A. Barkai Ideology and the Economy, Implemented Policies Source: A. Barkai, Nazi Economics - Ideology, Theory, and Policy (London, 1990), pp.158-172, 183-196, 225-235. Part A, B, C, D Chapter 4 Ideology and the Economy Between 1933 and 1936 the German GNP increased by an average annual rate of 9.5 percent, and the annual production index for industry and crafts rose by 17.2 percent. The principal source of this growth, which propelled the German economy out of a deep depression into full employment within less than four years, was increased demand by the Public sector, defined by German economists of the period as Staatskonjunktur (state prosperity). The average annual growth of public consumption during these four years was 18.7 percent, while private consumption rose only by 3.6 percent annually. These data alone already show that the Nazis overcame unemployment primarily through government-initiated public works and/or orders by the government and other public-sector authorities. Additional public consumption and investment in the period 1933 to 1936 came to over twenty-seven billion reichsmarks. Of this sum, eleven billion was forwarded by the Reichsbank; the remainder came from additional taxes, 'donations,' and loans raised from the public and from banks. An overall summary for these four years shows that no less than 80 percent of all additional spending went into rearmament and the expansion of the army. It is therefore true that rearmament played a major role in the liquidation of unemployment. Nevertheless, it would be erroneous to conclude that the latter was merely a fringe benefit of rearmament, successfully exploited by the propaganda machine. Full employment was an autonomous objective of Nazi policy, both as a principle and as a means of stabilising the regime as well as recruiting public support. The availability of idle production factors combined with their open-mindedness vis-a-vis novel economic concepts enabled the Nazis to achieve this objective simultaneously with their political goal of rearmament and preparation for an expansionist war. They could have achieved the same economic effect by allocating all additional resources to public works and the increase of private consumption, with no connection whatever to preparation for War. On the other hand, there is no doubt that, because of their ideological and political principles, they would have executed rearmament plans even if the state of the German economy had been different. They would not have hesitated to finance war in the traditional manner, using higher taxes and public loans at the expense of radically reduced private consumption. However, the political objectives of rearmament had economic implications besides increased employment, which will be discussed below. The Financing of Works Projects Statistical data support the assumption that the liquidation of unemployment was an autonomous economic objective alongside military preparations. Expenditure on non-military employment projects exceeded rearmament expenses in 1933 and remained approximately equal to them within the overall summary of the first two years. In 1933, 3.1 billion reichsmarks were spent on housing and road-development projects executed by municipal authorities, as against 0.7-1.9 billion (according to varying estimates) spent on rearmament. The total for two years, until the end of 1934, was 5 billion on non-military public works as against 6 billion on rearmament and the army. The combined expenditure reduced the 1932 average of 5.6 million registered unemployed to 4.8 in 1933 and 2.7 in 1934 1 . This does not mean that the Nazis accorded priority to civil employment projects during these years and that rearmament as a political objective surfaced only later. On the contrary, the preparation for war was Hitler's primary project, and his orders were to direct allocations for job creation accordingly. This order was not carried out at once because during the first few years the army could not absorb larger sums for technical reasons and because it lacked manpower. Alert to the urgency of unemployment relief, the Nazis immediately launched public works projects, projects that had in part been planned by previous governments. Toward the end of 1934 the centre of gravity finally passed to military expenditure. This state of affairs is unequivocally confirmed by Hitler's utterances on employment and rearmament immediately after his appointment as a chancellor. As early as February 8th, at a government-level meeting in the chancellor's office, Hitler rejected a proposal (presented by the transport minister) to allocate a certain sum for the construction of a dam in Upper Silesia, arguing that for the coming five years all available money should go into rearmament: 'The next five years must be devoted to the rearmament of the German people. Every public plan for the creation of jobs has to be judged from the point of view whether it is necessary for the rearmament of the German people. This thought must remain in the foreground, always and everywhere.' Hitler's position at this meeting was supported by Goering and Blomberg, minister for the armed forces. The minister of labour agreed with Hitler's argument but thought 'that besides the goals of defence policy, there are other valuable economic tasks, which should not be neglected.' At the conclusion of the meeting it was decided to postpone construction of the dam for the time being 2 . On the following day, February 9, 1933, at a session of the government committee for employment affairs, Hitler once again stated his point of view: 'Absolute priority to be given to the interests of defence while public orders are distributed.... He could accept the limited resources demanded by the Armed Forces Ministry at the time only from the point of view that faster rearmament was impossible during the coming year.... Allocations for the Immediate Program should also be determined in this spirit. In the battle against unemployment the appropriate auxiliary remedy was public works ordered by the state. The five-hundred-million plan was the largest of its kind and especially suitable to serve rearmament interests; it allowed for the camouflage of defence projects in the best possible manner. In the near future this camouflage would be of particular value.' 3 It was eminently clear that Hitler's primary goal was rearmament, to which employment projects were subordinate. He acknowledged the importance of liquidating unemployment as such, but understood that rearmament projects would also create jobs. This view was demonstrated in his talk to Rauschning in August 1932: 'I can achieve just as much by rearmament as by the construction of houses and by settlement. I can also give the unemployed more money to meet their needs. Thus I create purchasing power and increase the circulation of money.' 4 Public works financed by deficit spending were not invented by the Nazis. As we have already seen, the theoretical foundations for such a policy were established in previous years, and the Papen and Schleicher governments had begun to prepare practical plans in this spirit. The Nazi rulers appropriated both the theoretical propositions and the ready-made plans, but they implemented them with a degree of decisiveness and to an extent that exceeded all forecasts. The Bruening government had already announced a one-billion-reichsmark plan for additional public works in 1930 5 . But it was never even initiated, since the realisation of the plan, like some later ones, depended on loans from abroad; no one even thought of financing public works by deficit spending through the offices of the Reichsbank. The notion of such a loan under prevailing international conditions was utterly unrealistic. Though a special company was founded to this end, nothing ever came of it. The special committee appointed for this purpose (the Braun Committee), also made the granting of an international loan a condition for the extension of credit to government-initiated public works, which for the same reason never material 6 . The first move toward deficit spending on employment projects was announced by the Papen government in September 1932 through one of its emergency decrees 7 . The Papen plan was to promote employment primarily in the private sector: initially only three hundred million out of two billion planned for the first year was to go into public works. The bulk of the money was earmarked for the private sector in the form of tax reductions and employment premiums. A proposal was made to give employers 'tax-credit notes' representing 40 to 100 percent of the taxes due, to be utilised in the payment of taxes in subsequent years - that is, as tax discounts for the future. As these 'notes' were immediately discountable by the Reichsbank at a very low discount rate, they were actually liquid assets that increased the money supply. In addition employers received an annual bonus of four hundred reichsmarks (also in the form of tax-credit notes) for every new employee. As a special bonus employers who hired new workers were permitted to lower wages beneath the legal tariff, a proposal that made the trade unions reject the entire Papen plan at once, whereas employers on the whole tended to endorse it 8 . However, the RDI opposed any projects of public works as a matter of principle, stated in a declaration they had settled upon on August 17, 1923 9 . As it turned out, under then-prevailing economic conditions these tax discounts were not a sufficiently attractive incentive for private enterprises. Employers did not utilise this opening and did not hire additional workers; the allocated sums were not spent. In consequence the head of the Reichsbank, Hans Luther, and the minister of finance Schwerin von Krosigk, agreed to add five hundred million reichsmarks to the public works allocation 10 . The first significant move toward public works financed by the Reichsbank came with the Immediate Program launched by the Schleicher government. The plan's author, Guenther Gereke, was employment commissioner in this government and remained in office for a few months in Hitler's first government. According to his plan, five million reichsmarks was allocated at once to public works, to which another one hundred million was added after Hitler's take-over. The project was financed by bills drawn on fictitious companies, extendable without a deadline and at once discountable by the Reichsbank, thereby providing a basis for an immediate increase in the money supply. This was a special technique of deficit spending devised in keeping with Reichsbank statutes, which permitted the forwarding of credit to the government only in return for 'ordinary commercial bills' for a period that did not exceed three months. This procedure became a precedent for preliminary financing by Mefo-bills, a technique that Schacht subsequently turned into the main instrument for deficit spending. The Gereke Plan is of interest in the present context not only because it represents the first serious move toward deficit spending on a relatively large project of government-initiated public works but also on account of its origins. Its outline was worked out by Guenther Gereke in the summer of 1932 while he was chairman of the Verband Deutscher Landgemeinden (Association of German Rural Communities), which officially adopted the plan in August1932; Gereke was also a Reichstag delegate on behalf of the DNVP. His plan was composed in close co-operation with Ludwig Herpel, the editor of a right-wing periodical, and according to another source, with Werner Sombart's active participation 11 . The Gereke Plan was brought to Schleicher's attention by a veteran officer of the right-wing Stahlhelm, who tried to recruit wider support for the plan, even among trade unions and Social Democrats 12 . This once again confirms Friedlaender-Prechtl's claim, mentioned above, that all plans for job creation through public works and deficit spending were supported mainly by right-wing circles. Heinrich Draeger's research association and its followers supported the Gereke Plan enthusiastically; they devoted a special issue of the periodical Wirtschafts-Wende , edited by Friedlaender-Prechtl, to a discussion of it. On the other hand, business circles, which had received the Papen Plan favourably, sharply opposed the Gereke Plan because of its emphasis on public works and inflationary financing 13 . The Nazis admitted that among all available plans this was the best one, but attributed its merits to their own influence. Bernhard Koehler claimed that whatever was good in this plan the authors had adopted from Nazi sources: they had learned from Strasser's Reichstag speech of May 10, 1932, and Ludwig Herpel, who had once been a member of the party, was influenced by Gottfried Feder. Beyond that, according to Koehler, the plan was too modest and would at best only partially relieve unemployment 14 . After they attained power the Nazis left Gereke in his post until March 1933. In his own memoirs Gereke claimed that he was dismissed because he refused Hitler's request to join the party. According to Gereke, Hitler argued that the liquidation of unemployment had to be 'our own feat' and therefore Gereke had to join the party. When he refused, he was dismissed by means of a fabricated trial in which he was accused of embezzling some of Hindenburg's election funds in 1932. In the fifties Gereke moved from West to East Germany, where he was received with high regard. There he wrote his memoirs, a task in which he was aided by the East German historian Eberhard Czichon, who 'edited' his work 15 . We see therefore that when the Nazis took power they found two ready-made public works projects, plus the necessary legal arrangements for their financing. Work plans for the execution of specific projects were also available, mainly from municipalities where lack of funds had compelled postponement of numerous plans, but also from post-office and railway agencies. Their implementation could begin without delay. With regard to the Papen Plan, some changes were made at once: money allocated for activation of the private sector was redirected to government-initiated public works, to be carried out by public authorities. In April 1933 this was put into effect through modification of the respective law, which stopped the issue of tax-credit notes for the employment of additional workers and instead allocated the money to public works mainly through community agencies 16 . During the first months of 1933 the Nazis added large-scale works projects to those they had found waiting. The first Reinhardt Plan (named after Fritz Reinhardt, the first Nazi Staatssekretaer at the Ministry of Finance) allocated one billion reichsmarks to public works. It was financed by means of treasury notes discounted by the Reichsbank, that is, by the undisguised printing of money 17 . In September the second Reinhardt Plan added another five hundred million reichsmarks, aimed principally at the construction of housing. The money was allocated for additions to and renovation of residential and commercial building, on condition that the owners invested matching sums from their own resources 18 . Alongside these projects for immediate creation of jobs through public works, the Nazis encouraged investment and consumption in preferred branches of the private sector, in particular by abolishing the tax on motor vehicles 19 and by tax exemption for the renewal of industrial equipment 20 . Jointly these projects came to another two billion reichsmarks, which was spent on employment projects for state-owned companies like the post office and the railways. Out of a total of 350 million reichsmarks allocated for the construction of motorways ( Reichsautobahnen ), only 166 million had been spent by the end of 1934 21 . The projects described here actually include almost the whole range of non-military employment projects launched between 1933 and 1936. Of the twenty-eight billion reichsmarks that represented the total of additional annual state expenditures during these years as compared to 1932, only 5.5 billion were devoted to civil employment projects (see appendix, table 4). Mof this sum was spent during the first two years; beginning at the end of 1934, deficit spending went almost exclusively on rearmament. To finance rearmament, the government and the Reichsbank (under Schacht) initiated the creation of a special company with a one-million-reichsmark equity, the Metallurgische Forschungsgesellschaft m.b.H (MEFO, Metallurgic Research Company, Ltd.) in August 1933. As owners of the company, each of the four leading enterprises in Germany's metal industry (Krupp, Siemens, Rheinmetall, and Gutehoffnungshuette) signed up for 250,000 reichsmarks' worth of share capital. Representatives of the Reichsbank and the War Ministry were members of the company's managing board. Rearmament orders were paid for, by whatever agency had issued the order, in bills for a period of three months, extendable for up to five years. The bills were endorsed by the said company, which accounts for their name, Mefo-Wechsel (Mefo-bills). The absolute secrecy of this arrangement was preserved until after the war. The fictitious character of the company is obvious from the fact that, on the basis of one million reichsmarks' share capital, the company endorsed a total of twelve billion reichsmarks until the end of 1937. The Reichsbank discounted these bills on presentation, thus immediately increasing the current money supply. Although until the war only 20 percent of the total rearmament expenditure was financed in this manner, it made up 50 percent of the total expenditure on military orders during the initial years 22 . This system of preliminary financing by means of bills had a double purpose: first, it circumvented Reichsbank statutes, which permitted only limited financing of government expenses in the form of a loan but allowed for the inclusion of short-term commercial bills as legal coverage of the currency; second, it served to keep the scope of rearmament secret, at least until 1934, when even the publication of data concerning the national budget was stopped. As mentioned above, Schacht had already voiced his opposition to monetary experiments in 1932. Now he feared the psychological impact that publication of the true dimensions of rearmament might have on the population. He must have realised that the economic effect of Mefo-bills was not less inflationary than any other form of money issued from the printing press, but he accorded considerable importance to possible psychological effects. At a meeting of the Supreme Economic Council on September 20, 1933, Schacht announced that he was prepared to forward any required amount but not to name figures and that it was of great importance to prevent talk about 'theories and billions' in public 23 . This economic council was appointed by Hitler at the beginning of 1933 but was convened only a few times, merely in order to listen to speeches. In the light of all this, it is rather difficult to agree with Burton Klein, who argues that Schacht was ultraconservative and that the Nazis' whole economic policy, including their shying away from more massive rearmament, suffered from exaggerated fears of inflation 24 . Schacht and his Nazi masters were not wanting in fiscal adventurism; they conducted a policy of deficit spending that was unprecedented in peacetime economies. It is nevertheless true that their fear of inflation was deeply embedded and partly determined the means by which they carried out deficit spending. Among these was the special form of preliminary financing through bill that were to be paid off (as claimed at the time) by budgetary surpluses in coming years. However, in 1939, when the first Mefo-bill came due for payment, the Third Reich was caught up in hectic rearmament efforts, and the Mefo-bills were simply exchanged for ordinary treasury notes. After the war Schacht claimed that this 'violation of the agreement' was the last straw that made him resign from the Reichsbank 25 while Schwerin von Krosigk, who was minister of finance at the time, said that this arrangement had been agreed upon from the outset 26 . It really makes no difference, either in theory or in practice: Mefo-bills or any other bills issued to finance employment were merely paper money printed by the Reichsbank. Even the fact that in general only a third of Mefo-bills were presented to the Reichsbank for discount did not change their character as a principal means for deficit spending and increasing the money supply: among the asset portfolios of banks they served as secondary reserves. Nevertheless, the technique appears to have achieved its aim of concealing the scope of rearmament and deficit spending 27 . Between 1933 and 1936, 9.5 billion reichsmarks' worth of Mefo-bills, representing more than 85 percent of the Reichsbanks' direct money supply for deficit financing and rearmament, was issued. References: Chapter 4 1. Fischer, Deutsche Wirtschaftspolitik , p. 108. 2. BA, R 43/II, 536, Ministerbesprechung vom 8. February 1933. 3. Ibid., Sitzung des Ausschusses der Reichsregierung fuer Arbeitsbeschaffung vom 9. February 1933. 4. H. Rauschning, Gespraeche mit Hitler , 1932¯1934 (New York, 1940), p. 27. 5. K. Schiller, Arbeitsbeschaffung und Finanzordnung in Deutschland (Berlin, 1936), pp. 48f. 6. Ibid., p. 52. 7. Verordnung des Reichspraesidenten zur Belebung der Wirtschaft, vom 4. September 1932, RGB1. I, p. 425. 8. Petzina, 'Hauptprobleme,' p. 23. 9. BA, Nachlass Silverberg, no. 223, pp. 184f. 10.Interview with Schwerin von Krosigk, June 1974. 11.Czichon. Wer verhalf Hitler , pp. 31f. 12.Draeger-Materialsammlung. 13.Petzina, 'Hauptprobleme,' p. 26. 14.B. Koehler, 'Wwollen das Recht auf Arbeit,' Arbeitertum , Jan. 15, 1933. 15.Gere, Ich war koeniglich-preussischer Landrat , p. 158. 16.Schiller, Arbeitsbeschaffung , p. 57. 17.Gesetz zur Verminderung der Arbeitslosigkeit vom 1. June 1933, RGB1. I, p. 323. 18.Gesetz zur Verminderung der Arbeitslosigkeit vom 21. September 1933, RGB1. I, p. 651. 19.Gesetz zur Aenderung des Kraftfahrzeugsteuergesetzes vom 10. April 1933, RGB1. I, p. 192. 20.Gesetz zur Verminderung der Arbeitslosigkeit vom 1. June 1933, Abschnitt II, Steuerfreiheit fuer Ersatzbeschaffungen, RGB1, I, p. 323. 21.Schiller, Arbeitsbeschaffung, p. 155. 22.Fischer, Deutsche Wirtschaftspolitik , pp. 86, 102. 23.HF, K. V. Krogmann diaries, 11/K4, pp. 19f. 24.Klein, Germany's Preparations for War , p. 8f. 25.H. Schacht, Account Settled. 26.L. v. Schwerin v. Krosigk, Es geschah in Deutschland: Menschenbilder unseres Jahrhunderts , 3d ed. (Tuebingen und Stuttgart, 1952), p. 191. 27.Erbe, Die nationalsozialistische Wirtschaftspolitik , p. 54. Part B It follows that neither the financial technique the Nazis employed nor their assignment of deficit spending mainly to public consumption was their own invention. At least the Schleicher government had already prepared the initial blueprints. Even the autobahn project, later hailed as a special contribution of the Fuehrer's genius, was not original. From the end of the twenties a company named Hafraba (Hamburg-Frankfurt-Basel) had conducted a propaganda campaign and designed basic blueprints for an autobahn between these cities, to serve as the initial artery of an extended road network. During the Great Depression the authors of the idea added the job-creation effect to their propaganda, closely co-operating with Draeger's research association and the circle around Gereke. The manager of this company, Willy Hof, was received by Hitler immediately after the Nazi take-over; according to Hof, Hitler praised the idea enthusiastically and promised to carry it out by means of Reichsbank financing 28 . However, I believe that the question of whether or not Nazi economic policy was original is secondary and is not relevant at the present stage of this discussion. In the preceding chapters I showed that, when the Nazis assumed power, they were not altogether unprepared with regard to an overall economic philosophy; they had even adopted proposals for immediate economic measures in order to relieve unemployment. The decisive element was the fact that they succeeded in realising these proposals on a scale that extended all forecasts. There is no doubt that this success was crucial in recruiting majority support among the German people within a relatively short period of time and in winning their admiration for the Nazis' economic achievements, a phenomenon whose traces have not yet entirely disappeared. What generated this success is to be found in the political as well as in the ideological-propagandistic sphere. I have tried to show that what made the Nazis' employment policy feasible and successful, was more than a convenient accident or the result of pragmatic intuition, and that their success also arose from their ability to integrate new concepts in economic theory with their notion of the state's role in society and the economy. The Nazis succeeded where their predecessors had failed because they were able to secure absolute political power and they were given sufficient time. The Ermaechtigungsgesetz (the law establishing plenipotentiary authority) of March 23, 1933, the subsequent dismantling of all parties that participated in the coalition government, and the purging of all government and public bodies and agencies enabled them to implement their economic policy by means of administrative decrees with minimal interference. They were not merely freed from the necessity of seeking parliamentary consent: their political power provided the means to exert sufficient pressure on various interest groups which had previously been strong enough to abort similar plans and had contributed to the toppling of the government involved in such plans. The opposition of large-scale industry to public works did not cease after January 1933. In December 1933 the chairman of the branch association of iron-producing industries, Ernst Poensgen, complained at a confidential meeting of the board that industry, like b, was up against 'ideological difficulties.' According to him, these in price policies as well as in the allocation of resources for works projects. He thought that labour-intensive public works were acceptable only as a temporary measure. The genuine solution to unemployment would be achieved only by government orders for private industry (it is quite revealing that this paragraph in Poensgen's speech was marked in pencil 'not to be copied') 29 . Industrialists were quite right to treat employment as an ideological issue that was better not tampered with. Under the slogan of the 'right to work,' the Nazis had made full employment and ideological tenet to which they were fully committed before they seized power. Given the state of Germany's economy at the time, the relief of unemployment would have received top priority treatment from any government, and public support would have depended largely on the extent of success or failure in this sphere - the more so for a party that had conducted several election campaigns (especially the 1932 campaign) under the slogan Arbeit und Brot (work and bread) and claimed to possess the only practical employment project, as presented by Gregor Strasser in the Immediate Program. However, as part of Nazi ideology the principle of full employment went beyond its then-current usefulness, whether as a slogan to be used to achieve power or as an immediate goal for economic policy when they assumed office. It headed their list of economic objectives proclaimed as permanent to the extent that it became almost synonymous with what they called German socialism. As early as 1932 Bernhard Koehler had published an article in the paper of Goebbels's propaganda department, proclaiming the Nazi commitment to full employment: 'The Nation Socialist state will guarantee that every one of our people finds work.' 30 This, however, was not just a topical demand spawned by the scope of current unemployment but was the 'Socialist Revolution' itself: 'The creation of jobs is ... more than an economic measure or restoration of the economy or better provision for those who wish to work: it is in itself the Socialist Revolution against the government of capital.' 31 The Nazis retained their propaganda along the same lines after they assumed power. Otto Dietrich, the academically trained economist who headed Hitler's press bureau, explicitly identified German socialism with the right to work: 'Our socialism is no utopia, alienated from the real world, but natural life, full of pulsating blood ... the sole egalitarian economic demand it grants all the people is the right to work.' 32 When a state of full employment was already in sight, success reinforced the propaganda effect: what could be more persuasive than the claim that German socialism was already there, fulfilling the promise of a job for everyone? Thus, an article published in 1936 by Koehler declared: 'For the German people the battle for work is the turning point from capitalism to socialism because its intention is to provide every member of the nation once again with a job.... When he [Adolf Hitler] said We will liquidate unemployment by our own strength,' capitalism received its death blow.' 33 However, the more effective this claim was as propaganda, the greater was the commitment it implied. The Nazis knew that they could in now way survive a renewed employment crisis. Unfortunately they were never put to the test, as rearmament and war preparations kept the German economy in a state of full employment until the war and certainly for its duration. This does not change the fact that full employment was from the outset and also in retrospect an ideological component of their policy and not a temporary measure introduced in order to overcome a current crisis. After their take-over this fact became prominent in economic theory, beyond the ideological-propagandist level. For instance, in 1936 Karl Brinkmann, a well-known professor of economics at Heidelberg University, wrote in a preface to a doctoral thesis by Karl Schiller: 'Job creation is ... not just the ignition of the economy by means of public money but also, as shown by its ties to transport, housing, and defence policies, the most important juncture and a precondition for the emergence of a new economic and territorial order for Germany.' 34 The author of the thesis himself (who after the war was to become West German minister of economics under the Social Democrats) argued along the same lines: 'The battle for work has extended the notion of job creation beyond the objectively restricted sphere of public relief works; it has lifted it out of the sphere of restarting the economy, which was far-reaching but limited in time to the Great Depression; it has enhanced this notion until it embraces a comprehensive effort of all forces in the state, the movement, and the people, along the entire front of economic life.' 35 If we remember that Schiller wrote this at a time when a state of full employment was already in sight, it is clear that these economists considered job creation by the state a permanent component of economic policy. This was not just an 'initial restarting,' as the economist Wilhelm Roepke called it in 1931, or 'pump priming', as present-day economists would say. The promotion of full employment was no longer a passing emergency measure, to be followed by a return to reliance on the free-market mechanism which operates most efficiently without external interference. State direction of the economy through a system of controls that could be employed in accordance with the rulers' political goals had become a matter of principle. Within this economy, employment policy served as an important and permanent guideline. Since this tallied with the Nazi concept of the state's role in the economy, economic theory after 1933 kept in step. Beyond this statement of principle, one can point to ideological influence upon specific applications of employment policy. Besides deficit spending and public works, the Nazis sought to direct employment to sectors they preferred. A special law passed in May 1934 36 limited the employment of workers from villages in a number of large cities. This measure could have been justified by the fact that these cities had an extremely high unemployment rate, but the Nazis also emphasised the need to disperse the population and to prevent migration from villages 37 . Earlier decrees awarded special grants to newly married couples with the aim of promoting childbearing. A special grant and a tax discount were also offered for the employment of female domestic servants. Fritz Reinhardt took the trouble to explain these decrees both in terms of the need to relieve the labour market and through arguments concerning the 'role of German women': since marriage loans were awarded only to women who resigned from their jobs, he expected about two million jobs to become vacant within two years, as well as 'a permanent shift in the position of our German women.' 38 In a similar vein, the minister of finance explained the measures as true examples of 'National Socialist finance policy, which together with the reconstruction of military power, was due to the personal merit of Adolf Hitler.' 39 The head of the unemployment-insurance and labour exchanges praised the 'desired changes in professional structure. They aim, on the one hand, at the expansion of a sound and stable class of agricultural workers ... at the training of girls for their natural occupations as housewives and mothers, and on the other hand, at the liquidation of the chronic surplus in clerical and academic personnel.' 40 In this context one should also mention the Labour Service (Arbeitsdienst), which operated on a voluntary basis until June 1935, when it became compulsory. That the law making it compulsory was passed relatively late, close in time to the introduction of compulsory military service, provides evidence that the Labour Service was considered a framework for paramilitary training and ideological indoctrination rather than a solution for unemployment. Nevertheless, a decree of August 1934 created a kind of negative incentive by granting workers above the age of twenty-five preference in the matter of new jobs, while directing younger ones to agriculture and the Labour Service 41 . There is no doubt that the Nazis at that time already valued the educational impact of this service. Foreign observers were also impressed by a framework that brought working youth together with high-school pupils and trained them in manual labour, while they ignored the strong emphasis on the military aspect of the Labour Service 42 . All these decrees stress the tendency to direct labour to villages or at least to prevent migration to cities. At the same time opposing tendencies were at work - for instance, the promotion of the automobile industry through the abolition of special taxes 43 . Hitler's fondness for automobiles was well known and may have influenced this policy, though military considerations were certainly of greater weight. In March 1933 Blomberg, the minister of the armed forces, had already informed the transport minister that he had a special interest in 'an efficient automobile industry for reasons of defence.' 44 From an economic point of view this confirms that right from the beginning of the regime the tendency to prefer and promote agriculture was pitted against the conflicting desire to prepare for war. What had also already surfaced by then was the fact that by definition an industrial society resists attempts to turn the clock back. Ultimately these two factors were stronger than the ideological preference for agriculture, in spite of the latter's initial successes. Tax, Wage, and Price Policies One of the arguments against devaluation was the fear of inflationary pressures, despite all the theoretical counter arguments the reformers presented to the effect that with prevailing unemployment these fears were groundless. There is a story that Lautenbach was sent in the summer of 1933 to persuade Hitler with regard to deficit spending on works projects: 'Mr. Hitler,' he allegedly said, 'you are now the most powerful man in Germany. There is only one thing you cannot do: under prevailing circumstances you cannot cause inflation, however hard you try.' 79 Yet the traumatic experience of 1922-23 was still very real in the public mind and served as a deterrent to exaggerated increases in disposable income, even when it was already clear that deficit spending could not be avoided. This explains why it was stressed time and again that any such spending should be 'productive,' namely that the government-initiated projects financed in this manner had to be covered by genuine economic assets. The Nazis' Immediate Program of 1932 also attempted to defuse possible objections through its claim that the 'creation of productive credit' would only be a complementary measure and that the amount spent in this manner would be offset by real economic gain. For the same reason Schacht and his collaborators tries from the very outset to accompany their expansive policy with a number of preventive measures intended to pre-empt any possibility of inflationary pressures. This tendency is demonstrated in taxation policies as well as in the steps taken to stabilise prices and freeze wages by means of administrative regulations. These measures were in fact implemented sporadically and inconsistently as long as economic circumstances made them unnecessary. The nearer the economy drew to full employment, the more they became active and efficacious tools. Since regulation of wages, prices, and interest rates was in principle considered part of an economic system directed by the state for the good of the community, the regime endeavoured to create a suitable operative mechanism from its very beginnings. Tax policies showed a tendency not to increase the disposable income of the population. At first the tax-credit notes of the Papen Plan as well as a few selective tax discounts introduced during the first months of 1933 were retained. However, the discounts were rapidly redirected to branches to which the regime gave preference for reasons of job creation and rearmament, for example, by cancelling the tax on motor vehicles and promoting building of and investment in new equipment for industrial enterprises to further the development of war-related heavy industries. A law of July 15, 1933 80 , granted a 10 percent discount on income and corporate taxes for building construction, a relatively labour-intensive branch. In order to boost sales of small- and medium-sized retail businesses, the law abolished taxes on that part of wages paid in purchase vouchers for clothing and household appliances. Another paragraph permitted tax authorities to grant discounts or tax exemption to enterprises that introduced innovative methods or new products 'if a persuasive need for these [new products] is evident within the whole German national economy.' 81 These regulations emphasised the wish to promote the production of substitutes for raw materials and other rearmament-oriented industries, though I believe it is an exaggeration to label them 'a law for the promotion of rearmament industries,' 82 like the tax-exemption decree for air-raid shelter construction of October 1933 83 . Tax reductions for agriculture had unmistakable ideological significance. The second Reinhardt Plan of September 21, 1933, included a one-hundred-million-reichsmark reduction of property. The same law also reduced property tax on residential buildings. For the period of 1933-35 these tax discounts amounted to 250 million reichsmarks 84 . For agriculture and other preferred branches these discounts no doubt brought substantial relief. For the economy as a whole their significance was rather marginal. The majority of the high tax rates introduced by the Bruening government as part of its deflationary policy remained at the same level. Until 1935 all tax reductions, including the discount of Papen's tax-credit notes, came 1.76 billion reichsmarks. In contrast, the accumulated increase in revenue from taxes for the same period added up to 5 billion reichsmarks more than in 1932; already in 1933 the net revenue came to 400 million reichsmarks more than in the preceding year 85 . As a result of high tax rates and the increase in the GNP, additional revenue from tax collection reached 7 billion reichsmarks by 1936. To this sum one must add another 2 billion, collected through various levies like 'donations' to the Winterhilfe (winter aid). In October 1934 a National Socialist Tax Reform was proclaimed with considerable hullabaloo, though its main corporate taxes, plus intensified tax collection and tightened penalties on tax evasion. The tax-department chief of the Association of Industrialists (Reichsgruppe Industrie) emphasised that it was useless to attempt a precise comparison between new and old tax regulations because the important issue was 'the new spirit of the reform, the spirit of National Socialism. The principle of the common good precedes the good of the individual' stands above everything else. In the interest of the whole nation, everyone has to pay the taxes he owes according to the tax law.' 86 In accordance with this principle tax authorities were instructed not to bother with too many details while assessing tax dues, that is, to 'interpret' both old and new regulations with a view to stringency, as appropriate to a National Socialist weltanschauung. Thus, for the good of the community the German citizen was asked to act out the old German saying 'Pay your taxes and shut up.' The only flexibility assessment officials were permitted to employ was to choose, in case of doubt, the more severe possibility, thus pressuring the taxpayer even beyond his obligations under the law. Even an economic yearbook of the official Nazi publishing house questioned 'whether it was desirable to restrict regulations for the taxpayer's legal protection so severely.' 87 The situation created by these measures seems, on the face of it, paradoxical: the government increasingly drew money from the public at a time of widespread unemployment, while, simultaneously introducing a policy deficit spend. We find, however, that this paradox was a result neither of mistaken economic nor of a lack of theoretical skill: it followed from an overall policy that aimed to reduce unemployment by increasing the GNP through expansion of government demand, primarily for rearmament, and explicitly not by means of an increase on disposable private income, that is, the promotion of private consumption. This fact alone already invalidates the assumption still accepted by many, mainly German scholars, that the period under discussion consisted of an initial stage of job creation, followed by a stage of state prosperity ( Staatskonjunktur ), which began only after the former had been accomplished 88 . In fact the policy of a wage and price freeze complemented tax policies quite logically, deriving as it did from the same pattern of thought. References: 28.Draeger-Materialsammlung. 29.BA, R 13/I, no. 106, pp. 34ff. 30.B. Koehler, Unser Wille und Weg 2 (1932): 132. 31.Ibid., p. 302. 32.O. Dietrich, Das Wirtschaftsdenken im Dritten Reich (Munich, 1936), p. 14. 33.A. Holtz, 'Sozialistische Wirtschaft,' Der Aufbau 4, no. 17 (1936): 6¯7. 34.Introduction to K. Schiller, Arbeitsbeschaffung. 35. Ibid., p. 1. 36.Gesetz zur Regelung des Arbeitseinsatzes vom 15. Mai 1934, RGB1. I, p. 381. 37.Honigberger, 'Wirtschaftspolitische Zielsetzung,' pp. 40f. 38.Fritz Reinhardt, Generalplan gegen die Arbeitslosigkeit (Oldenburg, 1933), pp. 34f. 39.L. v. Schwerin v. Krosigk, Nationalsozialistische Finanzpolitik (Jena, 1936). 40.Moenckmeier, ed., Jahrbuch , pt. 2, p. 38. 41.Honigberger, 'Wirtschaftspolitische Zielsetzung,' p. 41. 42.For example, C. W. Guillebaud, The Social Policy of Nazi Germany (Cambridge, 1941), pp. 65ff. 43.Gesetz ueber Aenderung des Kraftfahrzeugsteuergesetzes vom 10. April 1933, RGB1. I, p. 192. 44.BA, Wi I F5/370, quoted by Ries, 'Finanzpolitik,' p. 35. 79. Tax, Wage, and Price Policies 80.Lautenbach, Zins, Kredit und Produktion , p. x. 81.Gesetz ueber Steuererleichterungen vom 15. Juli 1933, RGB1. I, p. 491. 82.Quoted by Ries, 'Finanzpolitik,' p. 38. 83.W. Sauer, in Bracher, Sauer, and Schulz, Machtergreifung , p. 800. 84.Ries, 'Finanzpolitik,' p. 39. 85.Ibid., p. 87. 86.Ibid., pp. 88f. 87.Moenckmeier, ed., Jahrbuch , pt. 2, p. 152. 88.Ibid., p. 160. 89.For example, Kroll, Weltwirtschaftskrise. 61. Part C The official explanation for the wage freeze was that it would prevent inflation. It was accompanied by a commitment to price control in order to preserve the value of wages. Labour trustees were instructed to deviate from existing wage rates only in very special cases. Nevertheless, the wage freeze was not absolute even under the law, which permitted certain branches or enterprises to be released from existing agreements. Price control, which will be discussed below, was conceived as a necessary complement to the wage freeze. However as certain prices, in particular those of agricultural produce rose nevertheless, the level of real wages sank. The level of real wages reached its lowest point in January 1934 and rose only slightly later. According to one assessment the level of real wages per work hour, using 1932, the worst year of the depression, as a base, rose only to 107.2 in 1936; however, even German economists admitted that the cost of living index that served as a basis for this assessment was deliberately set low. In addition, this calculation was based on the wage index before the deduction of taxes and other obligatory payments, which under the Nazis rose considerably, to as much as 15 percent of gross income 89 . It is therefore reasonable to assess that in 1933-34 net real wages per week dropped by 6 to 7 percent and returned to the 1932 level only at the end of 1936. On the other hand, the increase in work hours per employee and the expansions of employment raised the total amount of wages paid and, thus, the overall income of workers 90 . Labour trustees were aware of the drop in real wages and even tried to neutralise it by preventing the rise of prices, especially for food. At a meeting with Backe, the Staatssekretaer for agriculture, the Ministry of Labour representative also complained about the drop in real wages. He demanded that agricultural prices be lowered because under prevailing circumstances 'current nominal wages are unbearable.' Nevertheless, at this stage workers' demands 'to share in the achievements of agriculture and those branches of the economy that have been favoured by works projects' could not be met: 'The battle against unemployment and the rearmament of the German people have priority and require preservation of current wage levels.' But this could be achieved only by the lowering of food prices 91 . The argument that the wage freeze was still necessary because of employment and rearmament policies recurs in all press publications of the period. As the achievement of full employment drew nearer, demands for higher wages increased; at times even party organs voiced these demands. An article of September 1936 begins by admitting that, 'the question of higher wages is closely bound up with our shortage of foodstuffs and raw materials.... It is therefore not yet time to attack the problem energetically.' At the same time the article sharply attacks employers in heavy industry, who refuse to raise wages because doing so would influence prices: 'Is it truly necessary for every rise in production costs to be shifted to prices? In the light of the large profits and high liquidity of the industry in question here ... the iron and metal industry, this appears to us rather questionable.' The paper concludes that wages could be raised without raising prices and that a highly profitable industry could even 'afford to lower prices! This does not refute the tendency to strengthen purchasing power. This wage rise is not unjust, but for the good of the community.' 92 Price control was always presented as a complement of to wage freezing in order to preserve the real standard of living. Like administrative wage freezing, price control was in fact unnecessary as long as the economy operated under conditions of partial unemployment and the fear of inflationary pressures was largely imaginary. What motivated both measures, besides this fear, was the same anti liberalist economic philosophy that included the objection to free-market price setting and the search for just prices as a matter of principle. The Nazis created a control mechanism, frequently utilising previous laws and decrees, because it was a component of their preliminary plans. When it became obvious that under current conditions this mechanism was in fact superfluous, they activated it only sporadically and in sectors in which external factors created upward pressures on prices; at the same time, they retained the legal and institutional framework of the control mechanism with an eye to future needs. The Bruening government had already established a price-control agency. In 1931 the mayor of Leipzig, Karl Goerdeler, was appointed national price supervisor. The office was abolished in July 1933, but was re-established in November 1934 and once again given to Goerdeler. It is noteworthy that after Goerdeler's resignation in the fall of 1935 a whole year passed before a new supervisor was appointed, at a time when full employment had already been achieved. The new appointee was Joseph Wagner, the influential Nazi Gauleiter of Silesia, and his office was redefined as Reich commissioner for price formation ( Preisbildung ) instead of price supervision ( Preisueberwachung ), that is, not merely price control but the setting of prices by the government 93 . Until November 1934 agricultural prices were in fact raised administratively, both because this sector was severely hit by sharp price slumps during the depression and because of its ideologically preferred status. Steps intended to stabilise and/or raise prices were also taken with regard to some weak industrial branches, mainly through a law of July 15, 1933 that introduced compulsory cartels 94 . It appears that these measures were primarily introduced in branches in which thousands of small, middle-class enterprises fought each other in cut-throat competition, thus endangering their viability as businesses. The cartelisation law compelled these enterprises to collaborate on marketing and price agreements, the result of which was, of course, higher consumer prices 95 . It follows that during this period administrative price controls were rarely employed to prevent price increases. The only exception was for some imported raw materials, which were allocated to each branch or enterprise according to precisely calculated quotas at fixed minimum prices, accompanied by strict administrative supervision 96 . In spite of lax price controls, prices rose very little in 1935-36. The index of wholesale prices (based on 1925-27) rose between the first quarters of 1933 and 1937 from 66.1 to 76.6, that is, by 10.5 points, from 81.0 to 86.7. The difference between the rise of wholesale prices and cost of living indexes derived from reduced marketing margins, in particular in agriculture. This sector enjoyed a considerable increase in producer prices, which for certain products rose by up to 30 percent over 1932 prices 97 . The tendency to raise prices was not limited to agriculture. It appears that certain industries had already tried to obtain increases in 1933, after the first signs of economic recovery, justifying their demands by citing the rising cost of raw materials, and so forth. At a closed meeting of the RDI in December 1933, Schmitt, the minister of economics, was sharply criticised for not permitting price increases in spite of rising production costs. According to the minutes of this meeting, Schmitt was accused of being more radical than Gottfried Feder and other Nazis and of demanding that enterprises operate on the brink of profitability in order not to raise prices; in the opinion of these industrialists, his position could only be explained by political considerations. Association officials suggested that enterprise owners avoid, as far as possible, involving the authorities whenever their suppliers raised prices and try to arrange matters within their own agencies instead of 'running at once to consult the attorney.' 98 It seems that they sought to avoid providing pretexts for the state to intervene in their affairs since they still thought in terms of corporate self-management. A confidential internal circular of the Association of Chemical Industries also contains evidence of Schmitt's determination to keep prices stable: the circular warned members not to ignore the minister of economics because the government was determined 'to use its authority in order to dismantle associations, syndicates, and groupings that defy its regulations.' 99 The more unemployment receded and private income rose, the stronger the tendency to raise prices became. The NSDAP also regarded the preservation of price stability as one of its duties. In November 1934 it was decided (probably by Bernhard Koehler's committee in Munich) to conduct a national price survey. The decision attracted criticism from members of the business community, who claimed that the source for price rises was mainly agriculture, which enjoyed party support. They resented the party's tendency to turn public opinion against them by publishing figures and random comparisons of price lists that the layman did not really understand. 'To bring them together in a survey like the projected one is in any case difficult, but requires above all expert knowledge and a cautious hand.... In individual cases it remains to be seen whether what is not always correctly understood should at all cost be denigrated before everyone's eyes.' 100 The concern felt within the business community was not unfounded. Complaints by and municipal bodies increased at the time, generating a series of appeals to Hitler, the Ministry of Economics, and the RNS. In July 1934 the minister of interior informed the chancellor's office of a number of Gestapo reports ( Lageberichte der Staatspolizei ) from various regions that told of unrest following the rise in food prices. As we saw in the previous chapter, in August of the same year the Gauleiters met with Staatssekretaer Backe to discuss the same matter, just a few days after Backe's meeting with labour Trustees 101 . There was also press criticism of agricultural policy. In November 1934 the Frankfurter Zeitung devoted an editorial to Goerdeler's appointment as price commissioner. It praised the government for its wage-freeze policy but emphasised that this demanded price stability, which had not been sufficiently preserved. Once again the blame was put mainly on agriculture as well as on wholesale and retail trade in agricultural produce, which had caused a rise of about 24 percent compared to the low level of prices in the spring of 1933: 'The price commissioner will no doubt extend his supervisory activity in this direction, but it appears that the price policy of agricultural corporations also requires re-examination.' 102 It soon became obvious that Goerdeler was the loser in the contest with Darre and party officials entrenched in agriculture. He held office for less than a year and was continuously embroiled in arguments, not only about the level of agricultural prices but also about the whole method of authorising the RNS to determine prices. Hitler ultimately ruled in favour of Darre and agriculture, and not even industrial circles supported Goerdeler. It seems that the industrialists had meanwhile come round to the view that cartelisation and administrative fixing of prices for government orders served their interests better than a return to free-market rules. In 1931, when Goerdeler was appointed supervisor of prices for the first time, the lowering of prices was part of Bruening's overall policy of the Great Depression and unemployment. In 1934 the situation was different; he had to cope with a tendency for prices to rise within an expanding economy. Goerdeler held traditional liberal views on economics, believing that exaggerated cartelisation, particularly in agriculture, made prices rise. However, his efforts to lead the economy back to free-market competition clashed with the Nazis' basic economic principles and were therefore doomed from the outset. In a press interview of February 1935 Goerdeler explained that he approved of fixed prices for basic agricultural produce, but that one should seek 'to keep the market regulation of food-processing industries and the accompanying trade free from damaging cartelisation.' 103 In March another interviewer from Chemische Industrie received the impression that Goerdeler's objections were not limited to agriculture and that he refused 'to dictate prices or the set maximum and minimum prices; his only measure was an appeal to voluntary price discipline in the economy.' 104 In January, Goerdeler had written in the same paper that although it was impossible to abolish price controls immediately, an effort had to be made to moderate price supervision and eventually abolish controls altogether 105 . In February Goerdeler tried to reintroduce free price setting into construction work through a method of tenders, granting work contracts to the cheapest bidder. He soon found that in this matter industrialists were not prepared to follow his lead; they preferred the cost plus method (which they called 'fair prices') in their relations with public authorities. At a meeting at the Berlin office of the Association of Industrialist on June 4, 1935, the industrialists decided to protest against Goerdeler's proposal, arguing that it would attract questionable elements to their branch, which had just then been heavily burdened by the export levy. They claimed that, having been promised compensation for the levy through profitable prices on the domestic market, Goerdeler's decree constituted a breach of this promise. Goerdeler's representative did not budge from his position and even refused to let association officials participate in later consultations. It is of interest that the circular distributed by the association after this meeting was addressed not only to their own members and the Ministry of Economics, but also to the Nazi leadership's Committee for Economic Policy in Munich and to the Gauleiters 106 . It appears that industrialists considered the issue a matter of principle that the party was certain to support, as indeed it did. The matter of the export levy on domestic production reappeared in all discussions on price levels from June to September 1935, ultimately leading to Goerdeler's resignation. In his interrogation by the Gestapo following the assassination plot against Hitler of June 20, 1944, Goerdeler explained in detail what difficulties he had to cope with as price commissioner. His evidence shows beyond any doubt that his approach was diametrically opposed to the entire economic system prevailing at the time, including credit expansion by deficit spending and export levies: 'Scarcity of goods [exists] only in a few spheres. The interference comes from the direction of money (artificial creation of money!). Very different methods [are] therefore necessary: 1. To stop the artificial creation of money. To raise output without raising wages through longer working time. 2. To liquidate gaps in the supply of goods. 3. To examine prices and release from price controls.... Report on a controversy with Ley and interest groups that demand compulsory measures (already known): As to paragraph 1, Schacht could be won over only very late. He is bound by his promise to the Fuehrer to create money, a fact that became known to Goerdeler only in 1937.... There follows an exam of price controls. International obligations also have to be checked. Also on this with the minister of economy.... Fight against the inclination of business since 33, to demand directive measures. But the abuse of competition (dumping) is also to be fought.... All this was accomplished by May 1935. Now the money issued had to be regulated [point 1]. Here Goerdeler lacks adequate authority. Schacht cautiously refuses to stop the forwarding of further credit. The massive printing of paper money pushes prices upward, a situation Goerdeler tries to brake by an abundance of decrees. He thus arrives at the limits of what he can do; does not want a system of maximum prices.... Goerdeler makes stoppage of credit expansion a condition for continuing in office. Demands abolition of the export levy, which pushes prices up. A meeting with the Fuehrer because the president of the Reichsbank and minister of economy [Schacht] rejected his demand at the end of July. No ruling, the Fuehrer refuses to give it, but asks him to continue working. Goerdeler agrees provided that he is to receive additional authority. Talks that this may happen, but it does not because, as Goerdeler learned, some of the ministers opposed it' 107 . Goerdeler's account to his Gestapo interrogators on the eve of his execution following the assassination plot is fully confirmed by the correspondence on this issue from June to September 1935 kept in the files of the chancellor's office. The sharpest objections to enhanced authority for Goerdeler came from Darre, who insisted on RNS independence in the matter of prices. He claimed that he had supervised the lowering of bread and beef prices, while Goerdeler had agreed to raise them. In addition, he accused Goerdeler of the inclination to ignore the ministers concerned and make arrangements over their heads 108 . Three days later a letter whose contents were almost identical to these complaints reached the Reich chancellery (at Darre's request, according to various sources), signed by Martin Bormann in the name of Rudolf Hess. The letter conveyed the party's full support for Darre and opposed Goerdeler and his demand for more authority 109 . But a letter by Schacht expresses somewhat qualified support for the proposed law granting far-reaching authority to the price commissioner, on the explicit condition that a preliminary agreement with the minister concerned be achieved for every issue or that the issue be submitted to the Fuehrer for a final ruling 110 . Goerdeler rejected this condition out of hand and resigned 111 . I have described this affair in detail because it clear demonstrates: 1) that the regime favoured the method of price control as an inherent component of a comprehensive economic system that combined ideological motivations with immediate political goals; 2) that business circles supported this method from 1933 on and opposed Goerdeler's attempts to return to a competitive market economy; and 3) that a policy of credit expansion and state-regulated foreign trade were part of this system, so that Schacht opted with Hitler against Goerdeler. Given the condition of the German economy in 1935, when about 2.5 million people were still unemployed, purely economic considerations were on their side; Goerdeler's proposals for a longer work day and reduction of government credit were not to the point. For the same reason the government had no difficulty in accepting the price commissioner's resignation and could afford not to appoint a new one as long as there was partial unemployment and the danger of inflationary pressures was imaginary. Prices did indeed rise in certain sectors where shortages were caused by external pressures like rising prices on the international market or lack of foreign currency. But these were controlled through existing cartel agencies and the fixed prices for government orders on which these agencies depended. Acute inflationary pressures did not appear as long as production increased and most enterprises still had reserves of unemployed capacity. In economic terms this enabled these enterprises to expand their output at a lower average cost per unit. During the initial years these reserves were sufficiently large to set off opposing pressures, mainly from international trade 112 . The wage freeze to which price control was tied, on the other hand, had political significance and was designed 'to win the confidence of property-owning classes.' 113 There is no doubt that in 1933 as well as during the subsequent period Hitler still needed that group's support and voluntary co-operation; it is reasonable to assume that a proclaimed policy of wage freezing was part of this effort. The preservation of stable prices and, therefore, or real wages was emphasised as a balancing factor, aimed at public opinion and in particular at workers, who found themselves exposed and without legal protection after the abolition of trade unions. It follows from a political angle as well. One should also remember that price control as an instrument for social justice was an ideological focal point of all early Nazi plans and platforms. An economist from the Othmar Spann circle who adjusted rapidly to the new regime from the start stressed the ideological approach to the matter of price policies: 'A view of pricing which is causal-mechanistic is rejected by National Socialism for there should be no domination by the vagaries of the market. The economic fate of the individual must not be abandoned to the free interplay of supply and demand. This means that price policy has priority over price theory and that price regulation by the state or by the estates is superimposed upon the price mechanisms that result from the movement of the market. The demand for just or fair prices was voiced from the very beginning.' 114 Dietrich Klagges had already made a similar claim in withdrawing the decision making on interest rates, prices, and wages from the sphere of economic power and transferring it to the sphere of justice and legal authority.... 'But in economic matters the sense of justice is not all the same in both spheres, especially when particular interests are involved, which always happens with questions of prices and wages. Ultimately the regulation of wages and prices will therefore always become a matter for state decision.' 115 This argument was the basis for Klagge's strange demand for a mathematical calculation of social justice and the common good. It was thus no accident that in 1936, when the economy achieved full employment and the question of price control became economically acute, the office of price commissioner was given to a Nazi Gauleiter and not to an economist. The Voelkischer Beobachter greeted the appointment with an editorial written by its economic editor, who celebrated the occasion as a victory for the party, which would from this point onward change 'the whole structure of the economy.... When the Fuehrer said, The party commands the state,' every National Socialist knew that in [the area of] economic policy also the movement and its spirit would be mobilised. We have awaited this, convinced that the call would, indeed, come.' The author regarded the news of the appointment of Joseph Wagner as Reich commissioner for price formation and the appointee's announcement that he would call on party agencies not only for educational purposes, but also take part in day-to-day control activities, as the final realisation of the Fuehrer's promise 116 . References: 89.Guillebaud, Economic Recovery , pp. 186f.; Kroll, Weltwirtschaftskrise , p. 583. 90.J. Kuczinski, Die Geschichte der Lage der Arbeiter in Deutschland von 1789 bis in die Gegenwart , vol. 2, pt, 1, 3d ed. (Berlin [East], 1953), p. 184. 91.BA, R 43/II, 318. 92. Westdeutscher Beobachter , Sept. 4, 1936. 93.Kroll, Weltwirtschaftskrise , pp. 55f. 94.Gesetz ueber die Errichtung von Zwangskartellen, RGB1. I, p. 480. 95.Schweitzer, Big Business , p. 272. 96.Mandelbaum, 'Full Employment,' p. 191. 97.Guillebaud, Economic Recovery , p. 166; Kroll, Weltwirtschaftskrise , p. 538. 98.BA R 13/I, 625, Meeting of Nov. 11, 1933. 99.NA, T¯71, roll 139, fr. 653359f. 100. Deutsche Fuehrerbriefe , Nov. 2, 1934. 101.BA, R 43/II, 317/18. 102. Frankfurter Zeitung , Nov. 7, 1934. 103. Berliner Boersen Courier , Feb. 7, 1935. 104. Chemische Industrie , Mar. 16, 1935. 105.Ibid., Jan. 12, 1935. 106.BA, R 13/I, 238, pp. 50ff. 107.BA, Nachlass Goerdeler, no. 25. 108.BA R 43/II, 315a, DarrÉ an Lammers vom 6.7.1935. 109.Ibid., Bormann an Lammers vom 9.7.1935. 110.Ibid., Schacht and Lammers vom 15.7.1935. 111.Ibid., Goerdeler an Lammers vom 27.7.1935. 112.Schweitzer, Big Business , p. 186; H. Stuebel, 'Die Finanzierung der Aufruestung im Dritten Reich,' Europa-Archiv 6 (1951): 4134; Mandelbaum, 'Full Employment,' p. 189. 113.Mandelbaum, 'Full Employment,' p. 191. 114.Buelow, Staendestaat , p. 51. 115.D. Klagges, 'Soziale Gerechtigkeit durch Organisation und Berechnung,' Nationalsozialistische Briefe 5 (1929¯30): 29f. 116. Voelkischer Beobachter , June 14, 1936. Part D Chapter 5 The Economy of War and Conquest, 1937-1945 In August 1936 Hitler composed a confidential memorandum requesting the army and all government branches in Germany to prepare the armed forces and the economy for war within four years 1 . Full employment had already been achieved, and there were signs of shortages in skilled labour and raw materials, primarily imported ones. German exports, reduced partly because of conditions on the international market and partly by deliberate government policy, were incapable of providing the necessary foreign currency. Hitler demanded that these difficulties be met by allocating top priority to rearmament and by co-ordinating the activity of all involved authorities. He also specified particular, immediate objectives: an increase in synthetic fuel and rubber production as well as the output of iron and coal mining, irrespective of production costs. In September 1936 Goering was made responsible for the execution of these tasks. In addition to the offices he already held, he was appointed plenipotentiary for the execution of the Four-Year Plan ( Beauftragter zur Durchfuehrung des Vierjahresplans ). Goering thus arrived at the peak of his power in the Nazi hierarchy, though his appointment did not cause substantial changes in the economy and its management 2 . A number of branches were pinpointed within the Four-Year Plan administration in order to award them the priority outlined in Hitler's memorandum. Another directive agency with wide-ranging but unspecified authority was added to the existing control mechanism. The appointment of Joseph Wagner, Gauleiter for Silesia, as price commissioner was among the first measures taken to tighten price administering. Goering also appointed a number of authorised general deputies for various production branches like the steel, iron, chemicals, construction-work, and automobile industries. At the top of the pyramid stood the General Four-Year Plan Council headed by Goering himself and composed of the Staatssekretaere for economy, agriculture, labour, and transport. On the face of it these officials were appointed to the council with the aim of facilitating co-ordination between government departments, but at the same time they encroached on the authority of their respective ministers. Schacht was replaced as minister of economics in November 1937, first by Goering himself and later, at the beginning of 1938, by Walter Funk, who in January 1939 also took over Schacht's position at the Reichsbank. Prior to this time Funk was already a member of Goering's entourage, but he had much less experience, authority, and effective drive than his predecessor in this office. In spite of its apparently powerful status, the Four-Year Plan administration never reached the level of a comprehensive planning agency 3 ; its activity centred mainly on a few strategically important sectors plagued by shortages. Special attention was paid to the production of substitutes for rubber, fuel, and fibres for textile industries. Karl Krauch, an experienced chemist/industrialist and a board member of I.G. Farben, the leading chemical industry group in Germany, was put at the head of the department for chemical industries. Krauch had already served as Goering's adviser at the Air Force Ministry in 1933; in 1934 he was instrumental in the establishment of an industrial combine for the extraction of gasoline from coal. Now he was assigned as well to the development of synthetic rubber ( Buna ). His close co-operation with the I.G. Farben group facilitated participation of the group's administrative machinery in activities of the Four-Year Plan administration. Similar co-operative arrangements were established with other industrial branches connected to rearmament or production for its infrastructure, and these were progressively expanded during the war. Goering also established new state-owned enterprises directly managed by his administration. Outstanding among these was the Hermann Goering Werke, which started production in 1937 at Salzgitter near Braunschweig and processed iron ore whose quantitative and qualitative inferiority made it unattractive to private industry. Paul Pleiger, an industrialist from Westphalia and a friend of Goering's, headed this group of enterprises. During the war years he succeeded in establishing new plants and in annexing existing ones in Austria and in occupied countries. In the course of time the Hermann Goering Werke became a giant industrial complex involved in the production of machinery, mining of various kinds, and even shipping, its functions extending far beyond its assignments within the framework of the Four-Year Plan 4 . From the beginning of 1937 Goering, in his capacity as head of this plan, played a major role in hastening the ousting of Jews from the few economic activities in which they were still engaged. Following the pogrom of November 1938, he directed all expropriation and seizure of Jewish property. It was Goering who ordered compulsory Aryanization and payment of the 'indemnity' of one billion reichsmarks imposed on German Jewry. This indemnity was collected as a personal levy of 20 to 25 percent payable by every Jew whose registered property exceeded 5,000 reichsmarks. After the invasion of Poland, it was only a natural sequel for the Four-Year Plan administration to authorise establishment of the Haupttreuhandstell-Ost (Head Trusteeship East), empowered to manage all Jewish and Polish industrial enterprises in occupied territories 5 . Strategy and Rearmament, 1936-1940 Post war research has tended to depreciate the success in planning and performance of Germany's rearmament industries. The basis for these evaluations was a survey conducted by the U.S. Strategic Air Command in the fall of 1945. Two economists who took part in this survey (parts of which remain restricted even today) used it in works they published on this subject. Thus, for instance, N. Kaldo claims that 'although everything was "controlled" (on paper) right from the beginning of the war, the actual administration of controls was often clumsy and amateurish in the extreme.' 6 Burton Klein, in the study mentioned above, went even further, claiming that the planning itself was not geared to a lengthy war. According to Klein, although the production of consumer goods had reached pre-depression level, that is, the level of 1928, in 1937, it continued to expand right up to the outbreak of war. His conclusion was that 'in the pre-war period the German economy produced both "butter and guns" - much more of the former and much less of the latter than has been commonly assumed.' 7 Klein explained this surprising phenomenon by a distinction between 'rearmament in depth' and 'rearmament in width.' The former bases arms production on a firm industrial infrastructure and stable raw material supply, which insure continuous production for war purposes and the renewal of reserves over lengthy periods. In contrast, rearmament in width calls for the production of a wide range of war equipment in large quantities in order to achieve an immediate advantage at the initial stage of war. In Klein's opinion the Nazis considered the creation of a large-scale infrastructure for long-term armament production unnecessary because their military and strategic planning was aimed at one short blitzkrieg or a consecutive series of 'lightning wars.' They planned to insure quick victories by conducting rapidly moving campaigns based on the grouping of quantitatively and qualitatively superior forces and armament supplies, thus overpowering the enemy within a short span of time. They did not exclude the possibility that decisive victory would not be achieved in a single, rapid campaign and the war would therefore have to move to additional fronts. However, their planning for such an eventuality relied on the exploitation of the raw-material resources and industrial capacity of occupied territories. These territories were also to supply food for Germany's population in order to avoid the hardship of shortages of the type still recalled from World War I. As it turned out, such expectations were not exaggerated. We have already shown that Klein's calculations were too low with regard to the proportion of rearmament costs to the GNP and total government expenditure until the war. We have now to examine the performance of the German economy at the stage of accelerated war preparations (1936-39) and subsequently during the war itself. First, Klein and Kaldor underrated Nazi successes at these stages. Multiple competing authorities as well as individual or group rivalries were indeed characteristic of the Nazi regime; at all levels of the administration decision making did not always adhere to obligatory and permanent managerial nor. The surprising fact is that the system nevertheless worked efficiently and achieved its objectives in this as well as in other spheres. The confusion of authority and the existence of parallel or competing agencies represented conflicted economic and social interests, which the totalitarian regime did not permit to contend with each other in any other arena. This infighting generated friction, which damaged efficiency and no doubt also caused economic losses. It is possible, on the other hand, that this method of ad hoc decision making also provided a greater measure of flexibility and adaptability to rapidly changing conditions in the course of the war. Surplus demand for skilled labour, in particular in branches working for rearmament, emerged on the labour market even before full employment was achieved. The existing law permitted labour trustees enhanced productivity. Plants working for rearmament, especially in metal-processing industries, had already utilised this permit in 1934 to attract skilled workers from other enterprises. In this manner they even succeeded in recruiting workers from other districts, in particular from those to the west of the Rhine, where arms production was prohibited until the German army occupied those areas in March 1936. At the same time the construction and building industries, which played a leading role during the initial stage of unemployment relief, recruited thousands of agricultural workers in spite of the authorities' efforts to restrict migration from villages. In response to these pressures, an obligatory, personal Arbeitsbuch (work book) was introduced in which every change of workplace hat to be confirmed by the local labour exchange. Nevertheless, freedom of movement between workplaces was not yet restricted, even after the proclamation of compulsory military service in March 1935. The nearer the economy drew to full employment, the more the signs of labour shortages increased; these were exacerbated by the Nazi policy of returning women to their 'natural role,' that is, housekeeping. Beginning in 1936 this state of affairs generated upward pressures on wages, thus also imperilling price policies. Nevertheless, an absolute prohibition against wage increases was postponed until 1938, probably in order not to deter highly skilled workers from moving to rearmament industries. Even after this date competition among enterprises over such workers continued, though by different means: enterprises granted various fringe benefits, officially or somehow disguised - improved working conditions, aid in housekeeping, permanent use of light vehicles (usually motorcycles) owned by the firm, higher wages for overtime, and so forth. These benefits yielded considerable added income in spite of the total wage freeze officially in effect. The fever of war preparations reached its first peak in the summer of 1938, when about four hundred thousand workers were enlisted to build fortification works on the western frontier, the famous Western Wall. The method of recruitment, legalised by special decree, called for the issuing of individual summonses for a restricted period of time. From March 1939 the law forbade a worker to leave his workplace without permission from the labour exchange; thus militarisation of the labour force within the framework of the Four-Year Plan was completed. A shortage of imported raw materials had already appeared during the first years of Nazi rule. In 1928 Germany imported 95 percent of the raw materials for its textile industry and 60 percent of all mineral ores for heavy industry. Supervision Bureaux for the allocation of scarce raw materials had already been established in 1934. The Four-Year Plan accorded top priority to the production of raw materials and/or substitutes and united the Supervision Bureaux under a central authority. The use of certain raw materials like nickel, copper, and other non-iron metals was altogether prohibited in industries producing consumer goods. In addition, a massive scrap-metal collection was launched with the aid of party agencies, including women's associations, youth associations, and schools. (The refuse dumps of 150 towns yielded 55,000 tons of discarded tin cans between September 1937 and July 1938. 8 ) The efforts invested in the Four-Year Plan were of course not limited to rationing existing raw materials. They were aimed also at increasing the output of key industrial branches through the establishment of new enterprises and investment in the expansion of existing ones. The data in the following table show that these efforts yielded results in a number of spheres 9 . Production of Strategic Raw Materials (In Thousands of Tons) 1936 1939 Growth in percent Iron ores 2,259 3,928 73.9 Aluminium 95 194 104.2 Buna (synthetic rubber) 1 22 Synthetic fibres 43 192 346.5 Aircraft gasoline 43 302 602.3 Regular gasoline 1,214 1,633 34.5 Labour shortages became increasingly apparent in agriculture, where between 1933 and 1939 the number of employed fell from 9.3 to 9.0 million, or from 28.9 percent to 25.9 percent of the total number of employed 10 . It appears that, its ideological commitment notwithstanding, the regime had resigned itself to the flight of workers from agriculture to the armament industries and tried to offset the losses in the labour force in various ways. Once the administration for the Four-Year Plan was established, the Staatssekretaer at the Ministry of Agriculture also became an affiliated general plenipotentiary in order to 'insure the sustenance of the German people.' In March 1937 a special law authorised the RNS to determine what crops were to be grown in order to increase the output of scarce produce, in particular vegetable fats. In July of the same year peasants were ordered to hand over all wheat and rye harvests to official purchase agencies, while the feeding of these grains to livestock was strictly forbidden. From August 1938 grains were stockpiled in specially requisitioned gymnasiums and dance halls; up to 35 percent of the construction costs for the building of granaries was subsidised. To counter labour shortages students were recruited at harvest time and girls were committed to a year of duty in agriculture after graduating from school. The Labour Service, from 1935 on a compulsory year of pre-military training, was also partially utilised at harvest time. Peasants received considerable aid for mechanisation and the purchase of chemicals like fertilisers and pesticides. Jointly, these efforts yielded an increase in the output of some vital crops and the almost complete independence from bread-grain imports as early as 1938 11 . However, the shortage in animal and vegetable fats remained acute; it generated a propaganda campaign against the consumption of butter even before the war and was responsible for the familiar cliche of 'guns instead of butter.' The output of beef and pork, on the other hand, grew between 1936 and 1939 by 25 percent and 10 percent respectively, reflecting the rise in living standards resulting from increased employment and income 12 . The shortage of raw materials was quite prominent in the textile industries. To meet rising consumer demand, synthetic fibres of poor quality were added to fabrics, thus diminishing the product's quality and shortening its life span. Consumer complaints were met with decrees and restrictions for the producer: quality specifications like 'pure wool' were prohibited, as were cleaning instructions that were liable to reveal the poor quality of the product. It is interesting that in spite of these restrictions, caused mainly by the state of foreign trade, the output of consumer goods grew throughout these years and declined only slightly even after the outbreak of war. The per capita production index for consumer goods returned in 1936 to the level of 1928 and rose by 8 percent until 1939; by the beginning of 1942 it had returned to the 1936 level and only in 1944, when what was left of the German economy made its final rearmament efforts, did the index drop by 18 percent. The production of capital goods grew at a much faster pace over the same period: their per capita production index, which in 1936 also stood at 110 compared to 1928, rose in 1939 to 121 and to 150 in the middle of 1944 13 . There is therefore no doubt that industrial production directly or indirectly connected to rearmament enjoyed preference even before the war, but only to a small extent at the expense of current civil consumption, although the growth of the latter was slowed down. Even without going into details with regard to specific products, it is clear that the situation described above arose from deliberate government policy. The Nazis did not scorn public opinion and followed with concern every sign of public dissatisfaction, even when their success in foreign and economic policy resulted in widespread and sometimes enthusiastic support among the majority of the German people. This attitude left its mark on the sphere of consumer goods: the production of certain goods, at the time classified all over the world as luxury items, was explicitly encouraged. Thus, for example, a considerable effort was invested in the production and sale of a cheap, uniform model radio receiver. Awareness of its propaganda value caused production to continue even during the war. A popular refrigerator was also produced and sold in considerable quantities as part of a propaganda drive against the waste of perishable food products. Another campaign, accompanied by a clamorous propaganda drive, pursued an entirely different aim. In May 1938, with a great deal of publicity, Hitler laid the cornerstone for the plant that was to produce the popular Volkswagen. Even before the ceremony numerous Germans had begun to pay savings-installments toward future purchase of such a car. It is reasonable to assume that at the time, with accelerating war preparations, no one seriously intended to begin production of such cars in the foreseeable future. Instead, it was a measure directed toward the withdrawal of disposable income from the public, whose earnings had grown throughout the period of prosperity, wage restrictions notwithstanding. Hitler himself mentioned the issue in his foundation ceremony speech: 'If the German people spend all their wages on consumer goods, we cannot ... produce without limits, it will cause disaster. It is therefore vital to guide the purchasing power of the German people in other directions.' 14 In this case the direction was toward recruiting savings for armaments, with an additional incentive to work overtime in order to realise the dream of owning a car. By the end of March 170,000 savers had deposited the sum of 110 million reichsmarks in the Volkswagen account for the popular model. However, when the plant began operating, it produced military vehicles and aircraft parts exclusively 15 . Ferdinand Porsche's clever invention, the horizontal 'boxer engine,' achieved recognition and was mass-produced only some years after the war had ended. Can we conclude from all this that Nazi Germany did indeed not prepare for war and that the nation produced more butter than guns? We know today that such an evaluation is mistaken. Actually, from 1936 to 1937 on Germany pursued a regimen of covert austerity with regard to numerous consumer goods, with the explicit purpose of directing its scarce production resources to rearmament. There seems to be some justification for Blaich's view that during these years Germany produced not 'guns as well as butter,' but 'guns and jam' instead of butter and bunkers and fortifications instead of residences. Blaich is also right to claim that confusion and rivalries within the Four-Year Plan administration 'should by no means obscure the fact that by September 1, 1939, the foundations for centralised planning and the direction of the economy, based of private business initiative and private capital, had already been laid.' 16 Autarky was only partial; given the prevailing conditions it is doubtful whether it could have been expanded. Yet achievement on the road to self-sufficiency were still impressive, and the hope of compensating for shortages quickly by rapid conquests in Europe and the exertion of pressure on neutral countries like Sweden were not groundless, as it turned out. At the outbreak of war, rationing was at once expanded to additional products, though this was explicitly proclaimed to be a temporary measure and the rations fixed were only slightly smaller than the average consumption 17 . Jews still living in Germany generally received much smaller rations or, for certain products, none at all. They were forbidden to buy clothing or footwear and received no rations for meat, fish, white bread, fruit, sweets, and cigarettes 18 . In the initial stages of war, the general population's consumption was much less restricted than it had been during World War I; later on the Germans even enjoyed abundance when the spoils of war were removed from the occupied territories. Economic activity during the war was clearly divided into two periods. The first until the end of 1941, was still dominated by blitzkrieg strategy, that is, industrial production directed toward the short-term goals described above. On the face of it, military successes in Poland, France, the Netherlands, and Scandinavia justified Hitler's reasoning that an in-depth infrastructure for long-term war production was not necessary for the next stage of the blitzkrieg was sufficient to achieve a decisive power advantage and quick victory 19 . The Germans immediately seized all stocks of raw materials, such as mineral ores, in occupied countries and transferred large quantities of them to Germany even before they harnessed local production capacity to their own requirements. Substantial quantities of some materials gained in this manner were instrumental in relieving severe shortages in Germany's war industry. In Poland and France alone, 355,000 tons of non iron metals plus 272,000 tons of iron ore, along with substantial quantities of aircraft and other kinds of fuel as well as various chemical products vital in armament industries, fell into the hands of the Germans 20 . These, combined with the regular supply of high-quality iron ore from Sweden, enabled Germany to increase steel production by 26 percent between the end of 1939 and the end of 1940, almost without detracting from civil production; 40.8 percent of its industrial output was still directed to civil consumption, as compared to 41.5 percent in the last quarter of 1939. These data imply not merely stagnation but even a certain drop in the production of armaments in the summer of 1940 following the surrender of France. Loyal to their blitzkrieg strategy, German planners made substantial changes in their production plans in accordance with the specific requirements of the next campaign. In the summer of 1940, while the invasion of the British Isles was still on the agenda, production was directed to aircraft and shipping. At the end of that year and during the beginning of 1941, when the Barbarossa decision - to invade the USSR - had been made, production was shifted to tanks, guns, ammunition, and infantry equipment. It turned out that it was precisely the absence of rigid preliminary planning that provided the military and industrial system with a considerable measure of flexibility - as long as war objectives and the manner in which the war was conducted were almost exclusively determined by Germany 21 . References: 1. Treue, 'Hitlers Denkschrift,' pp. 184¯210. 2. Broszat, Der Staat Hitlers , pp. 349, 370ff. 3. Petzina, Autarkiepolitik. 4. Broszat, Der Staat Hitlers , pp. 374f. 5. 5Ibid., p. 376. 6. N. Kaldor, 'The German War Economy,' The Review of Economic Studies 13 (1945¯46). 7. Klein, Germany's Preparations for War , p. 76. 8. F. Blaich, 'Wirtschaft und Ruestung in Deutschland, 1933¯1939,' in K.D. Bracher, M. Funke, and H.A. Jacobsen, eds., Nationalsozialistische Diktatur, 1933¯1945: Eine Bilanz (Bonn, 1983), pp. 292ff.; Fischer, Deutsche Wirtschaftspolitik , pp. 83ff.; H. Aubin and W. Zorn, Handbuch der deutschen Wirtschafts- und Sozialgeschichte , vol. 2 (Stuttgart, 1976), relevant chapters. 9. R. Wagenfuehr, Die deutsche Industrie im Kriege, 1939¯1945 (Berlin, 1963), p. 18. 10.D. Petzina, W. Abelshauser, and A. Faust, Sozialgeschichtliches Arbeitsbuch, III: Materialien zur Statistik des Deutschen Reiches, 1914¯1945 (Munich, 1978), pp. 55ff. 11.Petzina, Autarkiepolitik , p. 95. 12.M. Rolfes in Aubin and Zorn, Handbuch , p. 771. 13.W. Fischer in Aubin and Zorn, Handbuch , p. 807. 14.M. Domarus, Hitler-Reden und Proklamationen (Wuerzburg, 1962¯63), pp. 867f. 15.P. Kluke, 'Hitler und das Volkswagenprojekt,' Vierteljahreshefte fuer Zeitgeschichte 8 (1960): 341f. 16.Blaich, 'Wirtschaft und Ruestung,' p. 315. 17.H. Kellenbenz, Deutsche Wirtschaftsgeschichte , vol. 2 (Munich 1981), p. 458. 18.W. Scheffler, Judenverfolgung im Dritten Reich (Berlin, 1964), p. 42. 19.Milward, The German Economy at War , pp. 30ff. 20.Ibid.; Kellenbenz, Deutsche Wirtschaftsgeschichte , p. 460. 21.Milward, The German Economy at War , pp. 38ff. Back to the top