The reality of how the economy of the Third Reich functioned is steeped in mystery and deception. Those in the mainstream right will claim that it was a socialistic and communistic centrally planned economy with no room for the individual businessman, while those on the mainstream left will claim that it was an oligarchy ruled by and in favor of capitalist interests. Obviously, as is the case when it comes to many other political questions, both mainstream left and right are grossly incorrect. The Third Reich’s economy can best be described as economically pragmatic, translating realpolitik from the language of foreign policy to economy. This proved enormously successful. Germany managed, under the Hitler government, to enable social mobility and private initiative, more than double the German birth rate, and increase wages by over twenty-five percent. This economic success is not owed to free market capitalism nor strong armed communism, but to the economic third position and National Socialist principles.

Now, with an understanding of the situation and catastrophic problems which Germany and its economy faced (see my essay on Germany after WWI), we can finally delve into the economic policy of the NSDAP. In 1932, an election year for Weimar Germany, the NSDAP released an ‘emergency program’ for economic growth and recovery. This program focused heavily on putting Germany back to work through a combination of private business and state initiatives, which involved now-famous public works projects, the most notable being the world renowned Autobahn system. The 1932 emergency program always comes back to jobs. It describes each and every German as having a “right to work.”

In the first section of the pamphlet, titled “The Reasons for Creating Jobs,” it is explained that employment creates prosperity. It says, “Just as the individual sinks into poverty when he no longer has a job, so also must a whole people sink into poverty when it does not use its productive strength and tolerates a political-economic system that hinders people’s comrades [Volksgenossen] who are willing and able to support themselves.” Ridding Germany of unemployment was not merely a talking point for National Socialist politicians, it was an ideological necessity. The consequences of tolerating unemployment, according to this pamphlet, include “hunger, poverty, and wage cuts.” The reasoning given for this is sound, “With less labor, less is produced, and therefore less can be consumed.” One of the most important elements of the economic program of the NSDAP is increasing production, which will in turn increase employment and bring down prices, allowing in turn for more consumption and further growth. Exponential growth of industry and production such as this played a major part in Germany’s economic recovery.

The first and second points of the first section of the emergency economic program revolve around unemployment and capital. Outlining the ideas that “unemployment causes poverty, employment creates prosperity,” and “capital does not create jobs, rather jobs create capital.” The complete and total elimination of unemployment is central to National Socialist economics, and was especially important to the German National Socialists of the 1920s and 30s, given Germany’s situation. The more work is done, the more capital is produced, and therefore the results of labor (lowering of prices and an increase in purchasing power) will be greater. A prerequisite to production is employment. In other words, the only way to produce is to labor.

The third point in the first section, titled “Unemployment Benefits Burden the Economy, but Job Creation Stimulates the Economy,” it is made clear that the National Socialists were conscious of the inevitable downwards spirals which are welfare and business/bank bailouts, writing; “The unemployed must [then] be supported by the community, which means an increase in public expenditures. The result: the collapse of public finance, despite an increase in taxation.” Then described is the decrease in contributions to the unemployment fund (welfare) due to widespread poverty. Tax revenue will then decrease due to poverty, while the same poverty forces many more people to rely on tax-funded welfare programs, plunging the nation into debt as it borrows to make up for a lack of tax revenue. Taxes are then raised, and small business is ruined by additional taxation. Large businesses are forced to be bailed out by the state, as their bankruptcy would cause even further economic misery. As a result of this neverending spiral of debt, irresponsible government spending, and economic misery, crushing debt which is to be placed on the shoulders of those still unborn is built up.

The paragraphs which follow these predictions, proved to be true by the failures and crushing debts of countless welfare states, makes clear that a combination of welfare programs, excessive taxation, and widespread unemployment is a death sentence for any nation and its economy. Of circumstances like these, the National Socialists say this; “Unemployment, poverty, and deficits have to get worse, the general situation more hopeless, as long as there is not complete change.” To make effective use of public resources is emphasized, “If public means are no longer wasted, but rather are used to create jobs, our labor will no longer be wasted, but rather used productively, which will result in improvements everywhere: an increase in production, increased purchasing power, reduction in taxes, a general improvement in the economy.”

With this reasoning, the National Socialists advocated for responsible and limited government spending, and wished to ensure that taxpayer money was allocated to projects which would have a return greater than the expense. The idea that all those who are available should labor (literally) for the good of the country, is prominent in National Socialist ideology. Without the efficient use of labor, there was to be no economic recovery. In order for Germany to reclaim its title as industrial powerhouse of Europe (which was lost after WWI), every German worker who was unemployed needed to be put back to work. Note that this is greatly different from the Marxist concept of employment, where work is viewed as a scourge and the employer as a ruthless exploiter.

When Hitler and the NSDAP took power in 1933, Hitler pledged to destroy unemployment within four years. By 1936, three years later, five million Germans had been put back to work. By 1938, there was a labor shortage. How did Hitler accomplish this? First he stimulated private industry through limited subsidies and tax rebates. He encourage spending through marriage loans, giving 1,000 Marks to each newlywed couple. For every child the couple had, a quarter of the loan was forgiven. The money was spent on and used to care for the children, stimulating industries which manufactured household goods and helping to increase the birth rate by easing the financial burdens on families. Housing projects for German industrial workers were greatly expanded, giving durable homes to German families and work to previously unemployed workers. Achieved alongside this was a 21% increase in weekly earnings from 1932 to 1938, as well as declines in the costs of heating and light.

The NSDAP outlines the German ability to create jobs in Section B, titled “Methods of Creating Jobs,” of the 1932 programme, “1. We have the productive capacity for more jobs. The stupidest objection to job creation is the claim that we lack the productive capacity. We have the land to produce more food (see section C). We have the machines and factories necessary to produce anything we can think of. Today, however, the land is not cultivated, mines shut down, factories close their gates, and machines rust. Our economy is ailing not because we lack productive capacity, but rather because the existing productive capacity is not being used.” The National Socialists planned to develop and revitalize this industry (through tax rebates and the occasional subsidy, as mentioned earlier) in order to eradicate unemployment. German National Socialists expressed a great desire for self-sufficiency, an autarchy, and they aimed to achieve this by massive expansion of domestic industry.

In point two, the NSDAP addressed the claim that there would be no markets for these new German goods (the United States had closed its doors to German goods, despite being Germany’s number one export partner). They said, “Markets for German production must exist as long as the needs of the last German people’s comrade [Volksgenossen] are not met. Today, 6 million people’s comrades are unemployed. They are starving, and they and their families suffer the most bitter poverty. And how many of the other people’s comrades today have what they need to live? In the face of such bitter poverty, the capitalist press dares to write about overproduction. The opposite is true. German production today is far under what our people needs. It can, therefore, be greatly increased.” Germany suffered from demand without the supply, and the National Socialist answer was this; German production for German consumption.

The third point in this section addresses the miserable failure of the previous governments to increase exports in an effort to find markets for German goods. The solution to declining German industry being pursued by previous administrations was idiotic, and failed to realize that domestic markets were available. I quote, “If the German economy is to meet its real task — meeting the needs of the German people — there are vast opportunities that are not today being met. Previous economic policy has aimed above all at increasing German exports, which has disrupted the domestic market in the interests of our ability to compete on the world market. (For example, pressure on wages, insufficient protection of domestic production against competition from abroad.) This economic policy has failed completely. Despite all efforts, German exports fell from a monthly average of 1.2 billion Marks in 1927 to 506.9 million Marks in the first five months of 1932. The current system destroyed the domestic market while simultaneously losing ground on the world market.” The economics of the NSDAP were undeniably protectionist, seeking to shield domestic German industry from the destructive, low “dumping prices” of the export economies of the U.K. or France, for example. Instead of advocating for catering to foreign markets, the NSDAP suggested that Germany’s industry focus on meeting the needs of the German people. Increased production brings both decreased unemployment and lower prices, resulting in a general improvement of the economy.

One of the ways which the NSDAP hoped to accomplish this economic refocusing onto the domestic market was to increase agricultural production. The aim of this was to both increase employment through additional labor and to create a Germany which was “independent of foreign foodstuffs.” The next step would be to “free to worker.” The pamphlet defines “freeing the worker” as this; “Refocusing the German economy on the domestic market can succeed only if the masses of the people have sufficient purchasing strength to absorb the increased production. That, in turn, can happen only if each German has the right to a job, and when each worker receives a decent income that corresponds to his achievements. These are the foundations for freeing the worker.” The expanding of agriculture would be done by strengthening the “independent small and mid-sized farmers,” freeing agriculture from the grip of hyper-capitalist and international financial interests.

The second to final point in this section explains what exactly needed to be done in order to accomplish this reorientation of German industry. “The following steps must be taken to refocus the German economy on the domestic market: Promoting the fertility of German soil by land reclamation (see Section C). Building developments with single-family houses for workers to promote the deproletarianization of working people, strengthening the purchasing power of workers, and encouraging a reduction in the industrial working day (see Section D). Building roads, canals, etc, to support the domestic exchange of goods, settling people in the East, and loosening the hold of big cities. [And] a general financing of production to promote private industry.” The next Section, titled “C. Land Reclamation,” goes even further into detail on the process of the expansion of German agriculture. Estimated costs and benefits are included, with the execution of this plan costing “around 2 billion Marks.” The amount of arable land estimated to be gained by these reclamations was 18 million hectares — another 70,000 square miles of farmland.

The next point deals with housing. Housing projects were commissioned by Hitler after he came to power, with the goal of building single-family homes for working families. From the pamphlet; “Along with food and clothing, housing is one of the necessities of life. The majority of those who live in big cities today do not live in decent apartments, but rather in terrible confined quarters without light and fresh air. The bad effects of such apartments on people is clear from the general state of health and decline in the birthrate in big cities, which are far below average. The number of deaths exceeds the number of births. Big cities would die out if people did not keep moving in. Expanding big cities is impossible for military reasons (air attacks, gas).” The housing situation in Germany was unsatisfactory for many Germans, with rundown apartments and slums being commonplace in large cities. This ultimately had a negative effect on the birth rate, morale, and overall health of the urban population. The previous Bruning administration had also attempted to expand housing, but the plan of the NSDAP bore several distinctions from this failed program. “Our plan is entirely different than Bruning’s. The new private homes will not be dog houses, as Bruning’s System planned, but rather solid, useful homes in which the owners will take pleasure. Furthermore, Bruning’s housing developments would surely be threatened as he reduces unemployment payments, without the settlers being able to support themselves from their tiny plots of land. National Socialist housing developments will benefit from the general improvement in the economy, which will guarantee that the homeowners will have jobs (usually part-time employment).”

The housing program proposed that 400,000 private homes be built per year. That, as estimated, will provide employment for one million Germans. Each worker which was willing and able to purchase a single-family house would receive a grant from the state for 40% of the value of the house. If he was employed, the rest of the money used to pay for the house could be borrowed from a state bank, which would guarantee “favorable terms and a quick decision.” If unemployed, the purchaser would be paid to help construct the house, providing employment for both the new house owner and an entire construction crew. A percentage of the unemployed homeowner’s pay will be required to be diverted to cover the cost of the house. Noted in this section is this, “(the larger the building program is, the greater can be the number of unskilled workers).”

The private home is defined as a “productive space.” To keep with this definition, each home built by the housing projects will have a yard of ¼ hectare. “That,” says the program, “will allow a worker to raise a significant part of the food he needs from his own land.” This was built in as a kind of insurance policy against possible future economic downturns, and to increase the flexibility of the family who owned the house. “His life thereby becomes more secure, and he is less dependent on his employer. If the worker becomes an owner who is assured work and the results of his labor on his own land, he will be able to survive necessary reductions in working hours that under current economic and social conditions can result only in absolute poverty for workers.” Objections to this policy included the assertions that agriculture and farmers’ markets would be hurt by household gardens, to which the NSDAP responded with this, “Homeowners will be unable to raise either grain or animals on their piece of land. They will have to buy these, as before, from farmers. Their produce will harm no one, for it will not replace existing production… Homeowners will not sell their produce, but rather usually consume what they produce themselves. Farmers sell little directly to workers. But even if sales decline slightly, it will be made up ten times over by increased sale of young plants, seeds, etc., to homeowners.”

The export market of Germany had dried up since the closing of US markets to German goods at the beginning of the Great Depression. After Hitler came to power in January of 1933, the head of the Jewish War Veterans called for an American embargo of German goods at a rally organized by the American Jewish Congress. This rally helped to kick off an international movement to boycott German goods. Anti-German movements sprang up in Lithuania, France, Holland, Great Britain and Egypt, willing to “use the most radical means of defense by boycotting German imports.” The Daily Express wrote, “In New York, Paris, Warsaw, Jewish businessmen are united to go on an economic crusade.” Later, the German government attempted to halt the boycotts by initiating a counter-boycott of Jewish-owned businesses in Germany. This lasted one day, as the German people largely ignored it and continued to buy from Jews. This was later circumvented by bartering with other nations using ‘real goods.’

The 1932 program opens its section on foreign trade with a summary of the current situation; “Since the middle of last year, foreign countries began systematically to strangle German exports. The result has been a decline in German exports of about 35%, more than a third, in the first four months of 1932 as against the previous year, while German imports declined about 8% during the same period. This attack by foreign nations on the German economy has worsened our condition significantly. It is time to take defensive measures to rescue our economy.” One of the largest weights which prevented economic growth in Germany was the foreign debt of twenty-two billion Marks, which Germany had accumulated through both borrowing in order to pay reparations and foreign trade. The NSDAP believe it was an “irresponsible waste” to accept a negative balance of payments in the future, but vowed to repay Germany’s debts (after restructuring them). Import restrictions were sometimes put into place, but only “when the result will be work for the German worker or the German farmer.” National Socialism opposed the “liberal world economy, as well as the Marxist world economy,” and sought to produce all the items which its people consumed.

The rejection of predatory hyper-capitalism and international finance forms the basis of the anti-capitalist sentiments which can be seen in some of the NSDAP’s policies and rhetoric. Under National Socialist rule, the banks were nationalized. The reason given for this was, “Bank presidents do what they want, and the state pays the bills.” Bankers had invested money foolishly, and then demanded that the state pay for their mistakes. The government did not directly control the functions of the banks, however, and this action only gave the government power to intervene in bank affairs. Other measures introduced to curb the poor investment choices of banks included a mandatory monthly statement which detailed all “positions and important changes.” In the 1932 economic program, it is said that the state will take a “supervisory capacity.” Banking reforms such as the expansion of the checking system. Additional laws to punish those who issued checks for money they didn’t have were put in place.

The ability of the state to put price controls in place was expanded. This was to prevent the “socially unjust” and “economically dangerous” overpricing of goods such as fertilizers, salt, and radio tubes. The objection, “This is harmful intervention by the state,” is included in the pamphlet and is responded to with this; “If prices are reasonable, state intervention is unnecessary. And the freedom of creative economic activity must not be confused with the freedom to ruthlessly exploit others.” Along with this, the NSDAP advocated for the shrinking of Germany’s bureaucracy. “To provide the funds for job creation, the state must exercise the greatest economy, just as in private industry. Party book officials, who do nothing for the general good, and who waste public resources, must be eliminated. Administration must be simplified, respecting the well-earned rights of the professional civil service. Expenses for prestige projects must be radically reduced. This includes limitations on the use of government automobiles, etc. As long as cities do not have enough funds for welfare payments, they should not spend a penny for ceremonial activities.” The NSDAP advocated very strongly for responsible spending, and thus did not allocate public resources to any venture it deemed unnecessary. The plan for tackling corruption is also outlined. For example, laws which banned civil servants from interacting in any way with companies which their offices had business relations, and doctors were not allowed to have any connections to pharmaceutical factories or other manufacturers of medications or health products. The death penalty for black marketeers was also introduced.

Circling back to farming, the pamphlet then gives a five point overview of the current agricultural situation in Germany and what must be done to remedy it. As mentioned before, Germany needed foreign foodstuffs to avoid starvation. This had pushed down the prices of food to a level which the German farmers could not compete with, and production costs routinely outweighed sales. This, coupled with unbearable interest and tax rates, led to German farmers holding a combined fifteen billion Marks in debt. The German farmer had no money to pay for seeds or for other material necessary for production. Farmers, left with unpayable debt and taxes, could no longer make a living. This caused Germany to even further lean on foreign farmers, and increased unemployment and poverty in the rural areas of Germany. Only three quarters of Germany’s demand for food was met by domestic production. The NSDAP proposed to rectify this by putting selective tariffs in place, and by lifting the interest and tax burden (described as “tax Bolshevism” by the program) on German farmers.

How was this renaissance of German agriculture supposed to occur? As mentioned previously, land reclamation campaigns would play a major role; making up for the farmland lost in the Treaty of Versailles. Eight policies are proposed, which include the raising of agricultural products by cutting off imports from nations which do not accept German exports, which corrects the inequity in the prices for agricultural and industrial products without increasing prices in shops. The elimination of “unjust profiteering by middlemen” is the second policy proposed. During the hyperinflation of 1923, many German properties had lost their value and gone “underwater,” meaning that the actual value of the property was less than the value of the mortgage. This forced many Germans to sell their properties at a loss to foreign investors (mostly Jews, one reason for rising anti-Semitism in Germany). The eliminations of foreign investors and predatory loans, said the NSDAP, would help to life some of the financial problems which faced the German farmer. Points three and four make clear the necessity of reducing the interest burden and the price of fertilizer, both to further increase purchasing power among Germans. The reevaluation of long term loans and the suspension of interest and principal payments until the agricultural industry is able to recover is also proposed, along with a suspension of the government’s ability to seize agricultural products. It is also proposed that about three-hundred-thirty-one million Marks be set aside for land improvement loans and grain elevators. The concept of resettlement in the East is mentioned again, and it’s goal is to reestablish the lost German agriculture in the East.

In conclusion, the economic policies of NSDAP can best be seen as economically pragmatic; not wholly protectionist or pro-free trade, and not wholly pro-free market or pro-central planning. Both the entrepreneur and the worker hold honored places in National Socialism, with an emphasis on social mobility and advancement based on merit. During the peacetime years of the Reich, wine consumption rose by 50%, champagne consumption by five fold, and between 1932 and 1938 tourism into Germany more than doubled. Automobile ownership more than tripled during the 1930s. The economics of National Socialism were constructed based upon circumstance rather than any defining set of ideals, such as the economics of Anarcho-Capitalism or Communism. There is much we can learn from the German economic recovery, National Socialist economic principles and work ethic, and the spirit of camaraderie and pragmatism cultivated by Hitler’s National Socialism.