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

by Adam Tooze

had been 50 per cent higher than that on which Germany survived in 1933. The German economy could not recover to anything like its normal level of economic activity without a substantial increase in the volume of foreign inputs. To make matters worse, as Germany recovered along with Britain and the United States, their combined demand would have the knock-on effect of raising prices on world commodity markets. Everything depended therefore on Germany’s ability to sustain a healthy flow of exports with which to service debts and pay for imports. Germany’s export trade, however, had been hit hard by the wave of currency instability precipitated by the British abandonment of gold in 1931 and the ensuing upsurge in global protectionism. As Sir Frederick Phillips of His Majesty’s Treasury admitted with disarming frankness: ‘No country ever administered a more severe shock to international trade than we did when we both (1) depreciated the £. (2) almost simultaneously turned from free trade to protection.’37 Roosevelt’s devaluation of the dollar in April 1933 made things even worse. Though the dollar’s devaluation reduced the Reichsmark burden of Germany’s debts, it made it even harder for Germany’s exporters to earn the necessary dollars. By 1933 the German trade balance began shifting inexorably into deficit and the Reichsbank’s limited foreign