The
Nazis came to power in the midst of the
Great Depression. The most pressing issue at that point was an unemployment rate of close to 30%.
[23] Before World War II, Hitler appointed
Hjalmar Schacht, a former member of the
German Democratic Party, as President of the
Reichsbank in 1933 and Minister of Economics in 1934.
[23]
At first, Schacht continued the economic policies introduced by the government of
Kurt von Schleicher in 1932 to combat the effects of the Great Depression. The inherited policies included a large
public works programs supported by
deficit spending – such as the construction of the
Autobahn network – to stimulate the economy and reduce
unemployment.
[24] There was major reduction in
unemployment over the following years, while price controls prevented the recurrence of
inflation. However, price controls in agriculture also squeezed out small farmers.
[25] Similarly, while unemployment decreased, standards of living languished: rationing of key goods like food and clothing, and long lines became common.
[26]
The economic policies of the Third Reich were in the beginning the brainchildren of Schacht, who assumed office as president of the central bank under Hitler in 1933, and became finance minister in the following year. Schacht was one of the few finance ministers to take advantage of the freedom provided by the end of the
gold standard to keep interest rates low and government budget deficits high, with massive public works funded by large budget deficits.
[23] The consequence was an extremely rapid decline in unemployment – the most rapid decline in unemployment in any country during the Great Depression.
[23] But whether this helped the average German is a matter of debate—while more Germans had jobs, a focus on rearmament meant rationing in food, clothing, metal, and wood
[31] for most citizens. Rationing eventually extended to use of fuel and production of cars, leaving many Germans unable to drive. Goering nationalized the steel industry of industrialists who fell from political favor (such as Fritz Thyssen in 1939) and formed the Hermann Goering Works in 1937 with the goal of producing steel from low grade German iron at rates unprofitable to other steel companies.
[32] However, production fell short of rearmament demand. When production in the nationalized iron ore industry declined, “brown shirts” seized private stores from factories, churches, and cemeteries.
[33]