1939 to 1942
1939 – 1942, Blitzkrieg: Armed conflict and Lightning War as an economic policy
In this period, Germany was facing major economic problems once again. The rearmament was having hugely detrimental effects on the German economy, as it was much too fast paced and appropriately placed great stress on the Reich’s finances, as detailed below:
1. Reduction of exports – because so much of the German economy was dedicated to it’s military, exports to other nations were drastically reduced as more and more sectors of the economy were rededicated to arms production.
2. Not enough labor in other parts of economy – while areas such as ammunition and military machinery had production numbers boosted alongside military research and development, other parts of the consumer economy were drastically reduced in scale.
3. Shortage of raw materials – The immediate solution to this, of course, was for Germany to import more and more raw materials from its trading partners established via the New Plan described earlier. However, increased imports and decreased exports as covered in point 1 meant that government debt was building up rapidly. Later on, Germany further improved the situation by using goods from conquered countries.
4. Reduced foreign currency earnings – with stringent government control of the value of the Reichsmark, it was clear to all that its exchange value was intended to give Germany benefits. Therefore, very few foreign nations dealt business with the Reichsmark, and this lack of usage meant that its real value fell significantly, despite government claims.
These economic problems left Goering (economic minster of Germany at that time) with two choices:
1. Re-integration into the world economy as the effects of the rearmament was overwhelming German economy. However, this would go against Nazi ideals of autarky and self-sufficiency, and thus not politically viable even if it was the most reasonable economic solution.
2. To effectively turn German economy into a ‘plunder economy’. This would mean that the German economy would be fulled by taking other nations’ resources and wealth by force of arms; this was politically viable as it was in-line with Hitler’s vision of ‘herrenvolk’; since the Aryan race was ‘superior’ to all other races, especially the Eastern European people and the ‘Bolsheviks’ of Soviet Russia, Germany therefore had a natural right to requisition their resources.
Hitler’s choice was point 2, using the justifications listed above. However, Goering and other generals realised that Germany could not, at that stage in time, sustain a long and drawn out war of attrition; therefore, they developed Blitzkrieg, or lightning war, in which the military would attempt to win a war as fast as possible, using as little resources to actually fight the enemy as possible as opposed to charging for key zones, such as resource-rich areas and politically viable locations, such as capital cities.
Germany needed to fight its war as swiftly as possible because neither industry nor military had the means to fight for extensive periods of time, and that would only come when it had the necessary resources to fuel a war of that scale. Goering believed that a successful Blitzkrieg would speed up the transition period into a total-war capable economy by utilising the resources of other nations and diverting them into the German war machine.
The economic objectives of the Blitzkrieg period were as thus:
1. To treat resource-rich areas as priority targets; the siphoning of resources would have begun as soon as possible, even if the invasion were not yet over. This was first exemplified in Austria following the Anschluss and Czechoslovakia after the invasion both before 1939, when mass amounts of raw materials were shipped to Germany; note that Blitzkrieg as a military strategy was not carried out here, but rather Blitzkrieg as an economic policy. Later on, this was repeated in France (where the first actual success with Blitzkrieg as a military policy was utilised); by 1941, 2/3 of French trains were comissioned to carry materials back to Germany to fuel the war.
2. Make Germany able to sustain a long-term war, via the resources gained through point 1.
With the resources and wealth gained, more money would have been spent on the armaments and military hardware/research industries. Military expenditure rose up to astronomical numbers. From 17% of GNP in 1938 to 38% in 1940, and 55% in 1942.
Evaluating their success in fulfilling their aims:
1. Did they support the army with enough resources to win the war?
German economy during 1939-41 was not well organized. Despite the increased efforts of increasing the firearms output, Germany military still had shortages of supplies. As early as 1939 December, Germany was already unable to replace planes lost in the battle of Britain. But early shortages didn’t hinder German success in the war.
The German economy supported the German army with sufficient weapons to have success in their early conquests. But by winter 1941, one third of the German soldiers didn’t have adequate equipment. Germany’s goal of destroying the Soviets failed and was eventually defeated in the battle of Moscow. Germany ran out of resources and couldn’t continue with their lightning war. They reevaluated their war plan and decided to enter total war to defeat USSR.
2. Did they succeed in preparing for a long war?
Some historians argue that German economy was not even prepared for the Blitzkrieg. And their success in the lighting war only relied on the temporary boosts gained from their victories. They only had enough resources because they exploited the economies that they conquered. Therefore, German economy by the end of 1942 was certainly not prepared for a total war.
By this time, making the German people ‘better off’ was of secondary nature as the Nazi party made increasing calls for people to take part in supporting the war effort, even if at personal loss. As such, this aim was not achieved as much as it was in pre-war years and, as will be explore later, to be pushed to the side.