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

by Adam Tooze

Since falling consumption offset rising investment, private demand in total accounted for less than half the resurgence in aggregate demand in both 1933 and 1934. From the outset, therefore, Hitler’s economic recovery was driven primarily by the public sector.83 What is also clear, furthermore, is that between 1933 and 1934 the priorities of the German state changed radically. In 1933 civilian work creation expenditure clearly did make a major difference, with increased spending at both local and national levels. Civilian spending by the Reich continued to grow strongly into 1934. But what is often forgotten is that from 1934 onwards this was offset by a severe squeeze on local government. In large part, Reich work creation spending simply ‘repackaged’ funds that might otherwise have been spent by local government. This was the reality behind Hitler’s promise on 1 February 1933 to rationalize relations between the Reich and local government. A state-driven economic recovery went hand in hand with an unprecedented centralization of public spending, of which the military were the prime beneficiaries.