The Wages of Destruction: The Making and Breaking of the Nazi Economy

by Adam Tooze

In 1938 the German economy reached the limit of this type of extensive economic growth. It was impossible to reconcile a 70 per cent increase in military spending and the heavy investment programmes of the Four Year Plan with any further increase in consumption. In an economy in which output was expanding at 8 per cent per annum, household consumption stagnated.37 And this understates the drama of the adjustment process going on within the German economy. Steel is more indicative. Measured in terms of steel, the quantity of materials available for non-Wehrmacht purposes was cut by 25 per cent between March and July 1938, from a high point of 1.345 million tons to 1.041 million tons.38 The cutback would have been even more serious, but for the decision taken in late 1937 to raise German steel production to the limit of capacity. By mobilizing all available labour, scrap and a special consignment of top-quality Swedish iron ore, Germany’s steelmills in 1938 achieved a record annual output of almost 21.5 million tons.