From Hyperinflation to Full Employment: Nazi Germany’s Economic Miracle Explained | History Hit

From Hyperinflation to Full Employment: Nazi Germany’s Economic Miracle Explained

Tina Gayle

08 Aug 2018

Before the Nazis took control of the Reichstag in 1933, around 6 million Germans were unemployed; the German economy was in total collapse, Germany had no international credit rating, and was almost bankrupt from World War 1 reparations payments.

The German people were demotivated, factories were closed from lack of money to pay wages, benefits were cut as the Government had no money to pay them and inflation was spiralling out of control.

weimar republic

Hyperinflation: A five-million mark note.

Third Reich economic nationalism

Inside an incredible three years, all this was changed. Unemployment was banned by the Nazi Party and went from 5 million to zero in the space of a few years. Every unemployed man had to take up an available job, or risk being sent to prison. Non-Germans had their citizenship removed and were thus not eligible for employment.

The launching of work programmes

The NSDAP stimulated the economy with spending programs using printed money and IOUs that companies could cash after 3 months when they’d taken on more staff, increased production and their output of goods. This was managed by the new ‘National Labour Service’ or Reichsarbeitsdienst.

Work teams were created from unemployed Germans and companies were given money if they employed more workers. Massive infrastructure-building projects were established, constructing new Autobahns between major cities, which stimulated the German Car industry to build more cars, which then needed to employ more people.

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State-sponsored industry

The Nazis sponsored building programmes for new Football Stadia, enormous housing projects, and planting of new forests. In 1937 a new state-sponsored car manufacturer was commissioned by Hitler to provide cheap cars for families. It was called Volkswagen, which meant ‘people’s car’ and families were encouraged to buy one by making monthly payments.

nazi industry economy

Third Reich stamp featuring a Volkswagen.

Huge public works programmes were established in construction and agricultural labour and workers were given an armband, a shovel and a bicycle and then sent to their nearest project to work. From 1933 to 1936 the number of Germans working in the construction industry tripled to 2 million. Many worked renovating and building the public buildings of Berlin.

National service programme

A new programme of Military Service took thousands of unemployed young men off the list and into the Wehrmacht (National German Army).

This meant that lots more guns, military vehicles, uniforms and kit were needed, so this in turn provided even more employment. The SS also took on thousands of new members, but since they had to buy their own uniforms, this tended to be from the more educated and affluent middle classes.

Women told to stay at home

Employers were discouraged from taking on women while the NSDAP delivered propaganda for women to stay home and be good wives and mothers, alongside giving them increased family benefits for doing so. This took women off the unemployment list and pretty much paid them to breed more children.

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Imports were banned

Imports were forbidden unless vital to survival and then heavily discouraged, with research established to reproduce these goods from inside Germany as soon as possible. No more bread was imported from Poland, so that meant more German bread was needed, creating new jobs for farmers and bakers who were needed to produce enough to supply the German nation.

The strongest economy in Europe

nazi economy

1935 Reichsmark.

By July 1935 almost seventeen million Germans were in brand new jobs, though they were not well paid by anyone’s standards. But nevertheless, these jobs provided a living wage, compared with just eleven million Germans who were in employment just two years before.

In the space of four years, Nazi Germany changed from a defeated nation, a bankrupt economy, strangled by war debt, inflation and lack of foreign capital; into full employment with the strongest economy and biggest military power in Europe.

Tina Gayle