The Priority of Rearmament
Autarky – self-sufficiency. Already discussed at length in Mein Kampf. Why did Hitler think it was necessary? There is only one reason: he wanted to prepare the economy for a general European war. The evidence:
Hitler address to army, SA and SS officers on 28 February 1934: in 8 years it will be necessary to ‘create living-space for the surplus population in the East’. The “western powers will not let us do this…So short, decisive blows to the West and then to the East could be necessary.’ Rearmament complete by 1942. Hitler intended this from the beginning. Already clear in general terms in Mein Kampf and Second Book.
Strategic thinking: conquer Eastern Europe in order to substitute for the overseas Empire Germany did not have (removed in 1919 and anyway not much use). Ukraine “bread-basket”, oil reserves near Baku on the Caspian Sea in the Caucasus, and so on. But this would require a war with the other European powers in order to achieve.
Rearmament from the very outset. Important to remember restrictions imposed by Treaty of Versailles. Break out of these.
Job-creation? Keynsian pump-priming? No. Propaganda, yes – statistical fiddling, labour service, marriage loans, much more. But: Hitler to cabinet on 8 February 1933: ‘The next 5 years in Germany must be devoted to the rearmament of the German people. Every publicly supported job-creation scheme must be judged by the criterion of whether it is necessary from the point of view of the rearmament of the German people.’ Even the Autobahns were military (and created relatively few jobs). ‘Motorization’ designed as basis for mobile warfare and esp airplanes. The slogan of job creation (said Hitler on 9 February 1933) ‘facilitates in the first place the disguising of work for the improvement of national defence’. Rearm in secret as long as possible to forestall possible intervention by the French.
The Argument of 1918
Hitler had fought in World War I and been shocked by defeat. 2 key dates in Nazi memory: 1914, re-create the spirit of unity (Volksgemeinschaft). And 1918, avoid defeat. This was a major source of Hitler’s anti-Semitism (stab-in-the back). But he also knew that while the British, French and later Americans had been able to supply themselves from overseas, despite the submarine warfare’s successes, Germany was unable to do so. No overseas empire. Lebensraun a substitute along lines of US west of Russian Siberia or British or French Empires. But until then the war had to be fought by Germany relying mainly on own resources. In particular the Allied blockade in 1914-18 had cut off food supplies. 600,000 Germans had died of malnutrition, starvation or nutrition-deficiency diseases. Hitler thought this a major factor in unrest at home, fomented, he believed, by unscrupulous Jewish agitators. In World War II he was to take major steps to avoid domestic discontent – plunder, looting, tax breaks, family allowances and so on. But problem still remained of how to make Germany self-sufficient until the conquest of Lebensraum so as to prevent possible economic blackmail by the Allies, or starvation and discontent in the early phases of war.
The Financial Arguments
Hitler also wanted to devote as much resources as possible to rearmament. Building a fleet of 6 massive battleships, 8 cruisers, 250 U-boats, and hundreds of smaller vessels, constructing 20,000 combat aircraft, manufacturing thousands of tanks, tens of thousands of lorries and field guns, millions of rifles, hundreds of millions of bullets and much more, all required huge amounts of steel. Rubber was needed for tyres and fittings. Petroleum and diesel was needed to fuel all of these machines. Cotton and wool were needed to clothe the hugely expanded armed forces, especially after conscription was introduced in 1935.
Germany was not self-sufficient in any of these materials. So they had to be bought from other countries. It might be possible to find friendly or neutral states willing to sell them. The Swedes for example had substantial deposits of iron ore. You could get oil from Hungary and Romania. Already from early 1932 to mid-1934 imports of raw materials to Germany rose by nearly a third.
But all this had to be paid for. No country or government can spend more than it earns for very long. Where was the money going to come from? Hitler did not want to raise taxes for fear of alienating the mass of ordinary Germans. Many welfare measures paid for by ‘voluntary’ contributions, e.g. Winter Aid. Other dodges included paying in advance for the Volkwagens that were never built. ‘Aryanization’ and confiscation of Jewish property – but less than 1 per cent of population.
Nor, Hitler admitted in February 1933 when he addressed top military officers, was it going to come from boosting exports. The world was still in a deep economic depression. Demand was low. The markets simply weren’t there. Worse still for the Nazis, Britain and the USA began imposing trade sanctions in protest against the Nazi persecution of the Jews. The value of German exports actually fell from 1,260 million Reichsmarks in the last quarter of 1933 to 990 million in the second quarter of 1934. German prices were also high on the world market because other countries had allowed their currencies to devalue while Germany had not.
In 1934 German gold and currency reserves fell by more than half as the money was shelled out to pay for increased exports. A stop had to be put on German loan repayments to other countries. So-called creative deficit financing – borrowing money from the public through loan bonds and promising to pay them back at some future, unspecified date when Germany conquered other countries – had to be backed in the end by printing money, and this threatened serious inflation.
One solution was to stop buying from overseas and trade instead with countries in areas, especially south-eastern Europe, that Hitler thought Germany would conquer in the coming war. The economic supremo Hjalmar Schacht set up a so-called New Plan in September 1934 to restrict imports to arms-related raw materials and foodstuffs and confine them to countries to which Germany exported a lot. Quotas and regulations had some effect.
By 1938, German imports from south-eastern Europe had risen to 22 per cent of all imports compared to 7.5 per cent I 1928, while imports from the rest of Europe fell from 7 and a quarter billion RM to just below 3 billion RM over the same period. But this did not solve the problem. Cutting back on imports put a huge strain on domesticraw material supplies and these were soon creating bottlenecks in the rearmament process.
These were all key reasons why Hitler and the Nazi regime sought to make Germany as far as possible self-sufficient. How far did they succeed?
Foodstuffs: Reich Food Estate tried to make farmers more efficient (cheap fertilizers, loans for machinery, encouragement to grow flax for linen, drafting young people in to work in the countryside, forcibly merging small farms into bigger ones and so on).
Germany became self-sufficient in bread, potatoes, sugar and meat by 1939.
But there were more jobs in towns, pay was better there, and conscription took away labour. Few farms were merged. Little new land was brought into cultivation.
By 1939, 15 per cent of food supplies were still being imported.
Shortages of fats, pulses (beans etc.) and eggs meant rationing; from early 1939 also coffee and fruit (esp imported like bananas and oranges). Shortage of milk and even wheat for bread. Emergence of black market.
This convinced Hitler already by 5 November 1937 that as he said to a meeting of top officers in the armed forces, recorded in the famous Hossbach Memorandum, that ‘autarky, in regard both to food and to the economy as a whole, could not be maintained’. So ‘Germany’s problem could be solved only by the use of force’, to conquer supplies of food and raw materials in eastern Europe. Already a year earlier, in September 1936, he had set up the Four Year Plan under Göring to prepare the economy for war in 4 years. Schacht was sidelined and eventually forced out in early 1938 as all his financial devices were thrown aside and the arms build-up was pushed forward at manic speed, to be paid for when Germany conquered other countries in the coming war. By 1938 arms expenditure was over 20 per cent of national income, a staggering figure, while the Reich deficit was 9.5 billion RM.
Despite Hitler’s admission of the long-term impossibility of sustaining autarky, a main aim of the Four Year Plan was to force German industry to increase production in the short term in preparation for war. This had some successes:
- From 1936 to 1938 coal production went up by 18 per cent, coke by 22 per cent, aluminium by 70 per cent, petroleum by 63 per cent.
- Especially the huge chemical company IG Farben was given incentives to produce synthetic petroleum (up 69 per cent from 1937 to 1939) and synthetic rubber (buna). Artificial fibres like rayon replaced cotton and wool for military uniforms; by 1939, 43 per cent of military uniforms were made of man-made fibres.
But overall the plan failed. Aluminium factories depended on imports, and Germany also had to import most of the raw materials for high-grade steel. Buna only made up 5 per cent of domestic consumption of rubber in 1938.Iron ore imports grew from 4.5 million tones in 1933 to 21 million in 1938, yet in 1937 the air force only got a third of the steel it wanted to build aircraft, and aircraft production fell form 1937 to 1938. Similar problems with tanks, ships and so on. Restrictions on use of army vehicles because not enough fuel.
To try and reduce this reliance on imports, the Reich government requisitioned iron and steel, tearing down iron railings from parks, requisitioning disused pots and pans, and using clay instead of iron for sewage pipes (remember, plastic not available). This did no good. German arms production was well below what was planned in 1939
So what happened? Well as we know, German armies conquered Poland with lightning speed in 1939, and France, Holland, Belgium, Denmark and Norway in similar fashion the following Spring. In 1941 they invaded the Soviet Union, Greece, the Balkans, and North Africa. They got their victories by achieving surprise, by moving very quickly using armoured columns, and be establishing command of the air at the outset of each campaign.
As soon as each country was invaded, the German economic administrators moved in, requisitioned raw materials and factories, forced thousands of young men to go and work on the land in Germany, and took away huge quantities of foodstuffs to feed the population at home. In Athens thousands of Greeks died of starvation after the German invasion because all the food production in the surrounding area was diverted to Germany.
The German armed forces carried out plunder on a huge scale. Not only food but also money, jewellery and a lot more besides was simply looted. The government in Berlin raised army pay and fixed exchange rates with the conquered countries so that German occupying forces could buy up local produce at knock-down rates. Taxes could be kept low at home as a result, and the state could still afford to pay for welfare measures on the home front. At least 25 per cent of German domestic consumption during the war was paid for by the proceeds of this exploitation, possibly even more.
Autarky therefore was never a fantasy. Hitler was always clear that it was only a temporary expedient and that in the long run the economy depended on conquest. Seen from this point of view, it was rational enough to try and maximize domestic production before the war began.
What was a fantasy was the idea that Germany could ever be successful in a long-term war against two powers, the British Empire and the Soviet Union, each of whose economic strength was at least as great as its own, and a third, the USA, whose economic strength was greater than any of them by far. Every battle won was won at the cost of men and equipment, arms and ammunition, and Germany simply lacked the resources to replace them with anything that matched the quality of the men and equipment, arms and ammunition brought to the war by the Allies. The turning-point came already in the winter of 1941-42 with the battle of Moscow, and from the defeat at Stalingrad a year later, Germany’s armed forces were continually on the retreat.
The more territory the Germans lost, the fewer resources they had, and so the defeat gathered pace despite increases in efficiency brought about by the new munitions minister Albert Speer, until in 1944-45 it became headlong. The fantasy lay not in supposing that Germany could be self-sufficient, it lay far deeper, in supposing that Germany could ever win a major, long-term war.