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

by Adam Tooze

In effect, Hitler’s government was declaring its independence from the implicit security guarantee that America had provided to the Weimar Republic since 1923–4.

This meant that by the second year of Hitler’s government, military spending already accounted for over 50 per cent of central government expenditure on goods and services.

In 1935, the military’s share rose to 73 per cent.75 At the same time, the spectacular announcement of the Battle for Work in March 1934 coincided exactly with the peak of the work creation drive.

The conclusion is inescapable: despite the propaganda fanfare that accompanied the renewed Battle for Work in 1934, it in fact made little if any contribution to the ongoing reduction in unemployment.

In 1935 private consumption was still 7 per cent below its pre-Depression levels and private investment was 22 per cent down. By contrast, state spending was 70 per cent higher than it had been in 1928 and that increase was almost entirely due to military spending. As far as the Reich was concerned, there can be no doubt that rearmament was already the dominant priority by early 1934. Between

Top priority, it was clear, was to be given to exporters and to suppliers to the armaments effort. Importers who had the approval of a surveillance agency were issued with so-called Exchange Certificates

The composition of this group was a clear sign of where the power now lay in the Third Reich. The military had been Schacht’s allies since 1933 and their relationship was even closer after the Night of the Long Knives. It is also significant, however, that the plan had to be

cleared with Hitler. The Fuehrer may not have followed the day-to-day details of economic policy, but no important decisions could be taken without his approval.73

What saved Schacht were three things: the continuing recovery of the global economy, which produced a resurgence in demand for German exports; 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.