World War II: Germany--NAZI War Economy

German city parks World War II
Figure 1.--Germany in 1940 and 41 did not look like a country at war, except for all the military uniforms. This photograph in a Berlin part did not look much different thzn before the War. The photograph is undated, but was probably taken in April 1940. We are not sure why the ladies have carts. Put your cursor on the image to zoom in on the family. A reader writes, "The people pushing carts here is interesting. First they look identical. Were they a goverment issue? The goods being carried look like liquid containers. Was it water?" HBC is unsure about what is in the carts. Could they be picnic lunches? Perhaps our German readers will know. Click on the image for a fuller discussion.

The German approach to a war economy was to covert the economies of occupied countries to the production of arms and war production. And to virtually pillage occupied countries to ship food and consumer goods back to the Reich so civilian consumption levels could be maintained. This began immediately with the conquest of Poland. And the conquest of Denmark and Norway (April 1940), Western Europe (May-June 1940) and the Balkans (April 1941) provided even more opportunities for plunder. Thus conditions in Germany did not deteriorate in the first two years of the war. Food and many consumers was still readily available. This was a policy Hitler ordered because of the impact of shortages on German morale during World War I. This photograph in Germany except for all the military uniforms do not look like a country at War. Nor were air raids at first much of aroblem. Hitler believing the War had been won, actually scaled back war production in 1940-41. He was concerned about stressing the home front. This decession delayed critical work on weapons development (such at jet aircraft). Hitler was very concerned with maintaining German civilian consumption levels. Hitler even before the War began was concerned about the home front. He was aware that food shortages had destroyed civilian morale and that the collapse of the homec front. Disorders at home were the principal factor in the Kaiser's abdication. The cut backs proved to be a terrible miscalculation. The NAZIs neither used Germany''s potential or effeciently used the potential of the occupied countries. When the War turned against Germany, the NAZIs found themselves fighting countries with far greater resources and industrial capacity. Hitler even ordered cut backs in military production after the victory over France. This did not begin to change until the advances in the East began befire Moscow (December 1941). As German workers had to be conscripted for military service, workers for the factories were meeded. Jews could have been used for the factories, but Hitler instead decided to kill them in what we now call the Holocaust. Thus the NAZIs began to concript foreign workers to work in German factories. Thd NAZIs as the war dragged on, also began to conscript workers from occupied countries to camps for forced or slave labor, often under horendous conditions. The NAZIs using this system were able to maintain production levels in the Reich. There were, however, huge declines in production levels in the occupied countries. This is why that even though the NAZIs occupied much of Europe, there were no massive increases in production levels comensurate with the pre-War industrial or agricultural production of Europe. Hitler eventually put Albert Speer in charge of war production. German industry began to be used more efficently. Battlefield losses and the Allied strategic bombing campaign, however, gradually eroded the German ability to continue the War. A key here was petroleum.

Chronology


1939

The Germany that Hitler seized control of was not in a position to launch another War. He launched an emense rearmament program--Aufrüstung. Nut arms wre only part of the preparations needed for war. Another was the popultion needed to conscript to the military. And thus another effort was launched to increase the German birthrate. And here they made some progress, limited but still progress. Another needed effort was y\the expand the German economomic area--der deutsche Wirtschaftsraum. And here Hitler made much more progress than in increasing the birthrate. After seizing power, he added important areas to German control bringing them within the deutsche Wirtschaftsraum. This included the Saarland (March 1935), Austria (April 1938), Czech Sudetenland (October 1938), the rest of Czechoslovakia (March 1939), Lithuania-Memel (March 1939). The first actions brought mostly Germans into the Reich. And Hitler assured Chamberlain at Munich that he wanted no Czechs. This changed when Hitler seized the rest of Czechoslovakia (1939). Not only did they gain control of millions of non-Germans, but they gained control of the important Czech arms industry, especially the Skoda Arms Complex. It would play an important role in building tanks for the Whermacht. Now Germany did have the capability of waging another war. It would play an important role in building tanks and artillery for the Whermacht. It would play an important role in building tanks for the Whermacht. Hitler launched the War by invading Poland (September 1939). The German economoc plan was put in full force with the invasion of Poland. And from the onset, the German approach to a war economy was to covert the economies of occupied countries to the production of arms and war production. And to virtually pillage occupied countries to ship food and consumer goods back to the Reich so German civilian consumption levels could be maintained. And German planners began preparations to reduce consumption in the occupied area to free up resources--one of the great crimes of history, the Hunger Plan which was part of Generalplan Ost which began to be implemented in Poland. Preparation for the Gettoization of Jews began, a program with economic consequences.

1940

The victories of 1939 significantly boosted the German war economy, but both Czechoslovakia and Poland were relatively small countries. Germany victories in the West, however, were starteling and signoficantly changed the world ballance of power. First came the conquest of Denmark and Norway provided two more small countries to exploit (April 1940). Then came the shattering victories in Western Western Europe (May-June 1940). France had the largest economy in continental Europe outside Germany, offering the Germans both massively increased industrial power and very important agricultural harvests to exploit. The the low countries taken as a whole also offered important indusyrial and economic potential to exploit. The Germans began to exploit these countries, but did notnove to massively convert the economies to war production. They were happy to ship French consumer goods to the Reich to supply the civilian population. As a result, rationing in the Reich was still very limited and consumer goods still eidely available. We are not entirely sure why the Germans did not move more aggressively to convert the French as well as the Belgian and Dutch economies to war production. One reason was that Hitler wanted to militarize France and eventually partition it so that it woukd never again be a threat to Germany. Also there were vast profits to be made from obtaining French consumer good cheaply and selling them in the Reich. Less apparent were German diplomatic steps. Hitler met with Franco at Hendaye on the French-Spanish border (October 1940). Hitler expected Franco to join the Axis and enter the War. Franco refused which meant that Germany would be unable to exploit the Spanush economy. Minerals and other resources Germany wanted would have to be paid for. Hitler did force Romania in to the Axis and German troops moved into Romania, seizing comtrol of the rail lines (October 1940). This was a key step because Germany had no important oil resources. The Ploesti oil fields would be Germany's major source of petroleum duruing the War. And the Germans did not have to pay the Romanians for it. Hitler believing the War had been won, actually scaled back war production in 1940-41. This was done even while planning for the invasion of the Sioviet Union had begun. He was concerned about stressing the home front. This decession delayed critical work on weapons development (such at jet aircraft). Hitler was very concerned with maintaining German civilian consumption levels. Hitler even before the War began was concerned about the home front. He was aware that food shortages had destroyed civilian morale and that the collapse of the homec front. Disorders at home were the principal factor in the Kaiser's abdication. The cut backs proved to be a terrible miscalculation. The NAZIs neither used Germany''s potential or effeciently used the potential of the occupied countries. The Germans also received larege deliveries of raw matwerials, including oil, from the Soviet Union as provided for under the terms od NAZI-Soviet Non-Aggression Pact. These rail deliversies unlike maritime trade could not be interdicted by the Royal Navy,

1941

The German invasion of the Balkans provided more resources to plunder (April 1941). Yugoslavia and Greece were small economies, but there were importany natural resources as well as agricultural production. German seizure of food in Greece would lead to a terrible famine there. Thus conditions for civilans in Germany did not deteriorate in the first 2 years of the war. Food and many consumer goods were still readily available. This was a policy Hitler ordered because of the impact of shortages on German morale during World War I. This photograph in Germany except for all the military uniforms do not look like a country at War. Nor were air raids at first much of a problem. Hitler launched his supreme step, Barbarossa--the invasion of the Soviet Union (June 1941). This as clearly indicated in Mein Kampf was Hitler's primary goal. And with the emense resources of the Soviet Union wjichbcould not be interdicted, Germany could wage war in perpetuity. And Hitler expected to gain that victory in a lighting summer campaign. But Barbarossa launched with stunning force and success because of Stalin's failure to prepare, bigged down in the mud a snow of the Russian Winter was stopped before Moscow by aowerful Red army offensive (December 1941). Hitler's response almost uncomrehensively was to declare war on Ameriva. Thus NAZI Germany which began the year in control of much of Europe and military force of stinning power only facing Britain in the War, at the end of the year found themselves fighting countries with far greater resources and industrial capacity and a military that had taken very serioys casualties amd equipment losses. The magnitude of the losses would begin to affect civilans on the home front for the first time.

1942

Major changes occurred in 1942 although te full impact of theWar was not yet clear to the German people. The cutbacks in military production and procurement Hitler order after the victory over France now came back to haunt him. The enormous personnel and equiment losses in the East were enormous and had to be replaced if Germany was to continue the War. And Germany did not have the industrial power to replace all that was lost before the summer campaign could be launched. Changes occurred in both industrial and labor policy. Minister of Armaments Fritz Todt was killed in a never fully explained plane crash shortly after taking off from Hitler's eastern headquarters at Rastenburg (February 8, 1942). Albert Speer, at the time primarily Hitler's chief architecht, had arrived in Rastenburg the previous evening after an arduous trip to occupied areas of the Soviet Union. He had an offer by Todt to fly him back to Berlin. He canceled becayse he was tired and had met with Hitler late in the evening. After the crash, Hitler immediately appointed a shocked Speer the Reich's new Armaments Minister. Reichmarshal Hermann Göring raced to Rastenburg hoping to take over Todt's responsibilities an increase his control of the economy. Hitler surprised him with the fait accompli of Speer's appointment. [Speer, pp. 193-96.] Göring had done very little to put the Reich's industry on a war footing. On a war footing. Speer on the other hand with virtually no experience with industry and economics, set in motion an ambitious program, often described as rationalizing industry, that significantly expanded war production despite the escalation of the allied strategic bombing campaign. As German workers had to be conscripted for military service, workers for the factories were needed. Jews could have been used for the factories, but Hitler instead in 1941 made the decesion to kill them in what we now call the Holocaust. This decesion could have been changed after the disaster before Moscow, but instead Hitler decided to kill the Polish Jews, many involved in productive labor in Getto workshops. Nor did he attempt to utlize the Polish and Soviet POWs for labor, many of whom persished in dreadful cimnditions during Winter 1941-42. The NAZIs instead began to concript foreign workers to work in German factories. The NAZIs as the war dragged on transported millions of foreign workers from occupied countries to camps for forced or slave labor, often under horendous conditions. Ernst Friedrich Christoph "Fritz" Sauckel, General Plenipotentiary for Labour Deployment. organized the systematic enslavement of millions from lthe occupied trritories. This was a major cause of the Resistance movement in France and other counties. Non-Jews except for food and other shortages had not felt the German occupation in dramatic terms until the labor round up began. Jews were also transported, but mostly to death camps rather than labor camps. The NAZIs using this system were able to maintain production levels in the Reich. There were, however, huge declines in production levels in the occupied countries. This is why that even though the NAZIs occupied much of Europe, there were no massive increases in production levels comensurate with the pre-War industrial or agricultural production of Europe.

1943

Germany by 1942 was facing larger countries with far greater material and industrial resoureces, and was not using its much smaller induistrial base very efficently. This was die in part to chhotic NAZI system and also due to Göring's mismanagement. Göring was rinning the ecomony through the Four Year Plan. Hitler eventually put Albert Speer in charge of war production--Minister for Armaments (February 1942). Speer succeeding engineer Fritz Todt who died in an airplne crsh. He proved to be a highly efficient organizer, but in the Byzantine NAZI system could not at first achiece a great deal. This changed in 1943 when Hitler gave Speer Reich Marshal Hermann Goering's responsibilities planning the German war economy. German industry began to be used more efficently. Under Albert Speer, the German economy even with the enormous pressure of the War expanded war profuctionin 1943. After the disaster at Stalingrad, Goebbels began talking about Total War. The United States and Britain began the around-the-clock boming of the Reich (January 1943). For the first time, the Germans began to experience major raids. An effective Civil Defense program kept civilian losses relatively low. And the Luftwaffe exacted serious losses on the Allied airmen. This did not begin to change until American P-51 long range escorts became available (December 1943).

1944

Under Speer's control, German war production increased even with the Allied Stratehic bombing campaign. The inefficencies in the NAZI economony was so great that dealing with the econmic structure more thn made up for the dislocations of the bombing. The question not often asked is how much more could the NAZI war econmy have expnded without the bombing. Prticularly important were the disruption to mjor NAZI effrts, including the V-weapons, a moern U-boat, and new jet aircraft. German industry was given a respite during the first half of 1944. After largely destroying the Luftwaffe in early 1944, the bombers were tirned over to SHAEF commnder Gen Eisenhower and used to prepare for D-Day. Here he primority was the trnsporttion nt work nd cutting off the invasion beaches from the Reich. After the Allied breakout from Normandy (July 1944), the bombers were turned back to the air commnders and the destruction of industrial Germny began. And without the protection of the Luftwaffe, German cities were reduced to piles of rubble. German war production after peaking (July 1944) began to collpse. A priority of the Air Commanders were the Germn Synfuel plants nd the transport system. With the Luftwaffe largely destroyed, the P-51 escortsbcne down to he grond nd attacked anything that moved (trains, barges, and trucks). The Deutsche Reichbahn (German rail system) had been the heart of the transport system and during late 1944 and early 45 was largely destroyed.Besides the bombing, Germany no longer had occupied countries to pillage. Battlefield losses and the collapse of the economy, ended the the German ability to effectively wage war. A key here was petroleum. Ploesti was no longer availble nd the Synfuel plsnts were being destroyed.

1945

The NAZI econony finlly collapsed at the end of 1944. The strategic bombing campaign was a major factor. The transport system was effectively destroyed. Another factor was the loss of occupied countries to exploit, especially France. Food became an increasing problem. Speer in the last months of the war did a great deal to thwart Hitler's scorched-earth policy. He put his life in danger on several occasions by counter-manding Hitler's orders. For most NAZI officials, this would have meant certain death.

Labor

Labor was a major concern for Hitler and the NAZIs. The massive unemployment as a result of the Great Depression was a primary reason that the NAZIs were able to win over voters and ultimately seize power. German industrial labor at the time did not have a right-wing orientation, but rather a left-wing orientation, voting for Socialists and Communists. Some desperate unemployed workers voted for the NAZIs and Communist votes increased as well. Most of this came from the Soicialist Party (SPD) which had been the dominant German political party. Workers retained their socialist outlook which was a problem for Hitler and the NAZIs. Their answer was to take ove the free labor movement and controling labor through the Deutsche Arbeitsfront (DAF). The NAZIs did succeed in reducing unemployment anf this was a focal point of Goebbels propganda machine which hid certain sttoicical slight oif hand by no longer incliding female unemployment. This was accomplished through a massive combintion of defecit spending to finance rearmment, the Reich Labor Service (RAD) to take youth out of the job market, military conscription, amd other prigrams, ultimately the War. While the NAZIs reduced unemployment what they did not do was to increase worker wages in real terms such as clothing, housing, and diet. This of course because Germny's production was being directed at military spending not at workers' well being. With the advent of World War II, labor became a problem as so many workers were conscripted. America and Britain solved the problemn by bringing women into the workforce, but this sollution was less availble to the NAZIs. Despite NAZI propahanda about Kinder, Küche, Kirche (Children, Kitchen, Church), women already were a very substantial part of the German workforce. Thus women could not have the massive impact it did in the Allied countries and NAZI ideology did not favor this sollution. Even before launching World War II with his ally Stalin, Hitler had the sollution. The concentration czmps opened by the SS in Germny provided slave labor. Hitler than occupied Czechoslovakia (March 1939), meaning that occupied people coiuld be use to replace German workers conscripted into the military. Czechoslovakia of course was only the beginning. Beginning with Poland a huge swath of Europe fell to NAZI control. When his advisers complain of a labor shhortage, Hitler would fly into a tirade, demanding that since they controlled most of Europe, there could be no labor shortage. The NAZIs would slove the labor shortage by various forms of slave and forced labor. The SS concentration camp system in the Reich was massively expanded in the occupied countries. POWs also added to the labor pool, although more thsn a nillion Soviet POWs were allowed to di from starvtion and exposure before the realities of war change NAZI policy. The Jews were a potential sourcde of slave labor, but here the orders were to kill rather than use them. Hitler appointed Ernst 'Fritz', Gauleiter of Thuringia, to be the General Plenipotentiary for Labour Deployment (March 1942). He would commit terrible atrocities in obtaining workers and transporing them to the Reich. Speer cooperated closely with him, but managed to cover up his involvement at the rime of the Nurmburg trials.

Finance

Germany was not in a good economic position when Hitler seized power and his decesion to launch a major armament program made the situation even worse. Hitler's rearament program was bankrupting NAZI Germany. The Anschluss improved the finalcial situation, but did not redress the basic problem (1938). It is questionable how long Hitler could have continued his rearament program if he had not taken Germany to war in September 1939. If the level of indebtness had become known, it would have syrely led to a greater financial crisis than that experined during the Depression. We know that NAZI government expenditures in the years just before the War began were more than twice as large as revenues. NAZI economic policies held little chnce for economic groth. NAZI focus on the military, inefficent production methods as a result of Germany's economic isolation, and the aging infrastructure, all argued against economic growth. Nor was Germany well situated to competing economocally with other major industrial countries. German corporations now acustomed to Government contracts were increasingly less capable of facing internatiinal competition. One analyst writes, "It is my conclusion that regardless of whether or not levels of deficit spending were decreased, Germany would be very poorly placed to compete in international trade, and would likely be outgrown by their major economic competitors. In the short term, they were not well placed to outgrow even the Communist economy of the USSR, which had experienced substantial levels of industrial growth while the rest of the world experienced the Great Depression." [Montgomerie] The success of the Whrmacht in the first 2 years of the War gve it possession or ontrol over most of Wesrern Europe. The NAZIs could exploit the resulting Grossraum without any financial distress on Germny itself. And to exploit it the Germans seized resources, enforced explotive trade and currencu exchange cinditions and brutal forced labor as well as slave work camps. They even began extracting the gold teeth if conentration camp imates and Holocaust vicims. Gold and foreign exchnge was needed for the ciuntries they did not occupy (Portugal, Spaain, Swede, Switzerland, and Turkey). The Royal Navy prvented Germany from importing needed material, except for these countries located on the perifery of Reich controlled territory. In contrast to the Allied countries where production expnded, production in the NAZI Grossraum declined, insome cases precipitously. (Production in the Reich increased, but not in the Grossraum.)

Energy

Oil was a problem for Germany from the first day of the War. Germany had very limited oil resources. NAZI diplomats worked to develop trade relations with the Balkan countries and to bring the countries in the rgion into the Axis. This included Romania which had fought with the Allies in World War I. Romania was critical because of the vital Ploesti oil fields. Ploesti would be the only important oil fields that Germany could utilize. Hitler was aware that when war broke out that the Allies would again blockade Germany. Thus maritime oil imports would be ended. Thus the NAZIs well before the War gave considerable attention to developing a synthetic oil indutry. The Soviets as part of the NaZI-Soviet Non-Aggression Pact (August 1939) delivered oil to the NAZIs. This of course eded hen the NAZIs invaded the Soviet Union. When Barbarossa failed before Moscow (December 1941), Hitler designed the 1942 Summer offensive to seize the Soviet Caucasan oil fields. To do this he had to split his forces. One prong headed south for the oil. The ther prong headed east for Stalingrad. Possssion of the city on the Volga would prevent the Soviets from sending reinforcements into the Caucasuses to protect the oil fields. The Germans began overruning Soviet oil fields in the northern Caucauses (summer 1942), but were unable to bring them on line or hold them very long. The division of forces, however, led to the disaster at Stalingrad. Oil played a key role in the destruction of the Afrika Korps in the Western Desert. A large portion of the Italian supply convoys were destroyed through British air and submarine attacks, Here Malta played a key role. And American carriers were deverted to make sure that aircraft and supplies (especially oil) got through to Malta. The Allies made a major effort to destroy the Ploesti airfields. It was one of the most heavily defended targets in Europe, but the refineries were finally destroyed after a prolonged and costly effort. Finally the 8th Ar Force went for the German synthetic fuel plants. The 8th Air Force had sustanined substantial losses on targets in western Germany during 1943. Many of the refineries were in eastern Germany. Long range fighter esorts finally enabled the 8th Air Force to challenge and defeat the Luftwaffe (1944). A factor here was that fuel shortages made it impossible for the Luftwaffe to adeqiately train new pilots. The destruction of the Luftwaffe opened up Germany to an unrelenting bombing campaign by the massive American and British strategic bombing forces built up in Britain as well as additional forces flying from liberated Italy. One of the primary targets became the synthetic fuel plants. Success here would prove to be a factor in the Allies victory during the Battle of the Bulge (December 1944-January 1945).

Raw Material

Strtegic materials played a critical role in World War II, in both the desire to launch the War and in the ability to wage an etended conflict. Acquiring natural resources was a major war aim of Germany and the other Axis powers. Only one country at the outbreak of World War II had the industrial and agricultural capacity as well as the resource base to wage world war and that was the United states which had no desire to participsate in another world war. The Soviet Union had significantly expanded the Russian indutrial base, but weakened the country's agricultural productivity through enducung the Ukranian famine and collectivzing agriculture. Like the United States, the Soviets posessed enormous natural resources and like Germany, they had designs on neigboring countries. Britain was less well situated. It had a substantial industrial and scientific base, but except for coal and iron, limited natural resources. And it had to import large quantities of food. Those resources, however, existed in the Empire and overseas trading partners like America. The Royal Navy existed to ensure access to those resources in time of war, but had been allowed to decline in strength during the inter-War period by budget-minded governments. France was better situated in terms of Britain as to food production and as a result of its navy and alliance with Briain was guaranteed access to needed raw materials in its colonies and trading partners. The Axis powers were less favorably positioned for War in term of raw materials. Germany was an important industrial and scientific power, but could neither feed itself nor possessed the strategic resources needed for industrial world war. The one critical resource Germany possessed in abundance was coal. Other important strategic materials would have to be imported. This made Germany vulnerable to blockade and as in World War I, Germany did not have the naval power to contest a Royal Navy blockade. Germany was particularly defecient in access to petroleum, a necesity for the modern mechnized war it planned to wage. Germany's answer to this was a synthetic petroleum industry, but this did not even meet the country's need in peace time. The limited resource base was why Hitler in his strategic thinking from a very early stage looked east to the copious resources of the Soviet Union--resources that were not subject to a Royal Navy blockade. Italy was the least prepareed of all the major beligerants. Italy had neither the industrial base or the raw materials to wage a protracted war. Japan was the most industrialized country in Asia, but its industrial base was small in comparison to America. And the Home Islands had almost no natural resources. Japan had acquired some in Korea and Manchuria. Like Germany, Japan had virtually no petroleum and imported most of its needs from the United States, making it even more vulnerable than Germany.

Agriculture

One of the reasons Germany was defeated in World War I is that support for the War and the imperial government collapsed on the home front. The Allies also cracked the Western Front, but the German Army could have continued the War for another year. The Rhine would have been a formidable natural barrier. It was the collapse of the home front tht ended the War in November. A major reason for the collapse of the home front was the substantial decline in agricultural production. It is interesting that Hitler after the War focused on the collapse of the home front and not the battlefield defeat of the German Army on the Western Front. (This was accomplished with an American Army of only about 1 million in France. (The United States was building an army of over 4 million at the time of the German requested Armistice.) As a result, the NAZIs in World War II gave considerable attention to supplying the home front with food. This was accomplished in a variety of ways. First, the Germans looted occupied countries of food. This was done rutlessy in the East and in a more civolized, but none the less efficent matter in the West. Little consideration was given to the civilians in the occupied countries. There was , for example, a dreadful famine in Greece. Second, the NAZIs used POWs as agricultural labor. Many Polish and Soviet POWs were essentiallu y killed by exposure and starvation. The French POWs were treated more correctly. Third, the HJ was used as a source of agricultural labor. This was done in a variety of ways. The children were set up in camps for this purpose. Some of the KLV camps were also used. Fourth, an effective rationing program was established. The efforts worked to supply both the military and civilians with food. Food began to become more scarce as German military defeats began to reduce the area in the East that could be pillaged. The system, however, began to collapse in late 1944 as the Allied air offensive began to destroy the German tranportation network.

Industry


Transport


Grossraum


Strategic Bombing Campaign


Sources

Speer, Albert. Inside the Third Reich (Avon, New York, 1970), 734p.






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Created: 7:07 AM 9/21/2009
Last updated: 12:15 PM 9/20/2017