The Nazi Economy and Employment

Six million to three hundred thousand

When Hitler became chancellor in January 1933 the official count of unemployed Germans stood at 6 million, one worker in three. By 1935 it was 1.7 million. By 1939 it was around 300,000, and employers were complaining of a shortage of labour. No other country recovered from the Depression so fast, and the recovery did more than anything else to make the regime popular. It was done in three ways. Public works employed men directly: the Reich Labour Service took 18 to 25 year olds for six months of draining marshes and planting forests at pocket-money wages, and the autobahn programme had laid 3,000 kilometres of motorway by 1938. Rearmament employed far more: conscription returned in March 1935, the army grew from 100,000 to 1.4 million by 1939, and military spending rose from around 3.5 billion marks in 1933 to 26 billion. And the figures were arranged: Jews dismissed from their jobs, women who left work for the marriage loan, and the hundreds of thousands in the Labour Service and the army were not counted as unemployed. Historians call this invisible unemployment. The worker who got a job also lost his union, his right to strike and his choice of employer, worked 47 hours a week instead of 43, and was offered in return cheap holidays, cruises and a car he never received. The exam asks how unemployment was reduced, how far the figures can be trusted, and whether workers were better or worse off. This module gives you the numbers and the shapes.

Five words the examiners use

Each definition ends with the moment it mattered, because a bare definition earns nothing in a 12-mark answer.

The economy, in order

Put these six events in the order they happened.

• The trade unions are dissolved and the German Labour Front takes their place
• Schacht introduces the New Plan to control imports and pay for rearmament with Mefo bills
• Conscription returns and the Labour Service becomes compulsory
• Goring announces the Four Year Plan for autarky and war readiness
• Schacht resigns as economics minister
• Official unemployment falls to around 300,000 and employers report labour shortages

Why did unemployment fall so fast?

Britain and the United States still had millions unemployed in 1938. Which explanation best accounts for Germany reaching near full employment by 1939?

• Rearmament did most of it: military spending rose from around 3.5 billion marks in 1933 to 26 billion in 1939 and the army grew fourteenfold after conscription in 1935, so that the arms factories and the barracks absorbed millions; public works did some, with the autobahns, housing and the Labour Service employing men directly from 1933; the world economy was recovering anyway from 1933; and the figures were arranged, with Jews, women, conscripts and Labour Service men removed from the count, so that the official figure fell faster than the real one.
• The autobahns employed most of the 6 million.
• Germany exported its way out of the Depression.
• The official figures were accurate and the recovery was exactly as large as claimed.

Was the German worker better off?

The 16-mark judgement on this bullet asks how far the standard of living improved. Set what the worker gained beside what he lost, and use the figures, because the answer turns on them.

Question 1: inference from a source

Source A: a description of a poster for the Volkswagen savings scheme issued by Strength through Joy in 1938. It shows a smiling family of four standing beside a small grey car on a country road with the autobahn in the distance, and a hand holding a savings card with stamps on it. The text reads: 5 marks a week you must put aside, if in your own car you want to ride. Below, in smaller type: Apply through your Strength through Joy office. A student infers that the regime was using the promise of consumer goods to win the loyalty of ordinary workers. Tap the TWO details that support that inference most directly.

• The savings card with stamps shows the car as something a worker could earn week by week from his wages, not a luxury for the rich.
• The car is painted grey.
• Applications went through the Strength through Joy office, tying the promise of a car to the party organisation for workers.
• The autobahn is visible in the distance behind the family.
• The slogan is written as a rhyme.

Rearmament and the Four Year Plan

Select the THREE statements that correctly describe how rearmament shaped the economy.

• Military spending rose from around 3.5 billion marks in 1933 to 26 billion in 1939, and conscription from March 1935 took the army from 100,000 to 1.4 million, so that the arms industry and the barracks absorbed more of the unemployed than every public works scheme together.
• Schacht paid for the early rearmament with Mefo bills, promissory notes issued by a dummy company and guaranteed by the state, which hid around 12 billion marks of arms spending from the published budget between 1934 and 1938.
• The Four Year Plan of October 1936 aimed at self-sufficiency in oil, rubber, iron and food so that a blockade could not stop a war, but by 1939 synthetic oil met a fraction of demand and Germany still imported a third of its raw materials, which is one reason the war came when it did.
• Schacht ran the economy until 1945.
• The regime put consumer goods before weapons so that workers would have more to buy.
• Rearmament was paid for by a boom in exports.

Two interpretations of the standard of living

Question 3 gives you two interpretations and asks how they differ, why, and how far you agree. The two below were written for this module to show the shape of the argument; the exam will print real historians. Interpretation 1. German workers were better off under the Nazis. The man who had been unemployed since 1930 had a job by 1936, a paid holiday by 1938, prices that did not run away as they had in 1923, and a share in a national recovery that the whole world envied. For the majority who had never been union activists, the loss of the right to strike was a small price for the end of the dole queue. Interpretation 2. The recovery was bought at the expense of the workers who made it. They worked four hours a week longer for wages that in 1938 had only just regained the level of 1928, they could not strike, bargain or change jobs without permission, a fifth of their pay went in deductions, the shops under autarky offered less for more, and the car they saved for never came. Full employment in a police state is not the same as prosperity. Question 3(c) asks why they differ. The answer is the baseline each uses: Interpretation 1 measures 1938 against 1932, the bottom of the Depression, and against 1923; Interpretation 2 measures 1938 against 1928, the best year of Weimar, and against what a free worker could do with the same wage. This meant that both are true of the figures they choose, and the judgement in 3(d) turns on which comparison a worker in 1938 would have made himself.

In the shoes of the economics ministry

Four decisions between 1933 and 1938. Choose what was actually done, and notice what each choice cost.

• May 1933. You are the new regime. Six million are unemployed and the unions, with millions of members, are the last organised force outside your control. What do you do?
• 1934. You are Schacht. Hitler wants an army and an air force that Versailles forbids and the budget cannot show. How do you pay?
• 1936. Schacht says the economy cannot take faster rearmament without cutting food imports and living standards. Goring says Germany must be ready for war in four years. You are Hitler. Whom do you back?
• 1938. Workers want more to buy and the Four Year Plan leaves nothing to sell them. You are Robert Ley of the Labour Front. What do you offer?

From cause to consequence

Because 6 million were unemployed in January 1933, the regime put men to work at once on roads and drainage through the Labour Service and the _____. Because Versailles forbade the army the regime wanted, Schacht hid the spending in _____ bills and cut imports under the New Plan. Because conscription returned in _____ and the army grew to 1.4 million, the barracks and the arms factories absorbed more men than any public works. Because Jews, women, conscripts and Labour Service men were left out of the count, the official figure fell faster than the real one, which historians call _____ unemployment. And because the Four Year Plan put guns before butter, the worker got a job and a holiday and paid for them in longer hours, dearer goods and a _____ that never came.

Saving for the people car

The Volkswagen scheme took 5 marks a week from each saver. How many marks did a worker hand over in a full year of 52 weeks?

Question 3(b): the main difference

Question 3(b) asks: What is the main difference between the two interpretations on the callout card? Explain your answer using both. Which answer would score all four marks?

• The main difference is that Interpretation 1 sees workers as better off, pointing to jobs for the unemployed, paid holidays and stable prices measured against the Depression, whereas Interpretation 2 sees them as paying for the recovery, pointing to longer hours, wages only back to 1928, the loss of unions and free movement, and the car that never arrived.
• Interpretation 2 says wages only got back to the 1928 level and the hours were longer.
• I agree with Interpretation 1 because a job is better than the dole.
• They differ because one is positive about the Nazis and one is negative.

A 12-mark paragraph, marked

Question 2: Explain why unemployment fell in Germany in the years 1933 to 1939. One reason unemployment fell was rearmament. From 1934 Schacht financed weapons through Mefo bills that kept around 12 billion marks of spending out of the published budget, conscription returned in March 1935 and took the army from 100,000 men to 1.4 million by 1939, and the Four Year Plan of 1936 poured money into steel, aircraft, synthetic oil and rubber. This meant that military spending rose from around 3.5 billion marks in 1933 to 26 billion in 1939 and that the arms factories, the shipyards and the barracks between them absorbed more of the 6 million unemployed than every road and drainage scheme put together, so that by 1938 employers in the arms industry were short of skilled men. Unemployment fell because the regime was preparing for a war, and a war economy has no idle hands. What earned the marks: a cause named in the first sentence; specific support (Mefo, March 1935, the army figures, the Four Year Plan, the spending); the link phrase this meant that; and a closing sentence that returns to the question. Two more paragraphs, on public works and the Labour Service, and on invisible unemployment and the way the figures were counted, and the answer reaches the top level.

Write the 12-mark answer

Explain why unemployment fell in Germany in the years 1933 to 1939. You may use the following in your answer: the autobahns; rearmament. You must also use information of your own.

• Support that counts: a date, a figure, a scheme or a name
• Causes of your own: the Labour Service, invisible unemployment and the counting, or the recovery of the world economy

Question 3(d): how far do you agree?

Question 3(d) asks: How far do you agree with Interpretation 1 that German workers were better off under the Nazis? Use both interpretations and your own knowledge. A student has written the case FOR Interpretation 1. Which is the strongest point to set AGAINST it?

• Better off than in 1932 is the wrong test, because every country was better off than in 1932 by 1938; measured against 1928, the last good Weimar year, the German worker earned about the same in real terms for four more hours a week, had lost the union, the strike and the freedom to change jobs that had raised his wages in the 1920s, and was saving 5 marks a week for a car the regime never meant to deliver, so the recovery gave him work and took the means of turning work into a better life, and a judgement should give Interpretation 1 the jobs and Interpretation 2 the living standard.
• The Nazis were evil, so workers cannot have been better off.
• The KdF cruises mostly went to party members.
• The war destroyed everything after 1939.