultural lands, factories, etc...

If it's just gold, who was trading with Germany and what was Germany buying?

  • [-]
  • Volksgrenadier
  • 3 Points
  • 21:52:27, 9 May

Primarily the Germans seized national currency reserves, as well as industrial complexes (the Skoda works in Czechslovakia, for example). Germany was fairly reliant on imports of things like petroleum, iron ore and other raw materials that were necessary to keep their industrial base (and by extension, their military machine) running.

  • [-]
  • ared38
  • 1 Points
  • 21:59:59, 9 May

Who did Germany buy the oil and iron from?

  • [-]
  • Volksgrenadier
  • 3 Points
  • 22:02:40, 9 May

The iron ore came primarily from Sweden, the oil came from all over. I'm fairly sure the biggest producers of oil during the pre-war era were the United States and the British Empire. They probably also got a good deal of it from Rumania, even before the war started.

  • [-]
  • nickpinkston
  • 2 Points
  • 02:33:43, 10 May

Also, the Germans got a lot of fuel from liquifying coal as well:

Coal Liquefaction

  • [-]
  • siecle
  • 2 Points
  • 23:52:56, 9 May

Germany plundered the occupied countries in a pretty civilized way - they forced the central banks of the occupied areas to exchange the local currency for marks (or equivalent credits) at an artificially low exchange rate. Then they used the currency they had extorted to buy whatever goods they needed.

  • [-]
  • toryhistory
  • 1 Points
  • 05:26:20, 10 May

This is an excellent book, another book that talks about many of the same issues is "Hitler's Beneficiaries", which is about plunder and the Nazi welfare state.