History of the Nazi Economy

When Hitler took control of the German government as chancellor, the economic situation looked grim. Hyperinflation and global depression had torn through the prosperity of prewar industrialism, and the draconian terms of the Versailles Treaty exacerbated the problem. Hitler was elected on the platform that he would restore Germany to its former greatness—and part of this meant that he had to pull the economy out of its slump. Surprisingly enough, Hitler considered the economy to be a minor issue, and left the government’s economic policies largely in the hands of a non-party member. Later, when the nation was preparing for war, Hermann Goering took the position of Minister of Economics, and created a Nazi economy that functioned nearly at capacity.

The real Nazi economy had its beginnings with the policies of a man who was not a national socialist. Although the Nazi Party had a clear and firm position on economic issues before Hitler emerged as its major leader, the Nazis who came to power in 1933 considered the economy to be of little importance, and even believed that previous administrations had been foolish to waste so much effort trying to influence or improve it. Hitler appointed Hjalmar Schacht, a man who was not a Nazi party member, to be Minister of Economics in 1934 to deal with the growing problem of unemployment, which was then close to 30%. Using price controls to prevent a relapse into hyperinflation, as well as Keynesian policies involving public works programs, such as the construction of the Autobahn, Schacht managed to reduce the unemployment rate. Because of these policies, Germany experienced the sharpest decline in unemployment in the world at that time. The Nazi economy had begun to prosper.

Still, these policies were not enough. The Nazis decided to outlaw unions and forbade workers to strike, and began a program of expansion based on a military build-up for war. The construction industry in particular boomed, as Hitler constructed a cutting edge highway system that would carry Germany’s troops and supplies throughout the country in a time of war. Once Goering was appointed minister, Germany began a campaign to cut Germany’s economic ties with other countries, making it more self-sufficient. Many different goals for wartime production were set. The Nazi economy was tooling up for war. 

One of the core principles of Nazi policy during the war was to exploit the people and resources of the nations that Germany conquered. Goods flowed into the country from across Europe, and undesirables became human slaves. As the war escalated, so did the Nazis’ use of slave labor. By 1944 Germany had devoted all of its production to war manufacturing, but Allied bombing campaigns were severely diminishing their output capabilities. It was because of these raids that the German economy eventually collapsed in 1945. Although the Nazi economy started strong, by the end of the war, Germany’s economy was once again in dire condition.