This is Part 2 of the true historical record of National Socialist economy as presented by Der-Himmelstern at DeviantArt. For those who haven’t read the prelude, Part 1 can be accessed by clicking here.


Main secondary sources used for this video (click images for links to these two excellent archived books):

Hitler's Revolution - Cover ImageWages Of Destruction - Cover Image

 

 

 

 

 

 


Wages Of Destruction - Cover Image On housing
“The largest single allocation to housing in Hitler’s Germany came from the work creation programmes of 1932 and 1933 that provided a total of 667 million RMs to subsidize the repair and conversion of existing apartments. In addition, 45 million RMs were provided as a subsidy towards the construction of private homes. In general, the housing policy of the Third Reich in its early years consisted of shifting responsibility back towards private sources of funding. Whereas under the Weimar Republic 42,4 % of all housing finance had been provided by the public authorities, by 1936 this had fallen to 8 %. Facing a continuing problem of overcrowding in the cities, in 1935 the Reich Labour Ministry launched an alternative vision of National Socialist housing in the form of so-called Volkswohnungen. Stripped of any conception of settlement or any wider ambition of connecting the German population to the soil, the Volkswohnungen were to provide no-frills urban housing for the working class, built according to the first projections for as little as 3.000-3.500 Reichsmarks. Hot running water, central heating, were all ruled out as excessively expensive. Electricity was to be provided for lighting. Each housing unit was to be subsidized by Reich loans of a maximum of 1.300 RMs. Rent was to be set at a level which did not exceed 20 % of the incomes of those at the bottom of the blue-collar hierarchy, or between 25 and 28 RMs per month.

On big business and banking
“On Monday, 20 February 1933, at 6.00 p.m., a group of about twenty-five businessmen were summoned to attend a private meeting in the villa of Hermann Goering, new acting as president of the Reichstag, at which Hitler, the Reich Chancellor, was to ‘explain his policies’. […] Hitler did not take questions from his audience, nor did he spell out exactly what was expected of the business leaders. Hitler had not come to negotiate. He had come to inform them of his intentions. And his audience can have been left in no doubt. Germany’s new Chancellor planned to put an end to parliamentary Democracy. […] What was clear was that legitimate authority in the 3rd Reich proceeded from the top down. […] It was also clear that many leaders of German business thrived in this authoritarian atmosphere. Hitler’s regime promised to free German firms to manage their own internal affairs, releasing them from the oversight of independent trade unions. In future, it seemed, wages would be determined by the productivity objectives of employers, not the dictates collective bargaining. In this narrow sense, therefore, the establishment of Hitler’s regime clearly accomplished what was promised on 20 February. And for those businessmen who operated in a small, National of local compass, the years after 1933 were clearly a golden age of authoritarian ‘normality’. To simplify for the sake of clarity, the peacetime agenda of the more politically minded elements in German business consisted of at least two distinct elements, the one domestic, the other international. The domestic agenda was one of authoritarian conservatism, with a pronounced distaste for parliamentary politics, high taxes, welfare spending and trade unions. The international outlook of German business, on the other hand, was far more ‘Liberal’ in flavour. Though German industry was by no means averse to tariffs, the Reich industrial association strongly favoured a system of uninhibited capital movement and multilateralism underpinned by Most Favoured Nation principles. Having regulated imports, exports and domestic price-setting, the RWM therefore moved in the spring of 1934 to control the use of business profits. The distribution of profits to shareholders was not to exceed a rate of 6 % of capital. Industrial investment would be funded out of the profits not distributed to shareholders. Access by corporate borrowers to the long-term capital market-replenished out of household savings flowing through the banks, savings banks and insurance funds – would be restricted, reserving these funds for use by the state. For the first time, the Reichsbank was given the power to define basic reserve requirements and to fully regulate the deployment of private banking assets. The Great Banks of Berlin were thus saved from Nationalization. The evidence suggests, however, that they never really recovered from the damage done to them by the financial crisis of 1931. In purely commercial terms the Berlin Great Banks were amongst the chief ‘losers’ of the Nazi economic recovery. Between 1932 and 1939, in which period German output more than doubled, the total assets of the Berlin Great Banks rose by only 15 %. By contrast, the assets of the savings banks, the main vehicle for what one might call ‘popular liquidity’, rose by 102 % over the same period. At the same time, the international business of the Great Banks was sharply curtailed by the collapse in Germany’s foreign trade. But, contrary to the view that the Great Banks were the ultimate string-pullers of National Socialism, it is in fact hard to think of any other period in modern German history in which these institutions had less influence than the period between 1933 and 1945. We must be careful to avoid falling into the trap of viewing German business merely as the passive object of the regime’s draconian new system of regulation. As we have seen, profits were rising rapidly after 1933 and this opened attractive future prospects for German corporate management. At first the profits were used to undo the damage done by the Depression. Then from the late 1930s onwards, they financed an extraordinary investment boom such as had never before been seen in German industrial history. What Hitler’s regime positively enabled German business to do was to recover from the disastrous recession, to accumulate capital and to engage in high-pressure development of certain key technologies: the technologies necessary to achieve the regime’s twin objectives of increased self-sufficiency (autarchy) and rearmament.

On domestic natural resource and businesses
On 21 September Schacht convened a conference of the leading industrialists in the coal and mineral oil businesses in Berlin and informed them that Germany’s foreign exchange situation required a very large expansion in domestic fuel production. At the time, even with low world prices, imports of petrol and oil-related products were costing Germany 200 million RM per annum. Schacht estimated that between 250 and 300 million RM would be needed for the first stage of the expansion. The state could, of course, have provided the funds. But the Reich had other pressing commitments. So Schacht made a direct appeal to the mining interests. They had earned good profits and gained great advantages from natural resources that actually belonged to the general public. Now they would be expected to make a contribution. […] Having failed to obtain voluntary agreement, he had the Ministry draft a Decree for the Creation of Compulsory Economic Associations in the Brown Coal Industry. Each was instructed to make out a cheque for at least 1 million RMs for immediate use. When more coal companies were added in November, Schacht threatened both unlimited fines and imprisonment of anyone refusing to cooperate. To satisfy the demands of the military, three new synthetic fuel plants built under license from IG Farben were to be brought into operation by 1936. To ensure that this schedule was met, Brabag was to be run not by its reluctant owners, but by a hand-picked team of managers who could be counted on to bring the project in on time.”

On trade
It is commonplace to describe Germany’s trade policy from the summer of 1934 onwards as autarchic – a generalized effort to restrict imports and achieve self-sufficiency. A close look at the trade statistics reveal that “autarchy” in fact amounted to a selective policy of disengagement directed above all against the United States, the British Empire and, to a lesser degree, France. In 1928, American exports to Germany had been worth 2 billion RM and exports from Germany to the United States were valued at 796 million RM. By 1936, this trade had shrunk to derisory levels. American exports to Germany were worth no more than 232 million RM and German exports amounted to less than 150 million RM. So being that the import-export business with America took a major hit, Germany looked in other places to find the natural resources. Namely, South America and Southern Europe. […] But America intervened where it could: Such was American concern about the growing German influence in Brazil that Rio was able to default on its large debts to the US without having to fear aggressive retaliation from Washington.”
(The United States was basically trying to economically cripple Germany in its international trade.)

“With its tight regulation of imports and the proliferation of bilateral clearing agreements the New Plan could easily have become a corset restricting any further progress of Germany’s economic recovery. What saved Schacht were three things: the continuing recovery of the global economy, which produced a resurgence in demand for German export, the willingness of countries other than the United States, most notably Britain, to comply with Germany’s new trading system; and the sheer determination and effectiveness with which the New Plan was imposed. As-of May 1935 a progressive tax was levied on the turnover of German industry to raise the tens of millions of RMs needed every month to maintain the competitiveness of German exports. In effect, the profits of the domestic armaments boom were being recycled to assist the ailing export sector. For most industries the levy was assessed at rates between 2 and 4 % of turnover. The surveillance agencies and the export subsidy scheme, together with the elaborate system of business organizations, cartels, and price controls that underpinned them, were all still in operation ten years later at the heart of the war economy. The system survived because it worked. From 1935 onwards, as a result both of the recovery of the world economy; and the effective new subsidy scheme, the disastrous decline of German exports was halted. From June 1935 until the spring of 1938, steady growth in exports was vital to sustaining the momentum of Hitler’s economic recovery. […] If we consider the extraordinarily small quantity of foreign exchange and gold at the Reichsbank’s disposal and the difficulty of obtaining credit, the volume of import and export business that Nazi Germany was able to conduct under the New Plan was truly remarkable. The elaborate apparatus of Schacht’s New Plan allowed the Reichsbank to sustain the international trade of one of the world’s largest and most sophisticated economies with foreign currency reserves amounting in the mid-1930’s to little more than one week’s cover. To say the least this was a remarkable organizational achievement. From the spring of 1934 onwards, the RB and the RWM squeezed down hard on all aspects of household consumption that were dependent on imported raw materials. The result was to split the German economy in two. Whilst the investment goods industries and all sectors associated with the drive towards self-sufficiency continued their surging recovery, the upswing in the consumer sectors, above all textiles, was suddenly stopped in its tracks. For more than two years, starting in the spring of 1934, Hitler’s Germany saw virtually no growth in the output of consumer goods. In order to (since they did not have abundant of the imported materials needed) they pretty much let textiles, surely with engorgement, be one of the items that were to avoid lower price setting and instead raise a bit more, making the products a bit more expensive to buy, thus, ideally being bought less by the public. Though exports were of course to be encouraged, the government’s refusal to devalue meant that most German exporters were only competitive if they first applied for a subsidy. This too required considerable paperwork and more bureaucracy. And the export subsidy in turn was financed by a severe redistribution tax levied on all of German industry. Managing this burdensome system of controls was the primary function of a new framework of compulsory business organizations imposed by Schacht between the autumn of 1934 and the spring of 1935. In each sector, the existing multiplicity of voluntary associations was fused together into a hierarchy or Reich Groups (for industry, banking, insurance, and so on), Business Groups (for mining, steel, engineering and so on) and Branch Groups. Every German firm was required to enroll. Each subdivision in each Business Group was headed by its own Führer. These men were nominated by the existing associations, vetted by the Reich Group and appointed by Schacht. The primary role of the Business Groups was to act as a channel between individual firms and the Reich Ministry of Economic Affairs. Decrees came down from the Ministry via the Business Group. Complaints, suggestions and information traveled upwards from the firms, via the Business Groups to Berlin. Since this entire apparatus of control was designed to limit German imports, it had the effect of virtually eliminating foreign competition from German markets. Nothing was imported that could be produced domestically and that meant virtually all manufactured goods. Combined with rising levels of domestic demand this enabled German producers to put an end to deflation and to push through a marked increase in prices. After years of deflation, the consumer price index rose by almost 6 % between the spring of 1933 and August 1934, enough to spark fears of inflation. To prevent this getting out of hand, the RWM enacted a series of decrees on prices, culminating in November 1934 with the reappointment of Carl Goerdeler as Reich commissioner for price control. […] the result by the end of 1935 was the creation of a comprehensive system of state supervised price setting. The compulsory cartels had the power to control investment in their sector and to rationalize the existing structure of the industry through systematic ‘buyouts’. The second cartel law of the summer of 1933 removed the legal protection provided by the Weimar Republic for firms that were not members of cartels to carry on their business as they chose. Cartels could now use the courts to pursue outsiders who were charging ‘unfair’ prices, or prices that were ‘detrimental to the welfare of the nation’. Voluntary cartels were thus transformed into compulsory organizations under state oversight.”

Wages Of Destruction - Cover ImageOn devaluation
“By 1933 only 20% of world trade was still conducted between countries with currencies fixed, in terms of gold. Germany’s failure to follow this trend meant that the prices of its exports, translated at the official exchange rate of the RM, were grossly uncompetitive. In 1933 Hitler and schacht had ruled out the most obvious solution to this problem, a devaluation. […] In Hitler’s terms, devaluation was tantamount to inflation and it was certainly true that by raising the cost of imported commodities any significant devaluation would have raised the German price level. The Reichsbank in the summer of 1934 estimated that a 40% devaluation, sufficient to offset the British and American competitive lead, would have raised the working-class cost of living by 5,4-7,4 %, with the price of food going up by at least 10%. The problem that now posed itself with ever greater urgency, however, was how to sustain German exports without a devaluation. A solution was found in the autumn of 1933 through a variety of schemes, all of which made use of the advantage that Germany had gained through the moratorium on its foreign debts. Either through a complicated system of buy-backs, or through manipulating the blocked accounts of the foreign creditors in Germany, the Reichsbank found ways of subsidizing Germany’s exporters at the expense of its creditors, earning Hjalmar Schacht his dubious reputation in the 1930’s as the dark wizard of international finance. The tension reached its climax in the 2nd half of June, with Schacht’s announcement on 14 June of a complete moratorium on foreign debt repayment and the imposition of a new regime of daily foreign exchange allocation.
(Germany pushed the debt payments back and imposed smaller repayment fees.)

Wages Of Destruction - Cover ImageOn debt
“In January 1933 the National foreign exchange reserve had stood at over 800 million RM. By the summer the Reichsbank’s holdings had been reduced by debt repayments to only 400 million, enough to cover no more than one month of minimal imports. Quite apart from the political significance of the foreign debts, the moment was fast approaching at which Hitler’s regime would have to face a difficult choice. On the one hand it could take desperate measures to increase exports, including a devaluation of the RM to make it more competitive with the pound and the dollar. If exports did not increase, they would face a stark choice between sustaining the bare minimum of imports necessary to the German recovery, or aborting the recovery to satisfy the demands of Germany’s foreign creditors. […] In April 1933 the cabinet gave Schacht carte blanche to instigate a moratorium on Germany’s international debts, at a moment of his choosing. At first, Schacht hoped to exploit the confused situation in the United States by announcing an immediate default. He gambled that Roosevelt’s administration, preoccupied with the agricultural depression at home, might be willing to sacrifice the interests of Wall Street in exchange for a German agreement to increase raw material imports. Schacht’s first interview with the President seemed to confirm this hunch. But, before Schacht could take irrevocable action, the US State department intervened, issuing a brusque communique stressing that the new administration expected Germany to honour its debts. […] Unlike in the 1920’s however, pressure from the United States was no longer enough to force Germany into line. On June 8th the cabinet gave its approval for a unilateral moratorium on Germany’s long-term foreign debts, to begin as of 30 June. As a sign of ‘good faith’, German debtors would go on making payments in RM into accounts administered by the Reichsbank. However, the RM accumulated in the creditors’ accounts would no longer be transferred into foreign currency. Payment in foreign currency would only resume once Germany’s foreign trade position was resorted to a healthy surplus. This ultimately depended on the creditor countries. If they wanted repayment of their debts, they would have to purchase German goods. If Germany could not achieve the required trade surplus, it could not be expected to engage in large-scale foreign debt service. […] The suspension of debt repayments was the first overtly aggressive foreign policy move by Hitler’s government. Though it had been widely anticipated, it nevertheless produced shock and outrage in the commercial capitals of the world. After his first experience with Schacht, Roosevelt described him simply as a “bastard”. At precisely the same moment as Germany announced the moratorium on its long term debts, Hitler’s government also took the decisive steps towards rearmament. […] The figure approved by Schacht was 35 billion RM, to be spent over eight years, at a rate of almost 4,4 billion RM per annum. To put this in perspective, annual military spending by the Weimar Republic was counted not in billions but in hundreds of millions of RM. […] Schacht’s programme called for between 5 and 10 % of Germany’s GDP to be devoted to defense for the next 8 years. Given the parlous state of the German economy in 1933 and the shell shock in the financial markets, raising even the first installment of the 35 billion RM through taxation or conventional borrowing was out of the question. So over the summer of 1933 Schacht initiated a military version of the off-budget financing system first used for civilian work creation. […] A few weeks after the meetings of early June, special account offices were set up to channel the off-budget funds that were now to flow to the military. As of April 1934, armaments contractors were paid in IOUs issued in the name of the Mefo GmbH (Metallurgical Research Corporation). This company was formed with a capital of 1 million RM, provided by major armaments producers. […] Secured by these big names, the rearmament bills became acceptable collateral for the Reichsbank. For a small discount, contractors to the rearmament drive could cash in their Mefo bills at the central bank. Since they paid good interest and were effectively guaranteed by the Reich, the majority of the Mefo bills in fact stayed in circulation. Small numbers of Mefo bills were issued in the autumn of 1933 to tide early Luftwaffe contractors over a cash crisis. Large-scale disbursement began in April 1934.”

Hitler's Revolution - Cover ImageOn agriculture
“The Reich also focused on relieving the distressed circumstances facing the German farmer. The depression had left many farms in debt. Younger family members often left their homes to seek opportunities in the cities. A September 1933 law established the Reichsnährstand (Reich’s food Producers), an organization to promote the interests of people in the agrarian economy, fishermen and gardeners. With 17 million members, the Reichsnährstand’s principle objective were to curtail the gradual dying-out of farms in Germany, and prevent migration of rural folk to concentrated population centers of industry. Controlling the market value of foodstuffs, the organization gradually raised the purchase price of groceries by over ten percent by 1938. This measure was not popular among the public, but greatly assisted planters. The Reichsnährstand not only arranged for a substantial reduction in property taxes for farms, but wiped the slate clean on indebtedness. This gave heavily mortgaged farm owners a fresh start. Another organization, the Landhilfe (Rural Assistance) recruited approximately 120.000 unemployed young people to help work farms. The government financed their salaries, training and housing. It also arranged for temporary employment on farms for school graduates and students on summer break. The Landhilfe permitted foreigners living in Germany, primarily Poles, to enter the program. Hitler had a particular interest in preserving Germany’s farming stratum. During World War I, his country had suffered acutely from Britain’s naval blockade of food imports. He considered a thriving agrarian economy vital to making Germany self-sufficient in this realm.

Wages Of Destruction - Cover Image“The census of 1933 counted no less than 9,342 million people as working in agriculture, almost 29 % of the total workforce. And apart from full-time farmers, many millions of other Germans produced at least some of their own food from small allotments or from home-reared pigs and chickens. It was refusing to accept that Germany’s place in the world was that of a medium-sized workshop economy, entirely dependent on imported food. This, as Hitler saw it, was a recipe for ‘race death’. Faced with overcrowding and low wages in the cities, urban families would do their best to reduce the birth rate. The best and the brightest would emigrate to new territories that offered more scope for advancement. For lack of natural resources, the German economy would never be able to match the affluence on show in the United States. And if Germany were ever to emerge as a serious trade competitor, it would be at mercy of the British and the Jewish propagandists of global Liberalism, who would not hesitate to unleash a second, ruinous world war, whilst crippling the German home front by means of blockade. Whilst Hugenberg dragged his feet over work creation, he set to work diligently, reinforcing the protectionist walls that insulated German agriculture from the world market. To consolidate the protection of the grain-growing interest he established a central purchasing agency that would guarantee minimum prices to all producers. In June 1933 German farm debtors were effectively removed from the ordinary credit system, being provided with complete protection against their creditors. Imports were subjected to quotas, as the agricultural lobby had long demanded. It was Hugenberg’s no-holds-barred approach to agricultural protection that gave the international community its first taste of the open aggression that was to be expected from Hitler’s government.”

On Lebensraum
It is hard to believe that by Lebensraum Hitler really meant mere land, rather than something more valuable such as industrial raw materials. But in making such assumptions we are in danger of ignoring the fact that ‘land shortage’ was in the 1930s still one of the chief afflictions of German society. When compared to the richer Western European countries, let alone the fabulously well-endowed North American settlements, Germany was indeed land-poor. Compared to Britain, Germany had more land to devote to agriculture, but its rural population was disproportionately larger. Compared to France, the German agricultural population was smaller in relative terms, but France was far more favourably endowed with land. Though comparing itself in terms of per capita GDP to countries like Britain and the United States, in terms of land per farmer Germany had far more in common with backward ‘peasant nations’ such as Ireland, Bulgaria or Romania. The conclusion was inescapable. Even under the most favourable assumptions, the territory of Germany was not sufficient to support an agricultural population substantially larger than that to which Germany had been reduced by 1933, at standards of living that were acceptable in relation to those prevailing in the cities.

On agriculture 2
For the purpose of protecting the peasantry as the ‘Blood Source of the German People’, the law proposed to create a new category of farm, the Erbhof (hereditary farm), protected against debt, insulated from market forces and passed down from generation to generation within racially pure peasant families. The law applied to all farms that were sufficient in size to provide a German family with an adequate standard of living, but did not exceed 125 hectares in extent. All owners of such farms were required to apply for entry in an Erbhofrolle. The term ‘peasant’ (Bauer) was henceforth defined as an honorary title, reserved for those registered on the Rolle. Those not entered in the Erbhofrolle were henceforth to be referred to merely ‘farmers’ (Landwirte). Entry in the Rolle protected the Erbhof for ever against the nightmare of repossession. By the same token, it also imposed constraints. Erbhoefe could not be sold. Nor could they be used as security against mortgages. Farms registered as Erbhoefe were thus removed from the free disposal of their immediate owners. regardless of existing arrangements between spouses, Erbhoefe were to have a single male owner, who was required to document his line of descent, at least as far back as 1800, the same requirement as for civil servants. ‘Peasants’ were to be of German or ‘similar stock’ (Stammesgleich), a provision that excluded Jews, or anyone of partial Jewish descent. The line of inheritance was now fixed in law. The entire Hof was to be inherited by a single male heir (by Anerbenrecht), normally the oldest or youngest son, otherwise the father or brothers of the deceased. As far as possible, women were deprived of inheritance rights. Surviving widows were entitled to nothing more than maintenance. It was proposed that the Erbhof farmers should assume collective responsibility for each other’s debts. The debts of all Erbhoefe, variously estimated at between 6 and 9 billion RMs, were to be transferred to, a state-sponsored mortgage bank. The Rentenbank would repay the original creditors at interest ranging between 2 and 4 % depending on the security of the original loan. For their part, all Erbhoefe, whether indebted or not, would in future make an annual payment to the Rentenbank, assessed at 1,5% of the value of their farm. It is not too much to say that the setting up of this organization and its associated system of price and production controls marked the end of the free market for agricultural produce in Germany. Agriculture and food production, which until the mid-nineteenth century had been overwhelmingly the most important part of the German economy and which still in the 1930s constituted a very significant element of National product, were removed from the influence of market forces. The mechanism of price-setting was the key. The RNS made use of prices to regulate production. Higher prices were used to encourage production. Lowering a price in relative terms served to divert production into other lines. But the prices themselves were no longer freely determined by the balance of supply and demand. The generous prices paid to farmers were passed on directly to consumers, who were faced with a sharp increase in the cost of living. After years of falling prices, the official food-price index rose between 1933 and 1934 from 113,3 to 118,3. At the end of 1933, milk prices were raised by the direct intervention of the RNS to 22 Pfennigs per liter. The Battle for Production is commonly dismissed as little more than a propaganda exercise. But this does no justice to the work of the RNS or to the constraints they faced. Once we allow for the reduction in imported inputs, farm production from domestic sources went up by 28 % between 1927 and 1936. […] What the RNS was able to achieve was not only a substantial increase in domestic food production, but also a substantial improvement in the resilience of German agriculture in the face of shocks. By 1936 German farm animals were consuming only half the imported protein and 30 % of the imported carbohydrates that had been available in 1928-9. To cover the gap, farmers were encouraged to substitute hay, turnips and the nutritious by-products of sugar beet farming – sugar beet leaves and heads. To make this feed palatable for the dairy herd, the RNS pushed through the near universal adoption of fermentation silos. What the RNS could not do was to manipulate the weather. After the spectacular harvest summer of 1933, the next few years brought dismal yields. Between 1934 and 1937 the yields of wheat and rye were consistently disappointing. The potato harvest in 1935 was disastrous. In managing these setbacks the RNS’s most important resource was the large grain reserve accumulated during the bumper harvest of 1933. Shortfalls in 1934 and 1935 were covered by running down the stock accumulated in the first good year of the Third Reich. This, however, was by its nature a short-term solution. By the summer of 1936 the grain stock, which in early 1934 had stood at 3,5 million tons, had been drawn down to the dangerous level of less than 700.000 tons. To dole out the scarce supply of butter, a discreet system of rationing was introduced in the autumn of 1935, in the form of customer lists kept by the retail outlets. The meat supply could not be completely insulated from the impact of the disastrous potato famine in 1935. To ensure that there were sufficient potatoes for human consumption, the RNS culled the pig population and pushed through a sharp increase in the price of pork products. In Berlin, the price of cooked ham was raised by almost 30 % between 1934 and 1936. From 1937 onwards German production was more than adequate to meet domestic demand. Imports were used, not to support current consumption, but to rebuild National grain stocks, which by 1939 were sufficient to cover the population’s bread supply for an entire year. It is easy to misunderstand the constant talk of crisis that afflicted the RNS. At no point was the German population threatened with real food shortages. The ‘shortages’ of meat and butter were due not to a collapse in supply, but to a huge surge in demand, especially from working-class consumers. Newly re-employed Germans with money in their pockets simply did not want to eat the austere vegetarian diet publicly espoused by the Nazi leadership with their Sunday lunches of vegetable stew. In general, however, a wholesale increase in food prices was ruled out by fear of provoking the kind of public outrage that had shown itself in 1934. It was this political freezing of the price system that created the appearance of shortages, forcing the RNS to resort to more or less overt forms of rationing. It was not until 1938, with the appearance of real supply problems in dairy farming, that the regime finally raised the prices paid to German farmers for milk. But even then the increase was not passed on to consumers. The price increased thus helped to stimulate production but did nothing to restrain demand. The farmers certainly found themselves more constrained than ever before in peacetime. In the first two years of Nazi rule, 250 new regulations were issued for agriculture. Probably the most onerous restrictions imposed by the RNS were those requiring farmers to deliver quotas of milk to licensed RNS dairies. German farmers, in fact, enjoyed a historically unprecedented level of protection and it is hardly surprising that this came at a price. In return for the exclusion of foreign competition from home markets, peasant smallholders had to accept comprehensive regulation and control. Farming in Germany, as in Europe generally, from the 1930s onwards resembled less and less a market-driven industry and more and more a strange hybrid of private ownership and state planning. According to figures calculated by Germany’s most authoritative economic research agency, total farm income, of which animal products accounted for more than 60 %, rose by almost 14 % in 1933-4 and by another 11,5 % in 1934-5. At the same time the burden of taxes and interest payments on agriculture fell significantly. When we allow for the general deflation in prices, increases in money incomes on this scale more than made up for the Depression. The situation would have been even better if it had not been for the bad weather and poor harvest in 1934.”


4) Rearmament

Wages Of Destruction - Cover ImageState spending was 70% higher than it had been in 1928 and that increase was almost entirely due to military spending. […] There can be no doubt that rearmament was already the dominant priority by 1934. In 1932 the German aircraft industry employed 3.200 people and had the capacity to produce no more than a hundred aircraft per year. Less than ten years later, the regime had created a multi-billion RMs aircraft and aero-engine industry. It employed at least a quarter of a million people and was capable of turning out every year more than 10.000 of the most sophisticated combat aircraft in the world. The really striking feature of the list of top corporations in Germany in the late 1930s is the presence of no less than six specialized aircraft producers, none of which, in 1933, would have ranked even in the top 500. Fundamentally, therefore, Germany’s largest new manufacturing sector was not merely state controlled. It was a product of state initiative, state funding and state direction. It was founded indeed on one of the most blatant acts of coercion applied to any non-Jewish business in the history of the Third Reich. Early in the morning of 17 October 1933 Dr. Hugo Junkers was arrested at his vacation home on charges of treason. Junkers was Germany’s leading aviation pioneer, a celebrated engineer who at his plant at Dessau had constructed the world’s first full-metal aircraft. Junkers’ factory, though modest in size, was by far the largest aircraft factory in Germany. In the 1920s Junkers had squabbled with the German military about the future direction of aerial rearmament. The new holders of power were not willing to argue. After twenty-four hours in police detention, Junkers agreed to sign away his firm to the Reich. Though all the Luftwaffe firms other than Junkers remained in private hands, their expansion had to be financed almost entirely by the RLM. Given the general recovery of the German economy and the alternative investment opportunities this offered, it simply was not commercially justifiable to invest large quantities of money in an overcrowded industry that was entirely dependent on an unpredictable flow of government orders. […] However, even here there was scope for entrepreneurial initiative. At times, indeed, the German aircraft industry was to become a byword for independent, competitive and often counterproductive entrepreneurship. In 1930 the majority of military aircraft were still wood and fabric biplanes. The Luftwaffe only tested its first generation of full metal monoplanes powered by high-performance piston engines in 1935. Less than five years later Ernst Heinkel launched the world’s first prototype jet fighter, opening the prospect that military aircraft might soon be able to operate within striking distance of the sound barrier or beyond. Of the growth in total National output in Germany between 1935 and 1938 almost half (47 %) was accounted for directly by the increase in the Reich’s military spending. If we add investment, of which a very large part was dictated either by the priorities of autarchy or rearmament, the share rises to two-thirds (67 %). Private consumption, by contrast, was responsible for only 25 percent of the growth over this same period, even though in 1935 it had accounted for 70 % of total economic activity.


5) Things Capitalists don’t care about

On Birthrates
The Weimar era, the birth rate was steadily dropping “from 36 births per thousand inhabitants in 1901, to 14,7 births per thousand inhabitants in 1933.”

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“An important expression of national confidence was a sharp increase in the birth rate. Within a year after Hitler came to power, the German birth rate jumped by 22 percent, rising to a high point in 1938. It remained high even in 1944 — the last full year of World War II. In the view of historian John Lukacs, this jump in the birth rate was an expression of “the optimism and the confidence” of Germans during the Hitler years. “For every two children born in Germany in 1932, three were born four years later,” he notes.”

On Crime rates and illnesses
Germany’s crime rate fell during the Hitler years, with significant drops in the rates of murder, robbery, theft, embezzlement and petty larceny. Improvement in the health and outlook of Germans impressed many foreigners. “Infant mortality has been greatly reduced and is considerably inferior to that in Great Britain,” wrote Sir Arnold Wilson, a British M.P. who visited Germany seven times after Hitler had come to power. “Tuberculosis and other diseases have noticeably diminished. The criminal courts have never had so little to do and the prisons have never had so few occupants. It is a pleasure to observe the physical aptitude of the German youth. Even the poorest persons are better clothed than was formerly the case, and their cheerful faces testify to the psychological improvement that has been wrought within them.” The improved psychological-emotional well-being of Germans during this period has also been noted by social historian Richard Grunberger. “There can be little doubt,” he wrote, “that the [National Socialist] seizure of power engendered a wide-spread improvement in emotional health; this was not only a result of the economic upswing, but of many Germans’ heightened sense of identification with the national purpose.”

Hitler's Revolution - Cover ImageOn Birthrates 2
The Labor Procurement Law provided newlyweds loans of RM 1,000 at one percent monthly interest. The loans came in the form of coupons to buy furniture, household appliances and clothing. To be eligible, the bride had to have been employed for at least six months during the previous two years, and had to agree to leave her job. Returning women to the home vacated positions in commerce and industry, creating openings for unemployed men. For each child born to a couple, the government reduced the loan by 25 percent and deferred payments on the balance for one year. For larger families, upon birth of the fourth child, the state forgave the loan. It financed the program by imposing surtaxes on single men and women. By June 1936, the government approved 750,000 marriage loans. […] The state imposed no property tax on young couples purchasing small single family homes.

On travel and paid vacation days
“Few Germans could afford to travel prior to Hitler’s chancellorship. In 1933, just 18 percent of employed persons did so. All were people with above-average salaries. The KdF began sponsoring low-cost excursions the following year, partly subsidized by the DAF, that were affordable for lower income families. Package deals covered the cost of transportation, lodging, meals and tours. Options included outings to swimming or mountain resorts, health retreats, popular attractions in cities and provinces, hiking and camping trips. In 1934, 2.120.751 people took short vacation tours. The number grew annually, with 7.080.934 participating in 1938. KdF “Wanderings”– backpacking excursions in scenic areas— drew 60.000 the first year. In 1938 there were 1.223.362 Germans on the trails. The influx of visitors boosted commerce in economically depressed resort towns. These activities were only possible because Hitler, upon founding the “Strength through Joy” agency in November 1933, ordered all German businesses and industry to grant sufficient paid time off for employees. Prior to that year, nearly a third of the country’s labor force had no union contract and hence worked without vacations. In 1931, just 30 percent of laborers with wage agreements received four to six days off per year. The majority, 61 percent, received three days. The National Socialist government required that all working people be guaranteed a minimum of six days off after six months’ tenure with a company. As seniority increased, the employee was to earn twelve paid vacation days per annum. […] Many choosing to travel during their vacation took advantage of inexpensive cruises sponsored by the KdF. […] Few aboard had never experienced a cruise, and they returned to port exhilarated. In well-publicized interviews, travelers enthusiastically described the new KdF fleet as “dream ships for workers.” News coverage enhanced interest in the program. With applications for bookings flooding the KdF, the vessels began a continuous shuttle of five-day cruises to and from Norway, offering passengers a tour of the coastline’s majestic fjords. […] By the end of 1934, the KdF fleet had provided five-day cruises, mostly to Norway, for 80.000 German workers and their families. The KdF introduced Mediterranean cruises the following season. Voyages to Italy allowed passengers to go ashore at Genoa, Naples, Palermo and Bari. […] Portuguese and Italian residents of ports of call saw for the first time working class Germans enjoying a recreational activity previously associated with the upper class. During 1935, over 138.000 Germans took KdF cruises. […] The sports office of the DAF sponsored labor’s involvement in other “exclusive” activities such as tennis, skiing, horseback riding and sailing. It offered inexpensive courses in these sports and built new facilities. Interest in the programs became so widespread that the DAF had to train a large number of additional instructors. In 1934 alone, 470.928 Germans took part in DAF sports courses. In 1938, the number had swollen to 22.474.906. The agency also promoted sports clubs in factories and businesses. Within two years, there were over 11.000 company clubs competing in team events against those from other firms or departments.”


There it is – a brief summary of historical facts about Germany’s National Socialism in the early-20th century. As the reader has seen, it was anything but a ‘failure’ and is clearly something quite different from marxist socialism as represented in other parts of the world. As stated in the prelude to Part 1, young people around the world are discovering these truths. And it’s a pretty safe bet that the masters of the international finance dictatorship are far more concerned about these young thinkers than they are about the old-school ‘left’/’right’ herd. The later being nothing more than foot-soldiers of an increasingly out-of-control social milieu.


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