** war and social upheaval: World War II -- nationl economies countries

World War II National Economies: Countries

Figure 1.-- World War I (1914-18) had been an industrial war. World War II (1939-45) would be the world's first motorized war. America not only had the world's largest industrial capability, but was the largest producer of mechanized vehicles. America was not just the largest producer of motorized vehicles, but made more than half of the world's vehicles. (The same was the case for aviation, radio (electronic componnts), and consumer durables like regigerators and washing machines--all potentially convertable for military production lines.) European auto companies were essentially craft shops producing expensive, high-quality vehicles for the well-to-do. American auto companies generated by capitalist forces were mass production operations producing low-cost functional vehicles for the average person. As a result, most Americans could afford a car which was not the situation in Europe. This basic difference would be the deciding factor in World War II. America's industrial power not only helped defeat the Axis, but prevented the Soviets from dominating Western Europe after the War. At the time of the War, there was only one power that had the industrialand and agriultural capbility to wage war on a world-wide level and that was the United States. The American people, however, were determined to stay out of any future war. Most Amercas believed that participation in World War I had been a great mistake and were adament that the mistake should never be repeated. Hitler and Stalin launchd the War (!939). The outcome of World War II to a major extent would be determined by President Roosevelt's ability to confront the Isolationists and change American public opinion in time to shift America's econmic capacity into a formidble war making force before the conquests of the totalitarian powers (either the Axis or Soviets) permanently changed the world balance of power. Prime-Minister Churchill warned President Roosevelt of just that. President Roosevelt had begun a defense effort, but it was nothing like what occurred after the Japnese carrier attack on Peal Harbor thrust America into the War (December 1941). The war was decided in 1942-43, if America had not entered the War at the time of Pearl Harbor, the outcome could have been very different. Even the delay of a few months would have had a critical impact on America's ability to project its power during that critical period.

We are developing information on each of the World War II belligrant nations. For the most part the major European belligerants (Britain, France, Germany, and the Soviers were rouhly evenly matched and had the economy and technology to build formidble militaries. German victoris erly inthe war was because of the mssive pending Hitler authorized when seizing power as well as a higly professionl military. Germany did not have a larger economy than Britain and France, but it began massive spending in 1933 which gve them a huge advantage byb1939. The Germans were aided by Italy, Hyngary, and Romania as well as exploiting the occupied countries after launching the war. Britain was aided by its Empire. The major outlayers were Japan and the United States. Japan was the only industrial power in Asia, but was not in the same league the Europeans let alone the United stes. The country only becme a formidable power becuse it poured huge amounts of money into arms (1920s-30s) which America and Britain were limiting defense spending. Once the NAZIs and Soviets became locked in a life and death struggle in the east nd the red army syrbived theunitial NAZI blow, the War would be settled by the United States nd it massive economy. The only question becme how rapidly the united states could convert its formidable industrial power to War abd beung theresult floot of weapons abd equipmnt to bear in the NAZI War Machine. Even while neutral American began aidinn Britain and the soviets, but it was only the Japanese attack onnPearl Hrbor tht gave President Roosevelt the ability to fully convert the the economy for war. And the first call he mase was to General Motors Pressident William Knudsen, one of the 'Economic Royalists' he had been criticising for 8 years as part of his New Deal effort to end the Depression.

Beligerant Powers

The World War II beligerant powers are generally seen as the Axis and Allies. In fact the situation was more complicated. The Allies ware primarily Britain and France. Czechoslovalia would have joined them, but was abadoned by Chamberlain. Poland was also an Allied power,but Britain and France did not come to its aid. THe British Dominions are sometimes forgotten, but played an imprtant role not only in fighting, but in Britan's economic power. America would become one of the Allied powers, but at the outbreak of the War the american people were determined to stay out of any war in Europe and had enacted neutrality laws to ensire that they could not be dragged into another European war. The Axis powers were Gemany. Italy, and Japan. Germany was by far the greatest danger and both VBritain and America would cmmit to a Germany First strategic effort. Italy was a junior partner with a substantial poplation, but small economy. Japan conducted essentialy a sparate war. There was little strategic planning and cooperation, in shrp contrast to the Allies. The Axis had junior partners which were more or less were forced into the War. The most important was Romnia as it provided the NAZI war machine vital oil resources. And an economic assessment has to include the captive nations. A major factor in the War was Germany's inability to fully utilize the economic capacity of the occupied nations and integrate them into the NAZI Großraum. The Soviet Union was a special case. It was the only country that was both an aggressor nation and a country targetted by the aggression. The Soviets spent nearly two years of the War as a NAZI ally. It never was a menber of the weater Allies, but as a co-beligerant. Chinas another special case which after World war I was hostile to the Wesern poers maintaining concessions in China and as aresult received both Soviet and German suport. In the end, the Japanese invasion worced it to throw its lot in with the Western Allies.


Production assessments vary as to the size of various national economies at the time of World War II. One ranks the British economy fourth in the world ($284 billion), behind Ameroiv, the Soviet Union and Germany. [Harrison] This combined with that of France ($186 billion) suggests a nationl output substabtially greater than Germany ($351 billion). We note other assessments suggesting that Germany had the second largest economy. We use data compiled by Mark Harrison at Cambridge University. A complication here is that Germanty annexted Austria, Czechoslobkia and much of Poland (1938-39), expanding its economy. These matters are discussed in detail. [Harrison] The data is only a rough estimate, bit it is fairly clear that wjile Germany had the largest economy, Britain and France combined had the edge. What ever the data set used, it is clear that the Allies (Britain and France) could have matched the Germans. The British in cooperation with France could have built a military more than capable of stopping the Germans. Prime-Minister Chamberlain was, however, primarily concerned with preventing a war through negotiation rather than preparing to fight a war or even pursue it aggresively once Hitler launched the War. As it turned out, it was German tactical doctrine (Blitzkrieg) that would prove desivive when war came. Britain not only had a substantial industrial base, but a very important research and technical establishment capable of developing modern weaponry. As a result, defeating Britian was essential in any German war plan. Hitler wanted to do so, but his focus from the ealiest days in Munich with the fledgling NAZI Party was on the East. And when the Luftwaffe failed to bend Britain to his will (July-September 1940), he could not resist delaying any further the titantic conflict in the East that he was determined to launch. The British war economy hinged on the ability of the Royal Navy to keep the sealanes open, especially the vital North Atlantic routes to America and Canada. Without imported raw material, oil, and food, British industry could not function. Britain's one major natural resource was coal. (The same was true for Germany, although in the German case the imports were delivered by rail.) Thus for Britain, after the Battle of Britain, the Battle of the Atlantic was the key campaign of the War on which all else depended. As the War played out, Britain did not have the industrial capability to manufacture many of the weaponry and equipments its scientists developed, part because so much of the British industrial effort was focused on the strategic bombing campaign. But America did have the industrial capacity to manufacture eapns devised by Brirish scientists and this began even before America entered the War. Many important American weapons came out of cooperation with the British. America at the time of world War I had very few advanced weapns programs. America provided the economic aid Britain needed to continue the War through Lend Lease. And Britain provided America with a wide range of research results on adanced weapons systems. This was especially important because American arms research and development programs were relatively limited before the War. British industry was similar to German industry in that it has two destinct sectors. There were highly modern corporations using advanced technology and production methods. There was also a less modern sector more like workshops. Unlike Germany, Britain had a fairly efficent agricultural sector. And another difference from Germany was that the Empire provided British industry access to raw materials--ashlong as the Royal Navy could keep the sea lanes open. As a result of the fall of Frnce (June 1940), the British adopted atoning and mobilization policies far more severe than the Germans. The Germans would eventually follow, but by the time they did it proved to late to make a difference.

British Empire

The British Empire had an economy exceeding that of Britain itself (nearly $400 billion), including the Dominions ($115 billion) and colonies ($285 billion). Only a small part of that economic actibity was industrial, but the agricultural and raw mzterial output was a significant support to the British war effoft. The French colonies were much less important (less than $50 billion). The British Dominions had relatively small populations, but fairly advanced but limited economies. We co not yet have precise data on the econmomies of the dominions and colonies. Together ere a very dunstsnisl economic bloc, substantially increasing the British economic potential. This was often not included in comparing the British economic potential compared to the Germans, at least before the Germans launched the War and occupied much of Europe. Canada played an especially important role in keeping Britain in the War, located as it was close to Bitain. It not only provided lage quantities of food from its Prarie Provinces, but had a sizeable industrial plant, tied into the American industrial Midwest. That capacity would be converted to a war footing and used to build arms. Especially important was the large numbers of ships, primarily small escorts which played a key role in the Battle of the Atlantic. The Canadian automobile industry also played an imprtant role motorizing the Britosh Army. In addition to the Dominions, the rest of the Empire, especially India, provided even greater economic power to the British war effort.


Canada was not a major economic power at the onset of World War II. Even so, Canadian food stuffs, direct cash contributions to Britain, and weaponry was a major assetts to the British war effort, especially before American Lend Lease kicked in. Canada also help supply countries fighting the NAZI war machine, most importantly the Soviet Union. Canada was a relatively small country in terms of population, about 11.5 million population. The Canandian economic contribution to the Allied war effort was out of all prooortion to kits small popualtion. And for a small country, Canada had a small industrial base. This was largely because the giant American automobile industry spilled over into Canada. As result, Canada became a major supplier of military vehicles to the British Army. It also like American conveted car manufacturing to aircraft production. And perhaps most importantly creating a whole new industry, creating shipyards to build escort vesseks for the North Atlantic convoys. Interestingly, the Germans occupied several small countries, which had industrial sectors of various sizes. Uniformily within the NAZI Grossraum, output declined and in most instances declined substantially. Canada in sharp contrast substantially increased its industrial output as well as that of other sectors. The Candadian ecinomy mnore than doubled during World War II. Canada's large agricultural sector played an important role from the beginning of the War. Canadian food played a major in keeping Brfitain fed and in the War. In addition, Canada was blessed with a host of vital natural resources neeed to wage war. These resources included lumber, minerals, and other resources including of all things rubber -- a resource previously more associated with tropical environs. These resources were fed into both American and Canadanian factories and fed through the North Atlantic convoys to Britain. It was an amazing feat of economic mobilization -- industrial production (ships plsnes, ans vehicles), agricultural products especilly wheat from the vast Prairie; lumber from the Pacific coast; and miberals from all over Cabada -- -all injected into the Allied war effort.


The Manchu (Qing) Dynasty finally fell (1912). China had been in turmoil for some time as a weakened imperial regime lost control of the country. The turmoil that followed the fall of the Imperial regime and the attempts of Republican forces to gain control further disrupted economic activity. The Republican era was a period of great turmoil and domestic disorder. Sun Yatsen and the new Chinese Republic were able to overthrow the Imperial regime, but not hold China together. Former imperial generals seized provincial areas. They fought with each other and the central Republican authority. In addition, the Japanese after Worlkd war I became increasingly aggressive, insisting on their 21 Points. Students organized boycotts of Japanese ptoducts, infuristing the Japanese. Chinese Republicans hoped that with the overthrow of the Manchu, that they could begin developing a modern economy. This did not prove posible of the warlords. Some areas descended into chaos and economic collapse. Eventually Chang Kai-shek and the Kuomingtang (KMT) finally seized control and both ended foreign control of treaty ports (except Hong Kong and Shanghai) and brought the war lords under control. They also defeated the Communists, almost destroying them. Mao's Communists would latter escape by the Long March into remote Yan'an, Shgaanxi. With the defeat of the War Lords, Chang began what is often described as the Nanjing decade (1927-37) for a united China. China made some economic progress during this time, including industrial expansion. Unlike Japan, China had made little progress in industrualization and was largely an agricultural society. Given the domestic threat from the Communists and the international threat from the Japanese wjo seized Manchuria (1931), the Government focused on industrial expansion on arms production, mostly small arms. Despite continuing civil war with the Communists and Japanese aggression (Manchuria), China experienced a decade of relative prosperity. The government began to stabilize tax collection, plan a national budget, and promote important construction and infrastructure projects, especially communications and railroads. The KMT conceived ambitious national plans. The Communists after their post-War victory, dismissed the KMT as corrupt and backward. Actually until the Japanese invasion, China was making economic progress. The country's market economy was operating and China was growing economically. [Chow] This ended with the Japanese invasion of China proper (1937). Chang had attempted to avoid war wih Jpan knowing that agricultural China was not strong enough to effectivly resist. The Japanese and Chinese publicopinion forced his hand. Japan pursued its invasion of China with increbible brutality. The Rape of Nanking was a attricity without parallel. Large areas of China were laid waist. Even so, the Japanese were unable to defeat the Nationalists (KMT) who withdrew into the interior. Gradually, however, the Japanese seized more and more important agricultural land. This had two devestating effects. The Natioinlists wre increasingly unable to feed the population in the areas it cintrolled, espcially as refugees poured in fleeing the Japanese. And the KMT behaved increasingly ruthlessly conscripting preasants for military service and seizing crops to feed its large, but poorly supplied army. This laid the conditions for a Communist victory after the defeat of Japan.


France ($186 billion) even after the Versailles settlement had an economy much smaller than that of Germany. Only with Britain as an ally could France hope to stand up to Germany. Even so, France had a substantial indusrtial sector (the third largest in Europe). The French economy was more diversified than the Brfitish and German economies. France had a larger agricultural sector and was not as dependent on food imports. With the rise of the NAZIs in Germany and German rearmament, France tried to prepare for the military challenge. Social divisions in the country impaired this process. And the labor unions while anti-NAZi were at first pacifist oriented, like British unions. Gradually the NAZI existential threat began to be appreciated, the unions were, however, generally unwilling to acceopt chnges in work rules to assist in the rearmament program. Workers in particulat defended the 40-hour week. The Communists, a important part of the labor movement, played a varied role. At first fierely anti-NAZI, after the NAZIs and Soviets signed an alliance to launch the War (August 1939). After that the Communists opposed defense preparations. France produced military equipment of high quality. French armor, artillery, and aircraft were competive with comparable German equipment. French military planning was, however, defensive. Huge resources were committed to building the Maginot Line rather than a large air force and armored divisions. It would be faulty tactical doctrine rather than wepons quality that led to the German victory (June 1940). The Germans essentially invented modern warfare--Blitzkrieg. These ideas were not adopted by the conservative French generals. The same was true with the Britih Army, but France did not have the Channel separating them from Germany. With the fall of France, France's substantial economic capacity was in German hands. France had a substantial agricultural sector. France would become the most important support for the German war economy of all the captive countries. And Pétain adopted a policy of collaboration, essentially buying NAZI goodwill by cooperating with the German exploitation of the French economy. While France was the most important support fir the Germn war ecinomy, Germn policies prevented full use of the French economic potential.


Hitler launched World War II with the world's third largest ecomomy. The German numbers are somewhat misleading. Germany ($351 billion) had some of the leading world corporations with cutting edge technology. The Germans also had a very substantial research and devlopment capability. This can be seen in the number of Germans winning Nobel prizes. Ironically, the German anti-Semetic campaign would drive many leding scientists (especially physicists) to Britain and America which would eventually aid the Allied war effort. The Germans despite their industrial and scientific prowess had not, however, developed American mass production techniques especially in the automotive industry, in part because of the relatively small size of the domestic market. German war production would be affected by this. (The one NAZI success with mass profuction would be railroad locomotives.) The Germans produced some of the fimest wepons of the War. They were often beautifully engineered, but complicated to produce and maintain in the field. American and Soviet weapons and vehicles were often less technically refiened, but easier to mass produce and maintain in the field. The most productive German automobile manufacturer was Opel, a subsiduary of General Motors. And while the Germans had many advanced corporations, a sizeable part of the manufactured output was produced by small or medium-sized companies operating what might be called workshops. Armaments Minister Speer immeduately upon his appointment (1942), launched an effort to rationalize this compicated system of small companies to increase production. Germany also had a relatively inefficent agricultural sector. Despite its vaunted reputation, the average American had an income and life-style beyond the imagination of the average German. And that economic difference affected the military power that the two economies were capable of generating.


Italy ($141 billion) had an especially weak economy for a country preparing for war with major world powers. [Clark and Maddison] The GDP was the smallest of all the major beligerant powers. And like Grmany nd Japan, was lacking in most natural resources. There was industry in the north, but much of the south was largely agricultural and in some areas virtually medieval. Not only was Italy primarily agricultural, but the country's agriculture was inefficent with low percapita output. Italy had a sunstantial population, but percapita income was far below the other major European countries. And 15 years of Fascist rule did very little to improve the Italian economy and pre pare it for war. It was not for lsck of effort. Mussolini understood very well that he would have to grow the economy if Italy was to become a major world power. Mussolini and the Fascists advocated the corporate state. He saw the Fascist state as acting as a mediator between the workers, capitalists and other interest groups. He attempted to institutionally incorporate them into the ruling mechanism, limiting their freedom of action--especially that of the workers. With the onset of the Depression in America, some New Dealers were impressed with Mussolini's idea of a corporate state. This was because they shared his rejection of free market mechanisms. Mussolini believed that the state could manage a complex modern economy better than market forces. Mussolini attacking the power of the trade unions so he could control them. And then he launchd a series of 'battles'. The first was the Battle for Births. They were followed by three economic battles: the Battle for Land, the Battle of the Lira, and he Battle for Grain.


Japan in the early-20th century was the only industrial power in Asia. The economy was about th samne size as Italy ($194 billion). The Mejii Restoration had begun with agicultural reforms in a country with no modern industry (1868). Japan's new leaders were, however, acutely aware that to ward off the well-armed Europeans and the Western colonization underway in China, the country would have to industrialize. Japan needed industry so it could supply its military with the implements of modern warfare. The Japanese made impressive progress in building an industrial base. Japan's economy was not, however, fully industrialized and had many potential weaknesses for a country planning war with the great powers. Japan was still largely agricultural and even so, the domestic harvests did not fully supply the country's food needs. Rice and other food stuffs had to be imported to supply the domestic population which had significantly increased in the late-19th and early-20th century. The Japanese while the only industrial power in Asia, had an industrial and related scientific establishment a fraction of the size of the European powers, let alone the United States. It had a higher percapita income than the rest of Asia, but only a fraction of Europe and America. This mean that Japanese industrialists had to look overseas for markets. Perhaps the weakest leg of Japan's econonomy was the virtual absence of the natural resources need to supply and sustain an industrial economy. The Japanese even before the military seized power with the Mejii Restoration, decided to use its new industril power to build an overseas empite. This began with the First Sino-Japanese War (1894-95) and the seizur of Korea (1909). World War I (1914-18) btought more overseas territories. The invasion of Manchuria/Manchuko was the further enlarged the growing Japanese Empire, but was first step toward World war II, but brought needed new resources. Japan's Empire (Formosa/Taiwan, Korea, Pacific islands, Manchuria, and parts of northern China) did enlrge its captive market nd provided important resources. Japan was able to obtain large quantities of coal and food from Korea, Manchukuo, and regions of occupied China. The need to enlrge and maintain the Empire convinced Japanese leaders that a large military force was needed. Japanese civilians leaders were unaware until iy was too late of the monster thry were creating. Japan's aggresive expanionism brought it into conlict with the great powers, first Russia (1904-05), but after World War I, the Soviet Union, America and Britain. The Japanese, both civilians and military, widely believed that establishing and enlarging a substantial empire was a matter of political and economic necessity. A large empire would prevent histile states from strangling Japan by blocking its access to food and vital naturalresources by cutting its sea-lanes. The Depression and foreign restrictions on imports further strengthened Japanese economic nationalism. Japan with an economy only slightly larger than Italy decided on war with America, calculating that the United because of the NAZI victories would focus on Euripe. It proved to be a disastrous decesion. And waging a naval warwith a n industrial giant inevitably would leave the country unable toobtain raw materials and staeving after only 3 years of war, it cities turned into mounds of smoldering cinders.

Soviet Union

The Soviet Union because it was such a closed society is difficult to compare with other countries, but assessments suggest that it had a total national output roughly comparble to Germany (about $359 billion). The Soviet Union was, however, much less economically developed than Western Europe. And Soviet enterprises were extremely inefficent as we saw after the disolutiin of the Soviet Union decades later. Because of the larger population, percapita income was only a fraction of European levels and living standards even lower because of the inefficencies in the economy. Soviet statistics show continued economic expansion during the Depression years of the 1930s. We are unsure just how to interpret these ststistics. As a result of Stalin's policies, beginning with the First Five Year Plan (1928), the Soviet Union had significntly expanded heavy industry, but seriously weakened its agricultural base. American companies had helped expand Soviet production of cars and trucks, importabt in preparing for a mechnized war. And the Soviet Union even before the NAZIs seized power in Germany had concentrated on military production. An extremely large share of national income was being directed to the military, meaning that the country had the largest army in the world and heavily armed with modern weapons. Unlike the Germans, the Soviets had vast deposits of natural resources, especially oil. Obtaining raw materials, unlike the situation in Germany, was not a major factor in Stalin's decesion to ally himself and his country with Hitler and the NAZIs to launch World War II (1939). Stalin's calculation was based on power politics and ideology. The Soviet Union on paper was better prepared for war than most countries. But Stalin's purge of the Red Army has seriously weaked the country's military. And various strategic and domestic policies made the country dangerously vulnerable. In addition, while heavily armed, many Soviet weapons, especially tanks and aircraft, were obsolete, but kept in service. The Soviet Union after the German invasion (June 1941) suffered enormous losses in men and material. Some 4.5 million men were killed or captured. The Soviets managed to move important war industries east of the Urals beyond the range of Luftwaffe bombers. It took time, however, to being the industries back on line. They began forming large numbers of new divisions. There were enormous shortages, especially in 1942 as the war plants moved east were not yet back on line. While poorly trained at first, they managed to stop the vaunted Whermacht in its tracks--albeit deep in the country. Food proved a critical matter as the Germans occupied much of the riches farm land and major grain producing regions of the country. As the Soviets began to resume production, the United States began to deliver important Lend Lease shipments. The Soviet Union after Britain were the largest recipients of Lend Lease aid. As with Britain, Lend Lease was just a fraction of overall Soviet output, but it nit only plugged in major defincies in the the Soviet war economy, but assisted the Soviets in increasing their production.

United States

At the time of World War II, there was only one power capable of wageing war on a world-wide level and that was the United States. The American economy was more twice the size of the German economy and much more efficient. The American people were. however, determined to stay out of any future war. Most Amercas saw participation in World War I had been a great mistake and were adament that the mistake should never again be repeated. The outcome of the War to a major extent would be determined by President Roosevelt's bility to confront the Isolationists and change American public opinion. The United States by an enormous margin had the world's largest and most efficient economy. The United States ($66 billion annual output) included a massive industrial output as well as agriculture and raw materials. Especially important was America's oil production. The United States thus at the time of World War II was the only country with the economic capacity to wage war on a global scale. It was also the country least willing to wage war. Large numbers of American had pacifist geelings, especially the large German population in the Midwest, or opposed to getting involved in another European war fo a range of reasons. As a result, when war broke out in Europe the United States did not have a substantial army, let alone producing weapons in large quantities. The United States had engaged in limited naval construction and some development of planes. Even in 1941, however, American factories were turning out mostly car using large quantiires of steel, copper, and cromium rather than tanks and other military vehicles. The United States did not bgin to significantly increase military spending until the fall of France (June 1940), and even then the increases were still relatively modest. Hitler reached the same conclusion as the German High Command in World War I, he could complete his conquest of Europe before the United States could mobilize its substantial industial potential for war. After Pearl Harbor, the samne indutrialists that had been accused of war profiteering during World War II stepped forward to turn the Arsenal of Democracy into the most formibable war engune in human history. Within a very short period of time, America emerged from ddepression and unemployment to booming factories and alabor shortage. Presidebnt Roosevelt who had been accusing these men of being 'econimic royalists' personally recruited them tio transform the American economy. The United States not only had a vast industrial establishment, but copious natural resources, including oil, and ahuge agricultural potential. The United States financed the war effort by borrowing. There were a series of well-publicized bond drives. This not only generated money for the war effort, but helped to tampen down inflation.

Occupied Europe

The German military successes before (especially the occupation of Czechoslovakia $3 billion) and in the early phase of the War (especially the Low Countries and France) significantly expanded Germany's economic power base. The economic capacities of the occupied countries were substantial: Austria ($2 billion), Belgium ($2 billion), Denmark ($1 billion), France ($12 billion), Greece ($1 billion), the Netherlands ($3 billion), Norway (probably about $0.5 billion), Poland ($3 billion), and Yugoslavia (probably $1-2 billion). The success of the German war effort in large maure would hinge on effectively utilizing the economic capacity of the captive nations. France played an especially important role in the German war economy. The Germans occupied the western Sovioet Union including the Ukraine (1941-43). Contrary to Hitler's expectations, this contributed very little to the German war economy. The German were not interested in restarting indisyrial production to any extent and the Soviets had ecacuated many industries east. The Germans were inyerested in raw materials, but Soviet demolituon work made getting mines and oil fields up and running difficult. The Soviet scorched earth policy also reduced agricultural production. The harvests in the Eat, however, barely covered the needs of the Wehrmact deployed there and relative small quantities of food were as a result shipped back to the Reich.

Axis Allies

Axis allies added to the German war effort. All but the Soviet Union, however, had relatively small economies. The single most important ironically was the Soviet Union which shipped massive quantities of raw materials to the Reich under the terms of the NAZI-Soviet Non-Aggression Pact until the the Germans invaded (June 1941). The NAZI Axis allies included Hungary ($1 billion), Bulgaria $0.5 billion), and Romania ($1 billion). Romania was especially importyant because of the Plesti oil fields. It is probably mote accurate to classify Austria as a NAZI ally rather than an occupied country, but either way it had a relativeky small economy. Finland (about 1 billion) was a co-beligerant against the Soviet Union. The small economies of the Axis allies and their limited industrial sectors meant that their armies were not well arned, especially with artillery and armor as well as aircraft. They fielded substantial fiorces, but were poorly armed. The Germans had trouble properly equipping their own forces and thus could not adequately equip their allies. There was another factor involved. Hitler did not his allies to well equipped. Well equipped allies were independent and more difficult to control.

Neutral European Countries

Several neutral countries contributed to the German war effort in various ways. Some like Spain supported the Germans, but others like Sweden and Switzerland faced invasion if they did not cooperate with the Germans. Their economies were not fully at German's disposal, but did support the German war effort. Of course here we are talking about countries that were able to maintain their neutrality. Mot contries in Europe wanted to remain neutral, but were invaded by the Germans, Italians, or Soviets. The countries wich suceeded in maintaiing their neutral status inclued: Portugal, Sweden, Switzerland ($2 billion), and Turkey. Sweden was important as a supplier of iron ore. Switzerland was the neutral economy which was most fully integrated into the German war economy.

Latin America

Latin America unlike much of Africa, Asia, and the Middle East was largely independent when the War broke out in Europe. The Latin American countries had economies based largely on exporting raw materials. Their economies were adversely affected by the Great Depression as demand for raw materials dried up. Another development was German economic policies. The massive rearmament program initiated by the NAZIs not only reduced what Germany had to export, but also reduced the funds available for importing raw material. Thus while therevwere ties in some areas, especially aeronautics, the economic ties had begun to decline. After Htler and Stalin launchedf the War in Europe, all of the Latin American countries declared their nutrality. And unlike Europe, the NAZIs had no way of invading them. Latin American leaders were impressed with the German victories, especially Col. Peron in Argentina who was a great admirer of Mussolini. Largely unaware of NAZI racial policy (besides supression of the Jews) the Latin Americans were reasessing their foreign policies. Under Secretary of State Sumner Welles (a Roosevelt intimate), informed the Prresident at the time, "the majority of the American Republics would run helterskelter to Hitler just as so many of the remaining small neutral vountries of Europe are doing today." [Welles] After Britain held, however. economic realties determined the course of the Latin policies. The British embargo meant that trade with Germany and Italy was impossible. And at the same time America and Britain offered lucrative markets for their commodity exports. The American Good Neighbor Policy before the War (1930s) helped pave the way for this Hemspheric cooperative relationship. As a result, the countries of the region eventually first broke realtions with Germany and then after Pearl Harbor declared war. Argentina was a rare hold out until the final months of the War. As a result Latin America became a major support for the Allied war effort. As best we can tell, Latin officials were geerally unaware of the fact that the NAIZs rarely paid its Axis partners or occupied countries for the material acquired during the War. America officials worked with the important exporters in the region to work out reasonable commodity prices. One historian suggests that American experts tasked with helping to increase Latin American profuction were largely ineffective. [Cann] A major change in several countries was the reduction of European influemce in the local economies. Strong export earnings, seizur of Italian and German property, and the decline in imported manufactured goods from Euope all increased local control of the economy. [Weinberg, p. 505.]


Cann, Frank D. Jr. The Brazilian-American Alliance 1937-1945 Princeton, N.J.: Princeton Univerity Press, 1937). This comment was primarily directed at Brazi See chapter 13. We are less sure about other countries.

Harrison, Mark. "The economics of World War II: An overview," in "The Economics of World War II: Six Great Powers" in Mark Harrison, ed. International Comparison (Cambridge: Cambridge University Press, 1998), p. 1. (University of Warwick). See World Ecomonies chart.

Weinberg, Gerhard l. A World at Arms: A Global History of Wlorld War II (Cambrige Universit Press: New York, 2005), 1178p.

Welles, Sumner. Leter to Presudent Rooevelt (June 3, 1940). This sentence was ommitted from the official transcript.


Navigate the CIH World War II Section:
[Return to Main World War II national economies page]
[Return to Main World War II economics page]
[Biographies] [Campaigns] [Children] [Countries] [Deciding factors] [Diplomacy] [Geo-political crisis] [Economics] [Home front] [Intelligence]
[POWs] [Resistance] [Race] [Refugees] [Technology]
[Bibliographies] [Contributions] [FAQs] [Images] [Links] [Registration] [Tools]
[Return to Main World War II page]
[Return to Main war essay page]

Created: 10:06 PM 1/9/2018
Last updated: 11:50 AM 10/27/2020